This question largely depends on the resources at your disposal. There are a number of options such as buying an existing bakery, buying a franchise, starting from scratch with a new bakery, or baking exclusively from home. Each option carries costs so its important to figure what makes the most sense for you right now. Unless you have a large financial backer with (potentially) a lot of money to lose, it’s a better idea to start small and work your way up.
Choose one product in the beginning that you can specialize in and then think about expansion. This product should be inexpensive to make and distinguish you from the competitors. Think of something that no one else is making (ethnic, gluten-free, organic, etc.) and would fare well in your community. Starting small helps you work out the kinks and understand the business process before you completely jump in.
Step #3: Figure out where you will sell your goods
You can always count on your family and friends for some business but what about the rest of the time? It’s important to think about a variety of places where you will be able to sell your baked goods. Be creative. Think flea markets, swap meets, craft shows, farmer’s markets, locally owned restaurants, grocery, and convenience stores. Quality, non-wholesale brand baked goods are in demand and represent a great sales opportunity.
Step #4: Write a business plan
Even though you may not be ready for your first round of seed financing from a big venture capital firm, a business plan is an important part of the planning process. This document will help you identify how you will make money and what it will cost to do so. As a general rule, charge three to four times what it costs for you make the item. This is a great tutorial on how to write a business plan for a baking business.
Step #5: Figure out a plan and then work your tail off
The single most important factor in the success of your new business is your resolve to make it work. 50% of new businesses fail anyway so it’s vital you put your blood, sweat, and tears behind your new venture if you want to make it work. 99% of a new business idea is execution. Work hard to establish yourself as someone who delivers reliably delicious baked goods and the loyal clients will follow. Don’t get frustrated with setbacks, you will experience a lot before it starts going well. The key is to keep working hard at all times and always keep your ears open for feedback.