Starting your bakery: a step-by-step guide

The baking business has gained considerable popularity in recent years, thanks to trends like the Dubai Chocolate and cooking shows such as the Great British Bake Off. Did you know that the global bakery market is currently worth $99.47 billion and is projected to go over $110.25 billion by 2028, as per a study by Research & Markets? This means that if there is a culinary artist inside you, now would be the best time to let them out and start a baking business.

For many individuals, a bakery has been a dream filled with delectable goodies and sweet treats that serve the community as a whole. But like any other entrepreneurial venture, creating a bakehouse requires a concise business plan, dedication to the craft, financial organisation, and attention to finer details. Unfortunately, it isn't as simple as picking up a rolling pin and getting to work. Starting a commercial bakery can be relatively straightforward and affordable by following simple tips. So, to help our readers begin their enterprise, we have written a guide to help them run a successful bakery in 2025.

Research and planning

The first step to any venture is careful market research and future planning to make sure your vision is well thought out. Start by answering the most basic questions, such as what sort of products you are going to sell, what baked goods you specialize in, your target demographics, financial projections, marketing strategies, locations, etc. Determining these aspects can help predict the ups and downs of the bakery business, know the operational costs, identify the competition, and achieve set goals.

A well-designed business plan should include the following sections:

• Vision and mission – These short statements help outline the direction for the bakehouse and how to make it successful. An example would be to provide the community with locally sourced, high-quality baked goods.
• Target market analysis – This section requires analyzing the local target audience demographics, including age, income level, lifestyle, locations, etc. By doing so, we can determine the consumption pattern, dietary trends, and preferences of future customers.
• Product line – At this stage, we work towards understanding the products that shall be provided at the bakery. For example, pastries, breads, gluten-free items, vegan produce, and specialty cakes. This product line helps to differentiate the business from its competitors and understand why a customer would choose them.
• Marketing plan – Starting a bakery is not just about cooking; it requires a prompt marketing strategy that helps grow the brand's presence both offline and online. Some of these plans may include local business partnerships, social media presence, community participation events, special promotions, and loyalty programs.
• Financial projections – The backbone of every business is profitability. This requires a careful financial projection that lets the owner know about their operating costs, estimated revenue, and profit margins over a specific period. These monetary analyses are also crucial for procuring funding, attracting investors, and showing them evidence of profitability and growth.

A detailed plan can serve as the foundation for your bakehouse as well as help get funding and make the process of opening a new bakery easy.

Choosing a bakery format

There are many different types of bakery formats that an entrepreneur can choose from. They primarily fall under the umbrella of two main categories – retail and wholesale. They both sell similar products, but differ in size, output, and customer base.

Retail outlets are the most common style of bakeries that we see selling pastries and loaves of bread in our neighborhoods. They come in different forms and require both front-of-house and back-of-house space. Here are some examples of them

Bakery cafè

This type is a combination of a café and a bakery hybrid that typically sells products like pastries, cookies, and breads, paired with coffee, teas, and smoothies. Normally, they have a small dining space for customers to relax and enjoy their delicious desserts.

• Pros – offers direct consumer interaction, potential for walk-in traffic, alternative sales options from café and bakery, and ability to build a local customer base.
• Cons – operational and startup costs are significant(rent, utilities, etc), greater neighborhood competition, and it requires an ideal location.
• Best for – owners wanting to build a community presence and a brand value for their business.

Counter service

As the name suggests, this bakery is a counter service with a front-of-house staff. They do not have a seating space and offer over-the-top baked goods as a takeaway for home or a picnic.

• Pros – helps to build a loyal customer base, lower startup costs, lots of foot traffic, and direct consumer interaction.
• Cons – the location can make or break your business, and lots of competition.
• Best for – bakers who do not have enough capital for a café hybrid, but still want to cater to the local community and build their brand presence.

Mobile bakery food trucks

Instead of having a traditional brick and mortar shop, mobile food truck bakeries are a great option to have all your essentials in one place and still change the districts as per your demand. Due to a small space, many bakers do not cook their products in the truck, but rather at home or a commissary kitchen ahead of time.

• Pros – lower overhead expenses compared to a bakehouse store, highest flexibility in location, and gives the option to participate in festivals and events.
• Cons: very limited space for storage and baking, sales are heavily reliant on good climate conditions, and regular maintenance costs are associated with the vehicle.
• Best for – entrepreneurs who are trying to attract a varied customer base from different locations.

Specialty bakeries

A specialty baker caters to a niche market and focuses on only one type of product, such as wedding cakes, donuts, gluten-free goods, or cupcakes. This style of business prospers as they are the leaders in their product, which the consumer cannot find elsewhere or at less-specialized bakeries.

• Pros – have higher margins due to signature products, a niche customer following, and the ability to cater for events.
• Cons – require lots of innovation and consistency in their offering, are heavily reliant on marketing and word of mouth publicity, and have massive overhead costs.
• Best for – bakers who have mastered the art of specialty baked goods and have lots of culinary experience under their belt.

Home Bakeries

This is the latest trend in the baking industry, especially since the advent of social media marketing. In this type of service, the owner operates their business from their home, with minimal startup capital or culinary experience, by advertising their products online and delivering them to customers. Many home bakeries also cater to a niche or supply twists on classic baked goods.

• Pros – very low startup costs, ability to begin small and scale the business, and flexible working hours.
• Cons – limited production capacity, legal zoning restrictions based on where you stay, and harder to scale the bakery.
• Best for – bakers who want to test the market at a minimal cost and do the business as a hobby or on a part-time basis.

Online-only bakeries

This type of business happened right after the pandemic, where many enterprises moved to an online-only format. These bakeries sell their products through online orders only, mostly in a limited locality, based on their offerings’ shelf life.

• Pros – minimal overhead costs as there is no storefront, access to a broader target audience, and flexibility to work from a commercial kitchen or home.
• Cons – major competition with established e-commerce platforms, heavy dependence on delivery companies, and issues of food freshness and handling during transit.
• Best for – bakers who are already leveraging social media platforms to reach their customer base.

As we mentioned, the other main type of bakery is wholesale. This entity functions on a larger scale and sells to other businesses like grocery stores, restaurants, bistros, etc. They do not provide products directly to customers, hence they do not require a front-of-the-house staff, dining space, or a desirable high-traffic location. However, since their volumes of production are bigger, they do need heavy-duty baking equipment, higher startup costs, and lots of space to function.

Securing funding and budgeting

One of the main rules of any entrepreneurial venture is to always keep your personal and business banking separate. This means having a clear financial vision to keep the cash registers flowing and the enterprise growing. Start by opening a separate account for the bakery for carefully tracking your sales, taxes, and daily expenses. Plan a budget for the bakehouse by taking into account the cost of the ingredients, staffing expenses, overheads, rent, and profit margins. The next step requires setting up a pricing strategy that ensures the number is competitive, doesn't undervalue the product, and generates good revenue. Remember, customers are ready to pay a premium for quality and value, so try to focus on these factors.

When starting a bakery, there are several major costs associated with the project, including renting a commercial area, hiring & training staff, paying for equipment, getting licenses and insurances, and utilities. So there is a need for massive capital to cover all these expenses. If you happen to have limited funds, here are the three main funding options a new business owner can explore:

• Traditional commercial loan – An entrepreneur with a good credit score can just apply for a business or commercial loan at any major or local bank in their country. This type of financing happens to have low interest rates and provides access to massive capital. However, it does require proper documentation, financial projections, and a wait time in procuring the money. There is also an option of equipment financing by putting them up as collateral with the banking institution. It is an ideal way to cover the upfront costs of starting a bakery.
• Business line of credit – This option works similarly to a credit card, where the business is approved for a line of credit up to a certain amount. The enterprise pays only interest on the sum they use and not the entire amount. As the bakery repays the balance, more credit becomes available for the business. The drawback in this type of funding is that they have higher documentation standards to follow, and the value is less than traditional loans.
• Small business loan – Facilitated by the Small Business Administration (SBA), this type of financing is designed to support small and medium-sized ventures to procure startup capital. The benefits of these, as compared to traditional systems, are that the interest rates are lower, and these are also available to individuals with borderline credit scores. The only issue with a small business loan is the requirement of collateral and a longer approval time.

Regularly tracing your bakery’s financial performance helps to maintain operational expenditures and identify areas of improvement for future growth opportunities. Do not forget to analyze sales data, expenses, and profit margins regularly to help set realistic budgets.

A bakery startup capital ranges between $12000 and $55000, depending on the size of your enterprise. The vast price tag covers licensing and legal fees, equipment expenses, cost of startup supplies and ingredients, commercial rent or mortgage, and salaries for staff. This is just a rough guide to help readers have a ballpark figure. Once the business is up and running, the budget shall reflect a more accurate number that covers all costs.

Legal requirements and permits

Before we swing open the doors of the bakery, we need to get all the proper legal requirements completed. For any business, the right permits and licenses need to be procured as per the state and federal government guidelines. To be legally able to serve customers, a bakery or café has to follow all the safety and health regulations as governed by the county, city, or state. An entrepreneur can hire the services of an agency for this work or just do their research online. Some of the permits required by any bakery business are:

• Food handler’s license – a certification required by all potential employees who will be baking or servicing the products.
• Sales Privilege Licence – for legally selling baked goodies.
• Catering license – required if an enterprise also deals in events, festivals, or wholesale operations.
• Zoning laws and permits – required for noncommercial spaces, like homes or commissary kitchens.
• Kitchen health and safety inspection – every food-based venture has to pass this inspection to work legally.

Besides all the above, every enterprise needs a unique tax ID number and Employer Identification Number(EIN). Understanding these helps to avoid costly mistakes in the future and saves time when it comes to procuring funding from investors, banks, or other institutions. This tax number will be required when opening a bank account, filing payroll returns, filing for business tax, and applying for credit and debit cards. The fastest way around this is to consult a professional agency that deals in accounting and helps with paperwork.

Building a website and online shop

In this modern world, every bakery business needs an online presence, which can be achieved through a website. Many people today do most of their shopping or researching on the internet. Having an online presence can greatly increase your chances of being discovered and attracting customers. Though there are many ways to build an online shop, the fastest and most cost-effective process would be to use the services of a no-code website builder like SpreadSimple. It allows users to create a high-quality, visually appealing bakery business website in a matter of just a few minutes, even if they do not possess any technical skills.

The application uses Google Sheets as its content management system(CMS), meaning that you can manage your menu information right in your spreadsheet. SpreadSimple is fast and very convenient, especially when you need to keep your content updated regularly. The best part is that a person can try SpreadSimple for free. To get started, just follow the three easy steps mentioned below.

Step 1: choose a theme or template

The first thing you want to do is choose a theme or design for your website that matches your logo and brand's color scheme. SpreadSimple offers built-in templates that any bakery owner can use and customize as per their requirements. Each template comes with a Google Spreadsheet, which you can extend and fill out with your data.

Step 2: add products and services information

Now that you have your basic template and design in place, let's move on to adding baked goods information to the spreadsheet along with pricing and quantity data. Make sure to incorporate major keywords, as well as graphical content like images and videos, into the descriptions of your products, as they can give your website an SEO boost, which in turn will help you rank higher in SERPs.

Step 3: create checkout policies

Think of checkout policies as the rules of your bakery business that customers must be aware of. They are like the Terms & Conditions, which tell the users about your policies for cancellations, promotions, deals, etc. Make sure to keep this information clear and concise for your potential consumers.

The above steps are just to get you started on your online journey. There will still be some fine-tuning needed before launching the bakehouse website to the public. Here are some essential elements that you should include in your website:

• Menu – One of the main reasons people visit a pastry shop's website is to check out the menu. Make sure all your information is clear and easy to read, with prices clearly listed. You can also include photos of your dishes to entice customers.
• Contact information – Make it easy for the target audience to get in touch with the business. Add your phone number, address, and email address, as well as links to your social media accounts. You can also embed a map to help your customers understand where your bakery or cafe is located.
• About us page – Share a bit about the history of your bakery, its mission statement, and any awards or accolades that you received. You can also highlight members of your team to give a personal insight into your business.
• Reviews – Including reviews from satisfied customers can help build trust and brand credibility with potential customers. You can also consider adding photos of your guests with their testimonials, but only with their permission.
• Images – Do not underestimate the impact of high-quality photos of your business and its products, dishes, and staff. These can help your guests get a sense of what it's like to visit your establishment.
• Specials and events – Highlight any specials or events you have coming up, such as deals, festivals, or special holiday-themed menus.
• Promo codes – Offer your consumers promo codes when ordering online, or free delivery if the amount exceeds a certain number.

When designing your bakery website, make sure the overall color scheme and branding of your pastry shop match your logo and decor. All SpreadSimple websites are optimized for mobile devices. They load quickly, are easy to navigate, and have a responsive design that adjusts to different screen sizes.

Setting up the bakery

If a person is planning to have a brick-and-mortar store for their bakery, then the location is highly significant as it affects not only foot traffic but also operational efficiency and visibility. Either you can hire an estate agent or consult an agency that deals in commercial spaces for the hospitality industry. Below are some key factors to keep in mind when selecting your shop.

Target demographics and community. Do a deep dive into the neighborhood demographics and the people's preferences. For instance, if the district is a family-oriented space, then offering kid-friendly meals and play sections would be a good idea. If there is a college campus near the bakery, then make sure to keep trendy items on the menu and affordable deals that appeal to young people and foot traffic. Most successful cafés and bakehouses are usually found in highly frequented retail areas with heavy pedestrian traffic. These districts help increase the brand’s visibility and attract more walk-in customers. Think of choosing a place near office buildings and bustling shopping centers.

Essential bakery equipment. Make sure to look for a space that is either stacked or has ample area to keep essential baking equipment like freezers, mixers, combi-ovens, refrigerators, display cases, storage, and workstations. There should also be a designated cleaning station for hand washing for your employees and storage of chemicals, along with disposable gloves, scrubbers, sponges, and other essential cleaning items. In addition to large equipment, stocking of smallwares, such as whisks, bread knives, mixing bowls, dough boxes, aprons, etc., should also be considered.

Layout design. Last but not least, make a well-designed layout plan that separates zones for customer service, production, and baked goods display. This brings about a nice consumer flow to the bakery that avoids blockages. There are four main layouts to choose from:

1. Straight floor plan: Here, the display cases are set up in straight lines for easier visibility for the customers.
2. Angular floor plan: This type of design is used for creating an upscale presentation using a curved display.
3. Diagonal floor plan: For large areas, a diagonal layout is used, which allows consumers to flow through the bakery with ease.
4. Mixed floor plan: Use a combination of all the above layouts to maximise your front-of-the-house space.

Proximity to suppliers. This is not a crucial factor, as there are delivery options available by nearly every kind of food distributor. But having a wholesale marketplace near the bakery can prove useful in times of emergency.

Once a spot has been finalized for the bakery store, we advise hiring a lawyer to draw up the paperwork and make a lease agreement with the landlord. This will protect you and the business from any potential future issues, including renovations, utilities, extension on the lease, and raising of rent.

Hiring and training staff

The bakery business's success lies largely in the skills, devotion, and training of the staff. Try to hire employees who share a similar passion for baking and customer service like you do. The size of the workforce varies based on the scale and style of your bakery. A small, locally owned spot will need a short chain of command, while retail outlets will also need a trained front-of-the-house department for taking orders and customer service. However, in every type of setup, there is a need for a back-of-the-house for preparing the baked goods.

For creating an efficient team, it is vital to define the roles needed in the store, balance costs, and create a supportive environment that increases productivity and retention. Three essential areas to focus on are:

Types of roles needed. Based on the style of the bakehouse and its signature offering, an owner will need counter staff, skilled baristas, managers, bakers, cashiers, and in some cases, delivery personnel.

Training and development. Just staffing skilled people will not do. There needs to be detailed training manuals complete with recipes, equipment usage, customer service practices, and operational standards. These standards help ensure quality and consistency in the long run, which translates to revenue and business growth.

Along with these practices, employees should also be developed to handle multiple tasks, such as counter staff being taught to have basic baking skills. This helps the operations run smoother, and everybody works like a flexible team, especially during busier times. You can also encourage the employees to attend workshops, take online classes, or participate in competitions to enhance their abilities.

Employee costs. A bakery is a business whose primary goal is to generate profits. But that doesn't mean saving costs wherever possible. Sometimes investing in the employees can be beneficial in the end of the day. An entrepreneur should consider giving additional benefits such as health insurance, bonuses, or paid vacation days, to attract and retain great, skilled workers. Smaller bakeries can allocate a budget for training, including onboarding materials, having programs where senior staff mentors the new hires, and external courses or certifications.

Marketing and Branding

Today’s business world is very cutthroat in terms of competition, so entrepreneurial ventures need to get creative with their branding and marketing strategies. Though the traditional methods like advertising in newspapers and going door to door are still effective ideas, word of mouth and social media platforms are the most powerful ways to market a bakery business. Before launching the enterprise, let us create a buzz about the bakery store by creating a unique brand and engaging marketing strategy, using the following method:

Build a brand name

Logo and aesthetic. Choose a color palette, logo, and storefront design that reflects the setting of the place. For example, match the name with the vibe, be it artisanal, cozy, or contemporary.

Values. As we mentioned before, communicate with the target audience about what makes your place special, such as global flavors, organic produce, or vegan goodies. This helps to connect with the customers.

Digital Marketing

Social media platforms – Applications like Facebook, TikTok, YouTube, and Instagram are amazing tools for sharing photos and videos of your products. You can also make reels advertising behind-the-scenes stories of how the business works to build excitement among your target audience.

Local SEO. Make the bakery business more optimized on search engine platforms by creating a Google My Business profile. You can list the store’s locations, hours of operation, contact information, and website link. This encourages consumers to check out the profile and leave reviews about it. Also, try to incorporate keywords into the website and social media applications that locals might search for. For instance, gluten-free cakes, a bakery near me, the best pastries in San Francisco, etc.

Engaging content. Just creating a profile will not help the business. Make sure to post consistently about different topics, such as easy bread-making tips, a 30-minute cake recipe, staff information, and the new Festival menu. All these help keep the target audience interested and connected with the bakery.

Customer engagement

Loyalty programs. Initiate a loyalty program to reward repeat consumers and encourage them to visit again, as well as spread the word.

Newsletters. Email is still one of the most effective ways for a business to connect with clients. Share newsletters via email, updating customers about new menu items, seasonal dishes, exclusive deals, and discount coupons.

Seasonal promotions. Offer limited-time deals, happy hour pricing, birthday discounts, and promo codes at the bakery. These help drive up traffic, especially during slower periods.

Comments. Make sure to try and respond to every customer review or comment left on social media profiles and Google. This way, an individual feels heard and connected with a brand better.

Most of the above-mentioned tactics apply to retail bakeries. For wholesale formats, we suggest focusing on researching local businesses, restaurants, cafés, and grocery stores to figure out where they get their goods from, and also doing a competitor analysis of the neighborhood. This can assist in reaching out and striking a deal with them to increase sales.

Grand opening and ongoing operations

The last stage requires hosting a grand opening and welcoming your customers into the bakery. A successful inauguration can do wonders for a new bakery and help generate loyal consumers. One ideal way to achieve this is to first create a lot of interest and alert the local target demographics about the opening date in advance. Offer special discount coupons to the first 100 people who purchase a product. Make sure to also give free samples of signature items and expose the consumers to more products.

A bakery business is an ongoing enterprise that requires constant monitoring and innovation. So, make sure to keep some things in mind, such as:

Cleanliness. It may sound like a cliche, but you would be surprised at the number of places that shut down because the owners do not pay attention to cleanliness. For food based industries a certain level of hygiene is expected, but by going the extra step, your bakery can have an edge over the competition.

Have an active social presence. Even if you have a brick and mortar store, maintaining a social media profile is paramount for success. Today’s generation largely depends on the internet when it comes to making each and every decision. Having positive online reviews, engaging with customers, and posting images and videos will surely increase footfall and revenue.

Listen to your customers. Food is quite personal to people. So listening to your target audiences will get you insights into what they like and what works in the community. Ask existing clients about new products, listen to their reviews and suggestions, and try to incorporate what you can into the business.

Try to have a unique selling proposition (USP). This does not apply only to baked goods. A business can differentiate itself from its competitors by having affordable lunch meals, seasonal specialties, quirky interiors, special games, and social media contests. Anything that helps the bakehouse stand out and succeed should be tried and implemented.

Leverage technology. Invest in a user-friendly point of sale system that helps to manage sales, inventory, and customer data. This will help streamline operations and enhance efficiency. Eventually, consider online ordering systems or third-party delivery to cater to a wider audience who prefer convenience.

Final thoughts

Starting a bakery business can be a blissful journey filled with excitement, passion, creativity, and business acumen. There are many building blocks that come together to form a successful enterprise, like perfecting recipes, commitment to quality, embracing trends, engaging with the community, and carving a niche in the market. But all this starts with taking the first step on the journey. So we hope this guide will be the first stage of starting your successful bakery business in the future.