Starting a bakery shop needs a clear vision about the type of bakery you want to start, finding a proper location, fixing suppliers, business registration, and obtaining key licenses. You also need bakery shop software for managing billing, promotions, inventory, customer relations, and accounting.

The best approach is to create a proper checklist and understand the intricacies of starting a bakery business in India. If you are reading this article, it means you are already trying to learn the best ways to start your home-based bakery shop, an elegant bakery store, or a large-scale bakery retail chain.

This guide covers everything you need to know to start a bakery shop business in India. From key checklists to SOPs, know how to start a bakery business the right way.

How to Start a Bakery Shop?

You may be a home maker who wants to turn a hobby/skill into a thriving business, or an entrepreneur looking to start a bakery chain, or simply a business person wanting to enter the bakery shop market. You may also be an established bakery shop owner wanting to go digital. This guide is for all of you.

With the right steps, planning, and attention to all details, you can start and scale a bakery business in the fastest and frictionless way.

Follow the steps and checklists below to start your bakery:

Step 1: Choose a Bakery Format

Bakeries are of multiple types you first need to decide what type of bakery you want to start. The type of bakery shop model impacts the starting costs, registration types, employee requirements, and supplier needs. 

You can choose from the below: 

Online Bakeries	Home Bakeries	Online Bakeries Bakeries Shop	Bakery Chain
– Delivers online only – No physical store required – Only Bakery Kitchen is required – May sell items from third-party bakery shops	– Started from home – No store rent or buy costs – Ideal for homemakers – Limited customer footfall	– Physical shop required  – Direct customer visits – Walk-in traffic  – Scalable	– Multiple-stores required – Higher investment  – More profit opportunities – More compliance prone – More suppliers required

Step 2: Know Capital Requirements

Once you have decided on the format, you need to know the capital requirements for your type of bakery. To calculate the exact cost

Once you have defined the type of bakery you want to open (home bakery, retail bakery/specialty bakery, online bakery, or a bakery chain, etc.), know that there are costs related to:

• Shop (rent/buy) depends on the location you choose
• Business registration costs: Registration for business, licenses, GST, etc.
• Equipment purchase costs (bakery ovens)
• Furniture costs: Interior design
• Stock purchase: Need to buy stock to make bakery products
• Marketing costs: Billboard, flyers, etc.
• E-store costs (for online bakeries and even for physical bakeries that also sell online)

Step 3: Choose the Proper Location

For bakery shops (other than home-based or online), choosing the right location for a bakery store is key for ensuring footfall, visibility, and less competition.

Proper business registration is a necessary step in how to start a bakery shop legally. Through thorough research, prioritize areas with middle-class residents, upper-middle-class residents. This is the target group that buys more bakery products like cakes, specialty gourmets, etc. Also, choose an area that has proper foot traffic and car parking spaces.

The location must be such that your bakery is visible from the road. Also, factor in rent prices or purchase prices. Check if there are other reputed or very famous bakery shops nearby or not. This will impact your footfall. Also, check supplier availability for your key ingredients at affordable prices.

Step 4: Take Business Registration and Licenses

1. Business Registration

Once you have decided on the place, the next step is to register your business there. Any business in India needs a valid registration for the legality of the business. You can register your business in any of the five categories below:

• Sole proprietorship
• Partnership
• One-person company (OPC)
• Limited Liability Partnership
• Private limited company

Don’t take business money in a savings account or without registering your business. Even home-based bakeries must register as sole proprietors and open a current account.

2. Licenses

Securing the following licenses is essential for the legal operation of your bakery business:

• FSSAI License: Essential for ensuring food safety in your bakery. This license is mandatory for all food businesses in India.
• Shop and Establishment License: For regulating work conditions and employee terms. (Includes PT and PRC in some states of India).
• GST Registration: Required if your annual turnover exceeds Rs 40 lakhs (or Rs 20 lakhs in special states).
• Health Trade License: Issued by the local municipal corporation to ensure your bakery meets health and hygiene standards.
• Fire Department Permission: Required for all commercial cooking spaces to ensure safety standards.

Licences ensure compliance in how to start a bakery shop without legal issues.

3. Documentation Requirements for the above licenses and registration

Various documents are necessary to fulfill the legal prerequisites for opening a bakery. These include:

• Personal Account Number for tax purposes.
• Aadhar card proof of identity.
• Rent agreement and utility bills for the place to register the business address
• Photograph of the Applicant
• Bank Statement of Applicants
• Various Affidavits may be required as per local regulations

Step 5: Get Interiors and Buy the Equipment

Interiors and furniture are your prerogative, but ensure it should be customer-friendly, aesthetically pleasing, and leave sufficient space for the billing counter, sales counter, and customer space..

Essential Bakery Equipment:

• Ovens
• Mixers
• Refrigeration
• Work Tables
• Baking Tools like measuring cups, scales, spatulas, etc.
• Bakeware requirement like various sizes of cake pans, bread pans, muffin tins, sheet pans, etc.
• For storage Ingredient bins, shelving, racks, and containers
• Packaging materials like boxes, bags, wrapping paper, and labels
• Cleaning Equipment sinks, dishwashers, cleaning supplies, and waste management tools

Step 6. Create a Checklist for Essential Bakery Products

Your customer must hear: ‘Sorry, this is not available’.

The most essential product categories that bakeries need to stock are:

• Bread: Various types including white, whole wheat, multigrain, and specialty breads
• Pastries: Croissants, puffs,
• Cakes: Birthday cakes, cupcakes, and specialty theme cakes
• Cookies and Biscuits: Chocolate chip, butter cookies, and other varieties
• Savory Items: Sandwiches, and pizza bases
• Seasonal Specialties: Festival-specific items like Christmas cakes, Diwali sweets, etc.
• Healthy Alternatives: Gluten-free, sugar-free, and vegan options

Plan Your Bakery Menu carefully by considering:

• Local preferences and tastes
• Unique offerings that differentiate your bakery
• Shelf-life of products
• Specialty products
• Profitability of each product
• Complexity of preparation and required skills

Step 7: Establish Supplier Contacts

Research and identify potential suppliers for ingredients by evaluating suppliers based on quality, reliability, and pricing. Establishing direct relationships with local farmers for fresh produce (if possible) can reduce ingredient costs and ensure fresh products.

• Set up accounts with wholesale distributors.
• Develop a process for regular quality checks on received ingredients
• Create a schedule for regular inventory checks and reordering
• Set up a system for managing perishable ingredients to minimize waste
• Establish relationships with packaging suppliers

Step 8: Recruit the Right Staff

Determine the number of employees required based on the size and scale of your bakery.

• For home-based baker: You can handle it alone
• For a small bakery: You might need a baker and a helper
• For a larger bakery: Staff requirements include a chef, cake decorators, cleaners, billing staff, etc. 
• For online bakery: Delivery staff 

Ensure all staff receive proper training in food safety and sanitation.

Step 9: Create a Happy Customer Base

An important step is to build a customer base. This is done by following the steps below:

• Train your staff to provide personalized service that makes customers feel valued
• Remember regular customers’ preferences and greet them by name when possible
• Handle complaints promptly and professionally, offering appropriate solutions or compensation
• Implement a point-based loyalty program to reward customers for frequent purchases
• Send messages for birthdays and anniversaries to customers
• Maintain strict quality standards for all products
• Keep an eye on food trends like gluten-free cakes, vegan cakes, etc.
• Create a feedback link with every bill
• Provide proper discounts and festive offers to customers

Step 10: Purchase a Bakery Shop Management Software

Last, but the most important step is to buy a bakery shop software. Bakeries have many operations to do. From early morning to late night, they have to operate the kitchen and shop and handle billing, customers, suppliers, inventory, stock, accounting, etc. Ingredient and recipe management are also challenging tasks.

Then, there may be visits from local authorities for sanitation, safety, hygiene checks, quality of products, etc. Manually handling all this is not good for your business, as it will waste a lot of productive time.

The best bet is to implement a bakery shop software that takes care of the A to Z processes of bakery shop operations.

Before you choose any software provider or software application for your bakery, keep the following points in mind:

Ensure the software has a module for POS, inventory management, CRM, business analytics, GST accounting, E-commerce store creation, and loyalty management.

Check if the software includes features:

Planning your menu is an essential part of how to start a bakery shop successfully.

• Billing & POS
• Payment integrations
• Shelf life management
• Expiry Management
• Ingredient management
• Recipe management
• Stock management
• Image-based POS
• Weigh-scale integration
• Stocking alerts
• Barcode generator
• Delivery management
• Birthday alerts & reminders to customers
• Alerts for best/least least-selling items
• Online store features
• Waste management features
• Compliance management features

Conclusion

Opening a bakery requires careful consideration of all the aspects mentioned in this guide. Smart bakery owners use bakery shop software, which helps them with all the workflows, activities, and compliance requirements to run a profitable bakery store. VasyERP’s cloud-based bakery shop billing software is designed specifically for bakery businesses of all sizes. VasyERP unburdens bakers from admin work and manages workflows like inventory management, CRM, shelf-life management, accounting, and billing. It’s a go-to software for businesses that want to run a profitable bakery shop.

Turn orders into delight: Bake more, and earn more with the smart bakery billing software by VasyERP.