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Starting a Bakery Business
We want to help you get your bakery business off the ground. Since 2004, we’ve helped over 1,000,000 people to become entrepreneurs, starting exciting businesses and bringing their ideas to life. We’ll give you the support, guidance and advice you need to create a business and make it into a success.
Here is our simple guide to starting up a successful bakery business.
From exploring the types of business you can start, through research, to the legalities of setting up your business and the realities of your day to day operations, this guide is here to help.
Read on for some insight into creating your own travel business and becoming an entrepreneur. In this guide we will cover:
From exploring the types of business you can start, through research, to the legalities of setting up your business and the realities of your day to day operations, this guide is here to help.
Facts and figures on the success of bakery businesses
Learn if a bakery business could be right for you
Ideas for the type of bakery business that you could form
Proving your bakery business can work
Useful online tools for bakery business owners
Choose the right business structure for your bakery company
Where to find bakery business groups, forums and support
Business plans for bakery companies
How to start your bakery business with information on equipment, employees, location, pernits, finance, taxes and more
Why This Industry?
Why You Should Open a New Baking Business
You might not think of the humble bakery as a powerhouse for business, but the stats say otherwise!
11K
There are more than 11,000 bakery cafes in the US
$300b
Bakery products make up over two percent of the GDP of the US, which works out to over $300 billion a year
$350
Average spending of each US household on bakery products
Sales from retail bakeries are expected to increase by over five percent a year
Two-thirds of bakeries have fewer than 10 employees
Gluten-free baking is rapidly increasing in popularity, with almost 30 percent of people purchasing these products
The time to take advantage is now — we’ll help you be a part of that success!
Is This Business For You?
Is Owning a Bakery Right for You?
Before deciding to open a bakery, it’s important to understand the skills and approach you’re likely to need.
A Day in the Life of a Bakery Business Owner
Here are some of the typical tasks you’ll be performing for your bakery business on a daily basis.
Understanding customer demand for the products you’re intending to make
Purchasing ingredients for baking products
Preparing ingredients for baking
Working out the costs of ingredients, selling prices and profit margins
Baking products and putting them out for sale
Storing products as needed
Marketing your bakery
Managing bakery employees
Dealing with customers
Skills Needed by a Bakery Business Entrepreneur
The following skills will be very useful in your role as a bakery small business owner.
An excellent grasp of the art and science of baking
Good soft skills and talking to customers to find out what they want
Math skills so you can work out the ingredients you need and what you should sell products for
People management skills for your behind-the-scenes and front-of-house staff
Marketing skills to get people into the bakery
What Your Bakery Customers are Looking For
Someone coming to your bakery is likely to want:
Delicious, fresh, high-quality baked products
A good variety of breads, pastries, cakes, and more
A place to sit, relax, and chat with friends
Reasonable prices for baked goods
Drink options like tea and coffee
What Type of Bakery Business Should You Start?
If you want to start a successful bakery business, it’s important to know what your options are. Here are some of the more popular business ideas:
A specialized bakery that makes top-of-the-range products like bread or cakes
Bakeries where consumers can personalize products like cakes for special occasions like weddings
Gluten-free bakeries that serve people with gluten intolerances
Vegan bakeries that produce goods without using eggs, milk or other animal products
A bakery food truck that makes sandwiches and other to-go food
Bakeries that cater to a specific audience, like bagel bakeries for people who want to grab breakfast
Validating Your Bakery Business Idea
These areas are just starting points — there are many different types of bakery businesses. Once you’ve identified the type of bakery you’d like to run and what you want to sell, you need to validate your business idea.
Start by checking you have the right skillset. Bakers work long hours and need sufficient technical skill to make great products. You’ll need to deal with employees and customers too, and there’s a lot of planning that goes into running a successful bakery.
The thing to learn here is that it’s okay to say “no” to your first, second, or third bakery business ideas. Very few entrepreneurs get it right first time. In fact, getting it wrong is often a badge of honor! Still, you don’t want to waste too much time, energy or money on the wrong initiatives, so ask and answer these questions honestly to find the right way forward.
Before committing too much time, energy and money into your new bakery business, it’s important to test the marketplace.
Identify your business’s unique selling points (USPs)
You need something that’s going to help your bakery stand out, whether that’s the quality of your products, the range of what you sell, the ambiance of your location, or something else.
Look at who your competitors are in the space
Having competitors is a good thing as it shows there’s a market, but if there are too many local challengers, you’re likely to struggle without a really good unique selling point. Don’t just look at other bakeries, you also need to see how many grocery stores and regular cafes you have in your area.
Understand your customers
Talking to customers will help you find out what they’re looking for, so you can tailor your products and offerings accordingly.
Get involved with local business communities and discussion groups
Speak with potential vacationers to understand what they want from your travel and tourism services. Ask about what they need from you to plan the perfect vacation or getaway.
Your Bakery Needs a Business Plan
You need to define how you’re going to run your bakery business, market yourself, get sales, make a profit, and grow. This can only come about through creating a watertight business plan. It will help you get your thinking in order and show your commitment to your bakery business.
You will also need to look at financial projections for your bakery business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others?
If you can, try to plan your revenue for the next month, three months, year and two years. It’s vital to take into account the cost of setting up a bakery business in the first place, also factoring in utility, staff and other costs.
An executive summary with the most important points from your business plan
Your goals and what you hope to achieve with your baking business
A description of your business, background information, and context
A market analysis and likely demand
An overview of how your business is structured
Your business model
How you will market and sell your offerings
Financial projections, revenue, and profitability
Appendices
We’ve got the perfect guide to writing your business plan.
We’ve got the perfect guide to writing your business plan.
Right Business Structure
Choose the Right Business Structure and Register Your Bakery Business
There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:
- Sole Proprietorship
If you don’t choose to form a legal business entity for your bakery business, you will be a sole proprietor by default. This won’t give you the legal protections you need, so we do not recommend this.
- Partnership
This is a type of business that is formed when two or more people work together without creating a more formal business entity. Like a sole proprietorship, it may not give you all the protections your bakery business may need.
- Limited Liability Company or LLC
The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your bakery business.
- S Corporation
This is a more complex type of business and isn't generally recommended for smaller organization.
- C Corporation
These are the largest and most complex types of businesses and are far more than the average entrepreneur or business owner will need.
For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure for your bakery business.
In most cases our recommendation would be to create an LLC. We have a complete guide to everything you need to do, and we can set one up for your bakery business. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.
Start Your Business with Us, Today!Setting up Your Bakery Business Operations
Once you've legally created your bakery business, you’ll need to get some other things in place.
LOCATION OF YOUR BAKERY BUSINESS
The location you choose will depend on the type of bakery you want to run. If you’re only producing baked goods to sell to other businesses, you won’t need a shop front. On the other hand, if you’re selling to the public or operating as a bakery cafe, you’ll need a retail location.
Equipment and ingredients
Bakeries will require specialized equipment. You’ll need a professional kitchen that’s licensed for commercial food production. You’ll need counters, shelf fixtures, display cases and other furniture to show your products. You’ll also require tables and chairs if you want people to eat at your bakery.
Employees
Unless you want to do everything yourself, you’re going to need employees. Bakery owners often work very long hours, and you can’t be making products and service customers at the same time. You’ll need to attract and employ great staff that are well-versed in customer service.
Finances and Taxes
Unless you want to do everything yourself, you’re going to need employees. Bakery owners often work very long hours, and you can’t be making products and service customers at the same time. You’ll need to attract and employ great staff that are well-versed in customer service.
SOFTWARE AND PROCESSES
There’s some specialist bakery software out there, and of course you’ll need a point of sale (POS) system. There are many other apps that can help you, see our list at the end of this guide.
MARKETING
Marketing will probably be part of your bakery business. At the very least you’ll need signs to attract people in, but you should also look into local advertising, both offline and online. It’s also a good idea to create a website where you can share details and photos of what you bake.
The Complete "Start Your Business" Checklist
A Clear and Comprehensive Guide to Starting Your Business the Right Way
Rules, Regulations and Taxes for Your Bakery Business
Rules, Regulations and Taxes for Your Bakery Business
You will need to explore local, state and federal licenses and permits, especially around food preparation and hygiene. We can also help out with researching your business licensing needs.
Taxes
Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. This can include self-employment tax, state income tax and federal income tax. Depending on where and how you’re selling products and services, you may also be liable for sales and use tax.
As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. We can also prepare and file your tax returns for you.
Maintaining Your Bakery Business
There are certain forms and legalities you need to follow to keep your bakery business in good standing.
File an Annual Report
Most states require all businesses to file a report once a year. This report has details of any major changes to who owns a business and other major impacts on a business’ legal status. We can file your Annual Report on your behalf.
Pay estimated taxes
You will be expected to pay estimated taxes on what you plan to earn in the current business year. Typically, you will need to pay estimated taxes in April, June, September and January (of the following year).
Renew Business Permits and Licenses
Your business will probably have several licenses, permits and other regulations. These typically need to be renewed every year.
Prepare Your Taxes
You will need to work with your accountant to prepare all the taxes you need to pay.
File your taxes
You will need to file your taxes once a year.
Pay payroll and sales taxes
If applicable, you will need to make payroll and sales tax payments on a regular basis.
Insurance for Bakeries and Other Baking Businesses
Most bakery businesses should have comprehensive business insurance. There are various types.
Workers Compensation Insurance
Workers’ compensation insurance provides coverage for job-related illnesses, disabilities or injuries that affect employees. Regulations for this insurance vary from state to state. It typically covers areas like medical costs, loss of earnings, compensation and retraining.
General Liability Insurance
This insurance protects your bakery business from claims due to being sued. This may include injury to members of the public, property damage, personal liabilities, legal defense, and more. It can help protect your business from financial penalties and bankruptcy. This type of insurance could be essential to your bakery business as you [rewrite]...
Home and Auto Insurance
If you are working from home, for example on the administration of your bakery business or driving a vehicle for work, check whether your existing home and auto policies cover you for work use of your home or car. If not, you should either expand your policy so you’re covered or get dedicated business insurance.
Groups and Forums for Your Bakery Business
Here are some useful places where you can connect with other bakery entrepreneurs.
Useful Online Tools for Bakery Owners
Here are some really great online tools for managing your bakery business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.
Collaboration
Social Media Management
Communication
Email Marketing
Advertising
Customer Relationship Management (CRM)
Customer Support
Human Resources
Website Development
Analytics
Hiring
Please note: This post contains affiliate links and we may receive a commission if you make a purchase using these links.
Conclusion
A bakery is a great way to provide amazing food to friendly people, and is an industry that’s still seeing growth in the US. If you can find a great niche, understand your competitors and put together a solid business plan, you will have every chance for success
