You’ve always had a passion for baking. You’re a big fan of baking shows like Cake Boss, Cake Wars and Ridiculous Cakes. You can make similar creations like the big and fancy ones on these TV Shows. Family and friends have been trying to convince you to put up your bakeshop. They’re convincing you to at least start a small operation at home. At some point, you might be slowly selling your products across the country. You’re already imagining the cross-country moving quotes for those big cakes, the number of people you’re going to hire, and where you are going to get your materials.
So how does one begin operating a small bakeshop? Here are a few ideas:
Bakeshop Business Outlook
The estimated revenue from the bakeshop business is around $30 billion per year. A total of roughly 9,000 retail and commercial bakeries are operating in the USA.
Globally, the top three largest bakeries (2018) are Grupo Bimbo, Finsbury Food Group, and McKee Foods. You won’t be competing with this lot anytime soon, but it’s good to be aware of the size of the industry and how it is doing.
Key Facts to Consider
Cakes constitute roughly 15% of the total bakery products. The most significant segment is still bread at 32%. Since you’re starting at home, you will be contributing to the cake segment. Experts advise for home startups to develop their specialty products, carve a niche, and develop customer following.
Here are other things you need to consider when starting your bakeshop:
1. Get the business in order.
Immediately work on registering and getting all the business papers in order—business name, registration, permits, health clearance, etc. You’re likely to be classified as a sole proprietorship business if you’re doing it solo.
2. Know the regulations.
Every county and every state would have different sets of rules for the cottage business, under which home baking is classified. Go to your country clerk’s office and find out more information.
3. Invest in the right equipment.
Those hand-held mixers will not cut it. Prepare to spend a big chunk of your budget on hardware, two of which would be a heavy-duty mixer and a proper oven. See if you can source out used ones that are still working fine to save on cost.
4. Define your product lines.
There’s plenty of competition out there even with small players like you. Start with a shortlist of product lines or with a specialization. For example, if you want to focus on just selling tiered fondant cakes of a specific size with customized design, do that. The margins here would be bigger because you could charge what customers are willing to pay. Alternatively, you can create four or five baked items that will build an extraordinary following. Don’t embrace plenty of things at the same time.
5. Hold off on the significant branding initiatives.
Create a logo, sure. That’s important. Focus on marketing initiatives that won’t cost too much to zero money. Maximize your social media presence. But hold off on printing paper bags and boxes with labels. Using plain paper bags, in the beginning, is excellent, according to Marlene Goetzeler, proprietor of Freeport Bakery in California.
As your market base increases, the variety of demand likewise increases. People would ask for low sugar or gluten-free products. Be ready to face these challenges.