Bakery Business Reality Check

[jay_aryan]

Hello Everyone,

I am Jay and I am a very small enterpreneur at the age of 29. I am in tech industry at the moment but I love baking.

I am at the stage of choosing a path for my upcoming life because current business is not doing well. I thought about learning how to bake by myself as i love baking. There is no culinary school here, so internet will be by teacher. But, while researching I got terrified by some forum posts and websites saying that it's not how it looks like, one has to arrange lot of money, failure rate is very high, you can't just think and do it, partnerships are safer, you can not rely on your team even at later stage, etc etc etc.

I would like to know the facts from all of you who are doing this business already. Below are more details about my plans:

1. I do not want to start bread baking at the moment. Just cakes, cupcakes, pastries, puddings and other basic items including drinks like hot chocolate, coffee, shakes etc. Donuts are coming in demand here, so i will add them too.

2. Here in my area which is located in India. The market is very limited for breads, but people love creative cakes and chocolate items. They don't like if it is all sweet in the menu, they like variaty in the menu. Things to eat, drink and enjoy.

3. I am ready to put myself fully into this business in the beginning years. I love trying and experimenting new things and i will do that with full passion. But, slowly I would like to build a team which can take care of the work and allow me some time to expand the business + time for my family.

4. I am not rich, so i will depend on loans and personal savings only.

Please give me reality check. Should i proceed with this kind of thinking and planning? or not?

 

[ChesterV]

First thing you do is see what the surrounding businesses are like. How many shops are there like the one you want? (if there are any) If there are some, what is it they sell? Do they sell well? Do they cater to a specific crowd?

If the area you want a shop in looks like it will sustain what you want to do, then you have to look at the local economy. Will people be able to afford what you want to sell? Are they interested in buying what you want to sell?

Then you will need to check out the physical locations. See what buildings or shops are available. Are they structurally secure? You don't want to have to dump a lot of money into a building that is going to need a lot of work. You want a building or shop space that can be set up with minimal work. Usually a place like a small cafe or small restaurant that went out of business is good for setting up a bakery. The kitchen is already there, and all you have to do is renovate the customer area to how you want it.

Then you need to see what licenses you will need, what insurance you will need, what kinds of code enforcements that may be needed for the area or the building, and if you will need a lawyer or not to help you out. I don't know the laws or regulations in India, but you might want to talk to a business lawyer to see what you might need in order to set up a business. You may not need a lawyer to set up a business, but it always helps to get some advice from one.

Then you want to talk to some reliable, honest business owners in the area you want to set up shop in. Ask them if it's good trade there, are there any problems with the area or location you are thinking about setting up shop in. Get some feedback from local shop owners.

Then you need to talk to some banks or loan institutions. Go to some reliable sources that have good customer ratings.

Do research, lots and lots of research. Get as much information as you can before you spend once cent on the business. The more information you have, the better off you will be in the long run.

 

[jay_aryan]

First thing you do is see what the surrounding businesses are like. How many shops are there like the one you want? (if there are any) If there are some, what is it they sell? Do they sell well? Do they cater to a specific crowd?

If the area you want a shop in looks like it will sustain what you want to do, then you have to look at the local economy. Will people be able to afford what you want to sell? Are they interested in buying what you want to sell?

Then you will need to check out the physical locations. See what buildings or shops are available. Are they structurally secure? You don't want to have to dump a lot of money into a building that is going to need a lot of work. You want a building or shop space that can be set up with minimal work. Usually a place like a small cafe or small restaurant that went out of business is good for setting up a bakery. The kitchen is already there, and all you have to do is renovate the customer area to how you want it.

Then you need to see what licenses you will need, what insurance you will need, what kinds of code enforcements that may be needed for the area or the building, and if you will need a lawyer or not to help you out. I don't know the laws or regulations in India, but you might want to talk to a business lawyer to see what you might need in order to set up a business. You may not need a lawyer to set up a business, but it always helps to get some advice from one.

Then you want to talk to some reliable, honest business owners in the area you want to set up shop in. Ask them if it's good trade there, are there any problems with the area or location you are thinking about setting up shop in. Get some feedback from local shop owners.

Then you need to talk to some banks or loan institutions. Go to some reliable sources that have good customer ratings.

Do research, lots and lots of research. Get as much information as you can before you spend once cent on the business. The more information you have, the better off you will be in the long run.

Thanks a lot for a detailed reply. I will keep these points in mind and I am quite sure that I will be able to do a lot of research based on these points before opening the bakery. I will surely keep an eye on the small cafes or kitchens which are closed recently, as you said that will help a lot.

Few points are still there in my mind which I would like to know and that is about the terrifying things which I read on forums and blogs online about the bakery business. They say that you can't just start this business with passion, you need a lot of experience, then a lot of money and the failure rate is higher than food business, around 1 out of 15 bakeries survive. That puts fear inside me as I have to decide what I am going to do in my coming life.

Also, could you please let me know if the point below is feasible in this business?

I am ready to put myself fully into this business in the beginning years. I love trying and experimenting new things and i will do that with full passion. But, slowly I would like to build a team which can take care of the work and allow me some time to expand the business + time for my family.

I have to learn everything by myself and with the help of online tutorials. I am willing to start things small then I want to grow big. The competition is already there in the market, but I want to know if a beginner like me should be afraid of all the facts mentioned in different forums and blogs or I should pursue with the kind of thinking and plan that I mentioned in my post?

Kind Regards,
Jay

 

[ChesterV]

It is good to always have a back up plan, or alternate course of strategy.

Since you are learning, and when you finally decided to open up your own shop, I would suggest selling things easy to make, that will bring in quick cash. Muffins, donuts, simple breads...here in the states, these usually are what small bakeries start out with. If you make a good muffin, donut, or bread, then people will come back when you expand your recipes to include cakes, pies, and even things such as casseroles or tortes.

Here in the states simple cakes, cupcakes, cookies, and donuts are the biggest sellers. They are cheap to make and easy to make, and can be made in thousands of different styles, sizes, shapes, and flavors.
These items can also be altered for the tastes of the local people, or for what is popular at the time.

As one businessman said to me once..............when you start out, make the one thing you KNOW you can do right and make money at it. Once you get that in motion, you can add on to it when the time is right.

Good luck!

 

[jay_aryan]

It is good to always have a back up plan, or alternate course of strategy.

Since you are learning, and when you finally decided to open up your own shop, I would suggest selling things easy to make, that will bring in quick cash. Muffins, donuts, simple breads...here in the states, these usually are what small bakeries start out with. If you make a good muffin, donut, or bread, then people will come back when you expand your recipes to include cakes, pies, and even things such as casseroles or tortes.

Here in the states simple cakes, cupcakes, cookies, and donuts are the biggest sellers. They are cheap to make and easy to make, and can be made in thousands of different styles, sizes, shapes, and flavors.
These items can also be altered for the tastes of the local people, or for what is popular at the time.

As one businessman said to me once..............when you start out, make the one thing you KNOW you can do right and make money at it. Once you get that in motion, you can add on to it when the time is right.

Good luck!

Thanks for these priceless tips. Yes, I will start with limited items and some drinks. That way, I will be able to give it a dry run at limited cost. The most challenging thing will be the research regarding what people like and what they want to eat on regular basis. Because things like donuts are getting limited traction here and cookies are even less popular. So, it will be a challenge for me to find out, but I will try my best.

One thing I would like to ask you. I read on a baking blog which says, serving more people after opening a bakery is not like doubling the amount of ingredients and just make things like cake, donuts, cookies in larger numbers. It requires a lot of experience, hence people who think that they can start a bakery just after learning at home is not a feasible thing.

What are your thoughts on this?

 

[ChesterV]

Thanks for these priceless tips. Yes, I will start with limited items and some drinks. That way, I will be able to give it a dry run at limited cost. The most challenging thing will be the research regarding what people like and what they want to eat on regular basis. Because things like donuts are getting limited traction here and cookies are even less popular. So, it will be a challenge for me to find out, but I will try my best.

One thing I would like to ask you. I read on a baking blog which says, serving more people after opening a bakery is not like doubling the amount of ingredients and just make things like cake, donuts, cookies in larger numbers. It requires a lot of experience, hence people who think that they can start a bakery just after learning at home is not a feasible thing.

What are your thoughts on this?

Well, that is true to some extent. But thats why your research on all business, economy, and consumers previous to going into business is so very important. Most people who go into business expect to make a lot of money, because they think they have what people want. And in most cases these businesses fail in the first year.

This is why you need to research the locals and find out what it is they WANT fresh made, but cannot FIND fresh made. So your consumer area is not big on sweets, such as cookies and donuts. Thats fine, each city, each area, each locality is different than the next, which is why you need to find out what it is the local consumers want. What they want, and is it something they want on a regular basis.....in other words, what is it you can make and sell that will keep customers coming back to YOUR shop?

Examples--

Consumers in your area don't want cookies and donuts. Maybe they are more partial to puff pastry snacks and desserts, or croissants and scones? Two items that are perfect for snacks, with meals, and just with having coffee or tea! They are sweet on their own with having little or no sugar in them. If the local consumers don't like those things, maybe they are more geared to something like a small, hand-held meat pie or veggie pie? Or something we here in the states call a "Pig in a Blanket" which is a small sausage and cheese wrapped in a puff pastry or pie dough and baked.

Again, this is why research is SO very important. You know when a small business fails, they didn't do their proper research before they started. I'm not saying you will be a success with doing all of your research, but you will be better equipped when opening a small business if you know all there is to know, before you start! Another reason small businesses fail, is they make what the owner wants, not what the consumer wants.

I would suggest, find out what the local consumers would want from your shop. If you think it is feasible, then practice that item at home until you perfect it. If you have at least 4 of these items, then you have your basic menu. Something your business can survive on if anything else you decide to sell does not work out. You need your "base" selling items to make any shop survive.

If local items that sell are popular in all shops, (for example) Baati, Bhatoora, and Daal Puri, and these are staple items that sell on a regular basis, then you might consider local staples as your base items to sell. Then later on, you can add a couple of pastries to see how they sell with the customers.

You have to also remember that your customers are also your test subjects. If they don't like it, try something else.

A good "base" menu might be (for example):
Baati
Bhatoora
Daal Puri
Scones
Donuts
Small cakes
Small meat pies or veggie pies
Puddings
Croissants or Scones (both?)

This way, you are selling something that is local, something sweet, and something savory.
These items should not be hard to make, and can be made in small or large quantities.
These items will also give you an idea of what customers really want....as even when you do your research, customer tastes will change by the time you open shop.

Once you have the right base menu geared towards all of your customers, then you can try out all of the other things you want to make. Of course this is all just an example for you, as you may have another base menu in mind.

It is also good to sell at least one item that no one else sells. This is what you might call an "accessory" item. It could be jars of local honey, it could be small gift baskets (in case a customer wants to give a quick gift to a friend of your goods), it could be flavored oils or spices made in your shop as well. Pretty much it can be anything that will sell, not take up much space, and can only be found in your shop, and can be displayed for all to see without hindering everything else you sell. This also works as a "gimmick", which is something that draws people off the street into your shop, who might not normally come into a cafe or bakery.

You don't need to be an expert at opening or running a business. You do need to be well informed before you take your first steps. The more you know, the better off you will be.
Make your plan and keep to it. Make sure each step you take has been made with plenty of research and careful planning. If you make friends in other shops, or with business people who you ask advice for along the way, so much better for you in the long run. You can always ask advice when you need it.

One last suggestion, keep a record of the nice people who do give you advice and help along the way. When you do get your shop running, you might send them a small "Thank You" gift basket of your shops treats. Of course, you want to keep to whatever "Thank You" gift to what is appropriate for the customs of your area.

Hope that helps. Of course, this is all from the American point of view and what I know of American start up businesses like this. Another reason it is good to speak to shop owners and business people in your area.

 

[Winterybella]

@ChesterV is always a tough act to follow but I will say this after being in the retail business for many years. Social media is a very powerful tool in the business world. While the dream for most is to have a physical location, if you do not have the resources for that at this time, I suggest you make the maximum use of places like Facebook, Instagram, Pinterest and others to put your product out there. You would be amazed at the the power of social media. If I knew back then when I started what I know now, my story would have been different. With a brick and mortar store and staff you have to factor in quite a bit of overheads. If you are just starting out think of if you need that right away. Research and execute if possible as you go along. You ought to know you target market as I believe Chester mentioned and it goes without saying you ought to set yourself apart from the competition.

Above all do not let the naysayers crush your dreams. Work towards accomplishing your dreams and don't let the possibility of failure hold you back. Failure means you tried and the record shows that some of the most successful people failed at one point or the other.

 

[Tina Nord]

Sounds like a fun business adventure for you. Cupcakeries are going into business like crazy where I live. There is one near my house and they make some amazing cupcakes. I think the big business for them is the custom made to order wedding and birthday cakes they also do. The only thing that would make me nervous is making sure that my bakery was up to health code.

 

[Roxanne G.]

Hi Jay! I have a Tea Room & Bakery in a small town in Minnesota. My advice is: Don't rush. #1 Write a Business Plan/ Find information about what to include in your business plan. Ask yourself these questions: Do you have managerial experience? Do you know your vision/purpose and why you want this business? Do you know how much money you will need to get your food business started? Have you talked to a banker about your plans? Do you have start-up money, money to live on, money to pay employees while your business gets up and running? Can you get credit from your suppliers? Who will your suppliers be? Do you need a partner? Do most businesses in your community appear to be successful? Do you know why? Does your community need a food business like yours? Go and visit other businesses like the one you are interested in opening. Note what you like what you don't like. What are people eating? What are their prices like? Then learn all you can about buildings in your area that might suit your needs and if they are up to code. NOW is when you start to think about menu items, after you have done all the homework to get you to this place. If it seems way too much, then maybe you're not ready. But if you're willing to do all the steps before - especially your Business Plan which is crucial because it is the backbone of your business and everyone involved will want to see it, then you will have a great time doing the rest. Once you get to menu - the process goes backwards! You have to have a clear idea of what you will have on your menu so you can have the right kitchen equipment and how much that equipment will cost, and the right kitchen design and how much the design firm will cost to design and build your kitchen that will meet whatever health standards you will be required to meet. Experimenting with your menu will be a joy! Also: VERY IMPORTANT!!! Reach out! Find groups, other people, organizations etc.... that you can become a part of to use a mentors. Do not try to do this alone. You must be surrounded by other people in business.

 

[Panadeiro]

Cupcakes are such a popular thing in my city and the entire country itself, it definitely will be a good business for you since you live in a country where these are sold really fast, indeed. Hopefully you get far with it, good luck!

 

[Tehan33.]

From my own experience in this, my advice is, there's alot of competition out there, if your just gunna start making all these things for the first time then you've got a very low chance of doing well,.you only get one chance to impress people and get returning customers, baking takes making a lot of mistakes and errors and learning from it to master it, it has to be 100% to be talked about by people otherwise its pointless, none of it can be sold cheaply it all costs money to make and run and time etc etc so people will only spend the money on your stuff if it's 10/10,