Opening a bakery business is like any other business. You need a plan with a budget if you want to succeed. Running a bakery is no piece of cake but if done right, you can set your business up for long-term sustainability. Simply put, your bakery business will grow with careful planning, preparation, and budgeting. If you are like most new business owners, you’re looking for ways to sweeten the deal and stay ahead of the curve. Medina Baking & Supply has you covered.

We know what it takes to run a successful bakery business and we are here to help you get started on the right foot. Below, we offered a few tips on the cost of opening a bakery and what your initial budget should include.  

Planned Income

First order of business is to know how much you plan to bring in with muffins, cakes, cookies, and any other delectable treats you plan to sell. Those items with a set sales price should be a priority, like loaves of bread and muffins. The prices you set should be competitive enough to entice customers and generate a profit. Having a good handle on pricing and projected profit will give you a better picture of what your expenses will be without losing revenue.

Start Up Costs

Startup costs often include security deposits, construction, permits, used equipment, and monthly expenses that may include insurance or staffing. These costs will vary depending on whether you are starting from scratch or partnering with an established franchise. If you are starting from scratch, you’ll have to purchase all materials and equipment, which can amount to almost $40,000. If you are starting your bakery business with an established franchise, those costs can increase greatly to $420,000.

baking supplies, bread in the storage

Operating Costs

Operating costs are incurred as a result of running the bakery and can be direct and indirect. For example, an operating expense would be ingredients used or the cost of labor to create the pastries. Other expenses included in operating costs include advertising and administrative costs.

Unexpected expenses

It’s always good business to plan for unexpected expenses. Your baking equipment may stop working suddenly and you may not be able to finish a custom order. These things happen but if you’ve planned ahead for the unexpected, they won’t impact your business.

While you are working the numbers out, it is always a good idea to proactively build your client base. Set up a booth or pass out goodies to your neighbors and fellow business owners. Word of mouth is priceless and it’s free! That doesn’t mean that you can’t brand your items.

Just don’t think you must do so right away. Spending money branding T-shirts and cups can be a waste if you aren’t sure what you’ll need yet. It’s ok to send your treats out in white paper bags initially until you know exactly what you’ll need to place that big order.

quality baked goods

Never sacrifice quality for savings on your goods

As your working out the kinks in your budget, know your break-even point. Also don’t be afraid to embrace customer credit cards for payment. There may be fees associated with taking plastic, but saying yes to the customer can pay dividends. Saving a few bucks here and there is recommended but don’t sacrifice quality for savings on your goods. The perceived quality of your freshly baked goods must be higher than anywhere else for the customer to justify paying the premium.

In the meantime, educate yourself on small business loans. They are out there! And utilize equipment financing for your baking assets like ovens, fridges, and a point of sale system.

Some questions to consider when choosing this route:

  • Do you want to own it?
  • Will it be useful to you longer than you make the payments?

This will help you find the right structure option for your financing. By doing this, you will save your liquid capital for the unexpected or other items you may need. For more articles like this, make sure to visit our website! Happy Baking!