How to Start a Bakery in the UK

Disclaimer: Nothing in this article should be construed as legal, financial or tax advice. Please always consult a knowledgeable professional advisor.

Starting your own business is an aspiration for many. And for those whose life calling involves starting a bakery café, it’s a dream that most likely started at home, the seeds planted when cooking family recipes in their childhood kitchen. This is a dream close to the heart, but turning dreams into a successful reality does require careful planning. So, we’ve put together advice on how to create a bakery business plan.

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How to start a bakery business plan

In order to create a plan that best supports your bakery business, consider your objectives and the specific factors unique to your business, in addition to general operations. Writing a business plan is a good way to organise the steps you need to take. Some of the things a good business plan includes:

• Know the market. Understanding and explaining the market landscape includes following competition and trends in your industry and neighbourhood. Research what makes your competition strong and where there are opportunities for your unique selling proposition (USP) to shine. Know what your target customer is looking for and how you can meet those needs.
• Know your business. It’s also wise to have a strong company point of view and an executive summary, as well as deep knowledge of your product, management, and sales structures. A well-run business attracts customers.
• Perform a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Being prepared for potential roadblocks helps you visualise the future and avoid mistakes. Asking yourself the right questions is the key to a beneficial SWOT analysis.
• Determine legal and health and safety obligations. Knowing how to follow codes and obtain permits, register your business, and get a business licence in advance pave the way for successful bakery business set up. To start a bakery, UK laws include both business guidelines and food handling laws, and the process is similar to how to start a coffee shop.

How much does it cost to start a bakery?

Defining your start-up costs can depend on things like size and location. The costs of running a cake baking business from home, for instance, will differ from operating in a brick-and-mortar bakery. Once you understand the costs, you can know whether or not you are financially ready for your venture. Some possible costs to consider include:

• Location and space – Do you want a place where customers will stay and relax, or do you envision counter-only service? Starting a bakery café vs. how to start a small coffee shop bakery or how to start your own bakery business from home require different considerations and are very different endeavours. How important is foot traffic and word-of-mouth to your business, or are you an expert in how to advertise your cake business? Is the space ready for operations or will there be building costs in addition to rent and utilities?
• Inventory – Managing inventory is a crucial part of a bakery business’ financial health. There are many ways to organise inventory, but one of the best is through online inventory management systems specifically designed to track and edit your quantities.
• Labour – Paying your employees includes their hourly wages, but it also includes training, benefits, and insurance. These business operations are made easier with systems that help you set up payroll and organise employee management.
• Equipment – Bakery business costs include a lot of equipment. Some may exist in your location, but you will have to make sure you budget early on for things like worktables, proofing cabinets, dough preparation equipment, and bakery ovens.
• Design and interiors – The aesthetics of your space communicate the personality of your business. How you want people to feel when they walk in—whether it’s warm and comforting or sleek and polished, interiors are part of an overall bakery business plan.

How to take payments at your bakery

It’s important to be set up to accept all kinds of payment from day one. Knowing how to start a cake business or run a successful bakery business includes getting paid. This means seamless connection between online orders, in-store purchases, and catering invoices. Things to consider when taking payments include:

• Choose the right online store provider. If you plan to sell goods online, Square Online allows you to create a bakery website to sell and ship orders or offer Curbside pickup and local delivery. You can also sell on Instagram, Facebook, and more through the system.
• Use a bespoke POS for transactions. Customise the Square POS for your specific bakery business needs. It helps manage your sales, records, and inventory. Employees can easily learn the functions and customers enjoy a quick and easy checkout experience.
• Opt for a restaurant-specific POS. If your menu is more complicated or the workings of your business resemble those of a restaurant, the Square for Restaurants POS will help you manage menus, orders, and payments.
• Consider all your payment options. Other ways of accepting payment include Square Payment Links for at-home orders, Square Virtual Terminal enables you to process credit cards from your computer, Square invoices to create and track incoming and outgoing orders, and in-person contactless card readers.

How to reach and keep your customer base

Making people aware of your business is a crucial step in moving it to the next level. Customer retention after you get them in the door is step two. Here are some ways to get your name out there and keep your customers coming back.

• Set up social media. Learn how to advertise cake business on Instagram, Facebook, and Twitter. Consider targeted paid social media to increase the number of local people who will see your ad.
• Build a website. A good website is part of the overall customer experience. If they are searching for a great bakery business near them, and your competitor’s site gives a better impression and answers their questions, you just may lose that business. Or, if a customer recommends you and details like your address and phone number can’t be found online, that’s another lost opportunity.
• Deliver fast, easy service. No matter how delicious your pastries and cakes are, starting a bakery café relies on customer service. The customer experience is often only as good as the technology that gets customers through the line. Square Payments allow you to accept different methods of payment, including quick contactless payment, Apple Pay, and Google Pay. The all-in-one Square Terminal does it all in a compact, intuitive package.
• Accept feedback. Feedback software is included in the POS system and lets you communicate openly with customers to resolve any issues. You can also track feedback right from the Square Dashboard to see the bigger picture of what is working and what needs improvement.
• Stand out from the crowd. Think about what makes your business unique or what you could offer that is different. Companies like Aries Bakehouse in Brixton, for instance include local craft beers and gelato in their offerings, as well as picnic packs for takeaway. Consider free-from foods for customers with allergies, healthy and vegan options, or featuring locally sourced ingredients.
• Boost sales with online sales. Diversify your offerings and sell goods and merchandise from your website. Sellers like 400° Pizzaria adapted their business when COVID-19 first hit and they had to close the shop. They began to sell dry goods through their Square online store, which helped keep them afloat until they could open again. Similarly, TODAY BREAD began selling pantry staples from their online store and extended their café bike delivery to include homes during lockdown.

How to manage a cake business from home

Whether cake is your passion or you want to know how to start a bread bakery business, it’s important to have diverse service options and be able to adapt to changing times. With the rise of remote work, some might be wondering how to manage a cake baking business from home. The main differences between how to set up a cake business from home and how to run one from a storefront include these steps:

• Register as self-employed. You can register with the HMRC if you are running your business yourself, have more than one simultaneous customer, and sell goods and services for profit, among other considerations.
• Register your business. Within 28 days of trading after you start a bakery, UK law states you must register with your local authority’s environmental health service. You can do this with the government’s food business registration tool.
• Prepare your home for the job. Make sure your home kitchen or the space where you will prepare your goods meets the Food Standards Agency guidelines.
• Get permission from your landlord. If you plan to run your bakery business from home, you must get written permission from your landlord.
• Make sure you are insured. Liability insurance, both public and product, protects you and your business. Other types of insurance to consider are business contents, employer’s liability, and stock insurance.
• Keep close track. Tracking income and expenses can be difficult without the right tools, but it’s important to have everything in order for tax purposes and business management. The Square Marketplace includes many business apps you can sync with Square to keep your finances organised.

Whether from home or at a brick-and-mortar location, if you start a bakery in the UK, there is much to consider. With tools like Square POS and its dashboard feature, you can stay organised and ready to face the challenges and joys of owning your own cake baking business, from home or otherwise. You can truly sell anywhere with Square.