In India, there is at least one bakery on two adjacent streets in every city. The bakery business is booming in the country due to its simplicity and affordable prices.
According to a study by IMARC, the Indian bakery market is expected to grow with a CAGR of 8.5% between 2021 and 2026. The expected value of the bakery market growth by 2026 is 12.39 billion .
If you plan to open a bakery with a bakery loan and enjoy the customer’s sugar rush, here are some basic steps to follow.
Decide on the type of bakery business to start
Based on your background in the bakery business, decide which type among the five bakeries you want to start.
If you are starting a business with a small investment, home bakeries are the perfect fit for you. You can take a bakery loan less than three lakhs for the raw materials and equipment required and start the business.
The most common types of bakeries in India are Storefront Bakeries. These bakeries require a small room as well as an area where customers can pick up goods. The investment for this would cost around 3-5 lakhs, which can be easily obtained from a Commercial loan.
These bakeries are a must-have option for people who have specialized in specific pastry recipes. This shop doesn’t offer a lot of variety but has a rich and unique take for all of the recipes on its menu.
Coffee bakeries are expensive to start up due to the costs associated with renting out areas, hiring staff, and maintaining. You can search for a MSME loan to help your finances.
We have seen an increase in online bakeries since the pandemic because people cannot go out. These bakeries are similar to home bakeries, but the products will be delivered to the customer by a delivery agent. The investment for these bakeries can be made by taking a bakery loan a minimum of 3 lakhs.
Make a bakery business plan
Creating a bakery business plan will allow you to understand the rationalization of operations and the allocation of the budget.
This summary should consist of an overview of your business, including a mission statement, the restaurant’s legal structure and its history.
Analyze the industry
In doing so, you can identify your competition’s strategies, find your target audience, and finalize your bakery location.
Since you want to start a business, you should already know the importance of SWOT analysis. Analyze your strengths, weaknesses, opportunities and threats to design a better strategy for establishing your bakery.
Plan of operations
This plan includes the operation of the bakery, the number of employees you wish to employ, the services offered by the bakery and the imports of raw materials. This plan will be extremely helpful in finalizing a budget to start your baking business.
The most vital step in making your business successful is having a clear financial plan. Either it is a bakery loan or Commercial loan, or MSME loan, be sure to note them in your financial plan.
Budget for your bakery
By estimating the costs involved in setting up your bakery, you will find your finances easy to manage.
- Equipment: The estimated costs for the equipment are between 5,000,000 INR and 10,000,000 INR. Grinders, oven, displays, packaging and many more constitute the equipment of the bakery business.
- To rent: If you want to open a bakery, the rent will cost INR 25,000-40,000 each month. However, for bakeries, the remainder is between 70,000 INR and 1,50,000 INR.
- Staff: To employ staff for a full-size bakery, the costs can amount to around INR 1,20,000 per month.
- Advertising costs: No business will gain popularity without proper marketing. To advertise your business, costs can range from INR 40,000 to INR 60,000.
You may not be able to manage all of these costs with just your savings. For this purpose, you can take a bakery loan or one MSME loan to start your business without financial problems.
Find a great location to establish your business
The location of your business plays an important role in its development. In India, shopping streets and markets are the most favorable places to start a bakery business. Stores facing the main road are most preferred as they have high turnover rates.
If you choose an area of 1,000 square feet, the rent should cost around 60 to 70,000 square feet. You can take a Commercial loan invest in the property early.
Obtain the required commercial licenses
To start a business in India you will need
- Food license: You can apply for this license on the FSSAI website online. If you go through third party agencies to get the license, it can cost around 5000 rupees.
- GST registration: If the annual turnover of your business is more than 20 lakh rupees, you need to find an accountant to get a GST registration.
- Health license: The municipal health inspector will cost you around 3000 rupees to provide you with a health license. The health license indicates that your business follows all required health guidelines.
- Fire permit: You can only get a fire permit after setting up your place with fire extinguishers and obeying all safety protocols. Then a fire NOC form will be given to you by the fire department and will cost Rs 1,000 to Rs 2,000.
These might seem like in-line additions to your final budget, but you can’t run a bakery in India without the licenses. It is better to opt for a bakery loan if you are starting a business for the first time.
From ZipLoan, we provide business loan or MSME loan, or other funds within 3 business days and have minimal documentation. For more information on MSME loans, contact us today.
Frequently Asked Questions
You can apply for a fast business loan up to Rs. 7.5 lakh from Ziploan to run a bakery.
Before starting a bakery, you need to do the following:
1) Create a summary
2) understand the industry
3) SWOT analysis
4) Plan of operations
5) make a financial plan
Opening a bakery is profitable and you can easily make a lot of money if you plan and execute everything correctly.
A small scale bakery can be started from Rs. 50K to Rs. 1 lakh. On the other hand, a large bakery will need at least 10 lakh to 20 lakh.
The most profitable bakeries have a gross profit margin of 9%, while the average is well below 4%.
You may also like: