How to Calculate a Business Budget for a Bakery

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Muffins, donuts and cakes are just some of the delicious treats that make owing a bakery a dream come true for many business owners. Like any business, owning a bakery requires a clearly defined outline for managing and calculating the day-to-day expense required for the business to function and be successful.

Rent and Utilities

If you plan on renting your bakery shop, you should not spend more than 8 percent of your gross sales on rent. To figure out how much your leasing budget should be you must estimate your projected sales. This number should by multiplied twice, once by 0.05 and once by 0.08, with each divided by 12. This allows you to start off looking for rental space that is 5 percent of sales and then increase your rental budget if necessary.

Equipment and Supplies

Equipment that is purchased outright does not need to be calculated as part of the bakery's operating budget, because they are one-time purchases. If you do not have the funds necessary to buy all of your equipment up front, you may want to lease more expensive items like industrial ovens and commercial storage fridges. Monthly rental costs should be added to your budget expenses. Food ingredients should be ordered based on expected need and adjusted based on sales to minimize lost profit.

Marketing

Few businesses can survive without effective marketing. When determining your budget, you should consider the level of visibility you want for your bakery. This includes factors such as how many people need to be reached, the means of communication being used and what resources the business already has available. In general, marketing should be no more than 4 to 6 percent of your business' net income. Low-cost high impact marketing strategies will help you expand your business while staying within budget.

Payroll and Employees

Like most food-based businesses, the profit margin for a bakeries is often slim. As a result, payroll is likely to be one of your biggest expenses. Your staff size should be chosen in consideration of your bakery's needs, current finances and projected growth. Wages should high enough to attract quality workers, while leaving room for future raises dependent on the bakery's success. Don't forget to pay yourself when calculating your budget.

References

About the Author

Sophia Harrison began writing professionally in 2007. She has a Master of Arts in economics from the University at Buffalo-SUNY, as well as experience working in the New York City financial industry.

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