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.
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:
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.
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.