Have you been thinking of starting a bakery business in Nigeria? Are you passionate about baking?
In this article, I am going to teach you how to start a bakery business in Nigeria (a one-stop-shop for all kinds of confectionery foods) and tips on how you can make profits from the business.
Bakery business is now becoming a profitable business in Nigeria that any Nigerian youths can go into because of love for baked foods.
From bread to the regular snacks, to cakes and more Nigerians cannot do without these foods. In fact, those that are not eating other kinds of baked foods due to one health condition still eat bread.
This is to tell you that so far in Nigeria everybody – the rich, poor, and the middle class are lovers of baked foods.
Is Bakery Business Profitable in Nigeria?
Yes, bakery business in Nigeria is profitable and I will state some reason here.
A. It is profitable because all Nigerians eat bread and the ones that do not eat which are the very low percentage like and eat other baked foods. This could be cake, sausage, or any other kind of snacks.
B. Another reason why bakery business can be a profitable business in Nigeria is that Nigerians eat cake a lot.
It is hard for you to see a Nigerian that doesn’t like cake and doesn’t buy cakes to celebrate his or her birthday, anniversary, weddings, and more.
Evidence of these are the bakeries around you.
Nigerians are cake lovers and cake eaters.
C. And finally bakery business in Nigeria is a profitable business because of Nigerians love for snacks. This is why Nigeria’s food business (fast food) is growing rapidly.
Snacks have come to stay because it is easy to make and fast to quench hunger and top of the fact is it also saves money. About 7 out of 10 Nigerians eat snacks every day either in the morning for breakfast or in the evening.
This is how much Nigerians like snacks.
Snacks Produced in Bakery
There are snacks that are lucrative and easily sold in bakeries in Nigeria. Some of these are;
- Small chops
- Egg roll/Scotch eggs
- Meat pie
How to Start Bakery Business in Nigeria
1. Understand the Business
One of the saddest things you can ever do as an entrepreneur in Nigeria is to invest in any business without trying to understand it first.
One my mentors always say do not invest your money in anything do not understand and I cannot agree less with this so this is why I suggest that you should try to understand the business first before starting.
Bakery business in the USA or in France can never be the same with Nigeria. Despite the fact that it is the same business, there are things that are working there that will not work here.
A good reason here is the fact that unlike these 2 countries I mentioned earlier Nigeria is still a developing country – it is prone to any kind of change – Political, ethnic, and so on.
Another reason is that despite the fact that bread been the most sort after food in the bakery business does not mean every other snack in the system will follow through.
There are bakery businesses in Lagos that produce only bread that are making millions and there are bakery businesses in this same Lagos that produce bread, cakes, meat pies, and others that are also making millions.
Sometimes, the behavior of your bakery business can be determined by the kind of consumers in the area where you want the business to be.
So you need to understand the bakery system first. Understand what will make it thrive; understand what Nigerians really like when it comes to snacks before settling down to start your bakery business.
To do these you can simply ask some vital questions from those who have worked in a bakery in the same area you are considering starting the business.
When you are opportune to meet these people, ask them questions like:
- What snacks do Nigerians like the most and usually buy?
- What kind of breads are bought the most?
- How much do they spend daily for the running of the business give or take?
- How does the bakery make profits from its bakery business and more?
You need an insider to tell you all these and everything.
2. Determine What you Want
There are different types of bakery businesses, especially in Nigeria. You need to determine what exactly you want – that is; how you want to stand out.
What do you want to sell that will make you different from the others? A good example here is our blog.
There are many blogs in Nigeria that write about starting a business (startups) but we go the extra mile in not just writing on these same businesses but how you can really make profits from them.
This is what your aim should be as a bakery owner in Nigeria. Ask yourself what you are bringing to the table?
Asides from this you need to also determine how big you want to start. Do you want to sell to the whole customers in the neighborhood (your snacks should be a household name) or you just want a small fraction?
Do you want to start the business on a small scale or large scale? If you want to start on a small scale how much do you want to invest as capital and if you want to start on a large scale how much do you want to invest as capital?
All these questions you need to ask yourself and answer them diligently.
3. Draw up Your Capital
After doing this the next stage is for you to draw up your capital and source for it.
Based on what I said earlier your capital can be either huge or small. Anyhow this could be you need to get it.
The capital needed to start a bakery business on the average in Nigeria is about #2,000,000 (#2M). This capital involves all expenses to be incurred on
- Buying of bakery equipment and ingredients
- Renting of space (for at least a year)
- Payment of utilities and generator for at least 6 months.
- Workers salaries.
- Charges for registration under NAFDAC and CAC.
You need to look for a way to source for this capital wisely.
4. Register Bakery Under CAC, NAFDAC & Other Relevant Authorities
Bakery business is just like any other food business in Nigeria so its registration under CAC (Corporate Affairs Commission) other relevant authorities like NAFDAC (National Food And Drug Agency Commission) is very important.
Avoiding this process and going on to start the business can be detrimental. You can be sued for almost anything. The registration under CAC takes care of the business part of your business while the registration under NAFDAC takes care of the food part of your business.
NAFDAC certifies your foods making sure the foods you produce in your bakery are hygienic enough for Nigerians to eat.
When you are done doing all this the next step is to get a location for your bakery business – a shop where you can produce and sell your bread and other snacks to Nigerians.
5. Rent a Shop
In this business renting a shop is very important. It cannot be set aside except of cause if you are starting your bakery business from home.
Renting a shop in the right location will determine how successful your bakery will be. It will make your customers to locate you easily and it will bring you zero cost on advertising meaning more profits for you in the business.
When it comes to renting a shop for your bakery business in Nigeria there are many things you need to consider as regards your location.
You need to make sure your shop is located in a place where thousands of prospective customers can easily see you. This could be a very popular spot in your area or a junction or at a roundabout or bus stop.
But make sure the budget for getting this shop is not too much so that it will not take a huge chunk of your capital.
If you take your time there should be places that have all these criteria and yet are budget-friendly.
6. Buying your Bakery Equipment and Ingredients
When it comes to starting a business like this it is not a must all your baking equipment are new as many of these equipment can be expensive taking a whole lot of your expenses.
You can simply buy the ones you can afford to buy new and buy fairly used ones – what we can tokunbo for the ones you cannot afford to buy new.
Baking Equipment for Bakery Business
- Baking pans or trays
- Measuring cups and spoons
- Metal turner
- Pastry Brushing
- Rolling pins
- Stand Mixer
Do not forget also that you will need a good standby generator that can stand in for you in case there’s a power outage.
Ingredients needed for Baking
You should consider buying these ingredients in bulk from their wholesalers as this reduces your cost of production making more profits for you.
7. Selling Your Bakery Products
Let’s face the fact here you will not get the look and the taste of your snacks right immediately you start the business no matter how professional your bakers are.
Even if you get the mixing formulation correct you might not get the taste right from the onset and this is not bad.
When this happens do not beat yourself over it. You’re just starting, as time goes by it will be perfect. Just make you or your supervisor always pay attention to details.
On your first day of baking make sure you invite friends and family to come and taste and buy from your snacks and bread. Also if you can offer free tasting to the public so many of them will come and check your bakery out.
Don’t beat yourself if many people don’t come in. Give them some time to get familiar with your bakery. Remember you are new in the area.
8. Increasing Profits in your Bakery Business
There are many things you can do to increase profits in your bakery business in Nigeria. Some of them I’ll list below here.
How to Increase Profits in Bakery Business
A. Track your Sales
This might not look like a big deal but it is. In any business especially a business where you sell different goods it is important to monitor your sales.
Doing this helps you to see into the larger picture. It helps you know the snacks what your customers buy the most and the least bought snacks.
By knowing this you will be able to focus on the snacks that sells fast thus making profits in the long run and short run.
B. Buy your Ingredients Wholesale
I talked about this earlier. Buying your Ingredients from wholesalers saves you a lot of expenses which will in turn increase your profits.
C. Deliver your Foods
When it comes to making profits from your bakery business delivery is also important. Doing deliveries helps you reach a wider range of customers (customers that may not be able to visit the shop and buy).
So by doing this you’re able to also win customers far away. This in turn increases profits.
9. Challenges in Bakery Business
This is the part many of us don’t want to hear but I will still share it anyway.
There are some challenges in this business and you need to know about some of them before venturing into it.
Challenges of Bakery Business in Nigeria
A. Losses Based on Bread Getting Burnt
There are times in this business where you will make losses based on your bread or snacks getting burnt.
This could be caused by the ignorance of your baking staff or mistakes during baking. Whichever way it is you need to make provision for this loss.
B. Power Outages Ruining the Business
There are chances of power outage ruining your bakery business in Nigeria. So you need to plan ahead for this.
I talked about having a stand by generator. So you need to also make the provision for this. Calculate all these expenses on the cost of production on each bread or snacks.
C. Constant Rise in Cost of Ingredients
The constant rise in the cost of ingredients used in baking can be another challenge in a bakery business in Nigeria.
This affects sales and often determines the profits in this business. All these costs should not be forgotten to be added to the cost of production.
Bakery business is a profitable business in Nigeria and there are many opportunities for young youths that want to go into the business.
It is a business that requires wisdom and patience. To be successful in the business you need to be diligent.
That’s all in this article. As usual, let me know if I missed any part of this article. Also, let me know if there are topics you want me to write about on the blog or talk about on our YouTube Channel or maybe our podcast.
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