Baking as a hobby can turn into a full-time, thriving business when you put in the time and effort to transition from a cake decorating hobbyist into your first storefront retail bakery. So how does one make that happen exactly?
While it can take years to grow into a storefront retail bakery location, it doesn’t have to. You can open a storefront immediately, and bypass the cake hobby stage altogether. There are different paths that a baker can take that ultimately lead to the end goal of having a location. Before growing into a storefront, make sure you have a solid plan in place as it will only set you up for success.
Planning for a Retail Storefront Bakery
Here are a list of business elements you need to take into consideration when you are planning to grow from a hobby or home-based bakery, into a retail storefront. As mentioned in our disclaimer, also consult with the professionals to ensure you have your bases covered.
- Location – Planning the location of your business means you need to consider multiple factors for business. There will be pros and cons to every location, so you will need to weigh out and factor how each location will work for your and your business.
- Is there foot traffic? How convenient is it to other stores, such as a shopping center? Is it attractive? Or will you need to put in a lot of work to make is appealing to a customer? Is it easy to get to? A location that is hard to find may hinder customers finding you.
- Cost – Is the rent affordable? Or is the building something that you wish to buy and keep long term? When renting you will need to factor in that you might be entering a triple net lease (triple-Net or NNN), where you pay all taxes, insurance, and maintenance fees that are related to that location. This is on top of standard rent, utilities, gas, etc. Most companies want leases signed for 10 years, so don’t think you can find anything for less than a 5-year lease. It is possible, to find year-to-year, just do not be surprised if you can’t find this.
- Cash – It takes a significant amount of cash to get your bakery started. Savings, investments, and loans are the most common ways cash funds a business. Regardless of how you get it, it will be used to secure your lease, fund your equipment, buy supplies need to actually produce, and pay for the ongoing business operations every month. The amount of cash needed is greatly underestimated by those wanting to open a storefront bakery. The best way to plan for the amount of cash you need to run a storefront bakery is is to build a budget which details every item that will need to be paid for every month, including salaries.
- Cash Flow – How will you bring money into the business on a daily basis? Cash flow is vital to the success and it is what will keep you up and running. The goal is to have enough cash flow every single month so that it covers all of your expenses, and ideally you have enough leftover to count as profit! The most common ways people generate cash flow is through cake sales, however that might not be enough anymore after expansion to a storefront. You might need to consider cakes for all occasions, including wedding cake sales, specialty cookies and desserts, even add on items such as party platters and fruit trays.
- Marketing and Branding – What image will you present to the world when you market yourself for business? As a home baker or hobbyist, the need for a unified look and message isn’t as urgent because you are on a smaller scale. You can get away with more when you are a one-person operation. As a business, you need a brand which is integrated into your marketing and your store. What is your color scheme? Will the staff have uniform? Do your menus and packaging align with your website and business cards? Everything needs to feel as if it is one company and one message.
- Equipment, Supplies, and Tools– Baking in a commercial environment is very different from a home-based operation. The tools and equipment you need have to be designed for commercial use. You also need large-scale equipment such as vent hoods, grease traps, commercial refrigerators and freezers, and commercial ovens. You also need commercial supplies because you will use much more product since you are creating more product. Finding a commercial supplier who can make deliveries to you on a regular basis will be a necessity.
- Payment processing and Payroll – Payment processing is not exclusive to storefronts, however you will need a more robust system to support the needs of a retail business with staff. You will need a point of sale (POS) display to take cash and credit cards. As a solo home baker, you might only need a square card reader and a paypal account. Both companies offer solutions for larger businesses. Payroll can be managed in house, by you or a manager, just know that it takes time away from other parts of your business, and is something that must be done on time in order for everyone to be paid on time. Payroll processing companies can manage everything for you, including all taxes. Just remember that this fee needs to be included in your total operating expenses.
Opening a Storefront Retail Bakery is Rewarding
Opening a bakery storefront can be a very rewarding experience. With these considerations, as well as guidance from a lawyer as you navigate the world of entering business contracts, your storefront can be a successful endeavor. Just be realistic about what it takes, and that it is a long-term, multi-year commitment.
Do you have a storefront? Tell us about your experience and how you made it happen. Leave us your comments below! We’ll even do an update with tips from those who have paved the way.
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