Your cakes win raves from friends. Your pies garner their share of awards. So you're thinking of opening a bakery. Before you risk all to see whether your dream will rise or fall, here are 12 important tips to keep in mind:Experience counts. A degree in the pastry arts helps, but a lifelong passion for desserts has fueled many bakeries. What you can't skimp on is experience in running a business. Take those small business courses. Join baking organizations like the Retail Bakers of America. Work in a kitchen for a time to understand how to make the most of your ingredients. "It's more than baking a nice cake or making good cookies," warns Tina Casaceli, director of pastry and baking arts at The French Culinary Institute in New York City. Money matters. Mike Kalupa, a 30-year veteran of the baking industry and owner of Kalupa's Bakery in Tampa, Fla., recommends that before printing your labels, be sure to have enough funds to carry you through 18 to 24 months. And if you need outside funding, hit up the local community banks, not branches of national banking corporations, for a loan. "People making decisions about your loan are not living in your community," he says. "Get to know your banker." But given the risky nature of the food industry, don't be surprised if you find it hard to secure outside funding. Self-financing is the road often traveled by baking entrepreneurs. Still, don't leave any stone unturned. To finance a new flagship shop in Phoenix, Slade Grove of Wicked Witch Bakery tapped select customers as investors because "they know what we do."
Be focused. If self-financing is your only answer, consider starting slow and small. Grove's start-up cost was a modest $25,000, because he shared the expense of a kitchen with a restaurant and focused on wholesale for the first two years. He opened a retail location, Wicked Bakery & Café, in 2006 only after demand from customers grew too loud to ignore. The cost: $160,000. Another way to get a foothold: Develop a niche. That could be learning what the local competition does not do well. It could be unearthing a family recipe and promoting the hell out of it. Edibles Incredible Desserts started with a little kiosk at the local mall selling fudge made from a secret recipe and toffee. After three months, owners Alan and Robyn Furman knew they had a business when they did $60,000 in sales and people wouldn't bother taking the escalator up to the Godiva. Freebies are a must.To further break out of the pack, the Virginia and Vermont-based dessert company offers free samplings once a month of cakes, fudge, cupcakes and any new product they're developing. "I always believe that you sample, sample and sample," says Robyn. "You'll get more back than what you give." Consider allergy-free. Given the growing number of people who have food allergies, offering desserts and sweets catering to this market could be another means to differentiate yourself from the competition. Whenever Seema Kalia needs an egg-free birthday cake for her kids, she turns to Edie Connolly of New York City's Cakes 'N Shapes. Her cakes are not only egg-free, they're baked in a nut-free environment.
Be realistic. One expense you can't dodge is rent. Select wisely. That means understanding your customer. It wasn't until Grove moved from wholesale to retail that he confronted the shortcomings of being in a strip mall located on a major artery with few stoplights. "A lot of our customers were scared to go in," he explains. "People were driving too fast." Another issue he faced with his location: air conditioning. In his lease, the landlord determined that. But since a bakery needs more air conditioning than most offices, he found himself constantly battling with the landlord. Leasee beware. Most leasing agreements run three to five years. But if you're successful, moving in five years is a huge headache. Be sure that you have the option to renew at a specified increase. Otherwise a landlord may take advantage of your success. Also read the fine print. Connolly didn't realize she had to notify her landlord five years into her seven-year lease of her intention to renew. "They told me after six and half years that I had to vacate the premises because their son needed my space," she recalls. Luckily, she found a space that was twice as large but that move, and the need to build that out, cost her $50,000. Hire right. Your payroll will likely be your biggest expense. Although finding good help in the kitchen and in the back office can be challenging, take your time. Alan Furman says that whenever Edibles Incredible Desserts rushed to hire someone because the position needed to be filled, it would inevitably not work out. As a result, they wasted everyone's time and their money on a bad hire.
Buy used. A bakery requires a lot of equipment, like commercial-size mixers, ovens, racks, sheets and refrigerator, just to name a few. Keep start-up costs under control by buying as much used as you can. Feng Shui it. You don't have to hire a feng shui expert, but you should consult a spacial planner when designing your bakery. Experts say flow is important, from the moment your customer opens the door, looks at the case of goodies, orders and pays. There should be no traffic jams. Grove is spending $15,000 to create his new flagship shop. Kitchen organization is also essential as it affects production. "People sometimes don't leave enough space for proper storage," explains Casaceli, who is also owner of Manhattan's Milk & Cookies Bakery. "Storage is very important because inventory is important. People waste a lot of money on inventory because things are not stored properly, or they don't know where it is. If you don't make it obvious for employees, they are not going to go the extra mile to look for it. They'll simply order more; it's not their money." Government issued.Like all food businesses, bakeries must have permits and subject themselves to health department inspections. And in the case of New York City, someone in a kitchen needs a food handlers license. "That license has to hang in the kitchen," says Connolly, "and if that person is not present when that inspector comes, they will shut you down." How much will it cost? Starting a bakery is no cakewalk. It can run you up to $200,000. Rent, labor and ingredients are expensive. Not surprisingly, upscale is the way most bakeries are going. But given the current economic slowdown, price can be an issue. "When the money is flowing, if it costs 50% more, it's OK because it's organic," says Kalupa. But now when it's a matter of gas for their car vs. organic, customers will opt for gas. "If Starbucks and Whole Foods is off 20% -- and that's the number we've been off too this year -- we're starting to see the effects of a bad economy on the organic market." So open a bakery only if you will not let anything stand in your way. "There are many road blocks," says Alan Furman. "But you can't let yourself consider the possibility that it is not going to work. If that is not your personal characteristic, then I am not sure if it's the right thing for you to do. There is so much competition. You have to believe in yourself." Got a story idea? Email Lan.email@example.com.