Understanding the Business of Starting a Bakery

Entrepreneurship is at the heart of almost every modern society.  Small businesses fuel the economy, create jobs, and provide tangible benefits to local communities.  Bakeries are amongst the most popular small businesses for entrepreneurs, and many local bakeries have become thriving businesses fit for expansion and even franchising.

If you are considering investing your time and money into a startup bakery, then there is some key advice that you will need to follow to get the best chance of success.

Finance Your Equipment and Establish Supplier Relationships

Rolling Pin.

Compile a list of kitchen tools and equipment as you create your business plan.  The biggest startup costs (outside of location and staffing) will come from equipment.  Financed equipment is common with bakery startups, and rentals are available in some major metropolitan areas.

Knowing how much you will need to spend on equipment purchase or rental will put your budget into perspective.

Don’t Focus Heavily on Branding in the Early Days

Basic branding is essential.  A business name, theme, and logos etc. are all required when you start a business.  However, you should avoid falling into the trap of overspending on your branding.  Expensive menus and display cards are only necessary for larger bakeries and those that offer a dine-in experience.

Try to find the most affordable balance when you are branding.  You can always find opportunities to do more in the future when your profits begin to stabilize.

Engage with Your Local Market Through Low-Cost Advertising

Social Media Icons for Linked In, Instagram, Facebook, and Twitter.

Startups today, especially those in the food industry, have the benefit of being able to run social media advertising campaigns at low cost.  If you have not used social media to market a business in the past, then now is the time to learn.


Social media takes time and in some cases trial and error to see what sticks to your market.  If you don’t have the time to invest then you can consider hiring a social media marketing manager.  Rates are extremely competitive and geo-focused advertising platforms like Facebook and Instagram can offer a lot of value.

Understand That Losses are Likely to Come Before Profits

Expect to spend more than you earn during the initial months of starting a bakery business.  It can take up to six months for some small businesses to turn a profit.  Breaking even should be your short-term goal.  As your business matures, you will find ways to optimize your spending and reduce costs.

Financial planning for losses is important and preparing yourself mentally can protect you from disappointment and a loss of motivation.

Embrace Credit Card Payments

Drawings of two blank credit cards with the embedded chip.

Many small businesses shy away from credit card payments because they want to avoid merchant fees.  With a small food business, accepting credit cards can actually increase average customer spend, offsetting any additional transaction fees that you will pay.

Consumers use credit cards as a convenience, and they are likely to spend more on small purchases if they can pay with credit rather than cash.

Make credit card payments an option and you will not only have more opportunity for revenue, but you could attract customers who are unhappy with the “cash-only” competition.

Focus on Quality and Start Small

Keep your products simple in the beginning and increase the variety of your baked goods as your business starts to grow.  Keep the focus on quality so that you can grow your brand through word of mouth and positive testimonials.  Customers will expect some variety in what you offer, but too much diversity will end up eroding your early gains.

A bakery may exist in a small niche of the restaurant industry, but the fundamentals of business planning are like other startups.  Start small, grow your brand, and focus on quality and sound business planning to have the most realistic shot at success.