Today’s full guide will be going through the process of how to start a bakery business in the Philippines for beginners. In this guide, we will cover some of the biggest questions when opening a bakery business, including questions such as – What is the budget for bakery business in the Philippines, how to open a pastry business in the Philippines, and a business plan for a bakery business. So let’s take a look at the beginning steps to get the business started.
How To Open A Bakery Business In The Philippines For Beginners
1. Research The Bakery Market
Research is one of the most important factors entrepreneurs need to focus on in the very early stages of business. We recently explored how to do market research for small businesses in the Philippines, and I have linked this full guide above for your reference for those looking for more information.
The great news is when it comes to research, the Philippines has some fantastic sources that can be used to help you start a successful bakery business in the Philippines. For example, the Department of Trade and Industry has some fantastic guides and even has a specific guide on bakery businesses that discusses the starting capital for a bakery business in the Philippines.
Nevertheless, it is also recommended to do some external research that focuses on your local community. This includes the current competition, the supply, and the demand for bakery goods. Wider research is also necessary, including the increase or decrease of the industry and changes to the economy (such as flour prices, for example), which will impact your prices and profit.
2. Create A Bakery Business Plan For The Philippines
The next important stage when opening a bakery business in the Philippines is creating a bakery business plan for your Philippines-based bakery. Entrepreneurs have several options when sourcing a bakery business plan.
The first option is to use a free template. Filipino wealth has a free business and financial template that has been designed for small businesses. This is completely free. No information is needed to get your free copy.
When sourcing a bakery business plan for the Philippines, purchasing one from an online provider is the second option. Most business planning that goes in depth about starting a bakery business has a fee involved. The total amount will depend on the supplier. Some free versions are available, but the business plans do not go in depth about the bakery business and may not be suitable.
The third option available is to create your own bakery business plan. Previously we looked at the steps and processes entrepreneurs can take to build a successful business plan. This includes many valuable points that are central to consider when starting a bakery business in the Philippines; therefore, I have linked to the full guide in the link above.
3. Investigation Of The Food Regulations And Business Laws
When it comes to the legal process of starting a bakery business in the Philippines, there are 2 main areas that entrepreneurs will need to focus on in the very early days. First, this includes food and drinks regulations, and the second area is general business law.
Below we have gone into detail about the legal requirements for a bakery business, so I will not go into too much detail here as we have all the information below. However, one area we will quickly discuss is the business laws. Below are the steps to follow;
- Register Your Business Name With The Department Of Trade And Industry
- Register For A Barangay Business Clearance
- Register For Local Mayor Permits
- Register At Your Local Bureau Of Internal Revenue
Additionally, there may be steps involved depending on the scale and scope of business. For example, you may wish to open up a business account to separate your bakery finances from your personal finances.
Additionally, there may be additional rules and regulations that bakery owners will need to follow, depending on your location. Therefore, we always recommend speaking to your local DTI & BIR office, as they will be able to give you the most up-to-date and relevant information about starting a bakery business in the Philippines.
4. Find Your Suppliers, Equipment, And Location
The next stage when opening a small bakery business in the Philippines is to find the tools to help you complete the job. In other words, this stage is where you will find the relevant suppliers, purchase your equipment and finally choose the location for your new bakery business.
When finding suppliers (to purchase ingredients) and bakery equipment in the Philippines, several options exist, including domestic and overseas businesses. If you are starting a small bakery business, purchasing locally is recommended; however, if you are buying in bulk, you will often find larger savings by purchasing from overseas, such as in China.
For instance, if you are planning to sell Donuts, you will be able to find 25 plastic trays from a Chinese supplier much cheaper than domestically. However, if you only buy 5 trays or a smaller quantity, prices will often be lower locally. But of course, this will depend on your local prices and other factors. So this is something you may wish to consider in the planning stages of the business.
Once you have found suppliers and the equipment, the next stage is to find the right location for your bakery business. The location needs to be accessible but also cost-effective. Profit margins are not always the highest in this type of business, so entrepreneurs must carefully consider their costs. Please take a look at our full guide when deciding the best location for a bakery business in the Philippines.
5. Start To Take Action, Including Building Your Menu
You will have done a great deal of research and planning at this stage, which is fantastic! The next stage of business is to start taking action and get the process moving so that your small bakery business can start to take life. The action steps will differ from business to business, but here are some common steps…
Building the menu. You do not necessarily need to have a full menu but deciding on what products to sell and ensuring these are visible to the customers is a good action step. If you let your customers dine in, purchasing comfortable chairs and tables is also a fantastic action step.
It’s recommended to build a plan of action steps. For example, you may have a list of 25 action steps. The starting position is where you are currently, and the last step is where your business is open to the public. You may wish to apply the Start Stop and Continue method, which we will discuss right now.
6. Apply The Start, Stop, And Continue Method
In the simplest definition, the Start, Stop, and Continue method can be used in many different areas of life and business. For example, when you are starting a bakery business in the Philippines, good questions include what can I start doing, what do I need to stop doing in my business, and what do I need to continue to do to build success.
These 3 questions are very simple but can save you a lot of money and time. They will also highlight important areas that you will need to focus on. For example, when asking these questions, you may find research has not been performed correctly, so to avoid problems in the future, you may need to revisit this area.
Additionally, you may find that there are steps that you discover when asking these questions that we have not talked about today. For instance, if you are starting a large bakery business in the Philippines, hiring staff might be an area you wish to consider. Asking the big important questions will often lead to the big important answers in the business world.
Budget For Bakery & Starting Capital For Bakery Business In The Philippines
So, with everything being considered, what is the starting capital for a bakery business in the Philippines? Is it possible to open up a small bakery business on a budget?
The total starting capital to open a bakery business in the Philippines ranges from 60K – 170K Pesos. If you are opening a bakery business at home or a small business, the starting capital will be at the lower end of the scale. On the other hand, if you are franchising a bakery business, opening a large business, or starting in an expensive area like metro manila, the startup capital will be at the high end of the scale.
Additionally, if you already have your equipment and the location, the budget for a bakery business in the Philippines will be much less. This is because the location and the equipment are two of the largest expenses. In comparison, ingredients can often be found cheaply. Therefore, if you can save on the location and equipment fees, you will find that starting the bakery is much cheaper than quoted above.
What Are The Legal Requirements For Bakery Business In The Philippines
When it comes to selling food and drink in the Philippines, several laws are in place to protect consumers and the wider public. We will now explore these laws, but it’s recommended to speak to the Department of Agriculture and the Department of Health or a legal representative for further classification.
Republic Act No. 10611 is perhaps one of the most well-known laws regarding food safety regulations in the Philippines. This is also known as the Food Safety Act of 2013. Therefore, it’s recommended to research this act in full as it explores several areas of food safety, such as contamination and packaging of food.
Food, Drug, and Cosmetic Act – Republic Act No. 3720 is a legal requirement for bakery businesses that entrepreneurs will need to follow. The act regulates many areas of food safety, including the production, sale, and distribution of food to protect consumers and the wider community. You will be able to find more information about this act and others via the Food and Drug administration/department of health.
Food Fortification Law of 2000 – Republic Act No. 8976 also has some guidelines. Depending on the products you plan to sell, other laws may need to be investigated.
Even though we continuously update articles, it is always recommended to seek legal assistance when looking at the legal requirements for a bakery business in the Philippines. Alternatively, you will find several resources on this topic with the Department of Health.
How To Open A Home-Based Baking Business Philippines
The great news is that opening a home-based bakery business in the Philippines is similar to opening a more traditional one.
- Research The Market
- Create Your Bakery Business Plan
- Investigate The Laws And Requirements
- Purchase The Ingredients And Equipment
- Open Your Business
- Market To The Local Community
Of course, there are some additional requirements that you may wish to investigate. For example, safety and security are always big considerations when opening a small bakery business at home in the Philippines. Other categories include your opening times and if your equipment can be used continuously.
Bakery Business Philippines Profit
From research, the industry average for profitability is around 5-12%. But the total profit a bakery business can make will depend on the cost of ingredients and how well entrepreneurs can make more for less. Bakeries in the Philippines can be very profitable. However, many bakeries do not earn a large profit due to their inaccessible location, low demand, or failure to stand out as a business.
Naturally, market research is key when looking at how to open a bakery business in the Philippines. But what is also incredibly important is the entrepreneur. with the right leadership, bakery businesses in the Philippines can be very profitable such as the great success of Pan De Manila.