How to Start a Bakery Business in 10 Steps

There are few things in this life as incredible and instantly transformative than a fresh pastry. Warm, gooey, delectable. If you’re ever thought about taking a love of all things baked goods and pairing it with your entrepreneurial spirit, then this step-by-step guide on how to start your own bakery business is for you. 

Bakeries can be the heartbeat of a community or neighborhood, but you need to follow some critical steps first before opening your doors. Ahead, we’ll dive right into everything you need to know. From deciding what kind of bakery to open, to creating a business plan, to administrative tasks, right up to all the tools you’ll need to be successful: let’s dive in.

How to start your own bakery business 

By 2022, there were over 200,000 bakers working in the US. But the entire baking industry—vast as it is—employs over 800,000 workers overall, contributing over $186 billion to the economy. Food is an evergreen market—everyone needs to eat! While starting your own bakery business may seem like a lot in the face of this many bakers across the country, remember that no one will bake quite like you bake. 

Starting any kind of business can appear intimidating from the outset. With the right approach and considerations those fears can be quickly quelled. 

Some pros for starting your own bakery: 

• Control over your own job and finances
• Creativity of product offering
• Connect with community
• Low start-up costs if running out of home first

Of course, it’s important to measure the benefits of running your own bakery with the realities as well. 

Some cons for starting your own bakery: 

• Long working hours often beginning early in the day
• Food spoilage hits your profits
• Entrepreneurship can be stressful
• Quality ingredients may be pricey 

Still thinking about how to open a bakery business of your very own? Opening your own bakery is a big decision. But, it’s worth it if you’ve got the right plan in place and know how to manage potential stressors, financial factors, and hiring issues as they arise. 

We’ve got you covered on the 10 essential steps to running your own bakery. 

1. Decide what kind of bakery you’ll open

The million dollar question: what kind of bakery do you want to open? What do you want to serve? How do you want to serve it?

There are lots of different types of bakeries you can open, some with more overhead costs than others. Get creative in figuring out how to start a bakery business that suits your products and brand ethos. 

Some types to consider are: 

• Bakery and cafe hybrid. This is a typical format that offers plenty of seating for your customers. If you want to expand your offering into more complex meals, this is the ideal type. 
• Counter style. Less spacious than the above type, the counter style is yet still a very popular format because your customers can grab and go with their baked goods. 
• Home bakery. A home bakery offers a lot more flexibility and a lot less overhead costs. You can bring your products to markets, offer catering, or deliver to cafes in the neighborhood. 
• Food truck. Everyone loves a food truck. With a bakery food truck, you can have all of your essentials in one place but change neighborhoods and locations far more easily than a retail spot. 

2. Conduct market research

An important beginning part of your bakery business plans is conducting market research. Start with the question of where you want to sell your baked goods. From there, you can start to research if a bakery is a good idea in your neighborhood or if you need to go to a different location. 

You’ll need to consider who you’re selling to, what else is around, and more. Here are some more market research topics to consider: 

• Demographics and target buyer. Who’s your ideal buyer and how old are they?  
• Competition. Where else in your ideal location are there bakeries and what do they offer?
• Budget. How much do you have available to spend?
• Local retail and market trends. How many bakeries have opened and closed in your ideal location? 
• Segmentation. Are you offering just breads? Just cakes? A little bit of everything?

3. Create a bakery business plan

Plotting out a thorough bakery business plan is crucial at the beginning stages of your business aspirations. It’s what will help get financing (we’re gonna get there soon!) and keep you on track for what your goals are. 

To start, create an executive summary. This is an overview of what your business plan is and where it stands now, and includes where you’ll be in the next five years. Remember all of that market research you completed? Include that in your plan in a separate section. Next, you’ll want to list out all of the products and/or services you intend to offer. After that are the big financial and marketing ones: you’ll need to include how you plan to market your bakery to customers and your projected sales, along with a projection of your overall financial needs for at least three years to prove that this is indeed profitable. 

4. Finance your bakery business

Bakeries can cost anywhere from $20,000 to $700,000 in opening costs. That’s an incredibly wide amount! But remember that what you want your bakery business to be helps shape the finances you’ll need. 

These are some of your financing options when you’re thinking of how to start your own bakery business: 

• Loan
• Business line of credit
• Grant
• Personal savings

5. Find a location for your bakery

If you’re into creating a brick-and-mortar space for your bakery, you’re going to need some help finding the right space to lease or buy, depending on your financial situation. Hire a real estate agent who specializes in commercial or business spaces to help you find the perfect spot. 

From there, consider the following for finding the location for your bakery: 

• Accessibility. How do your customers get to your space? Is it accessible to everyone?
• Layout. How is the space structured for your baking area, counter or cafe? 
• Competition. Who else is nearby? 
• Cost. How much is the space going to cost you?

6. Get your licenses and permits in order

Before you open your doors—before you do anything in the retail space, really—you’ll need to get your licensing and permits in order. This is crucial because without the right permits and licenses, you won’t legally be allowed to open your business and serve your customers. 

Some licenses and permits you’ll need: 

• Food handler license. You—and potential employees—need to certify that you know how to handle and store food properly.
• Sales privilege license. This allows you to sell your products. 
• Zoning permit. If you’re running a business out of your home, you’ll need this. 
• Health and safety inspection. Every food business needs to pass this inspection. 

7. Order your equipment and supplies

Now that you’re rolling in the deep of your bakery business, you’ll need to figure out what supplies and equipment you’ll need.
Common equipment includes: 

• Oven
• Refrigerator
• Bakeware
• Mixer
• Cabinet
• Sheet pans
• Cooling racks
• Utensils and decorating tools
• Table 

8. Hire your bakery staff 

Doing this alone can be a lot. If you’ve got employees in your business plan, that’s great, but you’ll need the right folks to help out and use the right tools to hire them—and maintain their schedules. 

Homebase can help you easily post job information, track applications and help onboard new employees all in one spot. Homebase even has a library of pre-written job listings, customized for you, to take the hassle out of this task. Easily onboard with a paperless offering that remains in the Homebase app. 

9. Market your bakery business

Now we’re really cookin’! In today’s business world, you can get pretty creative with your marketing. It doesn’t always have to be traditional marketing, like advertising or going door-to-door, but those are still viable options! Word-of-mouth is still a powerful way to market your business so consider coupons, discounts, happy hour pricing, anything that can help customers reach others for you.

Consider trying out social media, getting your customers to engage with you on the platform of your choice, and even getting the most out of the content they create about your business. 

10. Get the right tools to run your bakery 

With your bakery business in place, you’ll need some essential tools to make it run effortlessly for you. 

Consider the following:

• A point-of-sale system to serve your customers
• Social media scheduler to post to your social channels 

Homebase for all of your scheduling, payroll, and compliance needs.