Bakery Business in Nigeria: How to Start in 2021
A bakery is any factory where foods made from flour are produced. This includes bread, cookies, cake, pastry and others. The bakery business is one of the most profitable businesses in Nigeria. This is no surprise, Nigerians eat a lot of pastries and baked foods, most especially bread. Bread is the fastest and easiest meal to make. Bread does not require any form of preparation on the part of the consumer.
It can be eaten with beverages or other foods such as moimoi, akara or even stew. It is also one of the cheapest meal which many can afford. A small loaf of bread can go for N100. Bread is a common meal staple, often used as breakfast in many Nigerian households. Most importantly, bread is eaten by both young and old. This makes bakery business a very lucrative one in Nigeria.
Statistics show that over 10 million loaves of bread are being consumed daily in the commercial city of Lagos alone. You can only imagine how much profit you can make on such a business in whatever state in Nigeria you choose to start. The bakery business is such that you do not have to be scared about the availability of market because bread is always in demand. However, there are many other factors to put into consideration if you want to set up a bakery business.
Who can start a Bakery business in Nigeria
Starting a bakery business requires more than simply having a passion for baking. It entails business acumen in order to turn in profits, hard work, resilience, and good project management skills considering the bulk of bread to be produced daily.
The bakery business does not have to do with making bread only. One can also make other pastries such as doughnut, cake, finger foods. However, the most common is bread making.
In order to start a bread bakery business, you need to have enough capital to buy the needed equipment. Although, starting a bread business is not capital intensive, there are equipment that must be put in place.
How to start a bakery business in Nigeria
If you want to start a bakery, you will first need to get trained on how to bake. If you already are a baker, you could upgrade your knowledge and skills by applying to a catering school where you will be taught how to do things on a more professional level. If you are not a baker and you have no experience in the baking business, you can still go to a catering school where you will be taught from scratch how to bake professionally. Baking on a commercial level is quite different from baking for yourself or the family. Professional training will teach you about food processing. This will help you understand the intricacies of the food business. The extent of your knowledge in the baking business can be a determining factor in rate of your success or failure in the catering business.
Make a detailed Business plan
The thought of starting a business can be a very exciting one, however, you must tread with caution. Before you set up a bakery in Nigeria, you should write a detailed bakery business plan. A detailed business plan will help you answer questions and challenges you may meet in the future. A good business plan will lay out the structure of the business, the type of bakery, products to be sold and at what rate.
Below are important items that should be included in an ideal baking business plan:
Planning & Setup
As is often said, “Whoever fails to plan, plans to fail”. In order to set up a successful bakery, your business plan must include budget, reach of customers, market size, location of the company, organization and structure, business management and many more.
Source for capital
The capital needed to set up a cake business depends on the scale at which you want to set up. You will need just enough to get the equipment to get you started. However, the more financial investment you put in a bakery business, the higher the profit.
For example, it cost about N80.00 to produce the standard sliced bread in Nigeria. The average bakery sells at N130 to suppliers which gives a profit of N50 to the bakery.
The suppliers in turn sell to retailers at the cost of N170 and make N50 gain per loaf of bread. The retailers also sell between N200 to N220 to the final consumers. This means that N50 is the average gain for the bakery and the middlemen at every stage from production to the final supply.
Below is an example for a bakery with an average production of 50, 000 loaves of sliced bread weekly. A bakery with many customers can produce and sell about an average of 50,000 loaves of sliced bread weekly. When you multiply 50 by 50,000, the weekly profit for the weekly production and supply is N2, 500,000. After this, you will have to subtract the costs of other expenses. Below is a rough estimate:
Cost of production- N500, 000
The cost of fueling your diesel generator for the week – N50, 000
Cost of fueling and maintaining the supply vehicle – N100, 000
Cost of labor and staffs welfare per week – N100, 000
Damages and other miscellaneous expenses – N50, 000
Other costs that can be incurred include cost of advertising.
When you subtract all these from the initial N2.5 million profit; you will have N2.2 million left as your profit for the week.
These figures might look large, but it only goes to show that the amount of profit you will make in a bakery business depends on how large the business is and the investment already put in.
Once you have the required capital to invest in this business, you can start your bakery. Ensure you budget 7-12 months working expenses. This is what will help sustain your business before you start to make profits.
Decide on the location of the business
The location of a bakery is very important and can be a determining factor in its success or failure. The environment where a bakery is located should be hygienic and easy to access.
If you want to go beyond a home bakery, then you have to look for a good workspace.
You need to define the niche of baking you will be focusing on, in the business plan. Writing out future plans will help you know what you are planning for. This includes the variety of bread or pastries you want to go into. Here, ensure you give room for expansion and growth.
In your baking business plan, you have to include who your target audience is, that is, the profile of people you expect will patronize your business, where they are and how you intend to find them.
There is no business idea that does not require investment capital, no matter how little it is. This is the reason you will need to discuss your means of getting capital and how much profit you intend to makeover a period of time.
You need to set realistic goals for your baking business. Writing out your goals will help you stay focused towards achieving them within the set period of time.
The bakery business is a very competitive one, therefore, you cannot joke with marketing strategies. Ask questions such as, “How do I intend selling my market and getting ahead of my competitors?”
Your bakery business must be registered with the corporate affairs commission. All you have to do is come up with a business name, check if the name is still available and has not been taken up by another business and then have it registered. You will also need to obtain a license from NAFDAC because your business has to do with serving food to the public.
Choose a suitable location
A good location is important for a bakery business. A bakery should be located in a city or town where retailers can easily access. If a bakery is located in a remote area, there will not be enough chance for growth as it will be difficult to be found. You can always rent a building that is suitable for baking. Although land and rent costs much in cities, it is usually profitable for your business. It is also important that the road to your bakery is accessible. If retailers experience much trouble getting to you, they will rather buy from another supplier.
After training well, ensure you bake nice, fluffy and clean breads. If your bread is good and branded properly, people will patronize your business.
Get equipment and hire labor
You cannot do everything alone in a bakery business. You will need more hands with the baking, packaging, logistics and other aspects of sales. It is important that you hire the best hands to do the job. In fact, you do not necessarily have to be a baker to start a bakery business in Nigeria. Some hire professional bakers and pay them while they run the bakery. You only need to make sure the bread you produce meets NAFDAC approval requirement.
Buy the necessary equipment
Below are the necessary equipment needed in setting up your bakery.
A baking oven is used to produce bread. You can buy the industrial baking oven which is used by professional bakers who make bread in commercial quantities use. An industrial baking oven might be expensive but saves time.
The flour mixer is the device used to mix the flour and other ingredients into pastry. There are local mixers and there are standard electronic mixers. You can always go for the one that you can afford.
If you intend to produce sliced bread, then you will need a slicing machine. Sliced bread is the most popular and most purchased bread in the Nigerian market. This could be because it is easier to share in the family. You will get more profit baking sliced bread.
You may need to buy or design baking pans according to your needs. However, some heavy ovens do come with baking pans. Make sure you clean your baking pans properly after use.
Bread Wrapper Supply
There are people who specialize in supplying wrappers. It is important you have one to always supply you with wrappers (otherwise known as nylons). Make sure you have made a deal with a wrapper supplier even before production commences in your bakery business. This will ensure a steady supply of bread wrappers.
Bakery business in Nigeria will require a generator. You need a large size, standby generator to ensure fast and consistent production in your bakery business.
Other items needed in a bakery include:
- Milling machine
- Delivery van
- Ceiling and industrial fan
- Chopping table
- Slicer and pan cleaner
Every business needs to be marketed properly. Promoting your bakery business is key to increased brand awareness and sales. Marketing can be done via flyers and posters, social media, adverts on a local radio station, etc.
A bakery business must take its delivery method seriously. First, you must be able to meet up with demands as at when due. You must also be able to guarantee that the baked bread get to the customers at the time it is needed. This is the reason a good understanding of project management helps in the bakery business.
You may need to buy a supply truck to help you transport and market your bread. Use your truck to sell bread to customers.
The bakery business in Nigeria is a profitable business that has gone on for years and does not seem to be waning any time soon. However, it requires research and effective marketing in order to be successful.