Statistics show that the average Australian consumes 75.2 kg of bread and bakery goods every year!
Owing to such impressive data, many individuals are interested in the promising bakery business in Australia.
Instead of building a store from scratch, they prefer to purchase an existing bakery. After all, this helps them access a store with basic equipment, the right layout, employees, and even a customer base!
However, a passion for baking and funds to buy the shop aren’t enough to succeed. For long-term success, you must be aware of and navigate the following common pitfalls!
1. Not researching the market
To buy a profitable bakery business, you must have a good idea about your options and the industry. For instance, do you want a small retail bakery in the neighbourhood? Or do you want a big commercial establishment where you serve a high flow of customers?
Bakeries sell a range of baked goods, such as par-baked goods, sourdough and artisanal breads, and vegan goods. Assess what’s popular among the target market and competitors’ strategies.
2. Limiting your search approach
Most buyers limit their search for bakeries only in familiar areas or immediate vicinity. They rely on word-of-mouth recommendations from their close network.
However, that narrows down your choices and leaves you with only a handful of options. You may miss out on way better opportunities if you don’t broaden your search.
While you rely on these methods, you must also consider seeking a bakery for sale in Australia through reliable online listing platforms. Seek a platform where businesses are categorised according to locations and type.
In a well-reputed platform, you will even get a preview of the bakery business, its offerings, and the strong suits, along with the asking price!
3. Not accounting for the costs involved
A common blunder of first-time bakery buyers is that they underestimate the costs beyond the purchase! You must consider other financial investments in the business, such as:
Supplies
Learn about the current expenses on food and packaging supplies and their production level.
Equipment
Examine what equipment they already have, their repair history and processes, and their expected lifetimes. Assess whether you need to replace or upgrade any equipment.
License, Permits, Vendor
Note what business licenses and food handling permits you need and their renewal prices. Check their vendor contracts and decide whether to continue with them or seek new vendors.
Renovation
Check whether the bakery needs remodelling to align with branding or basic renovation to maintain food and health safety standards.
4. Ignoring due diligence
Never skip due diligence before buying a bakery business. This includes investigating the business’ finances, reputation, and other practices. The most important areas to cover are:
Financial Records
Seek the bakery balance sheets, income statements, tax returns, cash flow statements, and profit and loss reports. You can assess the shop’s financial health accordingly.
Sales History
Study their sales history to learn about seasonal trends and possible downturns.
Lease Agreements
If the current bakery owner rented the shop, study the lease terms. Check whether they’re favourable and whether you can renew the lease under similar terms.
Employee Contract
If you buy the bakery along with the current staff, know about their employment terms, labour costs, pay, benefits, scheduling, and other relevant details.
5. Neglecting location and relevant details
A bakery’s location says a lot about its profitability. For instance, it must be on a bustling street, visible to the target audience, and accessible to customers with different needs.
Based on the location, you must also consider:
Demographics
Identify the customer profile and whether the bakery goods are according to their preferences. If not, profits will be low.
Competition
Assess the number of bakeries in the vicinity and whether they sell the same products. If yes, it’s difficult to attract customers.
6. Not asking enough questions
Before buying a bakery, ask the current owner these significant questions.
“Why are you selling the bakery?”
Know whether they are going out of business due to lack of demand or staffing concerns. In these cases, it’s better to avoid buying the shop, as you’ll also face similar challenges.
“How would you define the bakery’s reputation?”
Know what’s working great among customers and retain that. If anything isn’t on par with customers’ expectations, you can update it.
Conclusion
Purchasing a bakery is an exciting venture for aspiring entrepreneurs passionate about baking. However, you must always keep the above-listed pitfalls in mind and research thoroughly before settling for a bakery.
Once you’ve found the right shop, start the acquisition process and strive for success!
Read More Articles: The Hype With the Etsiosapp Release Date: What’s in Store?
