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How to Set Up a Bakery Business

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A good bakery is what dreams are made of. It is hard to resist the smell of fresh bread coming out of the oven, cupcakes with swirls of frosting or eclairs with mounds of vanilla filling. Bakers thrive off customer satisfaction and the daydreams they create in the minds of many. This dream and the love of food is what makes bakers want to open their own bakery business and become a neighborhood celebrity.

Learn how a bakery works. Most bakers start their days in the dark hours of the morning so they can get baked breakfast goods out in time for the morning rush, and end their days when the bakery closes for the night. “New York Guides” reports popular BabyCakes NYC owner Erin McKenna works 12-hour days, designed her own bakery’s staff uniforms and had to find creative ways to stay afloat and find new investors.

Consult the American Baker’s Association ( or the American Society of Baking ( to find out more about the working life of a baker, industry trends and developments and issues bakers face. Learn what baked goods are the most successful, what foods are the biggest mistakes, the working hours for a bakery owner, the type of staff to employ and so on.

Ensure the need for a bakery in your community and find a location for your business. Learn who your competition is and what advantages these bakeries have over you. Consider the demographics of the area; the best customers are those who are considered middle to high-income, are interested in whole foods and do not mind paying for quality baked goods.

An ideal location for a bakery is an area that has little to no competition and has a lot of foot traffic. Areas to consider are those in high-end shopping centers, those near year-round farmer’s markets or a strip mall near a high-end supermarket.

Make a bakery business plan. Even if your bakery will be a small operation, create a business plan to help you focus on your goal. A plan will detail your bakery’s business operations, provide an analysis of your competition, list how much you intend to charge for baked goods and services and provide finance projections. In addition, discuss how your baked goods will be produced, the expected growth of the area’s bakery market, why your bakery’s location is expected to bear fruit, the marketing strategies for your bakery (such as printed advertisements or free on-house samples of bread) and list how you will overcome the risks of operating a bakery (like seasonality of customer purchases).

Get a business loan. Setting up a bakery is expensive. If you are not taking over the location of a former bakery, you may have to set up a kitchen from scratch by purchasing ovens, mixers, counters, display stands, stoves, refrigerators and so on. Work with a loan officer to make sure you get the proper amount of financing to get your bakery started.

Get a business license. Figure out the type of business you are going to run and get the appropriate paperwork to register your food establishment. Many bakeries have owners that are sole proprietors, have a partnership with another person or are a limited liability corporation (LLC). Talk to local and state government authorities to make sure you have the correct paperwork to get a proper business license for your bakery. File the appropriate paperwork and pay the necessary fees to acquire your license and register your business with the state.

Visit your county government offices to get a food handler’s card, if necessary, and submit a health permit application. County health inspectors will visit your bakery to make sure it does not pose a threat to public health, is sanitary and does not have any fire risks before issuing a permit.

Purchase bakery equipment. Go through a commercial restaurant and bakery wholesaler to purchase items for your kitchen at a good price. If you are not already familiar with reputable vendors, ask the American Baker’s Association or the American Society of Baking for recommendations.

Purchase business insurance appropriate for a bakery or food-serving establishment. Work with an insurance agent to set up a commercial insurance policy for the bakery that covers losses in the event of a fire, natural disaster, water damage, theft, bad publicity (such as news coverage about your customers getting sick from food-borne illnesses after eating food from your establishment) or power outages that can cause food to spoil.

Market your bakery. Get customers in the door by appealing to their needs and wants (needs: a good price; wants: tasty food), reaching them with an offer they cannot refuse (for example, offer three cookies for the price of one) and letting them know when you will be open for business. Consider having a grand-opening open house where you invite local business owners to network and offer free treats to the public. Then, continue with a grand opening week where customers can receive special discounts on your baked goods so they will be more likely to purchase a variety of your goods and come back for more.