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How to Use a Bakery Loan to Grow Your Business
October 07, 2019
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How to Use a Bakery Loan to Grow Your Business

Are you a small bakery business owner that wants to out-sell your local supermarket bakery section? Perhaps you’re in the process of starting a bakery business and want to learn the ropes. Or, maybe you want to expand your menu, but aren’t sure where to start.

Regardless of your current situation, there are so many ways to grow your business. However, it can be challenging to make consistent sales, afford regular expenses like rent and inventory, and have money left over for emergency expenses. Due to this, we’re sharing our top tips for using a business loan to offer high quality bakery items. Also, we’ll review bakery financing options so you can begin weighing your options.

6 Ways to Use a Bakery Business Loan:

1. Offer Delivery and Ordering Services

People appreciate convenience, so make purchasing items from your bakery a seamless experience. In order to do this, you could add online ordering capabilities to your website, or hire a transportation service to deliver items to nearby patrons.

If you don’t want to handle the logistics yourself, you could pay to list your business on sites like GrubHub, Seamless, and Yelp. When users search for keywords like “bakery” or “cookies,” your bakery will show up. Then, they can place an order and pick it up or have it delivered to them.

Having a budget and business plan for a bakery is necessary, so consider whether you have the cash on-hand to pay for these integrations out of pocket. If you don’t, this can be a great way to use a business loan.

2. Customize or Expand Your Menu

If you want to stand out against competitors, you’ll need to go above and beyondDon’t just stick to the status quo; try to develop items on your menu that are specific to your bakery. Offering classics is great, but you should have treats on your menu that customers won’t be able to get elsewhere. Also, consider taking custom orders for birthday parties, weddings, and other big events.

Another way to attract more customers is to offer gluten free, vegan, or low-sugar baked goods. This will help you earn sales, even from individuals who have dietary restrictions or try to eat relatively healthy items.

3. Hold Sales or Offer Coupons

By offering sales, customers will rush to your retail bakery shop for their sugar fix!

During the holiday season, give customers a discount, hold sales on items, or offer free delivery. In order to offer sales, it doesn’t have to be a holiday, though. You can hold a sale at any time of the year! Giving customers discounts, or even starting a loyalty program, will show that you appreciate their patronage.

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4. Cater Local Events

Make connections in your community by catering local events with your baked goods. If the attendees appreciate your treats, they may visit your bakery in the future. Plus, catering jobs can be a great way to make some extra sales on the side!

In addition to catering events to earn more sales, you can also donate items to good causes. For example, if there are non-profit organizations that you’re interested in getting involved with, why not provide baked goods for one of their events for a discounted price! This is a charitable way to give back to your community, while still growing your business.

5. Invest in New Marketing Strategies

Inform as many people as possible about your bakery! There are so many creative ways that you can market your business. Post pictures of finished cakes on your company’s’ social media profiles, advertise sales in local publications, or create online ads for your target market. The more that you spread the word about your business, the better!

6. Start a Bakery Food Truck

Take your bakery on the road! With your business financing, you can invest in a food truck that you park at different locations to reach a wider audience. At your food truck, you can sell fresh baked goods and other tasty treats, which will help you increase your overall sales.

Types of Bakery Business Financing to Consider:

Now that you have some ideas on how you can use business financing, it’s time to evaluate the different product options available to bakery owners.

  • Small Business Loans: When you apply for a business loan from an alternative lender, you can receive a lump sum that you’ll repay in a set term.
  • Merchant Cash Advance: Unlike a business loan, cash advances aren’t repaid in set terms. Once you receive your financing, you’ll remit it based on your business’s credit card sales. So, if your bakery receives significant credit card sales, this could be a great option.
  • SBA Loan: The SBA provides financing to business owners who can’t acquire it elsewhere. In order to receive an SBA loan, you’ll need to prove that your business has been declined from receiving traditional financing in the past.
  • Credit Cards: If you need access to financing on an ongoing basis, you might benefit from a business credit card. With a business credit card, you can charge purchases to this card, and hopefully earn rewards in the process (if the company has a rewards program). Of course, you’ll need to pay off the credit card balance on-time to ensure that you don’t rack up significant debt.
  • Line of Credit: When you receive a line of credit, you’ll have access to a certain amount of financing that you can borrow against. If the line is revolving, you can borrow the same amount of money again once you pay off the balance.
  • Bank Loan: Most banks offer business loans. However, if you have a bad credit score, are a new business owner, or need financing quickly, this probably won’t be the best option.
  • Inventory Loan: Business Owners that need money to purchase inventory can apply for this type of financing. It’s important to note that this financing can’t be used for other costs, so you should only apply for it if you need to buy inventory.
  • Equipment Financing: If you need bakery financing specifically for equipment (like ovens or a food truck), you can apply for an equipment loan.

Conclusion: Invest in Your Bakery’s Future

Have fun while running your bakery business – and customers will take notice! With these tips, you’ll be able to learn how to run a bakery that makes consistent sales from sweet items that stand out against neighboring bakeries. If you have additional tips on how to run a bakery, leave them in the comment section below!

Editor’s Note: This post was updated for accuracy and comprehensiveness in October 2019.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].