Starting your own baking business is a huge undertaking. It takes time, energy, and money to get it off the ground. Many people underestimate how much work opening a bakery entails before they take the plunge and start their own business.
For example, opening, a new bakery in New York City can cost as much as $1 million just on opening day!
So if you are dreaming of starting your first bakery, start by learning these all-too-common bakery startup mistakes and how you can avoid them.
I also included some helpful and inspiring quotes from successful bakery owners who have made these mistakes and learned from them so you don’t have to!
- Top 10 Mistakes to Avoid When Starting Your Bakery Business
- Bakery Name Ideas – That are Available! Not Taken!
- 10 Things I Wish I Knew Before Opening My Bakery
- Common Reasons Why New Bakeries Fail and How to Avoid Them
- FAQ About Starting a Bakery
Top 10 Mistakes to Avoid When Starting Your Bakery Business
1. Do not over-promise and under-deliver.
Remember to focus on your product line first before designing your physical bakery location or online store.
What’s important is that you have products people want to buy, rather than just having a place to sell baked goods. Sounds obvious but you would be surprised how often new entrepreneurs get overly focused on store design and neglect recipe development and menu planning to their detriment.
Try to have unique baked offerings that are not sold elsewhere. Find a unique niche for your bakery – French, custom cakes, Latin or Asian styles, or artisan loaves of bread.
If you’re starting an online bakery business, be mindful that your products will need to have a longer shelf life than if they were being sold in the store.
It’s important to know what type of customer base you want before opening your doors. You’ll either want to focus on making everyone happy (full-service bakery cafe) or specialize so that only certain people will be browsing your bakery like gluten-free, wedding cakes, or trendy desserts.
Starting a Bakery? Read my latest post – How to Start a Bakery: 12 Tips
2. Give customers what they want, not what you THINK they want
Many baking entrepreneurs struggle with knowing what products to sell to their customers. Here are my best tips for developing products or services that will genuinely be of use to them that they will happily buy from your bakeshop:
- Talk with your customers and develop an understanding of what they want. Please do not assume you know what they want because you might be wrong. My best selling products were not the ones I thought they would be! Your customers know best.
- Ask customers to come up with ideas and solutions for everyday problems important to them, then use these data points to guide when deciding what to build next. Issues such as what to serve at a dinner party or how to determine the correct cake to pair with their specialty entrees are good ideas to begin fruitful conversations.
- Make the customer’s life easier by giving them workable ways to accomplish goals or do tasks through your products and services. Examples would be a weekly bread subscription program, or a delivery service for office meetings, etc.
3. Be a good listener – listen to customer feedback and act on it
Customer feedback is one of the most valuable tools you can use in your business. It’s not always easy to get customer feedback, but it pays off when you do
- Speak with customers often and ask for their opinion about different aspects of your service or product. Listen closely – what are they asking to buy? What more could be done to make their experience better?
- It’s not just about asking for feedback – it’s also about listening. So please keep an open mind, even when customers are telling you something critical about your business or products.
- Sometimes they will have a valid point that needs addressing, and if this is the case, then it might be worth trying out their suggestion. Often the best new products are created from negative criticism.
- So be transparent and honest about what you can do for them and work together on solutions. Listening is not easy, but it’s a skill that will help your business grow and prosper in the long term – so make sure you’re always asking for feedback from customers!
4. Offer low prices for high-quality products
To compete with other retailers, you’ll need a range of products at competitive prices – but in some cases, this will mean that your margins could be lower. What’s important is making sure customers are getting good value for money by getting the most bang for their buck AND that you are making an adequate profit to pay expenses and salaries.
Your customers are your lifeblood and will always be looking for a bargain. So it’s in your best interests to keep prices low on products that you know they want while still maintaining quality high.
Take time to negotiate supplier pricing to cut your ingredient costs so you can lower prices.
5. Make sure your food is fresh
It’s essential to ensure your food is fresh and use high-quality ingredients, but don’t rely too heavily on outdated recipes or old ingredients! I know it seems a no-brainer – but this is mission-critical for bakeries especially since stale baked goods are very common.
Every day people make mistakes when cooking. One of the most common mistakes is using old ingredients or outdated recipes. Stale food will result in a poor-tasting item and make it more likely for food poisoning to occur – all of which will drive away customers! The following are some tips that can help you avoid these pitfalls:
- To be safe, don’t use any refrigerated ingredients older than one week.
- Keep your refrigerator at an optimal temperature, just below 40 degrees Fahrenheit
- Read the expiration dates on food before you buy it, and make sure to follow them closely.
- Keep a log of what groceries are on a date so that you will know when they expire. Logging is essential because foods like deli meats can last for a long time.
6. Keep up with the latest baking trends
To avoid mistakes in menu planning, keep up with current consumer food trends and preferences. For example, one of the more recent trends that have been catching on is gluten-free desserts. Check out this industry report about bakery items trends including – cuisine with a cause.
7. Don’t Over-extended Yourself
“You can’t do it all on your own.” According to Christopher Myers from Sugar Snaps Bakery in Brooklyn, trying to do it all yourself is one of the biggest mistakes bakers make when opening a bakery that sets them up for failure. Instead, it’s better to have a team of people with specific roles and skill sets rather than a jack-of-all-trades who does everything.
8. Get the Right Mentor.
“If you’re opening up your bakery business, I would recommend finding someone to mentor you,” says Stacy from Ovenly Bakery in Brooklyn. “Hire somebody to teach you the business side of starting up a bakery.”
“There’s no way I could have opened my bakery without having help from other people,” says Christopher Myers. “I would say, find someone who knows what they’re doing and pay them for their time.”
Looking for a business mentor? Here is a list of the best entrepreneur resources including low-cost (and free) mentoring by business experts
9. Don’t put all your eggs in one basket.
A common mistake made by new bakers is to focus all their energy on just a few types of products and neglect others that could potentially sell well under the right marketing circumstances. Remember that it is wisest to create a full assortment of baked goods for your customers to choose from.
Don’t pre-judge what your best-selling items will be. Offer a full range and let your customers decide their favorites.
It’s important for your bakery menu to offer a selection of pastries and cakes that will satisfy everyone’s cravings. Remember when you are starting out you don’t know which bakery items will be your bestsellers.
If you are thinking about starting a bakery, do not miss this article! Bakery Starting Guide
10. Don’t neglect marketing from the beginning.
Since most bakers are passionate about their creations, it’s easy to believe that customers will just flock to your store because they heard about you from friends or family members. However, without proper marketing, this won’t happen.
Spend time creating marketing content for your bakery business that will attract interested customers; whether it’s through social media, local newspapers, radio stations, or an online store.
BONUS TIP: Don’t underestimate the maintenance costs of having a physical location.
Your rental cost is just one part of paying for a location; you’ll also need to factor in the costs of things like utilities, insurance, ground maintenance, driveway snow removal, and waste collection.
It’s important to know what you need your bakery budget to look like before signing any contracts. If allocating funds for marketing or interior design isn’t possible then focus on getting more exposure through social media or an online store while scouting a location that will be inexpensive.
Bakery Name Ideas – That are Available! Not Taken!
Are you opening a new bakery and need cute bakery name ideas? Well then, check out my big list of hundreds of catchy bakery names complete with inspiring logo examples to name your baking business.
Get inspired by this ultimate list of memorable bakery names that is filled with hundreds of creative, cute, unique, edgy, funny, and cute bakehouse name ideas!
Now selecting a good bakery company name is a piece of cake! Sweet!
Examples of great bakery names
Tart Bakery – Check Availability
You’re Sweet As Pie – Check Availability
Sugar Lips – Check Availability
Honeybuns Bakery – Check Availability
Flourishes Custom Cakes – Check Availability
Pound Your Dough – Check Availability
Sugary Sweet Bakery – Check Availability
Hazelnut Bakery – Check Availability
Spiraling Caramel Dessert Shop – Check Availability
Sugardrop – Check Availability
Biscuit’s Corner Homestyle Baked Goods – Check Availability
10 Things I Wish I Knew Before Opening My Bakery
I hope these baker quotes inspire you as much as they did me!
We all know that starting a bakery is not easy, but staying open can be even more challenging. These quotes helped me, and my clients, get through some tough times, and I hope they will help you as well!
- A good day’s work is worth more than a few minutes on social media channels.
- Think about your prices and make sure you’re charging enough to make profit and your bakery sustainable.
- Variety is key! Offer as wide a selection as possible.
- Consider your bakeries’ theme, make it memorable and unique.
- Pricing is tricky – find a balance that encourages people to buy more than just one or two items. Offer daily deals.
- Packaging: be creative! Offer sample sizes at a lower price point so they can try the product before buying a full dozen.
- People are always looking for new and exciting food ideas – make sure you’re catering to these culinary desires.
- Be mindful of your bakeries’ hours: some people like to stop in on their way home at the end of the day, so keep this in mind when planning your schedule and be open when customers are passing by.
- Don’t be afraid to start small. Starting is the most important part.
Common Reasons Why New Bakeries Fail and How to Avoid Them
If you want to start a bakery business but are worried it won’t succeed, the chances are high that your concerns about failing will come true. Worrying about issues will not help. Instead, learn what to watch out for and how to correct – before – your new bakery fails.
Start by asking yourself these questions: how much does this cost? How long would I need to save before opening my own business? Then, if opening a small cafe or coffee shop sounds more appealing, take some time to explore your options. New bakeries often fail for various reasons, but the adage “failure is always an option” applies here.
It’s hard to know if you’ll make it as a bakery owner until you try and open one up–so why not take advantage of this opportunity? However, if you are still concerned about the financial risks of starting your own business, take some time to explore what it takes financially and emotionally.
Many new bakeries fail because they don’t have an experienced person on staff with a background in baking or running a full-time kitchen operation. If this is your situation, then it’s best not to open one up at all.
If you are still determined to open a bakery, you must do your research to create a workable business plan. You can find out how many bakeries have failed in the past by looking at city data on business licenses and other similar records. Historical data will give an idea of what kind of competition there is in the area and how many people are opening up bakeries.
A lot of factors can contribute, to failure such as these:
1. Poor Location
Many people do not want to drive down a dark alley or walk past rundown buildings and warehouses. But, unfortunately, if your business is near one, it could lead to losses in revenue.
Does the location have ample parking? Many bakeries are located in business areas, which means they will need to provide a place for people to park their cars.
If there is no parking available and customers have to find street parking or take public transportation, it could lead them away from your establishment.
2. Incomplete Menu
Appealing menu items are ones that will get people to come back for more. That doesn’t mean you need to have lots of fancy options or exotic dishes, but it does mean your food should be tasty and filling.
To meet this success requirement, consider these tips:
A) Start by following all safety standards in cooking meat products.
B) Include vegetarian options.
C) Invest in a high-end coffee machine so you can offer fresh-brewed java.
D) Offer healthy alternatives such as salads and fruit plates, especially to those with special dietary needs (i.e., gluten-free or vegan).
E) Consider serving alcohol if your facility permits it, even if it’s just a few selections to make your bakery more interesting and appealing. My favorite combos – cupcakes and champagne or apple pie and Irish coffee!
F) Keep an up-to-date list of seasonal produce and other ingredients so you can offer customers the freshest, most appealing choices.
3. Lack of Marketing Your Bakery
Use these marketing strategies to put your bakery out there!
- Include a “Bakery” section on your website with information about the ingredients you use and a few recipes for baked goods.
- Offer coupons and promotions in local newspapers.
- Start an email newsletter that announces new products, offers, discounts, recipes, etc.
- Make a Facebook page for your bakery to post updates, photos of products, and share recipes. Post pictures to Instagram too!
- Add social media buttons on the homepage of your website so that customers can follow you on all their favorite networks like Pinterest, Tumbler, etc.
- Set up an subscription service so that customers can have your blog posts delivered to their inboxes.
4. Inadequate Pricing and Inventory Management
Pricing and inventory management will determine how well your business does in the long run, so it’s vital to get this right from day one in your business plan.
There are many different aspects of pricing products: The cost of materials, labor costs, overhead costs, and the markup.
To figure out how much to charge for your products, you need to consider many of these factors. It’s a good idea to have healthy profits built-in when pricing so that you can make sure you’re not leaving too little money on the table after all overhead costs are paid off. You’ll also want to have a high enough price that you can make your mark up.
To figure out how many products are needed for inventory, it’s essential to consider the demand for those items and their lead time (how long it takes to get more products from suppliers). You’ll also need to factor in unexpected events such as natural disasters or if you have to order more products from suppliers.
It’s a good idea to work with an accountant or someone who has expertise in this area for advice on the different aspects of pricing and inventory management.
The difference between the retail price and the cost of goods sold is your gross margin.
The gross margin is a measure of profitability, calculated by dividing total revenue (the sum of sales plus any returns) by total cost or even more simply as the percentage dollar value leftover from sales once all costs have been subtracted from revenues.
One of the most essential aspects when it comes to selling baked goods is inventory ingredient management. The demand for your product can change depending on several things such as supply and demand, price changes, or new competitors in the market. Therefore, you’ll need good forecasting based on historical data and current trends to keep up with these changing supply demands.
5. Careless Supply Chain Management
Supply chain management is not only about the products you’re purchasing and selling but also includes other factors such as shipping locations and order fulfillment timing.
The supply chain begins with a product’s origins (researching factories, suppliers, etc.), then moves through different steps in production to distribution and sale of goods. It can include customer service and returns.
Other essential aspects of supply chain management include transportation, warehousing, storage, quality, and safety standards compliance for products or ingredients.
In addition, it is good to maintain accurate records on all transactions in your organization’s supply chain, such as; product availability and lead times (when you can purchase more products), fulfillment scheduling, and managing change in the supply chain.
6. Lack of Employee Training and Low Retention
Employee training and retention is a significant challenge for small business owners, with the average turnover rate for hourly employees being around 16%.
Apart from monetary incentives such as bonuses or increased wages, employers can take steps to keep their best talent happy by investing in employee development. One way of doing this is through coaching; according to Gallup’s research, 22% of employees who felt they received regular feedback and coaching from their manager reported high levels of engagement, compared to only 18% for those not receiving this.
The best way to build a loyal team is by investing in your people. Ensuring that you’re offering motivating incentives such as bonuses or increased wages can go a long way, but it doesn’t stop there. Investing in the development of your employees through coaching, growth opportunities, and learning new skills is a crucial step to take if you want to build long-term relationships with top talent.
As you can see, there are many avoidable mistakes new bakeries make. Some of these mistakes may seem small at the moment but will have a significant impact on your business later.
To avoid making these common errors when opening or running a bakery read this article and follow the expert suggestions.
FAQ About Starting a Bakery
Is owning a bakery profitable?
While the average profit margin of bakeries is 4%, there are some that make 12% on their revenue year after year. Some can even have a net profit margin as high as 20%, however, many shops don’t break even and make no profit.
A bakery is a great business idea because the average baker makes $50K/year. However, they still have to deal with challenges such as rising prices for flour and sugar and high spoilage rates.
Increase your bakery startup profits by focusing on selling the most profitable baked goods as shown by Bake magazine below.
What are the weaknesses of a bakery?
There are many possible weaknesses in owning a bakery, from not having the right ingredients on hand to changes in customer demand and even an increase in the competitors. One way to combat these problems is by investing in employee training and retention to have a loyal team committed to your business. Another smart strategy is to implement a strict ingredient management system. Fight competition by always featuring new items, flavors, and promotions to keep customers coming back to your bakery instead of the one across the street.
What do I need to know before opening a bakery?
There are several things that you should know before opening a bakery. The most important thing is making sure you have the proper financial backing to sustain your business. You’ll also need to develop a marketing plan and ensure that you have the appropriate space to open your bakery.
Why do small bakeries fail?
One of the most common causes is a lack of focus on marketing, in particular social media. Social media advertising can make or break your baking business; you need to invest time and money into it! A lot of time and effort needs to go into your posts once you get them out there too- make sure your posts get people engaged like with videos, contests, questions, etc. Things like these help keep customers coming back!
Use some of these smart social media strategies in the infographic below
Read my comprehensive bakery startup guide for your US state:
How to Open a Bakery in Your State
Thinking about starting a bakery? Learn how to open your own bakery with these step-by-step business guides specifically written for your US State requirements (Come back and visit again since more states are being published regularly)
What it’s like to own a bakery?
Owning your own business is an exciting prospect. There are many opportunities for growth and income, which draws many people to open their bakeries. However, there are also many challenges that you will need to deal with to maintain profitability. This post will go over some of the challenges and what is necessary for successful business ownership.
What do bakers do in a day?
Bakers can do a variety of things depending on the size and complexity of their bakery. For example, they may have to help with transportation, warehousing, inventory management, pricing, and purchase order fulfillment schedule. They may also have to deal with employee training and retention.