Operating a successful bakery business involves more than just a few good recipes and a passion for your craft. The production of your quality pastries, artisan pieces of bread, cakes, cookies, bagels, and more involves good quality bakery equipment, whether operating a larger wholesale facility or running a smaller bakeshop. You can keep your bakery running at optimum efficiency with the help of durable, reliable baking equipment, ensuring that you maintain the consistency in product quality that your customers expect. It is possible with the help of bakery equipment financing.
It is extremely overwhelming to run a successful operation when acquiring bakery equipment. Bakery equipment financing offers several benefits over conventional forms of funding, proving the best choice for established and startup bakeries.
Benefits of equipment financing for your business
Approximately 80% of US companies are leasing/financing a few or all of the equipment according to the equipment leasing association of America. The following are a few of the relevant reasons why so many are picking on the benefits of equipment financing and leasing:
- Access to better Capital
Equipment finance is offering you a cash influx allowing business owners like you to purchase the machinery you require to get the job done. In several instances, it is a straightforward and rapid process that depends on your creditworthiness. The loan can aid you in freeing up other working Capital that you can reinvest into your company with the help of marketing, payroll, or varied business needs. It can even help reduce downtime by allowing employees to work rapidly with relatively instant monetary access.
- Financial flexibility
Financing bakery machinery offers great financial flexibility to a company. Financing or leasing payments are generally smaller and manageable monthly instead of the company taking part with significant capital expenditure. Financing will never disrupt the cash flow since only a smaller down payment is required here. Small to medium-sized businesses benefit greatly from not depending on significant upfront payments for heavier equipment.
- Remain on the cutting edge
Equipment financing can aid you in staying updated on the latest technological innovations and advancements available for the machinery. Upgrading the equipment frequently becomes a financial burden that causes a few businesses to lag behind the competitors. Equipment financing can help you obtain heavy machinery at greater affordability and offer you the mode of acquiring the greatest and latest tools on the market.
- Adaptable terms and conditions
The terms and conditions involved in bakery equipment financing are generally developed in alignment with the company’s unique requirements. It appears that the terms and conditions for the equipment financing are secured in a way that suits your business, including the extension of the contract terms for reducing the monthly payment. Therefore, when the complete principal, along with interest, is spread throughout the predetermined period can help you in having a better understanding of the long-term budget.
- Tax savings
Knowing the perks of a few specific tax breaks available in your country as a business owner is vital. Under a few circumstances, these companies are financing their equipment using Section 179 of the IRS tax code to deduct the equipment cost. Additionally, businesses can generally deduct the interest being paid in the US. Ensure to review your tax saving options with your financial advisor to check whether they are applicable.
Best Tips for Starting a Bakery Business
Like you have a recipe for each pastry, there is always a proper way to kickstart your bakery business.
Taking instant business decisions will never give you better results. Have a robust business plan and knowledge of whatever you are encountering, and therefore you will have a booming bakery in a matter of no time. It is essential to have a strong road map if you are planning to avail easy equipment financing in this business.
Since almost every term of your financing might have a long-term impact on a budget of your working capital. We will now discuss the steps you should take to start a bakery, and we will even discuss how and from where to avail yourself of easy equipment financing for your bakery business.
- Understand the kind of bakery you wish to open
Before making decisions of any type, consider the type of bakery you aim to open, as it is important for your business plan. It can help you decide how much you will gain from the easy equipment financing whenever you have a better credit score.
It is always best to check out the trends in this industry. Investing in a trend you are considering will stay in for a while and can help you with long-term profits. Ensure, too, that the kind of bakery you pick matches the market in your area. The services and products you are offering should get the proper attention from your target market.
To help you in this, the following are a couple of different types of bakeries you are establishing:
- Online: It will allow you to operate without any storefront. You can start online as you need a proper website with images of your work and a way to place an order. There are a few individuals who are operating online bakeries from their homes.
- Counter service: The bakery is ideal for working in a smaller commercial space. The customers will start walking in and buying your products from the counter managed by the employees.
- Specialty service: It is the bakery that works best if you sell specialized baked products. You require a commercial space for this kind of bakery however the bakery can also get operated from the comfort of your home.
- Sit down: There are several investors capitalizing on the dine and sit-down option as it is now a growing trend in this bakery industry. It is the form of the bakery, which is often established like a restaurant or a hybrid between a café and a restaurant.
- Create a Strong Business Plan
You must create a business plan after deciding the type of bakery you wish to open. It will help you secure your bakery’s success by offering you a map toward your goals. Your business plan will help you avoid making any bad decisions and help you secure easier equipment financing. It is because most bakery equipment lenders prefer applicants with better business plans. It is the plan to convince the bakery equipment financing company you repay money of any type for lending in this bakery.
You just need to ensure that your business plan addresses every feature of your business while it should even state your business goals and how you generate revenue.
You should also enlist your expenses to allocate the business’s working capital appropriately, which will help you properly use easy equipment financing once you get it. Identifying your customer base, along with the customer services you are offering, will help you examine your competitors and adequately offer you a better idea of marketing your bakery.
Lastly, you should have a business plan that outlines how you are getting the funds for your bakery equipment, furniture, and fixes.
- Detailing the funds for your bakery
The startup phase for the bakeries is expensive, while the amount of money you require depends mainly on the kind of bakery you have. Counter services, sit-down bakeries, and specialty services start with external investments or bakery financing.
Online bakeries are generally getting started on the personal Capital of the business owners, as there are always exceptions involved. It is advisable to note down the potential source of the additional funds in your business plans, whichever you use for a startup. For instance, even if you have lots of working capital, you can easily benefit from bakery equipment financing for your business.
Retaining additional work preserves more of your business capital, allowing you to use them for emergency expenses. It would help you avoid financial instability during your bakery’s startup phase. Therefore several unforeseen expenses and delays pop out of nowhere.
- Create a List of Equipment
Always plan on making a list of the equipment you need to have. Startups require more equipment than what they already have in several cases. Therefore, it is more likely that you will spend more to acquire vital appliances and equipment for your business operations.
With all being mentioned, create a list of equipment you require and start estimating the cost involved. It will help you determine the amount you will borrow from the best bakery equipment financing company to preserve your working capital.
Therefore, several bakery business owners are making mistakes in paying cash for their equipment and taking out the expensive short-term working capital loan to hire, inventory, etc. You require appliances such as refrigerators and ovens. While creating a list, try including the smaller items such as the pans, utensils, mixing bowls, etc. The bakery equipment financing companies can astonishingly finance every dinnerware item too. When you have a complete list, it will help you to decide on the amount of money you can avail yourself of from easy equipment financing.
- Locate a place and set the costs for the products
If you pick to operate with a storefront, ensure the ideal commercial property. Be choosing in picking the commercial space. It is because your target market should be accessible to your bakery easily. The environment and the location of your bakery also contribute to its success. A place with higher traffic and fewer competitors can offer you better sales.
Never forget to fix the right price for your baked products, services, or goods, as you can check out your competitors’ prices to get an idea.
There are times when the location might start affecting the price of your offerings. Similar upscale locations might allow you to charge more for instance. Try not to overcharge since it is a great way of losing customers. You need not undercharge either, as you will lose your profits.
It can lead to issues in the longer run. You will face a tough time repaying the easier equipment financing if you cannot locate the Golden mean for the pricing. Find a niche bakery like to have an ice cream sandwich bakery near the beach while watching people queue up around the block to buy delicious ice cream sandwiches for cooling off. After you have constant foot traffic, it would increase the prices and watch your profits rise.
- Acquiring bakery equipment through an equipment financing option
To avail of the bakery’s tools and appliances, it gets easy equipment financing. It is never recommended to spend your money on equipment.
You will have to finance the other aspects of your business to get it up and running, as there are supply costs, marketing costs, operating expenses, and more. You will not have to pay for the acquisition of the equipment upfront with the easy equipment financing option.
Now that you are probably wondering why you should never use a bank loan; instead, you can get additional funds through bank loans.
Sadly, the banks will not likely grant your startup bakeries the funds. At the same time, these financial institutions approve loan applications from startup businesses since it is riskier for them. It is because there is no assurance that your startup business can repay the loan promptly. Besides, these businesses do not have collateral covering the loan costs.
It is why several bakery owners are picking easy equipment financing over traditional equipment loans. Getting financing done for your bakery offers your reliable equipment vendor with suitable funds they require immediately for purchasing the equipment. These equipment financing applications will take less than five minutes to get done. In reality, you can easily get approval in just a matter of minutes while the purchase order is out to your vendors in hours while funding the bakery equipment vendors in a single business day. Just fill out simple one page credit application.
You can even avail yourself of the equipment of your choice at affordable monthly payments. Several equipment finance companies offer flexible payment terms to their clients, such as little to no money down with deferred monthly payments for the initial ninety days.
To get approved as a start up it’s preferable that you have over a 650 fico score and have three years industry experience.
In our post today, we have spoken about starting a bakery and how easily you can avail of bakery equipment financing from online lenders. Starting a bakery business is a complex process, and you must follow the necessary process to ensure success.
Choose the type of bakery you wish to open. After this, you have to prepare a smaller business plan to help you avoid bad choices and decisions. Your smart business plan should easily portray your operations, goals, and how you can avail the funds for your startups.
If you need some extra funding for your business, then Trust Capital makes it easier for you to get the bakery equipment financing. It is the kind of business financing that is highly flexible and easier to avail approval from than any other bank loan. Picking the right type of online lender will help you get approval on the same day of your application, which means that you can start shopping for equipment and baking instantly.