How to Write a Bakery Business Plan for Beginners

Vũ Khôi

Author at Wotech Electronics Blog

When starting to open a bakery, you will need to build a complete and detailed business plan covering matters such as the market, potential customers, the business model, and financial resources. However, this is anything but simple for those without business experience. That is why SimERP has compiled the most effective steps for writing a bakery business plan for beginners in this article. Let's find out what you need to prepare to run a bakery!

Step 1: Market Research

Before getting into the details of your bakery business plan, you must research the market first.

Factors to look into include:

• Pastry trends

• User trends

• Popular types of cakes

• Pricing

• Competitors

For example, over the past two years, salted-egg sponge cake has been the most beloved cake. You can choose to put this item on your menu. In addition, pricing must be set to fit the market in order to attract customers.

Beyond the general factors of market trends and pricing, competitors also deserve close attention. Understanding your competitors will help you know how to attract customers, how to serve them better, what your business strengths are, and how to beat them. The store owner should clarify issues such as indirect and direct competitors, competitors' prices and services, and their marketing methods, and so on. From there, improve products and services and adjust strategy to reach more customers.

Step 2: Determine the Business Model

Selling Cakes Online

Nowadays, selling cakes online has become more common than before and is the choice of many store owners. When selling cakes online, you will use multiple social channels, with Instagram and Facebook as your main sales channels. In addition, the store owner can link up with food-ordering apps such as GrabFood, Now, or Baemin to reach more customers and deliver to them as fast as possible.

Selling Cakes Offline

Alongside online shops, brick-and-mortar bakeries are also a model many store owners choose. However, when selling cakes offline, you will incur additional premises rental costs and need more staff. There are two models that offline bakery owners usually adopt:

• Tea and cake shop

• Baking studio

Each different model requires different premises and staffing. For example, a tea and cake shop needs a baker, a barista, servers, a cashier, and so on, while a baking studio only needs a baker and a cashier. The premises of a tea and cake shop will also be much larger than a baking studio's, because customers will dine in more. Some typical examples of the hottest tea-and-cake brands today include Paris Gâteaux and Lofita, as well as famous bakeries such as Tous Les Jours and C'est Si Bon.

That said, offline shop owners should still use online channels as well, to build the brand and reach more customers.

Step 3: Analyze Your Target Customers

Besides choosing the model and products, the store owner must make sure the type of cake suits the potential customer base. That is why analyzing target customers is extremely important. Store owners need to build a target customer profile based on characteristics such as age, gender, income level, interests, consumer behavior, and more. Then, subdivide customers into different groups based on their characteristics. For example, if you sell custom-designed birthday cakes, your target customers will be young people aged 22 to 30 with high incomes who love birthday cakes with a distinctive character of their own.

Step 4: Business Registration

If you open a shop selling pastries, you will have to register the business as a household business. The registration dossier includes:

• The household business registration application;

• Legal documents of the individual who is the household business owner;

• A copy of the minutes of the members' meeting on establishing the household business;

• A notarized copy of the minutes of the meeting on establishing the shop.

You will then have to register for household business taxation and pay tax monthly. If instead you sell online informally and on a small scale, you do not have to register the business.

Step 5: Financial Planning

Whatever product you sell — cakes included — you need a financial plan. The more detailed the plan, the easier it is to control your cash flow and avoid losses or shortfalls when you need money. For a bakery, typical costs include:

• Premises rental and shop decoration costs (if any)

• Baking ingredients

• Baking tools and equipment

• Business registration costs

• Staff salaries

• Costs for store management software

• Marketing costs

• A reserve fund in case operations are not yet profitable in the early period.

Step 6: Choose a Location for the Bakery

This is an important step, especially for brick-and-mortar bakeries. For offline cake shops, when choosing a location, you should look for places with the highest concentration of potential customers. If you are targeting students, the shop should be located in an area with many universities. Shop decoration matters too, because it directly affects the customer experience and decides whether they will choose your bakery. Decorate so that it expresses your own character while remaining harmonious and attractive to the eye.

For the online model, you will not need to rent premises and can sell directly from home. However, to make purchasing convenient for customers, online bakery owners must choose distributors or delivery services that operate in central, easily accessible areas.

Step 7: Prepare the Cake Menu

Bakeries usually offer many different cakes and will select a few standout, best-tasting items that differ from other shops. So the store owner needs to research customer demand, refresh popular items, and give them new flavors that suit customers while preserving the shop's signature character. You should also design the menu nicely and use plenty of eye-catching images to attract customers. To avoid situations where customers are allergic to certain ingredients in the cakes, add an ingredients description or a note on the menu. Or even better, the owner should give items special names to attract and impress customers.

Step 8: Prepare Baking Tools and Equipment

Baking tools and equipment must be fully equipped to ensure the cakes are of the best quality and you can serve diners promptly. The main tools include: a dough mixer, an oven, an eggbeater, whisks, a scale, a mesh sieve, and more — prepare the equipment that suits your means and capabilities as a store owner.

Beyond the items listed above, one indispensable item is the cake box. It not only stores or packages cakes for customers to take away — it also promotes the store's brand. You can print the shop's name and logo on the boxes to impress customers. There are many types of boxes on the market today. The most common are rigid boxes made of PET, PP plastic, or paper boxes. However, to protect the environment and win over customers who care about this issue, you can look at paper boxes, recycled boxes, and the like. Although recycled boxes cost more than other types, the value they deliver to customers is very high.

Step 9: Prepare Baking Ingredients

There are many sources of baking ingredients to choose from: wholesale supermarkets, traditional markets, and even online stores on e-commerce platforms. Whichever source you choose, be sure to read reviews from past customers and ask people in the same trade which sellers are reputable. Also, when buying ingredients, buy small quantities from 2-3 different suppliers to test which is the best place to pick as your long-term supplier.

Remember to store your ingredients carefully, as they spoil easily. Items such as cream, cheese, eggs, and milk should be kept in the refrigerator at the right temperature. Flours should be stored somewhere dry and well-ventilated, away from damp that causes mold.

Step 10: Recruit and Train Staff

Before hiring, you should determine which departments you need staff for, how many people each department needs, candidate requirements, and job descriptions for each department. Typically, an online bakery will have a baker, a cashier who also manages the shop's inventory, a customer care agent answering customers, and a delivery person (shipper). If you use third parties such as Grab, Now, or Baemin, you will not need your own shipper. For offline bakeries with their own premises, you will need to hire servers and a guard as well.

After recruiting, store owners need to train and instruct staff according to the training procedures they have built: how to sell, service attitude, and how to handle customer complaints. This avoids situations where customers complain about the shop's service — or even "lose customers." In addition, you should also build an HR management process to ensure employees always work on time, complete every task, and are easier to evaluate.

Step 11: Build a Marketing Strategy for the Bakery

Promote Through a Website

If you have enough investment capital, you should build a website to promote your image, and even list your products on the site as another sales channel, just like ordinary online stores. Owners usually optimize SEO so the website ranks highly when customers search for information, thereby reaching potential buyers. With a bigger budget, you can run website ads with Google. Naturally, that takes quite a lot of money and does not suit small models.

Advertising on Facebook and Instagram

These are the two most popular channels for marketing a bakery, especially shops selling cakes online. Stores usually set aside a separate budget to run ads on these social platforms, because if you only build a fanpage or account, it takes a long time to reach potential customers. When posting on Facebook or Instagram, dress up the shop's page impressively with sharp, authentic, and appealing photos.

Seeding in Groups

For food products — cakes especially — posting and seeding in food "review" groups on Facebook or other platforms is an effective option that makes more potential customers aware of you. The main hook when posting introductions is the images. Polish your photos and use editing software to make them as beautiful as possible.

Partnering with KOLs

When working with KOLs — people with influence on social media — you ask them to post promotional content and pay them a commission fee. People who follow the KOLs will learn about and buy cakes from your shop because they trust that KOL. This is considered a highly effective strategy, as more and more reviewers become famous thanks to the growth of social media platforms.

Running Promotional Programs

Customers are usually drawn to promotions. Therefore, applying discount programs, customer-appreciation offers, and promo codes on special occasions will help you easily impress customers and drive purchases. In addition, you should add a few other formats beyond simple discounts — such as buy 2 get 1 free, free side treats, or free shipping — to diversify your customer attraction methods. If you run an offline bakery with a large floor area, you can rent out the venue for events, boosting revenue while promoting the shop to event attendees.

Conclusion

Besides building a bakery business plan, store owners also need their own management method to ensure the shop runs effectively. Applying management software such as SimERP helps you oversee activities like accounting, finance, HR, marketing, and even customer relations. SimERP currently offers a SimCRM package free for 30 days. Sign up and try it now!

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