Have a go at our Cake Shop Business Planning Quiz below. The results of previous respondents are then explained throughout this blog:

powered by Typeform

Having your cake and eating it has very much been a public trend in the UK for the past decade. The success of cake shops has risen like a perfectly baked cupcake with the quirky, boutique style establishments synonymous with the industry have sat perfectly alongside the resurgence of ‘country kitchen’ styling. Bingham table cloths and palette knives adorn many a home cook kitchen countertop and the small cake shop is a great small business for enthusiastic bakers to embark upon.

You have landed here because of your expressed interest in learning more about the cake shop business. Please enjoy the blog below and learn more about this ever more popular sector.

Industry Stats

The figure below shows some of the key industry stats for the UK Bakery Industry. The rise in the more niche independent or craft bakery has far outstripped the performance of the wider commercial bakery market. Passion for food combined with artistic flair has lead to a great number of new baking entrepreneurs trying their hand in business.

The UK has had an increased love affair small bakeries and cake shops from the early 2000s when the first Hummingbird Bakery was opened in Notting Hill, London. Borrowing some of the styling and methodology from our American cousins the premium nature of the service and offering elevated the once humble cupcake to a guilty pleasure of real luxury.

Just 6 short years after that original Hummingbird site opened the first series of Great British Bake Off hit UK television screens. Hollywood handshakes and awards for star bakers have fuelled a new generation of young entrepreneurs into planning their own bakery businesses.

The trend has continued to develop and the past year has seen yet further increases in the number of new startups entering the market. Amateur, home bakers are using their varied and unique personalities to cultivate different and alternate business plans, leading to a diverse and flexible market that seems only limited by business owners artistic flair and versatility with a piping bag.

 

 

The average space for a cake shop in the UK is just over 400 square feet. This allows for a simple retail counter area and some prep areas as well as providing enough area to display all wares and even a couple of sit in tables.

There are many different ways to operate the production of logistics of a cake shop business and each requires a very different business plan.

A cake shop can choose to bake onsite or if they are in a small unit can prepare consumables off-site. The finishing then may be done on site to add a little extra theatre to the shop or again this can be carried out at another location with the shop just there to sell the full completed product. Basic cakes can also be bought in and then bespoke decorated if the production element of the business wanted to be outsourced. A business owner may also want to differentiate between commercial and retail customers which would and another layer to any business plan.

There is, therefore, a multitude of ways to operate a cake shop business from any competitors before you even consider the physical product! The graphic below shows the most popular items offered in cake shops/craft bakeries. Finding a combination that works for any new business will require a good understanding of the local market and play to an individual’s own strengths.

It is a given that almost all cake shops will serve cake, though some may specialise in cupcakes/muffins as shown by the above graphic. Others still may specialise in pastries, taking customers around the world in a ship of rough puff and shortcrust.

Within certain areas of specialisation, there may be even further niches to be carved out. The cake targeted businesses may, for example, focus on celebration cakes for weddings and birthdays. Others may sell by the slice. The wide range of permutations and the inherent opportunity to put a businesses owners own personality into the offerings means there is still plenty of opportunity for innovative entrepreneurs even in a competitive market. provided they have a focused business plan in place.

The Average Cost of Cakeshop Spend

With the ever-increasing popularity of baking it is no surprise to see average spend on baked goods on the up. Cakes for special events such as weddings can retail upwards of £400.

An added premium has also come by way of the incorporation of unique ingredients as well as sourcing raw materials from organic and ethical suppliers

How Do Cake Shops Get Financed?

Just as there are many ways to bake a cake so there are many ways to start a cake shop business. As mentioned previously there is a number of ways to differentiate yourself in the market and by association a range of opportunities to fit all types of budgets. A new business with a prominent high street site and on-site baking facilities may well cost upwards of £100,000 but small outfits utilising shared space and off-site preparation can cost much, much less.

Diana started Cupcake Chic with a Start-up loan of just £12,000. Operating from a small retail shop the business sells extravagantly decorated cupcakes and cakes by the slice all of which are baked and prepared from a home kitchen. The future plan is to expand into a larger commercial sized bakery unit in a nearby industrial estate, saving the needed for any further space at the business’s current location. This success and opportunity to expand the business was born out of a highly focused business plan

The table below shows the main sources of business finance and their associated percentage. In some cases, for larger projects, businesses may need to obtain finance from more than one source.

The layperson may be misled into thinking a fully written business plan would only be a requirement if looking for outside finance. Whilst it is true a solid business plan would be a pre-requisite for any form of form debt or equity finance the value of having a quality business plan cannot be underestimated. Even for those self-funding, a viable and robust business plan is a sure way to keep focused and accountable which will ultimately lead to better business decision making.

Importance of a plan

As there are so many potential variations in a cake shop business having a clear business plan will go a long way to ensure there is a focused vision and ultimately prevent any decisions being made from emotion or reaction. Baking itself using plans when following recipes and the same importance can be applied to the overall business. Don’t allow your proposed business to be left behind by not considering the investment of a professionally written business plan.

So what can we say about starting your own cake shop?

Pros

  • Industry trending strongly
  • Lots of various permutations to the main business model
  • Can be started on a limited budget

Cons

  • A rising number of competitors
  • A good understanding of daily supply chain and cash flow required

 

How you can succeed

The best way to get ahead of the competition and eliminate the biggest unknowns and risks when starting your own cake shop business is to invest in a high-quality business plan. The investment is invaluable. We at MyBizPlan provide the highest quality and yet lowest cost business plan in the UK, for a minimal outlay you can obtain a high-quality, visually stunning, financially robust business plan. It will give you a greater chance of seeking that vital finance and in the long run, could save you thousands. 

If owning and running a cake shop business sounds like the kind of business for you, get started with a Cake Shop Business Plan from MyBizPlan. See which of our solutions is right for you by having a go at our – Do You Really Need a Business Plan Questionnaire?

 

Let us tell you when this blog is ready

An example business plan will be emailed to you shortly