Business Smarts: How to Save Costs in Your Bakery

So you’ve embarked on the entrepreneur's journey and started your own baking venture, and beginning to realise that starting up and owning your own bakery business isn’t as sweet as you initially thought it would be. With taxes, payroll, unforeseen expenses and business investments, it can seem as though there is no end to the expenses in running a bakery.

In addition, you might have a good stream of customers, but without correctly working out your costings, you might barely be breaking even or even go into a loss. Needless to say, minimizing expenses to the bare necessities and avoiding added expenses is crucial to survive especially during your first year or two in the industry. Wisk by Cakesmiths conducts cake baking classes and professional cake making course in Mumbai, and we’ve outlined some steps you can take to save costs in your bakery business.

Product: The first step is to figure out which products to sell. The common types of baked goods include cupcakes, pastries and artisan breads. Research the bakeries in your town to find out what you competitors are offering, and make a note of their price points and marketing strategies. The best way to start out is to carve a niche that has not yet been served. For example, a bakery that serves only gluten, paleo, and sugar-free goods can be considered a niche. Or, you might opt to sell elaborate cakes if there are very few in your city who currently offer such a product. Common baked goods include artisan breads, cupcakes and pastries.

Prices: How your goods are priced will impact your bakery’s profits. Pricing can be based in two ways, by basing it on the cost of ingredients, time, and delivery expenses plus a profit percentage; or you can price your goods based on what the market can bear. If your bakery is the only one in the city which serves gluten-free products, then you may be able to price your products higher than those of your competitors. Remember that your sales or revenue less the cost of goods sold is equal to your gross margin. The profit is what is left after deducting your general expenses from the gross margin.

Expenses: Generally, ingredients are the major source of a bakery’s expenditure. If you opt to use whole eggs, real butter and natural ingredients, bear in mind that this will increase expenses, as opposed to using margarine and imitation flavourings. However, if you want to use top-notch ingredients, you can still cut expenses by purchasing ingredients in bulk. It might be challenging to store a bulk quantity of an ingredient,mso keep that in mind as well. Other expenses to be factored in include employee wages, packaging, delivery costs, rent, electricity, and so on.

Marketing: This will affect both your expenses and revenue. Print and online advertising can range from cheap to expensive. Other marketing costs would include booth rental fees at exhibitions and events,flyers, catalogues, and so on. Word of mouth can provide effective marketing at no extra cost to bring in new customers to your bakery. Adding an inexpensive flyer to each bag of your baked goods sold or requesting customers to leave feedback on your website and social media profiles can be another way to boost sales.

Packaging: This is one place where you can cut costs. When you are starting out, it is perfectly fine to parcel and package your goods in plain packagings. You might decide to change things later, especially if you have ordered a bulk of packaging items with fancy branding, and realize that one of the products needs changing, or the design is off, etc. Be patient and invest in packaging and branding when you can afford to do so.

The author is working with a Cake Smiths, a leading supplier of baking tools and equipment in India. The writer has flair for writing and he keeps on writing related to baking industry.