By: Jessie Broz

 

Opening up your own bakery is no cake walk, but with the proper tools, one can be well-equipped to rise to the challenge. Sink your teeth into our online business formula; these “ingredients” that will make your bakery a success.

 

1. Stand out among the competition.

What makes your pastries better than anyone else’s? Assess qualities you believe will promote interest in your bakery and which qualities might be able to afford some improvement.

 

For example, a trending topic in today’s society is how to cut out various substances to improve health and well-being. This desire is derived from the growing intolerance of such substances including deter

• gluten,
• dairy,
• and pre-existing allergies to nuts.

 

By introducing menu items in line with specific dietary needs, you are expanding your target market. Moreover, you cater to an entirely different market from your local competition.

 

2. Write up a business plan.

A business plan is the equivalent to a game plan. In other words, they are essential in executing a fail-safe strategy. This is your opportunity to develop ideas and set goals and your ability to measure performance.

 

Need some convincing? Here are a few benefits creating a business plan can offer you:

 

• Answering key questions. A business plan allows you to assess your objective from many different angles, preparing you to tackle every unforeseeable obstacle. Here are some questions you need to be prepared to answer:

 

• • What start up costs do I need to consider?

Generate a list of all product ingredients, equipment, and expenses you expect to have, and then some. It is better to be over prepared than under. Once confident with your list, create a budget to ensure funds are properly delegated.

 

• • What kind of market are you catering to?

Consider your demographic. Specific characteristics that might influence your products are age, culture, and abundance of similar products.

 

• • How can I cater effectively to my market?

Hours of operation, order-delivery turnaround time, promotions, and pricing can place a tremendous impact on consumer interaction. Establish fair policies that ensure customer satisfaction.

 

• • What is your ultimate business goal?

Whether your goal is to be recognized as the best baker in your local town or to maximize revenue, you will need to devise a strategy on how you plan to make that happen.

 

• Keeping your vision clear. En route, you will brainstorm innovative creations and receive multiple suggestions. Before revamping your business, refer back to your business plan to assess your budget and goals. Are these new ideas worth the time, value, and expenditure?

 

• Attracting investors. If you plan to borrow funds, you will need to prove to your investors that your business is something worth investing in. Writing up a clear and concise business plan will allow them to understand your business and loan intentions and how you plan to create substantial profits.

 

3. Startup costs you can’t (and shouldn’t) avoid.

Calculating an estimate for your startup costs can be quite troublesome. You will spend a lot of time racking your brain for bakeware and equipment needed to create your confectionary masterpieces, rent if applicable, and labor. These are the most obvious startup costs that exist. So, what are you forgetting?

 

• Health inspections. The Health Department requires that you undergo inspections prior to making your very first sale. This is to ensure that your kitchen space is up to par with health regulations. Requirements vary from state to state, so be aware of which ones are mandated by finding your local health department. Once approved, you will be eligible to apply for the appropriate licenses and permits.

 

• Licenses and permits. Having a bakery license authorizes you as an approved handler and provider of food products. It ensures your ability to open your bakery and assures customers that your products are safe for consumption. Not to mention, it is also required by the Food and Drug Administration. Because licensing and permit requirements differ from state to state, it is important to do your research.

 

• Insurance. Other costs to consider include the possibility of property and equipment damage, food spoilage, employee dishonesty, work related injuries and accidents, and burglary. These are just a few of the many legitimate risks that bakers face when opening their business. Fortunately, these worries can be alleviated by getting coverage. Many policies exist to provide for a wide range of services. These services include online bakery insurance, home bakery insurance, and store bakery insurance.

 

By indulging in these startup costs, you acquire the legal necessities in place to open, operate, and protect your bakery. In addition, by displaying these credentials for customers to see, you assure them that your products are safe to eat and that they are doing business with a professional.

 

4. Know your products before you price them.

When time comes for you to price your products, you should have two goals. The first is to establish fair prices. The second is to generate revenue.

 

A great deal of math goes into calculating what price is both fair to you and your customers.

Here are a few things to consider when pricing your products:

 

• Manufacturing. To understand this, let’s get hypothetical.

You’ve decided to open a donut shop and need to determine the price of one donut.

 

• • Ingredients. The cost of raw materials plus shipping/transportation is $20. These raw materials yield 10 donuts. Therefore, the cost to produce one donut based on ingredients and ingredient shipment ($20/10 donuts) equals $2.

 

• • Labor. Employees are paid $8 per hour. It takes one employee 1 hour to make 10 donuts. Therefore, the cost to produce one donut based on labor ($8/10 donuts) equals $0.80.

 

• • Overhead. Calculate operating expenses that apply to you, including equipment costs, utilities, and rent. Divide that by the number of days in the month and then how many donuts you plan to sell each day. The monthly bill for rent and utilities average up to $300. Your goal is to sell 90 donuts a day. Your equation should look like this: $300 in overhead expenses/30 days/90 donuts sold in a day. Therefore, the cost to produce one donut based on overhead equals $0.11.

 

The sum of what it takes to produce one donut is your break even price ($2 + $0.80 + $0.11 = $2.91.) In order to make a profit, you would need to price your product greater than your break even price.

 

• Target Market. Before getting settled on the prices you have calculated, consider your target market. If you are catering locally, be aware of the average income level. Prices and income levels should have a direct relationship. The higher the income, the higher the price of your pastries, and vice versa.

 

5. Hire the help you need.

Being a small business owner is no small feat. It means working 24/7/365. Hiring help in and out of the kitchen can dissolve the load on your plate. Here are some questions you might ask yourself:

 

• Do I need a business partner? Before you answer this, you need to ask yourself if you are willing to share your dream. Take your time carefully sampling your options to ensure that your future business partner will help build your business the way you envision it. And most importantly, (if you do decide to take on a business partner,) put everything in writing. Write down the details of the responsibilities of each partner, how you plan to split profits, how to propose ideas, agreements made, and an exit procedure should you find you do not like doing business with them.

 

• How many employees do I really need? Revealing how many employees you need is quite bittersweet. That is because there is no magical number and the choice is entirely up to you! Rather than trying to figure out the workload a single employee can manage, decide on what qualities you are looking for in them. Can you confidently match your baking expertise with your knowledge of managing accounts and promotions?

A few skills you might want to consider in employees are:

• • Accounting
  • Bookkeeping
  • Marketing
  • Managing

 

6. It’s called “Cake Boss” not “Cake Friend.”

Taking on the task of becoming a business owner means becoming your own boss. Should you choose to hire help, it also means becoming the boss of your employees. If you lack experience in management and communication, it may be difficult to lead your team.

 

Here are three ways to tackle your new job title with confidence.

 

1. Be vulnerable. Share the biggest hopes you have for your business with your team. If they understand how passionate and driven you are, they will be more inspired to help you succeed.

 

2. Establish policies and protocol. Clearly express the responsibilities and expectations of each employee role via handbook or contract. Some things to include are:

• • appropriate attire/uniform,
  • submission etiquette for time off requests,
  • quantity of sick/vacation days,
  • bakery-specific duties,
  • Family and friend discounts,
  • explanation of payroll, and
  • consequences for poor work ethic.

 

Be as detailed as possible so that if a situation arises questioning a policy, the answer can be found within context.

3. Carry out consequences. Common mistakes are great opportunities for you to exercise guidance and personal judgement. However, inconsistencies and more serious acts against the code of conduct deserve the appropriate discipline. Being consistent with the rules creates a fair work environment. No one likes being the bad guy, but that is a part of the job.