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What are the first steps in opening a bakery?


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David’s Answer

Hi Rachel. Opening a new business is huge........and very exciting. I guess the first thing that I would suggest is for you to go online and find information on writing a "business plan". When you go through the exercise of writing a business plan, it forces you to look at the business aspects of what you are trying to do. Things like how much business you expect to be able to do on a daily, weekly or monthly basis; what the revenues could be; what your fixed overhead expenses will be on an ongoing basis, etc. A business plan looks at the financial planning aspect of opening a business which is what you will need to be looking at if you are going to need financing, either privately or through a bank or small business loan.
Everyone will want to know how much it will cost to open the business, how much it will cost to keep the business open, and will you be likely to have the resources to be able to pay back a loan. Once you understand the financial aspects of your prospective business you will be able to make better decisions about whether you still want to go forward and how to shape that plan.
Do you buy used equipment? New equipment? How large a space can you afford to rent? Staffing needs? There is a cost to all of these things, and once you develop a picture of your costs, you'll know how much money you need to have. PROBABLY THE BIGGEST SINGLE REASON FOR BUSINESS FAILURE IS A LACK OF FINANCIAL RESOURCES. If you don't have enough to stay in business for two years, at least, without everyday surpassing your financial expectations, then you will very likely end up like too many first time business owners. After you know what the money end of things will require, then you move to the next steps of opening your business. That's a different discussion.

Thanks for the info! Rachel C.

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Brenda D.’s Answer

Hi Rachel, it's exciting to hear entrepreneur questions. I have many questions for you, but for now, I'll respond hoping I can give provide some general advice for you.

The first steps in setting up a business would be:

-identifying the market need: is there a consumer out there for your products?
-running overall liking tests: is your product liked, have you made improvements based on testing?
-value proposition: how is your product perceived when you include your price? are you under or overpriced?
-market/competition: who else is doing it, how well are they doing it? how much they charge? what kind of products they offered? how diversified is their portfolio? you basically want to know EVERYTHING about your competition.
-location: for you it'd be very important to research location, a bad location could kill your business. Unless you're thinking this will be an online shop only.
-promotion: research what other bakeries are doing to promote themselves, how much money would you need for this strategy? evaluate if there are other ways to get the word out without breaking the bank, such as social media, sampling, etc. You'd want to advertise in a few media channels and only the key ones where your audience is present. Try to be very targeted.
-branding: what are you going to call the business? is the name taken? does the name have any bad connotations (consider researching in other languages for global exposure, even if your business is local), you'd need to pay a designer to work on a logo and a few web and stationery executions, make sure the final branding resonates with your key audience and communicates what your business is all about.
-try to work on your vision, mission and core values, that'll help you in the long run and set a tone for your operations and guide your business decisions in the future.
-make a performance plan, a budget. Forecast sales and have a list of expenses to be aware of how long it will take you to break even or be profitable.

If you do your homework answering these questions, then you can come up with a good business plan to ask for money, whether is to the bank or to other investors or family.

Hope this helps Rachel, good luck!

Brenda D. recommends the following next steps:

Contact a current business owner in your area to learn more about the current business environment.
Contact a Financial advisor to inquire about creating a budget for your business.
Contact a Tax advisor and get advice for later when you have to file your taxes as a small business.
Get a few quotes from graphic designers to help you work on your branding/logo.

Thank you for this helpful information! Rachel C.

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Jack’s Answer

Rachel,
First you need to work as a baker or a pastry chef. That way you can either work in the production end of the shop or you will know what your chef is up to. Try to work in a in a free standing bakery they are different then working in a hotel or club. The other advice that you have gotten from Dave, Brenda and Austin is very sound advice. One other piece of advice is to have the proper funding. When I opened my restaurant i thought I new a lot. But sadly I did not know enough about leases, government regulations marking or how to read the balance sheet from the person I bought the restaurant from. So after three threes I had to close.

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Aman’s Answer

A bakery business typically operates out of a storefront in the commercial section of a city or town. However, many entrepreneurs have successfully run bakeries out of their homes, attracting customers via word of mouth and small-scale advertising. Still others rent space in a commercial kitchen and distribute their baked goods wholesale to local cafes, restaurants, and convenience stores.

Retail bakeries prepare their items in-house and sell their baked goods directly to customers, with some locations offering seating for their clientele.

Commercial bakeries operate without a physical storefront, acting as suppliers for businesses that wish to sell baked goods, but don’t have the capacity to produce them in-house.

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Austin’s Answer

Hello Rachel, I believe the best options would be looking in to some business classes in order to properly get a start on creating your bakery, and learning how to run it properly. For that I would recommend getting some level of business degree at a college or university. I hope this helps.

Thank you! Rachel C.

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