If you’ve ever considered starting a bakery business in Nigeria, gather here. The bakery business is a very lucrative business because it meets the daily needs of people. The food business is one of the fastest-growing industries in the world hence, considering a bakery business is not out of place.
If you have culinary skills and want to learn how to commercialise it to a large market, you are in the right place. Also, the bakery business is not only for people with culinary backgrounds. There are several people in the industry with no culinary skills and are doing remarkably well.
This article covers all you need to know about starting and running a successful bakery business. To start, you will need some planning and entrepreneurial knowledge, all of which will be covered in this article.
Before starting any business, it is important to have an overview of what you will need and the costs. A standard bakery requires a lot of startup costs when you factor in the equipment, materials, labor, and lease. Generally, when evaluating the startup costs, you should include the cost of the following:
- Public Utilities
- Design and Repair
- Miscellaneous expenses
How To Start A Bakery Business In Nigeria
Step One: Decide The Type Of Bakery You Want To Open
Bakery business is broad and you will need to select a niche for yourself. There are bakeries that focus on the sale of baked bread, some focus on cake baking, some sandwiches, etc. You can either start a retail or wholesale bakery.
Learn about the two types of bakeries below.
a. Retail Bakeries
Most bakeries fall under retail bakeries. Just like the name implies, those operating retail bakeries sell baked foods directly to their customers.
Below are some of the retail bakeries you can select from:
i. Traditional Bakeries
These bakeries specialises in the baking of biscuits, bread, etc. For a place like Nigeria, bread is a fast food most people have in their houses. Starting the baking of bread alone can make you millions of Naira in Nigeria. You can make different types and flavours of bread; from coconut to butter or chocolate bread. There’s no limit to the level of creativity you can put into the baking of bread.
Also, you can make different types of cookies and it will sell because kids and adults love cookies. You can win anytime and any day with a traditional bakery if you can bring your creativity to bear.
ii. Specialty Bakeries
As the name implies, these types of bakeries focuses on a particular type of baked food. A good example of such is cake bakeries. There’s hardly a day of the week without someone celebrating a birthday. And, there’s hardly a weekend in Nigeria without a party or celebration going on.
Over the years, we’ve come to discover that cake symbolizes celebration and most people want to get a cake for their events. Without mincing words, this is a very good niche with a ready-made market. Hence, this is a great way to begin your bakery business.
iii. Pastry Shops
Many people are looking for different types of snacks they can quickly grab in the afternoon. A delicious snack paired with a cold drink is refreshing.
Basically, pastry shops specialise in the baking of different types of snacks; meat pie, egg roll, chicken pie, puff puff, doughnut, sausage roll, etc. With little capital, you can get a brick and mortar shop and set your business up.
iv. Bakery Food Trucks/Van
You may have come across a bakery van at some point. So, rather than getting a brick and mortar store, you can get a van to sell different types of baked food such as bread, cakes, etc.
This type of bakery is lucrative because you are not stuck at a particular location. You can always drive your van to any location where you can find your target audience.
v. Home Bakeries
This is another type of bakery that is gradually gaining ground. In an era where every business is going online, you can carry out all baking procedures in your kitchen and sell them off online.
This is cheap to start because you don’t need to spend so much on setting up the business. The only thing you need is to purchase the needed ingredients to bake your delicacies.
vi. Bakery Cafe
This bakery offers more than just baked food. They go a little further to add coffee and tea to their offerings. Basically, a bakery cafe offers bread and other pastries with coffee and tea. In this type of bakery, there is a dining table where people can sit to have their meals.
b. Wholesale Bakeries
The wholesale bakery is another type of bakery and unlike the retail bakeries, they cater to a larger customer base. They sell directly to retailers who in turn sell to the final consumers.
Once you’ve chosen the niche you want to specialise in and the type of product you want to sell, you can then move to the next step.
Step Two: Register Your Business With CAC
The first step to structuring your business in Nigeria is to get it registered with CAC. Most times, unregistered businesses find it difficult to build trust with prospective clients. With as low as N20,000, you can get your bakery business registered with CAC.
You can either register it yourself or pay an expert to do it for you. One of the trusted firms that can help with your registration is ReDahlia, regardless of your location, your business will be registered and delivered to you.
Step Three: Draft A Business Plan
The next step is to draft a business plan that highlights the goals and objectives of the business and how to achieve them. Typically, a good business plan should contain the following:
a. Executive Summary
b. Enterprise Description
c. Product or Service Description
d. Industry Analysis
e. SWOT Analysis
f. Market Research
g. Financial Projections
A solid business plan can help you secure funding from investors or venture capitalists
Step Four: List Out The Equipment You Need To Start Your Bakery Business
It is highly recommended that you have experience with baking before starting this business. Either you have been trained or have worked in a bakery. You cannot substitute raw knowledge in this business. Otherwise, you can hire someone who is trained in this field.
Usually, a bakery should have the following items:
- Dough proofer
- Wood Top Work Table
- Proof boxes
- Racks and baking sheets
- Flour Sifters
Step Five: Rent A Space For Your Bakery Business
The type of space you’ll need will largely depend on the type of bakery you are starting. For instance, if you are starting a van bakery, you’ll need to purchase a van and probably hire a driver for it.
On the other hand, if you are starting a home bakery, which is a good way to start, you may not need a large physical space other than your home kitchen. The online space and a delivery company will help to get your product to your customers.
But, if you are starting a traditional bakery or pastry shop, you can go for a commercial space. Rent a property and get the necessary lease agreement signed. Before signing your lease agreement, read through or get the service of a lawyer to ensure that whatever you are signing does not hurt your business in the long run.
In addition, choose a location that brings you closer to your target audience. A busy environment where there is high foot traffic is not a bad idea.
Other things you need to consider when renting a space include:
- Accessibility to space
- Health regulations
- Safety and crime rates
- Size and space requirements
- Proximity to customers and suppliers
Also take note of the following when choosing a space
- Your Bakery should be located far away from drainage and high pollution factories
- It is a requirement for every bakery to have a cloth room where your workers have a change of clothes.
- Your bakery should have heat extractor to expel heat from the kitchen
- Space must have a bakery, storage, and administrative section
- You must have fire extinguishers and emergency exit for safety purposes.
- Your bakery should also have smoke detectors
Step Six: Research The Relevant Licenses, Permits And Regulations
Running a bakery business is most times compared to running a fast-food company. Hence, the regulations can be heavy sometimes. Apart from registration with CAC as discussed earlier, you will need to register with relevant associations such as the Association of Master Bread Bakers (AMBB) in your local government area.
Also, thorough inspection of your location will be carried out by the Association of Master Bread Bakers and The National Agency for Food and Drug Administration and Control (NAFDAC).
Usually, the inspection and approval of NAFDAC take between 6 months to one year but the Association of Master Bread Bakers is continuous for as long as the bakery exists.
Additionally, you’ll need to provide the details of your suppliers to
NAFDAC and AMBB because they want to ensure you are using standard equipment for your productions.
Remember to research if there are other regulations aside from the ones mentioned here. This will mostly depend on your location.
Step Seven: Hire And Train Staff
The size of your bakery will determine the number of staff to employ. If you are running a standard bakery, for instance, you may need to employ a front-end personnel that will accept orders, then two or more persons that have formal training or bakery experience to oversee the actual baking.
In addition, you may want to hire some personnel to handle the dishwashing, mixing of ingredients, product packaging, and other menial jobs in the bakery.
Step Eight: Market And Grow Your Bakery Business
The aim of every business is to grow and remain profitable. There is a need for a good marketing strategy if you want your business to be discovered by prospective clients. Both new and existing businesses need solid marketing plan to survive.
While drafting your business plan, you must have done your market research and this should serve as a guide for you to follow. Additionally, there are marketing agencies whose job it is to advertise your business to your target audience.
But, if you cannot afford a marketing agency, you can attract your prospective clients through these tested and trusted channels.
a. Word of mouth marketing
b. Social media advertising
c. Sharing of flyers, handbills, and posters
d. Pay-per-click marketing
e. Email marketing
g. Referral/affiliate programs
h. Reviews/testimonials collation
i. Get listed on relevant directories
Threat To The Bakery Industry
1. People Are Becoming More Health Conscious
We are in an era where consumers are beginning to be more health conscious, and many are demanding for more gluten-free, low carbohydrate, whole grain, and organic foods.
Many are substituting baked goods with nuts, yoghurt, and fruit bars. Hence, bakers should factor these in their plan. You can have a section for healthy baked foods for health-conscious people or those watching their weight.
2. Profit Margin May Be Low
Another threat is that the profit margins are often quite small. When you consider the labor and utility costs of running a bakery, there is a possibility that your profit margins on some products could be under 5%.
3. The Cost Of Ingredients Is High
Baking ingredients are quite expensive and you’ve got to purchase these ingredients before any baked goods can be produced. Meanwhile, there’s no guarantee that you’ll sell all of your baked goods every day. This is why intense marketing is a necessity in this line of business.
Advantages Of A Bakery Business
1. High Traffic Locations Can Make For Easy Profits
If you can succeed in choosing a good location and can bake delicious food, you are halfway to making huge profits. The aroma of baked food can make anyone feel hungry and subsequently stop to buy.
2. You Can Start Out From Your Home
To start a bakery business, you don’t necessarily need to own a space. But, you will still have to adhere to regulations and get your license. However, starting from home will allow you to save some money and start with lower startup capital.
3. It Is Easy To Gain Customers
Practically, if people try your baked food and they enjoy it, they will return and also tell others about it. As more and more people try your baked foods, the more your customer base will keep increasing.
In conclusion, it is no hidden fact that the bakery business is one of the lucrative businesses anyone can start. Needless to say, the demand for baked products will always be on the rise, and so will the need for bakeries. If you are interested in starting a bakery business, the best time to start is now!
Do you run a bakery business? Are you thinking of starting a bakery business? We will like to read your insights in the comments. Also, reach us if you need to develop your business model for your bakery business.
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