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Bread is the third most popular food staple in most parts of the world. It is widely consumed across the continents by almost all citizens, ethnics and religions groups. Everyone likes the smell and taste of bread, especially when it is freshly baked. It is one of the quickest and cheapest food to get your hands on in time of hunger. With these in mind, we can safely conclude that starting a bread bakery business anywhere in the world is going to be a viable business.
Like I have always said, the best product to deal with is the product that is in high demand in the market and bread happens to be one of such product. About 10 million loaves of bread are consumed in Lagos everyday while the Americans eats 53 pound of loaves every year. Each French person is believed to eat a whooping average of 3 loaves of bread daily. Over all, 36 billion loaves of bread can only feed the entire world for just two weeks.
Therefore, if you are thinking of a business to invest into right now, I want you to consider starting your own bread bakery business. I once supplied sliced bread in Lagos and I know the profit we make back then. The same thing goes to bread makers, they make very impressive profit in the business, better than the average business in the country.
Bread bakery is not much difficult to setup once you have the financial capacity and able to meet the requirements and regulation by the authority. In this article, we want to explain in simple language how to start bread bakery business anywhere in the country but before we go ahead, let us first look at the profit potential as well as the potential risks in the bread bakery business.
The Profit In Bread Bakery Business
It cost about N80.00 ($0.50) to produce standard sliced bread in Nigeria. The bakers sells at N130 to suppliers and make N50 per bread. The suppliers sells to retailers at the cost of N170 and make N50 gain per loaf of bread they supply while the retailers sells between N200 to N220 to the final consumers. So, N50 is the average gain made by each of the parties involved at every stage from production to the final supply.
A typical standard bakery with good supply network produce and sell 50,000 loaves of sliced bread weekly on average. Now multiply 50 by 50,000 and what you get is the profit for the weekly production and supply – N2,500,000.
Since the cost of production have been taken care of by the N80. You just need to subtract the running costs to get your final profit. Lets say you spend the whole N500,000 for the running cost
1. Cost of fueling your diesel generator for the week = N50,000
2. Cost of fueling and maintaining the supply vehicle = N100,000
3. Cost of labor and staffs welfare during the week = N100,000
4. Damages and other miscellaneous expenses = N50,000
When you subtract all these from the N2.5 million, you will have N2.2 million left as your take home for the week. Can you now see why bread bakery business is considered one of the most profitable business in it’s category?
Risks Involves In Bread Bakery Business
Like most business on earth, there are some of the risks involved which you’d do well to be aware of. And being aware of these risks will help you plan properly on how to completely avoid or minimize them. It will also help you to properly plan your income and expenditure. Below are some of the popular risks in the business.
1. Your Bread could get burnt – Moment of carelessness by your workers could get you bread burnt easily which may result to high loss of money.
Install a smoke detector at all location of your bakery, because in our case all our night shift workers once fell asleep making about 5 flour bags of baked bread burn to ashes we were lucky the building didn’t burn down. So don’t over look little mistakes from workers otherwise it will come back to hunt you.
This is one of the major risks every baker must be aware of because of the potential danger it carries. But it’s a risk that could be avoided if you take proper precaution.
2. Spoilage – Because of the competition in the business and effort to attract more retailers, most bakers offers to accept back bread if it developed mold. Some retailers are so careless and ineffective in sells that they keep those bread unsold for long time only to return it when it develops mold.
When this happens, you are the final person to bear the cost and if it happens in large number, you may be out of business.
3. Price Fluctuations – Prices of baking raw materials is the most unpredictable as baking flour can change within days unannounced. When this happens, you buy flour at higher cost and still sell your bread the same price you used to sell because bread is a very sensitive commodity, you can’t increase the price arbitrary.
4. Police Harassment – Because bread is a ready made fast food, Police may stop your supply vehicle on the road even when you did’t do a thing and demand that you give them some breads. Though you are not under obligation to give but if you don’t, they may try to victimize you in other ways.
By the time you do that to and fro, imagine how many loaves of bread you would have lost? Road safety, LASTMA, and other agencies are equally there.
3. Theft – Internal and external theft by your staffs, people who may come into the premises, touts on the roads, and others may reduce your profit in the business.
How To Setup Your Bread Bakery
Having mentioned some of the major risks involved in the bread bakery business that you need to be aware of, let’s process to discuss how to get your bread bakery setup and the materials you need.
1. Get Training – To become a professional baker, you need training in bakery and food processing. Some people get their training by getting attached to a bakery to learn all the skills of baking from first hands experience. If you are fortunate to have worked in Bread Bakery, that will make things lot more easier as you must have learned the skill while working.
Look for a professional trainee who will train you in the art of bread making. Your success in this business depends on how much you know; do not trade knowledge for anything.
2. Prepare Your Business Plan – As they say: He who fails to plan, plan to fail. You need to have business plan that will guide you along the way. You can prepare it yourself or hire a professional to do it for you.
Don’t just assume you have everything in your head, lack of proper clearly written out business plan can make a business crumble within a short time.
3. Source For Finance – Bread Bakery business is a capital intensive business especially if you are starting it big which is my recommendation. You have to start big or medium if you hope to be producing quality bread that will attract good patronage. And starting big requires some good amount of money.
Once you have the required capital to invest in this business, you are halfway done. Make sure you budget 7/12 months working expenses; time you will require to gain ground before the profit starts flowing in. At this point you’ve started following your business plan.
4. Choose Location – This is important but not critical. While location in the city and busy towns allows retailers to come in and buy without having to travel distance, you can make up to this with good marketing and supply mechanism. If your product is good, well branded, and marketed effectively, people will find you no matter where you are.
So, weigh the situation carefully and look for suitable location that you think will be good for your business. Property cost higher in the major cities but well worth your business.
Note: People sometimes buy products based on the address. I personally have rejected some products because of where the factory is located. It may not be obvious but believe me it happens.
5. Build Your Factory – Here you need to engage the services of expert too. Your factory have to be properly planned and executed in other to meet NAFDAC approval requirement.
Bakery Equipment You Need To Acquire
1. Baking Oven – You need to go for the industrial baking oven if you can afford it. That is what professional baker who makes bread in commercial quantity use. It cost much but well worth the price and will make your work lot more easier.
2. Flour Mixer – Mixer is the device that mix the flour and other ingredient into pastry ready for baking. There are local mixers and there are standard electronic mixers. Go for the one that is suitable according to the standard of bakery you are setting up.
3. Slicing Machine – This is important if you intends to slice your bread. Sliced bread is the most popular and most respect in Nigerian market. Therefore, slicing machine is compulsory if you are baking in Nigeria or any other country like that.
4. Baking Pans – Some heavy ovens do come with baking pans but that may not be suitable to the size you wants to make. You need to buy or design baking pans according to your specification, I mean specification according to what is obtainable in the market.
5. Bread Wrapper Supply – You a well branded bread wrapper in constant supply. Make arrangement for this in advance before production commences.
6. KVA Generator – You’d always need a standby generator, very big one for that matter. Your production is sensitive and you can’t afford to joke with it.
7. Supply Truck – Then a supply truck to help in your marketing. There no way you will be able to market effectively if you don’t have at least one supply vehicle.
Get NAFDAC Approval For Your Bread Bakery Business
It is very sad that no bread currently produced in Nigeria that passes international health standard according to experts report. Everything shouldn’t be money first; do the right thing and then money will come and even surpass your expectation. Why give your fellow citizens poison in the quest to make fast money?
There is the challenge of unhealthy and unethical competitors whose warfare is price reduction. These bakers substitute ingredients like sugar (which is the most expensive ingredient) with saccharine because it is far cheaper to do so, without considering the health hazards of saccharine.
By all means, try and meet the international standard in your bakery business. I can assure you that if you do everything right, no matter how much money it take you, you are going to make plenty of profit in return and your business will enjoy good will from man and God.
Before you produce anything, you must obtain NAFDAC approval first if you are in Nigeria. If you are in other country, seek for the appropriate authority to get your approval. When all things is put in place, you will be good to go!