In India, we can find at least one bakery among two adjacent streets in every city. The bakery business has been booming in the country due to its simplicity along with affordable prices.
According to a study by IMARC, the Indian bakery market is estimated to rise with a CAGR of 8.5% between the years 2021 and 2026. The expected value that the bakery market would grow by 2026 is 12.39 billion.
If you plan to start a bakery shop with a bakery loan and profit from the customer’s sugar rush, here are some basic steps for you to follow.
Table of Contents
Decide on the Type of Bakery Business to Start
Based on your experience in the baking field, decide on which type among the five bakeries you want to start.
Home bakeries
If you are starting a business with a small investment, then home bakeries are an ideal fit for you. You can take a bakery shop loan under three lakhs for the raw materials and equipment required and start the business.
Storefront Bakeries
The most common types of bakeries found in India are Storefront bakeries. These bakeries require a tiny room along with space where customers can pick up goods. The investment for this would cost around 3-5 lakhs which can be easily obtained from a business loan.
Specialty Bakeries
These bakeries are a go-to option for people who have specialized in specific baking recipes. This shop does not offer many varieties but has a rich and unique take for all the recipes in their menu.
Bakery cafe
Bakery cafes are expensive to start because of the costs associated with renting areas, hiring staff, and maintenance. You can look for an MSME loan to aid your finances.
Online Bakeries
We have seen a surge in online bakeries since the pandemic, as 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 shop loan of a minimum of 3 lakhs.
Make a Bakery Business Plan
Creating a bakery business plan will allow you to understand streamlining operations and budget distribution.
Create a summary
This summary should consist of an overview of your business, including a mission statement, the restaurant’s legal structure, and history.
Analyze the industry
By doing this, you can identify your competitor’s strategies, find your target audience and finalize your bakery location.
SWOT analysis
Since you want to start a business, you should already know the importance of SWOT analysis. Analyze your strengths, weaknesses, opportunities, and Threats to devise a better strategy to establish your bakery shop.
Operations plan
This plan consists of how the bakery should function, the number of staff you want to employ, services that the bakery offers, and raw material imports. This plan will be extremely helpful in finalizing a budget to start your bakery business.
Financial plan
The most vital step to make your business a success is to have an accurate financial plan. Either it is a bakery shop loan or business loan, or MSME loan, make sure to note them down in your financial plan.
Devise a budget for your bakery
By estimating the costs required for the setup of your bakery, you will find your finances easy to manage.
- Equipment: The estimated costs for equipment is between INR 5,00,000 to INR 10,00,000. The grinders, oven, display boxes, packaging, and many more consist of the equipment for the bakery business.
- Rent: If you want to establish any bakery shop, the rent will cost INR 25,000 to INR 40,000 each month. However, for bakery-cafes, the rest is around INR 70,000 to INR 1,50,000.
- Staff: To employ staff for a normal-sized bakery, the costs can be around INR 1,20,000 per month.
- Advertising Costs: No business will gain popularity without proper marketing. To advertise your business, the costs can range from INR 40,000 to INR 60,000.
You may not be able to handle all these costs with just your savings. For this purpose, you can take a bakery shop loan or an MSME loan to kick start your business without financial problems.
Find an Ideal Location to Establish Your Business
The locality of your business plays an important role in its development. In India, shopping streets and market areas are the most favorable places to start a bakery business. The shops facing the main road are most preferred as they have high business turnover rates.
If you choose a 1000 sqft area, then the rent should cost around 60-70 thousand. You can take a business loan to invest in the property in the beginning.
Get Required Business Licenses
To start a business in India, you will require
- Food license: You can apply for this license on the FSSAI website online. If you go through third-party agencies to get the license done, it might cost around 5000 rupees.
- GST registration: If the annual turnover of your business is above 20 lakh rupees, you need to find a chartered accountant to get your business a GST registration.
- Health license: Municipal Health Inspector will cost you around 3000 rupees to provide you with a health license. The health license states that your business follows all the required health-related guidelines.
- Fire license: You can only get a fire license after setting up your place with fire extinguishers and obey all the safety protocols. Then a fire NOC form will be given to you by the fire department and has a fee of 1000 to 2,000 rupees.
These might seem like line additions to your final budget, but you cannot run a bakery in India without the licenses. It is best advised to go for a bakery shop loan if you start a business for the first time.
At ZipLoan, we provide a business loan or an MSME loan, or other funds within 3 business days and have minimal documentation. For more information on MSME loans, get in touch with us today.
Apply for Working Capital Loan
Frequently Asked Questions
You can apply for a quick business loan of up to Rs. 7.5 lakh from Ziploan to run a bakery shop.
Before you start a bakery shop you must do the following:
1) Create a summary
2) Understand the industry
3) SWOT analysis
4) Operations plan
5) Make a financial plan
Opening a bakery shop is profitable and you can easily make lots of money if plan and execute everything right.
A small-scale bakery shop can be started from Rs. 50K to Rs. 1 lakh. On the other hand, a big bakery shop will need at least 10 lakh to 20 lakh.
The most profitable bakeries have a gross profit margin of 9%, while the average is much lower at 4%.
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