Building a business is a lot like baking. You need a recipe (business plan), you have to have money to buy ingredients (capital for inventory and other expenses), and the passion to bake. When equating measurements to starting a baking business, you can say it’s because you need to understand your business finances and everything that goes with it. Equally important is the tools and resources you need to bake that perfect cake, similar to efficient, knowledgeable staff and the right equipment.
Starting a baking business can be quite fulfilling. To see the different ingredients come together in the perfect final product and bring people joy is particularly rewarding. So, if you are passionate about baked goods and want to turn this skill into a business, you have come to the right place.
Let’s get cracking (a few eggs)!
Start Your Baking Business
The starting point of any business is to understand what product you will be offering for sale, to whom and why. As a baker, you must know what you intend to sell and to which markets. For instance, are you a cake designer who will make wedding cakes, or are you a speciality baker who specialises in low-gluten baking to sell to diabetics?
Whichever you decide, it requires knowledge of your skills and the market. Therefore, conduct some market research in order to determine what the best products are to sell, but also don’t be too ambitious. Make sure the recipes are in your repertoire.
Next is the fun part. Name your business and think about the image you want it to have. You will need these when you register your business, open bank accounts and potentially create a business website. It is also important when you open social media accounts and would like to create marketing materials.
Business Plan
Creating a business plan will help you to focus on your business goals and help you execute them. It’s essentially a road map to establish your business and contains details about the funds you will need to set up your business, the tools or equipment you need to invest in, how the business will work, and your marketing plan.
Some of the tools you may need can be an oven if you don’t already have access to one, a mixer, a kitchen scale, measuring cups and various baking equipment. If you don’t already own these items, you must include them in your budget.
Set-up Cost
The set-up cost is the total cost of everything you need to be able to start and run your business until you are able to break even. The following list is some of the costs you must consider in this calculation:
- Start-up inventory
- Rent
- Utilities like electricity and water
- Packaging materials
- Point of sale system
- Accounting software
- Business registration
- Domain and website set-up costs
- Vital equipment costs
- Marketing expenses
By adding all the costs of the above together, you know exactly how much you need in start-up capital. Remember, it’s better to plan for your first few months to have low sales than to overestimate your potential income. But you can read more about how to calculate these costs in another article.
Decide on Your Product and Determine Pricing
Pricing is an element of business that is easy to get wrong. Undercharging for what your product is worth can have dire consequences, but overcharging may cause you to lose out on sales. However, chances are that you risk undercharging in your young business. Here’s why:
Some entrepreneurs forget to add together not only the cost of the ingredients that were used to make the product but also the cost of utilities, the cost of time you spent making the product, and packaging materials. If you had to deliver the products to a retail store, don’t forget to factor in the delivery cost, such as the fuel you had to use to deliver the product.
Once you’ve calculated the cost of a product and added the amount you need for profit, you can calculate how much you need to bake and sell in order to get a steady income. For example:
Ideal steady income = Profit x Amount of sales
Market Your Product
You can market your baked goods via social media, even sharing on your social media. You need to start building a client base and encourage them to share their reviews of your product on social media and also tell their friends and family about your product.
Baking Business Ideas
There are many types of baking businesses you can start. Here are a few ideas:
- Speciality cakes like birthdays, baby showers and weddings
- Biscuits and risks
- Breads and pastries
- Speciality baked goods such as gluten-free or vegan products
Final Touches
Throughout your business, it is vital to know that you must remain compliant. For a baking business, this means ensuring that your kitchen meets the standard of acceptability, that you comply with safety regulations, and that you have all your paperwork with regard to tax and VAT up to date.
Ensure that you implement a hygiene protocol and prioritise food safety at all times.
