How to Start a Bakery:
With the right combination of careful planning and dedication, our blueprint will empower you to successfully start your own bakery.
Decide what type of bakery you would like to open.
Decide between a wholesale or retail bakery.
There are two main types of bakeries: wholesale and retail. Each type of bakery serves different customers and has different needs.
Wholesale bakeries sell to other businesses. A wholesale bakery is typically larger than a retail bakery as their baked goods are sold to businesses like grocery stores, restaurants, delis, and cafes.
Retail bakeries sell their baked goods directly to customers. They are the most common type of bakery. Retail bakeries typically have lower startup costs compared to wholesale bakeries, as they require a smaller space and less baking equipment.
Decide on a business entity type.
Research the types of business entities you can start in your state, and decide on one that meets your needs. In general, there are five main options:
- Sole proprietorship: This business is started by an individual owner-operator. The sole proprietor and their business are regarded as a single entity.
- General partnership: Two or more individuals start a business together where liabilities are incurred personally.
- Limited partnership: This business structure is made up of at least one general partner (who typically manages the business) and a limited partner who accepts no personal liability for debts.
- Limited Liability Company (LLC): An LLC more formal than a partnership in that articles of organization need to be filed. Owners can elect to pay personal income tax instead of corporate income tax.
- Corporation: A corporation is the most formal business structure. Owners hire a board of directors to make major business decisions, and the board hires officers to run the company.
Decide on a business name.
Write down name ideas.
Make a list of the names that you like and then search for them in the United States Patent and Trademark Office's (USPTO) trademark database. This will highlight whether anyone has trademarked the exact names or close variations thereof. You should also check whether the names are available to use in your state.
Read our detailed guide on how to do a trademark search for more information on searching the USPTO trademark database.
Once you have found a suitable name, make sure to register the matching web domain and social media handles, should you wish to market your brand online.
Register your business name.
In most states, you can register your favorite name with your Secretary of State. Simply search for your Secretary of State's website and follow the directions provided.
Write a business plan.
Write an executive summary.
Describe your business and list your goals, as well as what sets you apart from other bakeries.
Describe your launch ideas.
Describe how you plan to launch your business. For example, you could host an opening sale and advertise by handing out flyers.
List your sources of revenue.
Let investors know how you plan to earn money from your bakery. Selling baked goods would be your primary revenue source, but you may also choose to sell merchandise or beverages.
Name your management team.
List the job titles and names of the individuals who are part of the management team.
Describe your target market.
Discuss who your ideal customers are and describe their spending habits.
List your promotional outlets.
Describe which channels you will use to promote your business. For example, you may choose to advertise on social media, offer loyalty cards, or put flyers in local mailboxes.
Do a SWOT analysis.
Identify the strengths, weaknesses, opportunities, and threats (SWOT) related to your business.
Describe your competitors.
List the top three bakeries that you would identify as your competition. Explain how your bakeries are similar as well as what makes your business unique.
Describe your finances.
List your sources of revenue, revenue projections, and startup expenses.
Download our free business plan template near the top of the page to find an in-depth guide to describing your finances for investors.
Describe your future plans.
Let investors know how you plan to grow your business. For example, you could open another bakery or hire more staff members.
Research loan options.
Opening a bakery involves many costs. If you are unable to fund the bakery on your own, you will need to take out a loan. The most common way to get funding for a bakery is by securing commercial and/or small business loans.
Commercial loans can be applied for at any major or local bank. You will need a high credit score to qualify and will benefit by getting access to large amounts of capital at lower interest rates, although you may have to wait months before accessing funds.
Small business loans are specifically meant to protect small businesses and provide them with startup capital. They are available to those with borderline credit and offer lower interest rates. They require collateral and the approval process may take longer than other loan types.
Open a business line of credit.
Business lines of credit work similar to a credit card. Upon approval, you can use credit up to a certain amount and are only charged for the amount that you use. You have more access to credit once you pay off the existing balance. Note, however, that business lines of credit do not allow you access to as much money as some loans.
Approach loved ones for funding.
You can ask friends and family for help with funding through websites like GoFundMe or by approaching them directly.
Buy or lease a commercial space.
Consider the type of bakery you want to open.
The commercial space that you require is determined by the type of bakery you wish to open.
Wholesale bakeries can be located further from cities while retail bakeries will require a commercial space in populated areas. Food truck bakeries may require leasing space in a commissary kitchen.
Find a suitable space.
Key factors to consider when looking to lease a commercial space are:
- Foot traffic.
- Proximity to suppliers.
- Size and space requirements.
- Health regulations and zoning.
- Safety and crime rates.
Consider hiring an attorney to assist you in drawing up and negotiating a lease. To avoid potential issues with the landlord, specify the length of the lease, any raises in the rent that might be included, who will pay for renovations, and what utilities are covered.
Obtain the necessary permits and licenses.
Apply for a food service license.
Your bakery will likely require a food service license. This will be issued by your city’s health department to confirm that your bakery is operating in accordance with food safety regulations.
Research which other licenses and permits you need for your location.
There are a variety of permits that might be required depending on your location. These may include an electrical permit, plumbing permit, signs and awning permit, patio permit, dumpster placement permit, or food handler’s permit.
You can contact an attorney to get advice on local laws and regulations, especially specific laws applicable to a bakery.
Design a layout.
Design the back-of-house.
When creating the layout for the back-of-house area, you will need four main sections: cleaning, storage, food preparation, and baking. If your bakery has a front-of-house area, then the back-of-house layout must include a service station where food can be transferred.
Your kitchen layout must have a logical flow to create a seamless back-of-house environment. This usually starts with the storage area before going to the food preparation and baking stations, after which the freshly baked goods can be served or packaged.
Your kitchen layout will also be determined by the placement of water and gas lines. Accurate measurements of the back-of-house must be recorded so that you are sure that you have sufficient space.
Design the front-of-house.
When creating a design for the front-of-house floor plan, use a layout that makes customers comfortable and facilitates purchases. Bakery layouts come in four variations.
- The straight floor plan enables customers to browse the freshly baked goods easily as the display cases are organized in straight lines.
- The angular floor plan creates an upscale presentation using curved displays.
- The diagonal floor plan enables customers to easily move through the bakery.
- The mixed floor plan combines all floor plans listed above to maximize the space.
Buy or lease equipment for the bakery.
Know what equipment you need.
Essential bakery equipment includes:
Shelving, which serves as storage space for ingredients, supplies, plates, utensils, and other items.
Baking equipment, including a commercial mixer with accessories; a stand or tabletop mixer; a machine that assists with crimping, folding, trimming, and sealing dough; a slicing machine; and a dough proofer.
Commercial ovens. Consider the number of goods you'll bake daily to decide how many ovens you'll need.
Utensils including dough cutters, flour sifters, and spatulas. You'll also need cutlery and crockery if customers will be eating at the bakery.
Pans for preparing, moving, and displaying the baked goods.
Donut fryers with accessories are required if donuts are included on your menu.
Wrapping materials, bags, and boxes for customers to take their baked goods away.
Display cases so that customers can see all the baked goods that you have available.
Warewashing equipment such as a three-compartment sink should be the centerpiece of the cleaning station. Include a hand washing station for your employees with essential items such as disposable gloves, sponges, and scrubbers.
Chemical detergents and sanitizers to keep your kitchen clean and safe.
A modern and reliable point of sale (POS) system to process transactions when customers buy baked goods. The POS system should accommodate multiple payment options and have good integration capabilities. The POS system will also assist with daily, monthly, and annual reporting.
Buy or lease the essential equipment for your bakery.
It may be best to hire some equipment instead of purchasing it because of how expensive baking equipment can be. There are several items that a bakery relies on heavily, such as commercial ovens and stand mixers. If your business does not have much funding, renting these staples may allow you to use more high-end and reliable machinery.
Items like utensils and crockery should be bought since they are not very expensive and can be broken easily.
Consider using equipment financing for assets such as a dough proofer, ovens, fridges, and POS systems. This will ensure that your business credit card, bank line, and personal capital are kept healthy for things that will continuously cost money.
Hire and train employees.
Apply for an EIN.
Your bakery needs to be registered with the government in order to legally employ people and deduct taxes. Registering will give you an Employer Identification Number (EIN). This number helps the IRS to recognize who an employee works for when they file their income tax at the end of the year.
Read our guide on how to obtain an EIN for more detailed instructions.
One of the most important parts of starting any business is hiring. Some roles you may need to fill include:
- Food service worker.
- Food service runner.
- Food preparation worker.
You can use free job posting sites like Indeed and Glassdoor to advertise your vacancies. You can also use social media platforms like LinkedIn and Facebook to post your job descriptions.
Have employees sign non-disclosure agreements.
You may want all staff to sign non-disclosure agreements (NDAs) and non-compete clauses in their contracts to avoid ex-employees taking your recipes to another bakery or starting a competing business. Consult with a legal practitioner to draw up your employment contracts that include these non-disclosure and non-compete clauses.
Have employees complete Form I-9.
Form I-9 verifies that employees are allowed to work in the U.S. Employers keep this form on file instead of submitting it.
Display workplace posters.
Research which posters you are required to display in your workplace. There are both federal and state-specific workplace posters you may need to display.
Report new hires.
Most states require employers to report new hires. Find out where you need to report new hires, as many states have a short period in which you need to report new employees.
Market your bakery.
Decide on the most appropriate form of advertising for your business.
Consider whether traditional newspapers, Google search results, social media, word-of-mouth, radio, or other forms of reaching an audience are right for you and within your budget.
Create realistic goals for marketing and advertising your bakery.
These could include a certain number of followers on your business social media accounts and achievable sales targets for the month.
Create a digital presence.
Customers will likely look at the bakery’s social media accounts and website before deciding on whether they want to visit, so an active online presence is important.
Use search engine marketing.
Use search engine marketing (SEM) to increase the visibility of your bakery in Google and other search engine results pages. When people are looking for a bakery, they usually search for "Where is the nearest bakery?" or "What's the best bakery near me?" and scan through the results.
You may want to research this topic on your own to get started or consider hiring an agency that can handle this. At a minimum, you'll want to register for Google My Business and upload images to your account. This will allow companies to find you more easily in Google search results and locate you on a map.
Host a grand opening.
Advertise your launch locally.
Let people in your immediate vicinity know about your launch by advertising in a local newspaper or handing out flyers.
Offer opening specials.
Consider free samples and discounts to entice customers into visiting your bakery for the grand opening. These could be in the form of offering a baker’s dozen to those who purchase a dozen baked goods, discounts for the first hundred customers, or free samples.
Tips from Successful Bakery Owners:
"Baking is a multi-billion-dollar business. No one is the big dog. Maybe Entenmann's or Pillsbury is, but not us. The market is so large that we are not competing for customers per se. People seek us out. I'm certainly not crafting my strategy around what anyone else is doing."
"I knew that if I was going to take the business further, working from home was not going to cut it. Corporate clients want to know that they were dealing with an established firm. Now, the majority of our business comes from corporate clients."
"Make sure to use your business account for anything relating to the business. This helps you know exactly what you are using and buying. Use your bank account and a system like Quickbooks to integrate a payroll option to pay your employees, and even yourself."
How much money does it take to start a bakery?
Bakery startup costs can range anywhere from $2,000 to $50,000 depending on the type of bakery you wish to open. Wholesale bakeries cost significantly more than retail bakeries since they require larger locations and more equipment. Online bakeries are often operated from home and require very low startup costs.
How much do bakery owners make?
The owner of a small bakery can make approximately $18,000 to $57,000 per year. However, competition in the industry is fierce, so bakery owners should conduct thorough market research and plan their business activities carefully.
Can you sell baked goods at your home?
Yes. You can consider this if your startup capital is limited and obtaining a small business loan is difficult. You can keep costs low while establishing your bakery’s brand. Home bakeries usually specialize in variations of specific baked goods such as muffins, cupcakes, and cookies.
How do I start my own baking business?
- Decide which type of bakery you would like to open.
- Pick a business name.
- Write a business plan.
- Obtain funding.
- Buy or lease a commercial space.
- Obtain the necessary permits and licenses.
- Design a layout.
- Buy or lease equipment for the bakery.
- Recruit and train staff.
- Market your bakery.
- Host a grand opening.
Do you need a degree to open a bakery?
You do not necessarily need a degree to open a bakery, but it is a very good idea to take some business or entrepreneurial courses. Examples include a course on costing your goods, a marketing course, an introductory accounting course, and a course on taxes. It is important to know how to manage your business properly in order to gain success.
How do I start my own bakery business plan?
Your bakery business plan should include the following which you will need to research extensively:
- Executive summary.
- Company overview and description.
- Market analysis.
- Business offerings.
- Management plan and ownership structure.
- Marketing and advertising strategy.
- Financial projections.
How do I start an online baking business?
Follow the steps in our article on starting your own bakery, but instead of looking for a commercial space to buy or lease, you can create your own website with beautiful pictures of your products.
What licenses are needed for a bakery?
- Business license.
- Food service license.
- Electrical permit.
- Plumbing permit.
- Signs and awnings permit.
- Patio permit.
- Dumpster permit.
- Food handler’s permit.
How do you market a bakery?
- Share images of your goods to Instagram and Facebook.
- Register for Google My Business.
- Hold a grand opening.
- Offer discounts and free samples.
- Sell your goods at a farmer's market or other local events.
- Post flyers.
What equipment do I need to start a bakery?
- Baking equipment.
- Commercial ovens.
- Wrapping materials, bags, and boxes.
- Cooling racks.
- Display cases.
- Warewashing equipment.
- Chemical detergents and sanitizers.
- A point of sale (POS) system.
What are local SEM essentials for bakeries?
- Register for Google My Business.
- Start a Yelp profile.
- Create a Facebook account.
- Take images of your baked goods.
- Upload images and descriptions to all your social media accounts.
- Encourage customers to rate you.
- Use pay-per-click advertising.
What is the best type of bakery to open?
You have the option of opening a wholesale or retail bakery. Wholesale bakeries produce larger volumes of baked goods marketed for businesses, while retail bakeries serve customers directly and produce baked goods on a smaller scale. Startup costs for wholesale bakeries are remarkably higher than those for retail bakeries.
What happens if my bakery fails a health inspection?
If your bakery fails a health inspection because of critical violations, it can be shut down in most states. Non-critical violations can be just as detrimental to your bakery as failing, and can often damage your bakery's reputation.
What type of commercial space do I need to open a bakery?
Wholesale bakeries should lease commercial space away from the city to reduce leasing costs. Retail bakeries should lease commercial space in populated areas to attract customers. Food truck bakeries may require commercial space in a commissary kitchen while online bakeries may not require commercial space.
Are there any specific ways to design my bakery layout?
What revenue does a bakery generate monthly?
The revenue generated by a bakery depends on a range of variables including scale, experience, and business model. Bakeries often experience surges in business during the holiday season and the summer wedding season which compensate for off-peak periods.
What are the best books to read before starting a bakery?
- "How to Start a Bakery Business: The Complete Guide to Opening and Operating a Successful Bakery" by Jonathan Schafer.
- "How to Start a Bakery: A Six Figure Business Plan for Bakers" by John Perez.
- "The Business of Baking: The Book That Inspires, Motivates and Educates Bakers and Decorators to Achieve Sweet Business Success" by Michelle Z. Green.
What baked goods must I sell at my new bakery?
According to research, the most popular purchases for customers at a bakery are cookies, cakes, cupcakes, muffins, scones, cinnamon rolls, and bread. Gluten-free and vegan options — particularly cakes and cookies — are proving to be successful new product introductions.
How do I comply with Health Department regulations at my bakery?
- Follow proper sanitation procedures.
- Label opened products with use-by dates.
- Use gloves and hairnets.
- Use approved decorating tools.
- Never store items on the floor.
- Store food at the correct temperature.
- Ensure the cleanliness of sinks.
- Store ingredients in food-grade containers.
- Never store cleaning products near food.
- Ensure that your bakery is rodent and pest-free.