Opening a bakery is no small feat, so we want to help those in search of a bakery business plan in Nigeria. Find out what steps you need to take to open your own bread bakery, the equipment you might need and what risks you should be aware of before starting the business.
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Business plan for bakery in Nigeria
As any business plan goes, we can only offer you a general understanding of what you should expect if you want to open your own business. In this bakery business plan example you can find the general information and recommendations for opening a bread bakery, so if that is what you have been looking for, let’s get to it!
- Learn more about baking business. This is incredibly important, as you cannot jump into something you have no knowledge of. Learn how things usually work, consult specialists, even find out how the bread is made step by step before you go any further.
- Create a business plan. As we cannot predict your desires for your business, we can only offer advice. You will have to do the rest yourself, such as deciding on the scale of your business, its location and the rest. Depending on the scale, you will also need to figure out how many workers you will need to employ. Depending on the location, you will need to find interested buyers in the area. Calculate how much money you are going to need and create a feasible business plan.
- Find funding. If you already have enough money to open the business on the scale you want, great. If not, it is time to bust out your business plan and find someone willing to sponsor you. If you have done a good job and created a good plan, you can easily find investors or get a loan at a bank. If you are not going big, you can also ask your friends and relatives to help out with your startup.
- Find a good spot for your factory. This is not the most essential step, but getting a good location for your factory can improve your chances of attracting more buyers and selling your product quicker. The closer your factory is to potential buyers, the more sales you'll make
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- Build your factory. Depending on the size of the business you are going for, this step may vary for everyone, but you will most likely need a baking oven, flour mixer, slicing machine (if you are making sliced bread), baking pans, bread wrappers, KVA generator, and a supply truck. This basic equipment is used by pretty much all bakeries, but you can always add some more machinery if you feel it is necessary.
- Get NAFDAC-approved. Without the approval from National Agency for Food & Drug Administration & Control (NAFDAC), you cannot sell any food-related products, so until you get it, your business will not be able to bring you any profit. Get on it as soon as you set up your factory to avoid dead time.
- Hire workers. You will most likely not be able to take care of everything on your own, so you should hire workers for your factory. Try not to hire the cheapest people available, as it might affect the quality of your product and, in turn, the profitability of your business.
- Advertise your business. When everything is in order, and you are ready to start making bread, it is time for you to find some buyers. Run an ad that can attract them in your area (banners, flyers, online ads, etc.). Make a trial batch of bread to let your clients try it for themselves. As soon as you find people who want to buy your bread, your business is ready to be run!
How profitable is bakery business in Nigeria?
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Now, of course, the profitability of your business depends solely on you (how you run your business, the scale you decided to go with, success on the market, etc.), but let’s calculate the approximate profitability of an average bread bakery.
It costs around ₦80 to make one loaf of (sliced) bread. Bakers can sell it for ₦130 and make ₦50 profit. Assuming a bakery is producing 50,000 loaves of bread per week, this means ₦2,500,000 per week. That said, even though this amount does not include the cost of production (₦80 per loaf), this number still has the running costs.
To get to the final profit, we need to subtract all the expenses associated with production. For instance, the bakery has spent ₦50,000 on diesel generator, ₦100,000 on the fuel and maintenance of the supply vehicle, ₦100,000 on staff costs and somewhere around ₦50,000 on miscellaneous expenses. This adds up to ₦300,000, and if we subtract this number from the ₦2,500,000 of gross profit, we end up with ₦2,200,000 net profit.
As our bread bakery business plan proves, running a bakery business is a rather profitable venture. However, it is not without its risks.
Risks associated with a bakery business
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So what risks can you expect if you want to open your own bakery? Here are some of the most common issues bread bakery business owners have to face:
- The product is easy to mess up. If you cut the costs on hiring inexperienced workers, your bread might get burnt, or the recipe could be messed up, leaving you with unusable product and significant losses. Of course, this could also happen accidentally, but just to be safe, do not hire cheap workers, as it might cost you more in the end.
- Bread spoils fast. You need to have a steady system of buyers who can take the bread off your hands as soon as it is ready, as even one day is too long if you want your product to be good. So before you go full on into the production, make sure you have the buyer situation figured out.
- Prices change. While it does seem rather attractive that you might be earning up to ₦2,500,000 per week, keep in mind that prices tend to fluctuate, so you might be a millionaire one week and see the bottom of your wallet next week.
- Be wary of thieves. Theft comes in many shapes and forms, so you should be wary that your people might be stealing right under your nose. Of course, there is no need to be paranoid, but if you see sudden losses you have no explanation for, maybe it is time to check on production and see who is pocketing stuff.
This has been just a bakery business plan sample, so if you want to start a business, you need to do much more, make sure you are aware of all the risks and calculate every detail you can before venturing into the bakery business. That said, we wish you best of luck in your endeavour!
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Source: Legit.ng