Question

Topic: E-Marketing

Online Bakery

Posted by Anonymous on 12/7/2009 at 11:50 AM ET 250 Points
I've been thinking of starting a bakery. However since I don't currently have the cash reserves to open a physical location, I'm thinking of starting out as an online business as a way of saving up for an actual store eventually.
I've never been in business for myself before, so what are the things I need and need to know from a financial and legal standpoint? The goods will be baked in a commercial kitchen.
Also, would the recipes have to be my own, or could I use the ones in my cookbooks, legally and just make sure I include the sources from which the recipes came from somewhere on my website? About how much would all this cost, startup-marketing costs, website development, and all?
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RESPONSES

  • Posted by Gary Bloomer on 12/7/2009 at 12:30 PM Accepted
    Dear antcheek,

    From the KHE archives there's this:
    www.marketingprofs.com/ea/qst_question.asp?qstID=15851

    Then there are theses resources:

    www.bakeryonline.com

    www.helium.com/knowledge/4036-how-to-start-a-bakery-or-a-cookie-business

    www.ehow.com/about_4678196_starting-home-bakery-business.html

    www.yourbusinesspal.com/business_plan_bakery.html

    The goods will be baked in a commercial kitchen? Good. But how will you put those goods in front of your audience and how will you ship them?

    Who is your ideal customer? How will you take orders? How will you process payments? How far will you ship goods (locally, regionally)? Then there are the questions of how you'll ship to ensure delivery in perfect condition, what goods you'll offer and which diets you'll cater to, and what food hygiene rules and regulations you'll need to abide by (normally overseen by county, if you're based in the USA).

    But, before you do ANY of this and before you begin fretting about costs, do you have a business plan, do you have an idea of just how you'll get your message out, and do you have customers?

    If you'll be borrowing money your lender will want to see projections of costs, revenues, and potential break even points.
    If you can't supply these things your request for funding may be turned down. Why? Because as a business owner your goal will be to make a profit and businesses that cannot make a profit cannot pay back their loans, which makes them a bad risk in the eyes of the lender.

    But perhaps your biggest key is this: Do you have a starving crowd who are EAGER to buy your baked goods and can you offer something that people actually WANT to buy not just once, but over and over?

    This point underscores the LTV (life time value) of each customer. It's a point that many businesses that depend on repeat orders often ignore or are ignorant of.

    The point of running a business that depends on repeat business isn't to sell to a customer once, it's to sell to that same customer once, create a peak experience for that person, and to give them something they'll want to repeat.

    Customer loyalty has its roots in the soil of value and fulfillment. But its flowers are in the warm sunlight of unmet needs and something that was delivered but that wasn't advertised.

    I hope this helps. Good luck to you.

    Gary Bloomer
    Wilmington, DE, USA

  • Posted by Jay Hamilton-Roth on 12/7/2009 at 12:35 PM Accepted
    Contact your local SCORE or SBA chapter. They'll have lots of free information to help you and answer your questions about liability, etc.

    But unless you're only making specialty baked goods that are delivered locally, it'll be hard to sell your goods online. People want to smell/touch/taste your goods in advance. They want the goods to arrive quickly, undamaged, and while fresh-baked.

    As far as costs - the sky's the limit. The basics are rent, commercial license, insurance, website, phone, packaging, utilities, etc. (all of which vary around the world). Basic startup marketing vary based on how professional you want things to look.
  • Posted by NatashaChernavska on 12/10/2009 at 1:54 AM Member
    Hi antcheek,

    I believe you were given some good advise here. Here's my 5 cents (as web professional).

    In my opinion online bakery sounds like buying wall paint over the phone without seeing the swatches. Telemarketer tells you "well, it's beige" and you have no idea what kind of beige it is, there could be 100 shades of beige.

    Same with bakery. Especially if it's a totally new company just gaining the market and introducing its new product (no matter how well known the recipe is, it's gonna be a new product from a new company), it's gonna be much harder to enter this business doing it just purely online. It will take extra effort, extra money, and extra time, and you may get away with just a small % of this "extra", but it also may be hundreds %%.

    How much easier would it be to set up a real shop - people will not only see, they will SMELL, and they WILL BE ABLE to come in and TASTE - in the end, that's most important for your future customers - how it tastes.

    Online they will only be able to "look" - and only if the pictures are good. If you don't get an amazing web representation - you will waste not just money and time, but a chance to enter your market - a chance you are given just once.

    I would suggest you very carefully consider starting your bakery just doing it purely online. Calculate the cost of gaining devoted customers, don't underestimate the power of online and its disadvantages in the business where physical interaction with the product is crucial when it comes to decision to buy. Compare apples to apples not only opening physical store and advertising it and creating a good website and promoting it, but also difference in the cost of actually building your client base. What could be easy and almost at no cost with actually existing store may require a fortune and long way without it.

    Another thought could be that launching your bakery online first you may actually get somewhat (if not completely) different target audience vs the one you will get for an actual store.

    Think carefully, do the math.

    And Good Luck!

    Natasha Chernyavskaya
    Artographica
    Los Angeles, CA
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