Are you looking forward to starting a bakery business in Kenya, but have no idea on how to start and run the business to success? Well, this article will take you through the ins and out of starting the business, running the business, and a list of all potential risks and obstacles you may face in the venture. You will also learn about the required capital to start the business, and the licenses required for you to operate legally in Kenya.
Let’s dive in;
#1. Get a business plan for your bakery business
For a smooth start and proper funding from local traditional banks, you will need a well-designed business plan.
This business plan will guide you on how to start and run your new business. It will also enable you to focus on your goals and give a careful SWOT analysis (strengths, weaknesses, opportunities, threats).
Despite business plans not being a mandatory requirement, statistics have shown that they are invaluable in setting you apart from other entrepreneurs and increasing your chances of success in this baking business.
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#2. Look for capital depending on the size of the bakery you intend to start
To start a good bakery business in Kenya, you will need capital ranging between KES 700,000 and KES 800,000.
So how will this capital work towards setting up the bakery business?
Locate your business premises
Locating your bakery premises in Kenya will entirely depend on your budget. In most shopping centres and residential areas, you will be able to secure a room that suits your needs. Focus on security as your equipment will be very expensive.
Furthermore, you don’t want to get your freshly baked products stolen just before opening your business in the morning.
Since you are starting a new venture, it is advisable to invest only in what is necessary. You will want to focus on securing a safe space in a well-accessible apartment. In big towns such as Nairobi, rent may range above KES 50,000 while in smaller towns such as Nakuru, Naivasha, Eldoret, Kakamega etc., the rental fee may range between KES 10,000 to KES 50,000. For this tutorial, we will work with KES 20,000.
You will need to have at least 3 months’ worth of rent since profits will not start kicking in after one month of investment. All businesses take time and you will therefore need ample time to build your business, without a nagging landlord on your doorstep every month.
|Rent||20,000 × 3|
Apart from securing good premises and paying all related fees, you will also need to cater for all necessary equipment and tools that will be used in your baking hustle. Here is the breakdown:
Purchase important equipment for baking
Here is the breakdown of the most important tools and equipment you will need in your new baking business in Kenya, and their estimated prices.
|Proof Boxes of different sizes||70,000|
|Aprons and headgear||5,000|
|Dough Mixers (30L)||70,000|
|Sinks + Installation||10,000|
|Racks and Trolleys||4,000|
|Miscellaneous baking utensils||20,000|
Sort out business license expenses
All businesses in Kenya are required by law to be registered. For your bakery business, you will need to cater for the following licenses;
- E-citizen business registration
- Fire & Health Certificate
- Food and Hygiene Certificate
Have at least KES 20,000 for the above expenses. They may vary from county to county, and it is, therefore, advisable to visit your local Huduma centre for more reliable information.
|Tools & Equipment||645,500|
Are you worried that your finances are not sufficient? See out how to get a personal loan here.
#3. Find a market for your baked goods
After successfully starting your baking business, you will need to look for a market to sell your products. Consider approaching academic institutions such as high schools or universities, as they are the biggest bulk buyers.
Setting a good rapport with the institutional heads a few months before you start your business will be crucial for your market success.
Aside from educational institutions, advertise yourself to potential party organizers, e.g., wedding organizers etc.
If you fail to succeed in the two previously mentioned ways of finding a good market, then just ensure that your business location has high traffic that quickly converts into sales.
#4. Work on your distribution channels
Once you start receiving orders nationally, you will need to have an elaborate method of supplying the baked products safely and economically. Working with courier services is very affordable compared to having your vehicle and hiring a driver to supply your goods.
Make sure you have more than one option of delivery, just in case one transport system abruptly fails.
What are the advantages of starting a bakery business in Kenya?
- You are doing what you love – Baking is a fun way of passing time. If you convert your hobby into a career, you will always love what you do.
- Fast-moving bakery products generate income faster as compared to other businesses – Baked goods have a short half-life, meaning that people consume them faster and buy more. This means that the more you bake, the more you are likely to make. However, watch out for diminishing returns as you increase production.
- You do not need a lot of equipment to start the bakery – The good thing about this business, is that you can start small. You don’t need to purchase all tools and equipment listed earlier in this article, such as refrigerators, dough mixers etc.
- Learning how to bake is very easy – Even if you don’t know how to bake, you can learn the art in less than a month from friends, relatives or YouTube Videos.
What are the challenges faced by a bakery business in Kenya?
- It is physically demanding – Baking, especially if you are alone, can be very tiresome.
- High standards of hygiene are required – You have to produce clean food, lest you risk getting penalized by government health assessors.
- Some equipment may be very expensive – Some equipment such as dough mixers and ovens are quite costly to purchase.
- A power outage will negatively impact your business – You can mitigate this problem by having a power backup e.g., a generator or solar power.
- You will have to wake up earlier than your customers to bake, to provide fresh baked goods in the morning when traffic is highest.
How can you make your bakery business in Kenya successful?
- Wake up early – Customers prefer fresh bread and cakes, and for this reason, you will either have to stay up late to bake or wake up early. This requires some level of dedication, higher than that needed by other businesses such as electronic shops, play station lounges, etc.
- Learn when most customers buy – In Kenya, most customers buy in the morning hours, and therefore, you should have enough stock. You don’t want to run out of bread or cakes at 8.00 am. You will lose all your customers to competitors.
- Be a good listener – Different customers have different needs. Listening to and implementing what they need on their orders is critical to your survival in the baking world. Your business will mainly grow through word of mouth, and therefore, satisfying your clients is the best way of growing your client base.
- Think about your distribution channels – Once you bake, you will need to reach more people, apart from the ones near your bakery. You will therefore have to think outside the box. Assess and try implementing marketing strategies such as e-commerce and digital marketing, to reach more clients across the country.
- Package and seal your products neatly and indicate expiry dates – Baked products have a short shelf life. You, therefore, have to package them neatly to keep out moisture and microorganisms. Place a legible expiry date on your products to guide your customers after they purchase your products.
Starting a bakery business in Kenya can be very challenging, especially if you don’t have a good layout to follow. If you follow the steps listed in this article and implement them fully with additional research, then you are destined for success. The values given in this article are just a rough estimate of the actual prices in the market. Please do further research.