4 Ways A New Bakery Can Raise Money

4 Ways A New Bakery Can Raise Money

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Raising money as a new business can be a difficult situation to navigate for some. Especially if you are a product-based business, such as a bakery. Sure, you can give out free cupcakes or cookies for publicity, but that also takes profits away from your business. 

Most banks like to see proof of a 30% personal contribution for a business such as a bakery before considering a loan. So even if you get approved for a loan, you will need to raise some of your own capital first.

Four ways a new bakery can raise money are, have a bake sale or host events, apply for federal loans or grants, join a crowdfunding platform and collect donations.

No matter which path you choose, it will be a process to raise money for your bakery. Each of these options will require time and effort, so let’s break them down.

Bake sales and Events

4 Ways A New Bakery Can Raise Money

You know what they say, back to basics. Whether you are trying to earn money to open a bakery or trying to raise extra money for a bakery you’ve already opened; bake sales and events are a great idea. 

Granted you may not make a hefty sum of money each time, but you can make connections and network each time. Which can get you more events and jobs in the future. Sometimes you need to think beyond the money to see how beneficial events can be.

Bake sales can work from your home or bakery, especially if you have a few days to prepare. You can make a few dozen cupcakes, cookies, cakes, and so on. Whatever fits the event is what will work here. Then price them accordingly to ensure that what sells is making a profit. Towards the end of the sale, you can offer specials to prevent goods from not being sold.

Events are another great option with a guaranteed income from the event. As long as you are properly pricing your services and goods. Depending on the event you may need to make muffins and bagels, or cupcakes and tarts. However, you can charge a set price for event packages which is ideal when trying to raise money. 

Plus, events allow those attending to try your menu without you having to do any advertising. It kind of ends up being a win-win for your bakery.

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Apply For Federal Loans And Grants

The federal government does offer some loan and grant applications meant to help small businesses, especially if you are disabled, a woman, or a member of a minority group. There are no specific loans or grants to help small for-profit businesses get started, but as mentioned specific ones do exist for different groups of people. Conduct research and see what options you may have before disregarding the idea. 

One example is that Iowa’s Department of Economic Development can provide a grant of up to fifty thousand dollars to women-owned small businesses. The intent is that they can use the grant to then get financing through a bank because they now have a substantial contribution towards the business. Although, they do require the individual or business to have ten percent of the cash investment to be considered. 

There are also loan financing programs in states such as North Carolina. They have an express loan program that offers loans of up to five thousand dollars at low interest. These can be used to start or expand a small business depending on the owner’s current needs.

Several programs and options are depending upon your state and the resources they have available. While grants are preferred for many businesses as they do not need to be paid back, low-interest loans are still a fabulous option to consider. Any help is getting you one step closer to your goal.

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Join A Crowdfunding Platform

Crowdfunding may be an unfamiliar concept to some, so first let’s define the term. This is funding a venture or project through typically smaller donations from a large number of people. 

It acts like a grant or donation more so than a loan, so any money received from a crowdfunding site such as Kickstarter or Fundable goes directly to you after the site collects any fees needed for operating the collection. This allows strangers who believe in your bakeries business plan to donate, and friends and family to contribute if they feel the need to. 

Sites like Fundable are specific for small businesses. The site allows people looking to donate to choose to make one for a small business that needs it rather than giving the money to someone trying to make a new invention. Each type of situation more or less has its own site for crowdfunding. 

Whereas, Kickstarter is a more neutral site that everyone uses. Whether they are trying to start any type of small business, spread awareness of their creation, or expand a current business. These platforms allow people to contribute, small or large amounts, towards an end goal. 

One thing to consider though is that many of these sites do have requirements and rules, so it’s important to do proper research before setting up any accounts. Many of them will allow you to set a fundraising goal, which is good and bad. If the goal is reached, you receive the amount left after their fees are taken. However, if you do not reach your goal, you can receive nothing and everyone will receive their money back.

So looking over terms and conditions and reading everything is key here. 

Collect Donations
4 Ways A New Bakery Can Raise Money

Collecting donations fits the “if it’s not broke don’t fix it” mantra quite well. People collect donations for school trips, to raise money, to donate money to shelters, and so on. The list is truly endless. 

You can go about this in several ways. One you can just set out a jar on your counter that allows people to donate their change or cash to you. Nowadays it’s key to have a Venmo and Cash App option as people tend to pay more with their cards and less with cash. So even if they have no cash they still have the option to donate. 

You can set up these accounts on your phone, and add the QR codes to the jar, which is quite easy to do. All customers would need to do is use their camera to scan the code and it will take them to your account to send money, as a donation which should be noted in the notes section.

Or you can offer a promotion for every donation received. These can go several ways. One is offering to give a dozen cookies to a local girl scout or boy scout troop for every twenty-five dollars donated (overall amounts may work best here). So while people are donating to you, they are also giving back to their community, especially the youth in some way.

Or you could offer to bake a certain number of baked goods for a retirement home if a specific amount of donations is received. It will not raise money quickly, but it will get you a good reputation in the community. Plus, people will still perceive you as doing good deeds for the old and young in the area without seeming greedy per se for asking for donations.

It allows you to toe the donation line without feeling bad for asking or receiving them. 

Now, none of the options are going to get you a large sum of money quickly by any means, but it’s also unrealistic to think that they would. 

Four ways in which you can raise money for a new bakery are through collecting donations, crowdfunding sites, federal loans and grants, and participating in bake sales and local events. While they require time and effort they are great options to consider, just remember to research your states regulations. 

Business Insurance & Protecting Your Company

Frequently Asked Questions

  1. If I do crowdfunding are the people who donate now stakeholders in my bakery?
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No, as long as you are participating in donation-based crowdfunding. There are different types, some of which allow others to become stakeholders in a business but not with donation-based ones. The amounts donated here are typically too small to be worth any fraction of a business, allowing the donations to be seen as charitable. 

  1. Should I try and make myself look good in the community while raising money?

Yes, reputation is everything for a business, especially a small business. Those in your community will soon become your customers if they aren’t yet. Remaining in good spirits with them and being involved in the community whether that means events or talking to people is key to being successful.

  1. How long would these processes take?

There’s no definite answer, it all depends on how much money you are trying to raise and what methods you try. Any federal programs will require you to have some capital before you would be considered, so that will take time. Then your application needs to be filled out, submitted, approved, and so on. It could take weeks to months on end to hear anything. Then the donation route is all dependent upon what avenue you take and the results you get. 

To learn more on how to plan your own bakery business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.