How to start up a bakery business

Have you passed those artisan cupcake stands in Tube stations? Or rushed passed the heavenly smell of savoury pastries on your way between platforms? Personally, I think baking is a lot of fun. At least, it’s a whole lot more fun than smashing into people on the Tube at 7 am. Or staring at train ads in a desperately British attempt to avoid eye contact en route to a bone-dry meeting.

Cakes are here to stay for sure, which isn’t even a thing we need industry statistics to know. Cupcakes, cake pops and related fanciness apparently have their own special trends going on for some reason, and that’s slightly beyond us at Findmeastartup. But the baking industry in the UK is worth around £3.5 billion, and baking can be incredibly lucrative if you find the right niche.

Have you ever thought about making money from cakes, bread, pastries and all that rather than eating them? We did some research and spoke to a few people who have started a business making sugary things from home, then delivering them. Here are some of the pros and cons.

The fun parts of being a baker

* Montage-like moments as you stand laughing in the kitchen with chocolate smeared across your face, happy as a lamb

* Eating your own leftovers- Self-explanatory.

* Your job will involve zero spreadsheets, meetings, or Tube journeys

* Flexibility. With your resource inputs of eggs, flour, sugar, and so forth, you have a plethora of niches at your fingertips. Commissioned wedding cakes, customised cupcakes, gourmet bread, and pastries for morning commuters are just the start. There’s also that gluten-free market to cash in on!

* With the above, you have myriad opportunities to diversify and scale up

The harsh realities of life as a baker

* Median pay for bakers in the UK is £7.83, roughly half that of your average full-time worker at £13.94

* You won’t have reliable days off when you’re starting up, especially not if you’re planning to grab every opportunity you can until you break even

* Just to be thorough, eating all your own leftovers will potentially cause cholesterol problems and more outgoing costs for new clothes

* Waking up at the crack of dawn. As early as 2 am if you want to corner the fluffy cakes niche—there’s lots of egg whisking involved in that. Same applies if you’re

planning to deliver fresh cakes on a same-day basis, or just daily to capture the commuter market

* Baking is lots of magical fun, but cleaning up is not.

What do I need to run a bakery delivery service?

Whether you’re dead set on being the next Mary Berry or you’re just playing with the idea, it can be invaluable to think about filling out a business model canvas. At the very least, a list of potential target customers can be a great way to figure out whether it’s truly your calling. What else might you need?

* You’ll need to be bothered whisking, sieving, kneading, weighing – basically should have an actual interest in baking, or what’s the point? (Would you really rather be a florist?).

* A good idea of what your potential products could be – and it doesn’t hurt to be a little savvy on tips and tricks too. For example, making a massive brioche dough will allow you to offer pastries, burger buns, and panettone, to name three things. Less effort, greater product variety.

* Access to a kitchen. Probably not a shared kitchen if you’re going to wake up at 2 am and turn on the egg beaters. Or hog the oven all day long.

* Equipment – bowls, spoons, weighing scales for a start. Bread machine and fancier stuff like bench scrapers and if you’re scaling up. Unless you’re planning to sell everything in bags, you’ll want some pretty packaging like cupcake liners or cake boxes.

* Ingredients – and a good understanding of what the potential allergens might be, as baking can involve everything from eggs to nuts and gluten. If you want to scale up, you’ll want at least a vague idea of where you might start buying ingredients at wholesale prices.

* Insurance – absolutely anything food-related is going to require insurance, in case someone chokes or has an allergic reaction. You never know.

* Some form of delivery method – do you want to deliver your product(s) yourself? Are you going to buy a van or a scooter? Are you going to outsource this as you grow? * Training – food hygiene courses can vary from HACCP courses on food safety management to City and Guilds accreditations for food preparation, to culinary schools like Le Cordon Bleu, if you’re serious business about piping icing and stuff.

* Creativity – or not, depending on your niche. But it can certainly help and make the job more enjoyable.

Can I quit my job and become a baker from home?

Good question. I, personally, have continued to be curious after being told so many times in fawning voices that “OOH YOU SHOULD REALLY SELL THESE”. My curiosity peaked while I was studying for my MBA when I started wondering what would this would actually involve from a business perspective. Based on my ‘research’ (chats with people who bake for a living), here’s what I reckon.

1. Find your niche

Before you invest in a tall chefs hat, you’ll need to think about what you’re planning to sell. Who’s going to buy your cakes? Why should people buy your baguettes or pitta when they can buy bread at Tesco for 55p? What about the Cafe Concertos that are popping up everywhere?

2. Know your competition

Chances are, you aren’t going to start off with an industrial-sized plant and a team of hair-netted, uniformed factory workers. According to UK Bakery market statistics then, you’ll probably either want to open your own store and be an in-store baker, or a craft/artisan baker.

Well, people aren’t going to stop eating bread any time soon. If you’re going to position yourself as a cupcake baker, though – let’s stick with this example – you’ll need to look at market leaders like Lola’s Cupcakes and established players like Primrose Bakery. At either of these, young professionals and the like aren’t going to choke at paying £3 upward for a fancy cupcake. Which is why you’ll need to know exactly why you’ll stand out. Some good ideas of how you might compete include:

* Price – Are you going to be Kensington’s cheapest cupcake baker?

* Product quality – Can you guarantee something awesome, like super-healthy cupcakes, exceptional flavours, or amazing diversity?

* Customer service – e.g. “I will answer all your questions at literally any hour of the day and night”

3. Decide where you’ll sell from Home can be a nice place to start. You should register your home (your new bakery!) as a food business 28 days before you start to avoid being locked up for 2 years. Registration is free, though it might be necessary for the council to approve your home before you go live. If you’ve opted to delivery hot pies, you also may need an additional license for selling hot foods between 11 pm and 5 am.

Your primary overhead will most likely be gas or electricity for your oven:

Electric oven at 2000-2200W per hour, at around 14p an hour = approximately £2.35 for an 8 hour day, or £858 annually

Gas ovens are considerably cheaper, although it all depends on how energy efficient your appliance is.

Baking and selling on rented premises will involve a whole range of other costs – though as an example a serviced kitchen can cost around £1,500 a month. You can look on or even Gumtree for ideas. Erm, be safe if you’re going to do the Gumtree idea.

4. Figure out your pricing

This is the exciting part because I like money. Unless you’ve decided to low ball everyone else on the market and produce something akin to your own personal baking sweatshop, you will need to start with your overheads. Granted, not many will make it this far. I once tried to sell cakes at a farmers market and got bored once they were baked. True story.

With electricity at £2.35 per day and 8 hours of baking, maybe you’ll make 24*8 = 192 cupcakes. I’m not actually going to type a list of all the ingredients here but let’s say you are using the standard eggs, sugar, flour, icing, extract, icing sugar, milk, butter etc. at around £3 each.

£3*8 basic ingredients = £24 will last you at least 4 batches, so shall we say £48 a day?

Your fixed costs are therefore around £48.35 a day, plus an initial outlay of £30 for standard equipment (from TK Maxx, not Lakeland).

That means your costs are roughly £78.35/192 = 41p a bog-standard cupcake, for the first batch.

Sell them at £3 each, I think. For a profit of £497 daily.

5. Be aware of the rules around serving and preparing food

Unless you know 192 people who all have the same overwhelming desire for 1 bog-standard cupcake each and every day, this isn’t what you’ll be achieving at first.

So you’ll probably be eating your own cupcakes until you scale up and can start shipping them out like a Shenzhen factory ships out white-label Smartphones.

You’ll also need hygiene training (or certification) to be legit, which is surprisingly affordable at between £30-£125 at High Speed Training. This place is probably more serious than it sounds, to be fair.

6. Insure yourself

There is special insurance for home baking, to cover you from things like product and public liability. The average annual UK public liability insurance costs between £40-£119 annually.

Probably worth it.

7. Last but not least, marketing

No need for anything mental like an army of content writers or billboards at the M1 junction. A website can be more than effective and easily linked with social media and blogs. You can update these yourself or outsource this to a specialist or your teenage cousin as you see fit.

Even a simple blog can be a super start, but a professional website that shows off your cutting-edge carbohydrate masterpieces can be as cheap as £800 annually. Without hosting costs.

If your cousin doesn’t want to take cupcake photos for free, hire someone for just the best pieces. That shouldn’t cost more than £100.

Startup costs

* Equipment – £30 to £100

* Rent a kitchen – £0 to £18,000

* Liability insurance – £120

* Training – £30 to £125

* Ingredients – £15,000

* Electricity – £858 * Tall chef hat (optional) – £16

* Delivery man/van – £12,000/£2,000 to £5000

* Van insurance – £1,000 to £2,000

* Website (plus optional photographer) – £800 (+£100)

Total approximate startup cost – £19,838 to £33,619

So, there is a thing or two you might have noticed. If, for example, you’ve decided that you genuinely will be running the oven 8 hours a day, you will most likely not have time to deliver your own goods.

You’ll also need something more realistic than your existing fridge/freezer as you grow your customer base. Even from the start, a mini-fridge is not going to cut it if you’re shoving £48 of groceries inside daily.

Otherwise, yay! How about it? At £497 daily, I’ve been giving it some thought, too.

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11 Responses

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