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How To Start A Home Based Bakery
Baking and selling sweets may sound like an attractive business idea, but opening a bakery can be a messy endeavor without the right knowledge and skills.
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While cooking for the enjoyment of others is rewarding and a passion for cooking is important, a love of the craft will only take you so far. Let’s dive in to find out what you need to know when starting a bakery business.
All retail bakeries sell baked goods directly to consumers, but some specialize in one type of baked goods or service. You can choose from the following types of retail bakeries:
You may want to consider diversifying your product offerings to attract different customers, especially if you sell mostly seasonal items, such as wedding cakes with most ceremonies being in the summer.
The type of bakery you want to operate will determine other aspects of the business, such as the amount of space, equipment and ingredients you will need. We will discuss these details later.
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Depending on your available financial resources, you can buy or rent a bakery. Renting space can be a cheaper option for new business owners, but buying commercial real estate can be a better long-term investment.
Your city or state may provide resources for finding a business address. Some even offer incentives like tax credits, so check with your Small Business Administrator or Small Business Development Center.
Equipment is the second largest upfront expense for bakery owners after rent. No matter what type of bakery you sell, you can buy a bakery case, commercial oven and refrigerator. Workbenches, mixers and large tables called dishwashers are also crucial in the bakery. Your costs will depend on what your bakery offers, as well as the size of the space.
Many bakery owners buy used equipment at first, but it can be beneficial to purchase some new items. A used oven or refrigerator can have a lingering odor that can affect your baked goods. The pastry box should not smell or be damaged, so that the sweets are appetizing. If purchase is prohibited, an equipment lease allows you to use the equipment you need for a certain period of time, but at the end of that time you no longer own it.
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New bakery owners often think they can run the entire business themselves, but hiring a manager, especially someone with experience in the industry, can be a big help. A manager can offload administrative tasks from you, like ordering inventory, and can train every baker you hire to make sure the products are consistent.
You can hire experienced staff to train staff to save time and money. Finding talented, on-time designers can be difficult, he said, but the right people can be invaluable.
Rent and equipment are often the biggest expenses for bakery owners, but other running costs can add up. Payroll can be a large expense, depending on the hourly wages of employees depending on their skill level.
Economic factors often cause ingredient prices to fluctuate, and it is difficult to predict your bakery’s inventory costs. In addition, natural disasters or weather events in other parts of the country may affect the price of raw materials such as wheat and vanilla extract. Buying key ingredients in bulk also helps reduce inventory costs.
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The price of baked goods usually reflects the labor and ingredients required to make them. Calculate the time it will take to make the cake to determine the cost of the item. If you can afford the price increase, consider the cost of ingredients and the costs of keeping the bakery open, such as electricity and water costs, depending on how long it takes to make the cake.
Promoting your bakery is an important step in gaining customers. Create social media accounts and a website for your bakery where you can post pictures of baked goods.
Engaging followers on social media with giveaways and contests encourages people to interact with your brand and learn about your bakery. Make sure your social media presence matches the actual experience of visiting your bakery. Customers also expect consistency, so your offerings need to look and taste the same every time they arrive.
If your personal savings are not enough to open a bakery, there are several business financing options that can help you. Here are some financing options that may be suitable for new bakery owners.
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The SBA works with lending institutions to secure loans for small business owners. You can get up to $5 million in SBA-backed loans to cover common business expenses. The SBA offers several programs, including the 7(a) loan program and the microloan program, that may be of interest to bakery owners.
A 7(a) loan is the primary offering from the SBA. Eligible small business owners can receive up to $5 million with repayment terms of seven to 25 years. These loans can cover operating costs or current working capital needs. Smaller micro loans, with a maximum amount of $50,000. The SBA sets limits on interest rates to prevent lenders from charging high amounts for loans. Competitive rates and terms make SBA loans an attractive financing option for many small business owners.
Alternative online business lenders can be a viable financing option for those who have trouble getting traditional bank loans. Online lenders can approve borrowers with shorter business histories and lower credit scores. Repayment times for online loans are usually fast, with some lenders posting approval within days or hours.
You can apply for payday loans, equipment financing, invoice financing, cash advances and lines of credit from online lenders. However, there is a price for fast funding and minimum requirements. Online lenders often set high interest rates and short repayment terms for loans, and usually offer a lower amount than the bank offers.
Starting A Home Based Bakery Business
Crowdfunding allows entrepreneurs to raise capital from family, friends and the general public. Startups sometimes have difficulty getting a business loan without much experience or collateral, and crowdfunding can be an alternative. Online platforms like GoFundMe, Kickstarter and Indiegogo allow you to organize a campaign that explains your business and funding needs. Most platforms charge a service fee and may require donors to access a product or share in their company in exchange for money.
Funding times can be slow as it takes time to raise money and you may not earn as much as you expected. It can be difficult to compete online with other crowdfunding platforms, but the exposure you get from platforms like GoFundMe or Kickstarter can be valuable in building a customer base.
Although a formal culinary or business education can make the process of opening a bakery easier, it is not required. Local small business development centers or community colleges can provide education and guidance as you make decisions about your bakery.
The quality of the food and the in-store experience must be consistent to keep customers coming back. The key to maintaining sustainability is effective bread management. If you don’t have much experience in the industry, consider hiring a manager who can lead and manage your team, or at least teach you how to run a bakery. We use cookies to make it great. By using our website, you accept our cookie policy. Cookie settings
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Opening a bakery at home is not as easy as it seems. In order to successfully establish and operate a home bakery, you will have to follow the local laws and take the business seriously. There are many things to consider when deciding to open a home bakery, but with a good business plan, you will be well on your way to creating a successful home business.
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This article was written in collaboration with the team. Our team of skilled editors and researchers check articles for accuracy and completeness. Our content management team closely monitors our editorial work to ensure that each article is supported by reliable research and meets our high quality standards. The article was read 273,685 times.
To start a bakery at home, start with one creation
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Hi, I am Erick Norman. A blogger specialist in Kitchen Design.