Bread is the third most popular food staple in most parts of the world. It is widely consumed across the continents by almost all citizens, ethnics and religions groups.
Everyone likes the smell and taste of bread, especially when it is freshly baked. It is one of the quickest and cheapest food to get your hands on in time of hunger. With these in mind, we can safely conclude that starting a bread bakery business anywhere in the world is going to be a viable business.
Like I have always said, the best product to deal with is the product that is in high demand in the market and bread happens to be one of such product. About 10 million loaves of bread is consumed in Lagos everyday while the Americans eats 53 pound of loaves every year. Each French person is believed to eat a whooping average of 3 loaves of bread daily. Over all, 36 billion loaves of bread can only feed the entire world for just two weeks.
Therefore, if you are thinking of business to invest into right now, I want you to consider starting your own bread bakery business. I once supplied sliced bread in Lagos and I know the profit we make back then. The same thing goes to bread makers, they make very impressive profit in the business, better than the average businesses in the country.
Bread bakery is not much difficult to setup once you have the financial capacity and able to meet the requirements and regulation by the authority. In this article, we want to explain in simple language how to start bread bakery business anywhere in the country but before we go ahead, let's first look at the profit potential as well as the potential risks in the business.
The Profit in Bread Bakery Business
It cost about N80.00 ($0.50) to produce standard sliced bread in Nigeria. The bakers sells at N130 to suppliers and make N50 per bread. The suppliers sells to retailers at the cost of N170 and make N50 gain per loaf of bread they supply while the retailers sells between N200 to N220 to the final consumers. So, N50 is the average gain made by each of the parties involved at every stage from production to the final supply.
A typical standard bakery with good supply network produce and sell 50,000 loaves of sliced bread weekly on average. Now multiply 50 by 50,000 and what you get is the profit for the weekly production and supply - N2,500,000.
Since the cost of production have been taken care of by the N80. You just need to subtract the running costs to get your final profit. Lets say you spend the whole N500,000 for the running cost
1. Cost of fueling your diesel generator for the week = N50,000
2. Cost of fueling and maintaining the supply vehicle = N100,000
3. Cost of labor and staffs welfare during the week = N100,000
4. Damages and other miscellaneous expenses = N50,000
When you subtract all these from the N2.5 million, you will have N2.2 million left as your take home for the week. Can you now see why bread bakery business is considered one of the most profitable business in it's category?
Risks Involves in Bread Bakery Business
Like most business on earth, there are some of the risks involved which you'd do well to be aware of. And being aware of these risks will help you plan properly on how to completely avoid or minimize them. It will also help you to properly plan your income and expenditure. Below are some of the popular risks in the business.
Local Bread Bakers at work
1. Your Bread could get burnt - Moment of carelessness by your workers could get you bread burnt easily which may result to high loss of money.
Install a smoke detector at all location of your bakery, because in our case all our night shift workers once fell asleep making about 5 flour bags of baked bread burn to ashes we were lucky the building didn't burn down. So don't over look little mistakes from workers otherwise it will come back to hunt you.
This is one of the major risks every baker must be aware of because of the potential danger it carries. But it's a risk that could be avoided if you take proper precaution.
2. Spoilage - Because of the competition in the business and effort to attract more retailers, most bakers offers to accept back bread if it developed mold. Some retailers are so careless and ineffective in sells that they keep those bread unsold for long time only to return it when it develops mold.
When this happens, you are the final person to bear the cost and if it happens in large number, you may be out of business.
3. Price Fluctuations - Prices of baking raw materials is the most unpredictable as baking flour can change within days unannounced. When this happens, you buy flour at higher cost and still sell your bread the same price you used to sell because bread is a very sensitive commodity, you can't increase the price arbitrary.
4. Police Harassment - Because bread is a ready made fast food, Police may stop your supply vehicle on the road even when you did't do a thing and demand that you give them some breads. Though you are not under obligation to give but if you don't, they may try to victimize you in other ways.
By the time you do that to and fro, imagine how many loaves of bread you would have lost? Road safety, LASTMA, and other agencies are equally there.
3. Theft - Internal and external theft by your staffs, people who may come into the premises, touts on the roads, and others may reduce your profit in the business.
In my next post on business, I will let you know how to set up a bakery business
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