4 Ways to make sure your Small Baking Business becomes profitable

As a Baker or Bakerette thinking of starting up a small baking business – or if you’ve already started up your small baking business; one of the most important things to consider is how fast you can ensure your small baking business becomes profitable. It’s a major concern for most bakery business owners in the industry.

In today’s post I’ll be sharing 4 steps you can take to start making sure your small baking business becomes profitable over time. Click here if you would prefer to watch the video.

Choose a niche for your bakery

When starting your business; one thing you need to do is to define your niche in the baking industry. This is the ‘gap’ you fill, the particular segment of the baking market you join. Examples are; healthy baked goods niche, another can be Vegan and Gluten-free baked goods, you can also choose to work on celebration and wedding cakes. Another niche to choose from can be custom cakes or you can also choose to focus on artisan breads. Click here to read a post on types of bakery niches to choose from.

Whatever you decide; make sure to choose a niche for your business. This provides clarity for you and helps you focus all your business activities in a positive and productive way. Instead of focusing on trying to bake everything and please everyone; choose a niche that you will perfect over time, your business brand will be known for it and you will concentrate your marketing efforts in that niche. This will in turn help you have a steady sales increase which will contribute to your profitability in time.

Minimize Costs and Expenses

When starting your small baking business, you need to keep your costs and expenses as minimal as possible; in business the concept is also known as ‘starting lean.’ This is important in many ways since it helps you grow your business without too much friction involved. If you start out having many expenses to pay; your business may not be able to handle it the first year or two. When you reduce your expenses; your business is able to persevere between low sales seasons and other challenges a small business may encounter. Over time; by maintaining low expenses and costs, your business is able to increase sales and have more profit since the expenses are low.

Examples of starting lean may be having a low-capital setup such as starting a home-based baking business, before moving to a different set up. This means that you don’t have to worry about the rent expense when starting. If you don’t have the option of baking at home; you can start by having a small premise/shop before moving to a larger shop set-up.  You can also choose to start by doing the majority of the business activities yourself e.g. baking, marketing, delivering, etc. Then as your business grows, you can start outsourcing labor e.g. a delivery guy or courier service to assist in deliveries – keep your delivery/distribution costs to a minimum. Click on this link to see various ways to keep your baking business costs down when starting.

Cost and Price Correctly

You want to ensure proper costing and pricing of your baked products if you want to make a profit in your business. A lot of bakers and bakerettes don’t sit down and do the proper costing in their baking business before starting to sell; some estimate costs and prices and others copy from other bakeries. This is one of the biggest mistakes you can make as a small business owner; since you may be going at a loss and you’re not aware.

Please sit down and find out the cost of producing each baked product that is on sale in your small baking business; this will then help you in your pricing. Click on this link for a post that will give you tips on cake pricing. Please remember that as a small baking business owner; when pricing, you need to price not only for profit but also for growth. This means that – yes, you should definitely price in a way that you’re able to cover your costs and then have some extra cash (your profit). You should also make sure that in that ‘extra’ you have enough to start helping you take steps to grow your business e.g. saving to move to a different bakery business set-up, etc. To get our book on pricing and costing, click here. For details of our next costing and pricing class; Click here.

Increase your sales by ensuring effective marketing efforts

The most important step to take in ensuring your small baking business is profitable; is to increase your sales. This is highly effective if you have taken the first 3 steps since it will increase your profits as you grow. In order for any business to increase sales; you have to market consistently, efficiently and effectively. This means that you have to market day in day out, for as long as your business is in operation. It means that your marketing efforts have to be focused on the right activities that suit your target market and give results (more sales). It also means that your marketing efforts when executed well, daily – should give you very good results – increased sales.

This particular step requires you as a small business owner to be focused and disciplined; you have to be committed to growing your business. If you’re not committed, disciplined or focused enough to do any the above; you will not achieve profitability in your small baking business; you will forever struggle to increase your business sales and profits. This is the reality of being a small business owner; be sure this is what you want and know that it’s the only way to get positive results.

I hope this post has been of help and you’ve gained insights. If you’re a small baking business owner or want to start; please leave a comment below and feel free to share your challenge or just what you’ve learned, I’ll appreciate it ^_^

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Happy Caking!