In today’s world bakeries are as important as the grocery or departmental stores. Knowingly or unknowingly, we depend on bakeries for our day to day needs, starting from the daily bread to occasional treats like birthday cakes, pastries, and holiday pies to satisfy our chocolate and sugar cravings!
To get you started, here are some financial tips before you start your bakery business.
Firstly, take up serious branding a little later
Don’t spend too much of money in branding your items right from the beginning. For the initial years use white bags, white cups, white packaging. This way you will be able to save a lot of money. If your items are really good you will automatically get customers. Save up for a while and then get everything printed nicely. Remember don’t compromise with the quality of the printing so when you do it do it right and properly. First you have to understand the market and understand what your customers are looking for. It is always good to save as much as you can in the initial years because later you will need the fund to may be, expand your business.
Focus on customer relationship from the very start
Try to build cordial relationship with your customers because don’t forget that word of mouth will play a major role in the expansion and development of your business. Try to provide samples to your customers because people like extra care plus if you provide something for free that’ll be appreciated. If you have business cards, give it out to people so that they can contact you whenever they need. Treating the people in your neighborhood once in a while is a great marketing strategy.
A bakery business can this be extremely rewarding for people who can bake well and want to explore their talent. Starting a bakery can be a hefty affair, in terms of monetary investments, but the profit margin too is pretty good. To make your business more profitable and streamline your cash flows a bakery point of sale system is excellent for processing payments really fast, viewing your sales report and a lot more things. But before that, a lot of financial planning will be needed for you to bake your success along with cakes!
Stay flexible in payment methods
Be open to many types of payment methods as this will make your business more sought after. Make it user friendly. Accept credit cards, debit cards, online payment, etc. this way people will want to buy more from you. People nowadays are dealing in plastic money more and more so upgrade yourself and your systems too.
Be certain of your breakeven point
You must make sure that you have a clear idea about your breakeven point. Your bakery must be good enough to ensure that you are getting back at least what you invested else there is no point in continuing the business. The breakeven point will provide you a good idea of how much you must charge for an item. In this regard you have to take into account variable costs (includes the cost of flour, sugar, butter, chocolate, etc.), fixed costs (includes rents, insurance if any, electricity bill, etc.), unit selling price (the final price you decide for the product taking into consideration the previous two factors and the profit margin), contribution margin (after covering the variable expenses you will get an amount that will help you to deal with all the fixed costs). It is good to first start as a take-away joint, since setting up a café involves additional overhead expenses which might not be necessary at the very first.
Quality is crucial
You have to maintain the quality of your bakery and the items. Don’t think that since your items are high in demand you can tweak a little with the quality because if you do so customers will understand and then your bakery might suffer heavy losses which you don’t want. So, no matter what be consistent with the quality and keep up the “always happy to help” conduct.
Go for small business loans
You take small business loans if needed and when your business will do well you can pay off the debt slowly. There are many small business tools available in the market, provided by banks and other financing sectors. So, research a little and make a well chalked out plan before you get started.
Take advantage of equipment loans
Yes, you can make use of equipment financing to the fullest. In case of equipment financing you can save a lot of money by buying all the baking equipment that you need and in doing so you don’t have to pay hefty amount upfront for the brand-new equipment. This way you will be able to preserve working capital which is immensely useful.