Do you want to start a bakery business? The bakery is one of the most popular food processing industries in India. If you enjoy baking, starting a bakery business can fetch you good returns.
But first, before starting this business let us have a look at whether the bakery business is profitable in India or not?
Is Bakery Business Profitable in India?
Bakery items are among the most consumed items in India. Most Indians prefer bakery products as snacks item along with tea and coffee. As a matter of fact, the bakery is the third most profitable industry in the food processing industry in India.
The Indian bakery market reached USD 7.60 billion in 2020. Experts predict that the market is further supposed to grow at a CAGR of 8.5% between 2021 and 2026. The market value is estimated to reach USD 12.39 billion by 2026. The availability of bakery items at low prices is driving the growth of the bakery industry in both rural and city areas in the country.
This data proved beyond any doubt that the bakery industry is poised for good growth in the coming years.
Here are the 10 Steps to Start a Bakery Business in India
Here are the steps to start a profitable bakery business in India:
Understand the Local Bakery Market
This is the first step to undertake for any individual looking forward to starting a business venture. Do local market research and collect information about the variety of items being sold, the price of items, and the level of competition from existing bakery business owners. Based on the feedback, plan your business, and try to explore the gaps as much as possible.
Choose the Type of Bakery Business
There are many ways one can start a bakery business. The decision will largely depend on your area of interest and your financial resources. The popular types are listed below:
a) Home Bakery – If you are short on budget or want to taste the water before jumping big, opening a home bakery is the best option. The mantra of the home bakery is simple. Start small and scale up as profit starts coming in.
b) Cloud Kitchen: This business type is a relatively new one and it requires not much investment. In this concept, mostly you will be baking items for some other brands. One can open a cloud kitchen hiring space or from your home too.
c) Bakery Shop/ Cafe: This bakery business format requires a larger investment. You need sufficient retail space for accommodating customers to have a food and hangout experience. Selecting a proper location is key to success in this business.
3. Create a Bakery Business Project Plan
Crating a business project plan is essential for the long-term success of any business venture. It not only works as a future map for the future course of action but also as the single-most-important piece of document for pitching for funds. It is advised to hire a professional project plan writer in developing the plan document.
4. Register Your Bakery Business
For the hassle-free running of the business, it is wise to register your business. Depending on the resources and scale of operation choose an appropriate business structure. There are different types of company formation structures that are available in India. The most popular are sole proprietorship, partnership, limited liability partnership, and private limited company.
5. Licenses and Permits
The types of licenses required will depend on the business format of your bakery business. But some licenses are a must to run a bakery business in India. They are the following:
- Company Registration
- Shop & Establishment License
- FSSAI License
- GST Registration
Suggested Read: Best GST Software in India
6. Equipment Required to Start a Bakery Business
There will be a requirement for different types of equipment to smoothly run a bakery business. Below is listed are some of them:
- Wafer-biscuits making machine
- Weighing balance
- Working table with an aluminum top
- Butter mixer
- Cutlery and Utensils
- Packing Materials
7. Cost & Profit Margin of a Bakery Business in India
The biggest components in calculating the startup cost of the bakery business are space rent and equipment cost. Other expenses are legal costs, manpower costs, software like POS maintenance, unit setup cost, and promotional cost. Below is an approximate cost estimation to open a bakery business in India:
- Rent Cost – Rs 30,000 to Rs 2 lac.
- Equipment cost – Rs 5 lac to Rs 15 lac
- Legal & License cost – Rs. 50,000
- Manpower Cost – Rs. 1 lac – Rs 2 lac.
- Cost of POS software – Rs 20, 000 to Rs 50,000
- Promotional cost -Rs 50,000 per month
Based on the above assumptions, one can start a small-scale bakery business in India with an overall investment in the range of Rs 10 lacs to 20 lacs.
It is without saying the profit margin will largely depend on the input cost of producing bakery items. However, one can expect a profit margin in the range of 20% to 35% from a bakery business.
8. Arrange Funds
If you already made arrangements to finance your bakery business, then no need for further worries. However, if you need any approach banks and financial institutions with your business project plan and apply for business loans.
Also, do not forget to apply for a business credit card. If used properly it is more than a handy source of short-term working capital requirements.
9. Hire Manpower
The number of personnel required to run your bakery business is subject to the scale of operation. However, you will need a minimum of four staff to run a small bakery shop. They are head chef, assistant chef, cashier, and leaner or housekeeper.
10. Go Online
Nowadays, having an online presence is a must for any business. Develop a website and create necessary pages like about us, products, and a contact address. In addition, create an online store so that customers can order products online.