What Do You Need For A Bakery

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Melissa Wylie is a former Senior Small Business Writer covering small business financing for and domain owned MagnifyMoney and ValuePenguin. In her role, Melissa explores all aspects of business ownership, from start to sale and all the hurdles in between.

What Do You Need For A Bakery

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Before joining, Kurt spent his past life as an academic, studying US history. He now brings nearly a decade of teaching, writing and editing to help people better understand personal finance.

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Baking and selling sweet snacks may seem like a fun business idea, but starting a bakery can be a messy endeavor without the right knowledge and skills.

While cooking for others to enjoy can be rewarding and enthusiasm for baking is essential, love for your craft will only get you so far. We’ll dive in to find out what you need to know when starting a bakery business.

What Employees Do You Need For A Bakery?

All retail bakeries sell baked goods directly to customers, although some specialize in one type of pastry or service. You can choose from these types of retail bakeries:

You may want to consider diversifying your product offering to attract a variety of customers, especially if you mainly sell seasonal things, like wedding cakes and most ceremonies in the summer.

The type of bakery you want to run will determine other aspects of your business, such as the amount of space, equipment and ingredients you will need. We will discuss the details later.

You can buy or rent a bakery location, depending on the financial resources you have available. Renting space may be a cheaper option for new business owners but buying commercial real estate can be a better long-term investment.

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Your city or state can provide resources for finding business locations. Some even offer incentives like tax credits so check with your local Small Business Administration office or Small Business Development Center.

Equipment is the second largest startup expense for bakery owners after rent. No matter what kind of baked goods you sell, you can expect to buy pastry cases, commercial ovens and refrigerators. big table, called work bench, mixers and dishwashers are also crucial in a bakery. Your cost will depend on what your bakery offers, as well as the size of the space.

Many bakery owners buy used equipment in the beginning, but may need to purchase some new items. Ovens or refrigerators used may have odors that may affect your pastry. Pastry case should also be free from smell or damage, so pastries appear appetizing. If buying is prohibited, renting equipment will allow you to use the equipment you need for a certain period of time, but you will not have it at the end of that time.

New bakery owners often think they can handle the entire business alone, but hiring a manager, especially one with industry experience, can be a big help. Managers can take administrative tasks off your hands, like ordering inventory, and they can train the bakers you hire to make sure the product stays consistent.

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To save time and money on employee training, you may want to hire an experienced employee. Finding talented and capable decorators who can meet deadlines can be difficult, she says, but the right person can be appreciated.

Rent and equipment are usually the biggest expenses for a bakery owner, but other costs can add up. Salary can be a big expense, depending on the employee’s hourly pay rate based on their skill level.

Economic factors often cause ingredient prices to fluctuate and it can be challenging to forecast your bakery’s inventory costs. Also, natural disasters or weather events in other parts of the country can affect the price of raw materials such as wheat and vanilla extract. Buying basic materials in bulk also helps reduce inventory costs.

The price of baked goods usually reflects the labor and materials required to make them. For the price of an item, estimate the amount of time needed to complete the cake. If the price can go up, also factor in the cost of ingredients and the cost of maintaining the bakery, such as electricity and water costs, based on the time it takes to make the cake.

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Promoting your bakery is an important step in gaining customers. Create a social media account and website for your bakery where you can post photos of your baked goods.

Engaging social media followers with giveaways and contests will encourage people to interact with your brand and become familiar with your bakery. Make sure your social media output matches the actual experience of visiting your bakery. Customers also expect consistency, so your offering needs to look and feel the same every time they arrive.

If your personal savings are not enough to start a bakery, there are several business financing options that can give you a boost. Here are some funding options that may be suitable for new bakery owners.

The SBA partners with lending institutions to guarantee loans made to small business owners. You can get an SBA-backed loan of up to $5 million to cover general business expenses. The SBA offers several programs, including the 7(a) loan program and the micro loan program, both of which can be attractive to bakery owners.

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7(a) loans are the SBA’s primary offering. Qualified small business owners can receive up to $5 million with repayment terms between seven and 25 years. These loans can pay for start-up costs or ongoing working capital needs. Microloans are smaller, maxing out at $ 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 funding option for many small business owners.

Online alternative business lenders can be a viable financing option for those who have trouble qualifying for traditional bank loans. Online lenders can approve borrowers with a shorter time in business and lower credit scores. The turnaround time for online loans is usually fast, with some lenders advertising approval within days or hours.

You can apply for term loans, equipment financing, invoice financing, cash advances and lines of credit from online lenders. However, there is a price to pay for the fast time for funding and minimal requirements. Online lenders often assign high interest rates and short repayment terms to loans, usually offering smaller amounts than banks provide.

Crowdfunding allows business owners to raise capital from family, friends and the general public. Startup businesses sometimes have trouble qualifying for business loans without much experience or collateral, and crowdfunding can be a possible alternative. Online platforms like GoFundMe, Kickstarter and Indiegogo allow you to set up campaigns that describe your business and funding needs. Most platforms collect fees for using services and you may have to give donors access to products or shares in your company in exchange for money.

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The time for funding can be slow, because it can take some time to collect money, and you may not collect as much as you hope. It can be a challenge to compete with other crowdfunding platforms online, but the exposure you get from platforms like GoFundMe or Kickstarter can be invaluable in building your customer base.

Although a formal background in culinary arts or business management will facilitate the process of starting a bakery, it is not a mandatory requirement. Local, small business development centers or community colleges can provide education and guidance when making decisions about your bakery.

To keep customers coming back, the quality of the food and the in-store experience must be consistent. The key to maintaining consistency is effective bakery management. If you don’t have extensive industry experience, consider hiring a manager who does and can lead your team, or at least teach you the ropes of running a bakery.

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