Bakery Business Model: How to Start a Business

The smell of fresh bread in the morning, specks of icing sugar dancing through the air turning every breath sweet, and the satisfaction of creating something delicious from scratch. This is the amazing reality that comes from starting your own bakery business. Bakers with ambition can find a true feeling of gratification if they take the plunge into the hospitality industry.

However, as romantic as the idea of starting a business is, you still need to be realistic about the challenges that will come with the process. Being a talented baker is no guarantee of success. Preparation is your best friend here, and a full bakery business plan will ensure that you're ready for any issues that may appear as you get the ball rolling.

What is a bakery business plan?

Simply put, a bakery business plan is a document that outlines the concept, mission statement, business goals, and financial projections of a company. This document can be thought of as a list of goals with added information about how the new company will achieve these goals.

Business plans are often used by companies to secure funding and loans to help them get started. The majority of banks and potential investors will ask for a copy of your bakery business plan as a requirement for investment.

Why is a bakery business plan important?

A well-thought-out business plan puts you in a position to get started quickly and effectively. While not all bakeries will take the time to write a bakery business plan, those who will effectively have a headstart over their competitors.

A business plan is also an opportunity to take an objective look at your concept before you put it into action. It can be easy to get swept away by the excitement of starting a new bakery business. Writing a bakery business plan gives you time to sit with your ideas and see what's worth pursuing.

Writing a business plan allows you to work through starting your new bakery in stages and helps identify what steps you need to take. Building your bakery from the ground up requires difficult decisions, and your business plan will help guide you to the right choices.

Keeping track of what you need can also be overwhelming for new businesses. Business plans are essential lists of what needs doing and what you'll need to do it. By continuously referring to your bakery business plan, you can stay on top of what needs to be done to get you over the finish line.

How to write a bakery business plan

Sitting down to write a bakery business plan can seem scary at first. There are a lot of different factors when starting a business plan and you need to consider almost every aspect of your business. Some small businesses choose to hire a business consultant to write their plan for them. This is a perfectly normal thing to do, but sometimes these businesses do lose their own personal touch in the process.

Cover page

This is the simplest section in your bakery business plan, but it will be the first thing any potential investors see. Your cover page should feature the name of your bakery business, your name as the founder, the names of your business partners (if any), and all your relevant contact information. You should also include your logo if you have one. A cover page isn't mandatory, but it does give your business a sheen of respectability.

Executive summary

The first main section of your bakery business plan should be your executive summary. This section is a summary of your bakery business concept. In succinct terms, you should outline your budget, a description of your business, estimated startup costs, and target marketing strategy.

Your executive summary needs to reflect the kind of bakery you're trying to create. For instance, a home bakery will have very different needs to a food truck bakery. This section in your bakery business plan should paint a picture of your business goals and how you'll achieve them.

Since this is the first proper section of your plan, you need to write in an interesting and engaging way. This is how you will hook potential investors and get them excited about your bakery business. Your personal style and attitude is what will attract your target customers so try your best to get that across in this section.

Company overview

In many ways, a company overview is very similar to your executive summary. There are, however, key differences that set the two sections apart. Your company overview is concerned with the more practical aspects of your new business, while your first section was more focussed on the general concept.

In this section of your bakery business plan, you need to outline exactly what kind of business you're running. There are many different types of bakeries, and it's important to show your investors what their money is going towards. Are you planning a wholesale bakery or a bakery cafe? A specialty bakery that focuses on vegan baked goods? Your investors need to know.

Your company overview will also need to include information about ownership structure, company culture, operations plan, and customer experience journey. Essentially, all your practical information such as your intended location, employee management practices, and the food products you plan to sell needs to be in this section.

The company overview is also the last chance you have in your business plan to include any conceptual information. With this in mind, you may want to include your logo, color-scheme, and how you'll try to create your intended ambience.

Team structure

The quality of your team is crucial to your success, as they'll be helping you run your day-to-day operations. Bakeries require specialized staff with sector-specific knowledge. With the team structure section of your bakery business plan, you can lay out exactly who you'll need to hire and where you'll place them within the business to best utilize their talents.

Defining the hierarchy within your bakery business will help you build a healthy and supportive place to work. Your management team and staff should have a clear understanding of your expectations and the type of environment you want to encourage at the business. Home bakeries won't have to worry too much about this section, as they are often staffed by a small team of one to two people.

This section is also used to define the roles of each employee throughout the business. The better staff understand their roles, the better they'll be able to perform them. Ask yourself a few questions like: who will be in charge of your social media accounts? Will there be a division between the back and front of house? Will you do your marketing in-house?

Sample menu

This section is unique to businesses in the hospitality industry like bakeries. Your menu is very important as it is what will initially bring in your customer base. If you have a head baker, they should be brought in to help draft the menu.

Writing this section is simple. All you have to do is list your menu items and their proposed price. This will give potential investors an overview of what you plan to serve and how much you'll be making on each item.

One of the benefits of drafting a sample menu is that it will give you a good indication of your monthly raw ingredients cost and the bakery equipment you'll need such as a deck oven and measuring cups.

It will also prompt you to think about where you're getting your supplies. Baking artisan breads can get very expensive and if you can find a wholesaler with a better deal on supplies, you should use them.

Market analysis

The bakery business is a competitive one and towns will often have multiple bakeries (not including the ones found in supermarkets). As part of your business plan, you should scout out bakeries in your area and get a better understanding of your local market.

Using market analysis, you can identify local niches that your bakery could fill. The market research you collect during this competitor analysis can then be used to formulate a strategy that will help you gain an edge over your competition.

The market analysis section in your bakery business plan should also include information about your pricing strategy. With your competitors' information, you can build a strategy that allows you to properly price your items. If you want to beat out your competitors, you may decide to undercut their prices.

Marketing strategy

If new customers don't know about your bakery, they simply won't come and buy from you, no matter how good your product is! A good marketing plan brings in new people and turns them into repeat customers. The marketing strategy section in your business plan should be used to outline your unique selling points to your target market, and the marketing tactics you'll use to entice them.

Many hospitality businesses, like bakeries, benefit from word of mouth to attract new customers. If your service is impeccable and your baked goods are delicious, your customers are more likely to tell their friends and family about you.

While word of mouth can be effective, it can be unreliable. Your marketing plan should focus on effective but affordable tactics. This includes social media marketing. This form of marketing gets your baked goods in front of potential customers straight on their account feed.

Business operations

In a well-run bakery, there are a hundred little jobs every day that need your attention. The business operations section in your business plan is focused on these day-to-day functions. This includes your customer service, your bakery Point of Sale system, sales forecasting, accounting services, and supply chain management.

This section should be used to form an operations plan that deals with these day-to-day functions. For example, a hospitality POS system can cut down on your daily admin. This gives you more time to concentrate on your customer service which in turn attracts more customers.

The right POS system for your bakery

Now you have a real business plan in place, it's time to invest in the best POS for a bakery. The Epos Now Complete Solution features everything you need to run a successful business including payment processing services, inventory management tools, and a suite of award-winning integrations.

If you're interested in finding out more about Epos Now, get in touch with our expert team below.