Ultimate Guide on Starting a Bakery Business in Kenya

Do you love baking?

Are you thinking about how you can use your baking skills to make money?

A few days ago, I met Betty who is in baking business and this is what she told me.

“I started a baking business and earned Ksh.2,000 in profits on the first day.

I went on to earn almost Ksh.500,000 a month in profits while baking from home.

In 2012, after trying my hands in the online writing world and feeling like I failed, I decided to start a baking business because I needed to keep living and paying my bills.

I wanted the side hustle money from baking because I know people love to eat.

I took my mum’s mandazi recipe and started baking mandazi with less than Ksh.5,000 shillings.

I borrowed the startup capital from a friend. He gave me Ksh.10,000.

I figured I must spend less than Ksh.5,000 so that I remain with the rest and not borrow again.

Instead of spending a lot of money on starting up the mandazi business, I bought a few packets of baking flour, baking powder, a kilo of sugar, a mandazi frying pan and cooking fat. Yes, I started with fat.

I spent about Ksh.2,000. I also bought plastic bags to use for bagging my mandazis.

I carried samples to give to my customers who included local shops.

On the first day of making and selling mandazis, I earned more than Ksh.2,000 in profit.

I said, “Look at what God does when you decide on doing something”.

If you want to succeed as a baker now, start with a niche market.

A niche market means starting with a particular product.

I started the mandazi business baking and selling mandazi only.

Ask what do people love eating and you can bake and sell?

What can you be known for as a baker?

When a customer eats your baked goods, they want to taste something unique and not everything everyone sells in the market.

Starting from a niche market doesn’t mean you are not exploring other options.

I started with mandazi and added cookies.

The more variety of products you make, the more money you make.

A baking business is a visual business, keep that in mind.

Customers will eat with their eyes before opening their wallets.

Take time to package your goods in appealing ways.

Use social media to your advantage with your baking business by taking customers behind the scenes.

Show customers what you do when they are not seeing.

This long article will help you understand how to begin a baking business in Kenya.

*Is Bakery a Profitable Business?*

How beneficial is a bakery business?

Can I make a living out of starting a bakery business?

How much money can I make from a bakery business as a profit?

These are some of the common questions entrepreneurs that want to join the bakery business ask.

A bakery business is a good place to start for anyone who wants to make good money from something they love doing.

The food industry has a wide customer base and you are highly likely to get a large and steady income flow from sales conversions.

A bakery business is very lucrative and you will smile back at this moment when you made your decision to start a bakery business in a few months.

*What is a Bakery and How Does It Work?*

To start, a bakery is a shop in which bread and other baked goods such as cakes are baked and/or sold.

When you start a bakery business, you will produce and sell flour-based food baked in an oven, for example, cakes, cookies, bread and pastries.

*What Bakery Business Can I Start?*

There are four types of bakery businesses you can start depending on how scalable you want your bakery business to be.

*1. Home-based bakery business*

This type of bakery business usually operates online.

You can start your bakery business activities from your home kitchen on a small budget with the recipes you have created and then sell the final product to your customers.

*2. Retail bakery business*

This type of bakery business is a walk-in storefront where people will walk into your physical store to buy your baked goods. They can also sit in and dine.

*3. Custom cake shop*

Here, you will be dealing with custom orders only where your customer will order a cake that they will later pick or be delivered to them on a set date.

*4. Commercial bakery*

This is also known as an industrial bakery business.

This type of business involves large capital costs and the production of baked goods is done on a large scale.

You can pick the type of bakery business that appeals to you most and start your bakery business.

*How Do I Start My Bakery Business?*

You now have the perfect business idea and you want to make the first step in starting your business.

Here is a step by step guide on how you can start any bakery business on your own.

*1. Do your research*

Establish the market gap in your business, look at the competition, the different pricing models and find out what is missing.

Are customers satisfied with the current prices?

What are their pain points?

What are your competitors doing?

What pricing are they using?

Is it fair to customers?

Doing market research and analysis will give you all the reasons you need to start your bakery business.

*2. Register your business*

Whether you are operating a home-based or retail bakery business, you need to get the required business license so that you are in full compliance with the law.

Since you will be dealing with food, you have to go through some health inspections and clearance before you start your bakery business.

You do not want to start your business and risk getting it shut down for failure to follow the government’s rules and regulations about your business.

*3. Plan*

You have to prepare all the recipes that you are going to use in your bakery business beforehand.

You do not want to start your bakery business when you have not tried and tested your recipes with friends and family to see if they are a good taste for your business.

You also have to plan ahead for the ingredients that you are going to use for your bakery business.

*4. Market your bakery business*

Once you have set up your bakery business, you have to market it widely and promote yourself so that you can have people making orders or visiting your retail bakery business.

When you market your business, you expand your customer base and also increase your business’s growth potential.

*5. Network*

Connect with industry experts through community events and baking competitions that are held every year.

You will not only improve your skills and product creation, but you will also make meaningful connections and grow your customer base.

*What Will I Do in a Bakery Business?*

A bakery business is more than just baking pastries and selling them.

You will take on different roles and responsibilities so you need to be aware of what you are signing up for.

This is what you will do on a typical day in your bakery business.

*Assembling your ingredients and preparing your baking space.

*Making sure your baked goods are well done.

*Interacting with customers

*Keeping track of the business expenses

*Operating the cash register

*Marketing your business

*What Do I Need to Start a Bakery Business?*

These are the requirements to start a bakery business:

*Basic ingredients e.g wheat flour, sugar, icing sugar, baking powder, eggs, milk etc.

*Utensils e.g baking pans, oven, nozzle set, icing spatula, whisk, other utensils.

*Packaging materials and labels

*Business license

*Business insurance for general liability and property insurance.

*What are the Expenses for Starting a Bakery Business?*

The bakery business has both initial startup costs and ongoing expenses.

We are going to look at these costs in detail so that you do not end up falling short when you come up with the financial budget for your bakery business.

1. Cost of ingredients. Should cost you approximately Ksh.12,000 when you are buying wholesale in bulk.

2. Cost of utensils. If you are getting new utensils, you can budget for Ksh.40,000 and more, if going full-commercial.

3. Other materials e.g packaging materials and labels, brochures, fliers, cleaning agents and miscellaneous should have a rough estimate of Ksh.10,000.

4. Cost of marketing and advertising. This will depend on the platform you are using.

5. Business license fees

6. Rent for your store facility

7. Utility bills e.g electricity

*How Much Does It Cost to Start a Bakery Business?*

Bakery business has varying capital costs depending on how large or small you want to start your business.

On average, you can start a bakery business with as low as Ksh.10,000 provided you are using your kitchen oven and equipment at home.

If you are thinking of going large scale where you will need more appliances and even labour, your bakery business should cost you Ksh.100,000 to millions of shillings to start.

*How Do I Make Money With My Bakery Business?*

There are two ways to make money with a bakery business:

The basic and most obvious way in which you will make money in your bakery business is through the sale of baked goods.

For every baked goods sold, you earn money on the price.

There is also an alternative way to make money with a bakery business.

This is through the sale of other complementary food items like cold drinks and beverages.

You can incorporate this in your bakery business and it is most favorable if you operate a storefront bakery business.

*How Much Should I Charge Customers?*

The amount of money you charge your customers will depend on the following factors:

*The cost of the ingredients

*Size of the cake

*Where the shop is located

*The labour involved

For example, if it costs Ksh.1,500 to bake a cake, you can sell it for either Ksh.3,000 to Ksh.4,500.

Always mark up your prices by doubling or tripling. Consider the number of hours it takes you to bake and include in your price.

Most bakers only consider ingredients then wonder why they suffer losses.

Consider how much your customers are willing to pay per product.

You can start from a niche then include other products to help increase your profits.

*How Much Can You Make With a Bakery Business?*

You can make over Ksh.100,000 a month or more by selling baked goods.

You have to make sure that you have consistent customers and overall sales conversions.

You can make more profit when you sell complimentary food like beverages and by adding a variety of products.

Don’t bake and sell bread only, which you started with as a niche. Add cupcakes, cakes, cookies, muffins.

The more your product selection, the more income you make.

Ensure the quality of your product is inspected before selling to customers.

Taste your food before selling, I know some food sellers that don’t taste their food.

Don’t sell what you can never eat.

*What are the Legal Requirements for a Bakery Business?*

There are some necessary permits and licenses that you need to first obtain before you can operate a bakery business.

You have to remember that since you are starting a food business, you will need to go through a health inspection so that your business can exist.

Your business will be discontinued or shut down if you don’t show compliance with the law.

Here are the legal requirements for a bakery business.

*Certificate of occupancy to lease or build your own commercial bakery

*Business insurance for general liability in case of fire. You also need property insurance and worker’s compensation insurance.

*Health inspection certificate, since you will be handling food e.g Food Handling Medical Certificate and Food Hygiene Certificate.

*What’s the Best Location for a Bakery and What Should I Consider?*

Always remember that location will make or break your bakery business.

You may have the best-baked goods, but if you do not locate well, you will be on the losing end.

You have to go for the best location, especially if you are operating a storefront.

This is what you have to consider for the best location for your bakery business.

*Accessibility – The area you have chosen should have transportation links like main roads and motorways for delivery of your baked goods to customers.

*Competition – You should consider starting your bakery business in places that have relatively low competition so that you may tap into the crowd of buyers on your own.

*Foot traffic – Start your bakery business in places that have high foot traffic so that you may increase the chances of people walking into your storefront bakery business.

*Growth potential – Do you plan to operate your Bakery business in the short term or in the long term? This will determine if you will pick a certain location over the other.

*Demographics – Who are your customers and what are their needs? Understanding customer demographics is important before you start your bakery business.

*Parking access – It is good to start your bakery business in a place that has enough parking space so that people may park their vehicles as they come into your store.

*Crime rate – Before you choose any location, check the crime rate in that given area. You do not want to suffer losses that will arise from theft.

*Business rates – Make sure that you can afford the rates of rent, utility and taxes in that area before you start a bakery business.

The best location for a bakery business is in the commercial section of a city or town.

*What Skills Do I Need to Start a Bakery Business?*

There are certain skills and qualities that you need to have to start a bakery business.

*1. Baking skills*

Unless you are planning on hiring people to do so, you should know how to bake.

If you do not know how to, you can take baking classes or watch YouTube tutorials and try it on your own until you perfect the skill.

*2. Interpersonal skills*

This is particularly important if you are starting a storefront bakery business.

You should be warm and welcoming to your customers so that they can build trust and loyalty with you.

*2. Customer service*

Practice excellent customer service in your bakery business.

This will determine if your customers will come back to your business or not.

If your customers are satisfied with your business, they will most definitely come back and bring more people along with them.

*3. Passion*

You should be passionate about what you are doing.

Starting a bakery business can be a lot of work and if money is your only motivating factor, you will not survive in this business.

*4. Financial management*

You have to know how to properly manage and keep your books of account.

Check to see all the cash flows so that you may know where your business stands in terms of revenue and expenses.

*5. Planning*

One of the skills that you need to have in your bakery business is being able to plan ahead of time what you are going to do, how you are going to do it and when.

That’s why it is easy to see many bakery business owners working crazy hours to make sure they are on schedule.

*Who are My Customers and How Do I Attract Them?*

You do not have to look too far for customers for this type of business.

Your target customers are mostly people who are looking to have weddings.

They can be literally anyone.

Your audience is spread out so you need to know how you can attract them as first customers to your wedding rental business.

Here are a few ways.

*1. Survey customers*

Examine the prospective customers that you have and prepare survey questions for them.

This will allow you to generate new leads.

*2. Use social media*

Leverage the connections you have built online to talk about your bakery business.

Go to Facebook, Instagram or Twitter and talk about your business or have your business advertisements set up so that people will contact you.

*3. Create a website*

Every good business has websites.

Your website should have content about your bakery business and you should optimize it so that it appears on top of the lists when someone searches for it on Google.

*4. Word of mouth*

Be the best bakery business in town that everyone knows about and within no time, people will start visiting your storefront bakery business or making orders for pickup or delivery.

*5. Offer free gifts and discounts to customers*

This is the fastest and surest way to attract people to your bakery business.

*6. Business Listings and Directories*

Make your bakery business available on sites such as Google or Food Advisor so that people can come online and search for your business easily.

Create a business profile, showcase your baked products and ask for customer reviews if you want to make it to these directories.

*7. Networking*

Connect with other industries, participate in local and community events and meet new people.

You will get more clients and leads in this way.

*8. Use flyers and postcards*

Use postcards and flyers with good branding, details and direction and contact information so that customers may easily find you.

*Advantages of Starting a Bakery Business*

These are some of the benefits of starting a bakery business.

*Loyal customer base – It is easy to get a loyal customer base from a bakery business because once your customers have a taste of your delicious baked goods, they will come back for more.

*More customers – The bakery business has a sustainable market. When you set your business in places of high foot traffic, you will have more customers coming into your business every day.

*Low capital costs – Since you can start a bakery business at home, you do not have to incur heavy startup costs for a storefront bakery business. You can easily work in the comfort of your home.

*Specialization – You can choose a niche market for your bakery business. You can either bake cakes exclusively for birthday parties, weddings or graduation events.

*You can start small – Starting small means just setting up your bakery business from home then expanding outwards if that is your goal.

*High growth potential – Most bakery businesses today started small. A bakery business allows for expansion and growth more than any other business. This is a good thing, especially if you are operating a bakery business as a full-time job.

*Disadvantages of Starting a Bakery Business*

These are the problems and challenges that you will face when starting a bakery business.

*High competition – It is no secret that so many people today are starting their own bakery businesses. You need to know how you can gain a competitive advantage and grow your business.

*Profit margins are often too low – Sometimes the profit margins for your baked goods may be too low and it may be difficult for you to recover all your expenses.

*Crazy working hours – You may need to wake up earlier than usual to prepare orders or sleep in late in the night as you get yourself ready for the next day.

*High cost of ingredients – Sometimes the cost of ingredients may be high, especially if you are purchasing at retail.

*Health regulations – You will need to go through a health inspection every so often and you stand a risk of having your business shut down or fined if you are not in compliance with the law.

*How Can I Run a Successful Bakery Business?*

It is not enough to just start your business. Ask yourself: what next?

What can you do to make sure that your business moves in continuity and you are successful in your business venture?

These are some of the ways you can start and run a successful baking business and make a good profit.

*1. Keep track of the best selling items*

Know what baked goods sell more and focus on producing them.

You will make more sales and in turn more returns in your bakery business.

*2. Change your menu*

Sometimes the thing that is holding you back is that you stick to the same boring menu.

It can be a little expensive to switch things up, but it is worth the risk.

*3. Market your business*

Always keep on promoting yourself and your business if you want to cover more ground, expand your customer base and have new customers visiting your bakery business and seeking your services.

*4. Try new artistic styles of baking*

If you have a creative eye, you can try out new cake designs for your bakery business.

Always remember that people are attracted by what they see first and if you can keep their gaze on your products, you probably will.be selling more.

*5. Offer complementary products*

You can start selling beverages such as coffee or fresh juice to go with your baked goods and earn extra cash from that.

*Why Bakery Businesses Fail and How to Avoid These Mistakes*

Starting a bakery business can be a bit tricky.

You have to know all the common problems and mistakes that most bakery business owners have made so that you may not do the same things they did wrong.

I will give you some tips and advice on how you can avoid these mistakes so that you can run a profitable and successful bakery business.

Statistics show that around 3 out of 5 bakery business startups fail.

If you don’t want to be another statistic, you have to know the mistakes that most bakery business owners make so that you can avoid them and steer your business towards success.

*1. Failure to cost your products*

You need to calculate the cost of your ingredients and the cost of the products so that you ensure that you remain fair and profitable to your business. If you do not, you will incur losses.

*2. Not utilizing waste*

Sometimes we have leftover products that you can reuse.

Not everything is a waste. Remember, you want to cut down on your expenses as much as possible.

*3. No market analysis*

Do thorough market research and analysis so that when you start your bakery business, you know you will be dealing with a clear problem in the market.

*4. Retail purchasing your ingredients*

Retail purchases are quite an expensive way to buy ingredients.

Always go for wholesale ingredients and get in touch with a supplier whom you can trust.

*5. Blind passion*

Sometimes you get so carried away by an idea that you do not stop to think if it is a good idea or not.

Ask yourself why you want to start this business.

If your reasons are solid, then you should go for it.

*6. Not improving on your skills*

Always strive to learn new baking techniques that are on trend so that you can beat the competition and run a successful bakery business.

*Profitable Bakery Business Ideas/ How to Make More Money With a Bakery*

When you start a bakery business, you may not want to do what everyone else is doing.

There are different bakery business ideas that you can try for a start.

They are highly profitable and very viable for anyone who wants to get into the bakery business.

Here are some lucrative bakery business ideas that you can try today for your startup.

*Food photography

*Baking classes.

*E-commerce baking business

*Food blogging

*Event catering

*Specialty ingredient sales

*Coffee shop business

*Holiday treat making

*Writing cookbooks and recipes

*Baking product reviews

*Cake mold manufacturing

*Final Word*

Just like any other business, starting a small bakery is not a smooth sailing venture. However, as long as you have figured out your target audience, get the required equipment, get the required ingredients, have your recipes in place, figure out your workspace, get all the required licenses & permits and a marketing plan, you are ready to go.

Written By
Justine Nyachieo
Business Man & Mentor

Leave a Reply