You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your pet bakery. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a pet bakery?
The startup costs for a pet bakery business can range from $1,000 to $100,000, depending on the bakery’s business model. Upfront costs that all pet bakeries have include insurance premiums, licensing fees, initial ingredient costs and packaging costs. Licensing fees vary, but they usually cost a few hundred dollars, at most. Pet bakeries that cost tens of thousands of dollars to open are usually franchise operations, and they often have a brick-and-mortar location.
Pet bakery owners who want to keep their startup expenses minimal can sell through a website and established retailers, rather than through their own physical store. They also can purchase small amounts of ingredients and packaging materials to start with, increasing their order amounts as their business grows and generates revenue. Finally, many states let pet bakery owners use their own kitchens as a processing facility, as long as it’s licensed. This eliminates any rent costs.
What are the ongoing expenses for a pet bakery?
The primary ongoing expenses for a pet bakery business are annual license fees, the costs for ingredients and packaging materials, and any employees’ salaries.
Who is the target market?
An ideal customer is someone who is concerned about the health of their pet and has discretionary income to spend on gourmet pet food. There is usually a higher demand for specialty pet food in cities, where more pet owners have discretionary income to spend on specialty pet food. (Pet bakeries in less populated areas often face less competition, though.)
How does a pet bakery make money?
Pet bakery businesses make money by selling the pet foods they create. These foods may be sold directly to customers (retail) or through intermediary retailers (wholesale). Wholesale prices are lower than retail prices.
How much can you charge customers?
In 2014, the average price for private label pet food $1.22 per pound, and the average price for branded pet food was $2.22 per pound. Thus, a 25-pound bag of private label pet food would cost $30.50, and a branded bag would run about $55.50.
The average price of a branded bag shows that consumers are willing to pay $55 for a 25-pound of pet food. Although the average price for private label pet food is less, a specialty pet bakery business that is able to gain customers’ confidence may be able to charge branded rates for their specialty foods.
How much profit can a pet bakery make?
How much a pet bakery business profits depends on how many outlets it's selling in. The more places a pet bakery’s goods are sold in, the more customers will see and, potentially, purchase the bakery’s pet foods.
Two pet bakeries show the potential revenue that such a business can generate. Dogswell was founded in 2003 with one pet food specifically designed to help dogs who suffered from hip dysplasia and arthritis. The company earned $35,000 in revenue in its first month and $500,000 in its first year. It’s now in several national chains and had an annual revenue of $17 million in 2008. Three Dog Bakery started in 1989, so it’s a well-established company. It has dog foods in national chains and averages between $10 and $15 million in annual sales. Local pet bakeries, it should be noted, won’t see these types of sales unless they get their products into national chains.
How can you make your business more profitable?
A pet bakery business can increase its profits by finding additional retailers, offering new lines of pet foods and creating pet treats.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your pet bakery is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Federal Business Licensing Requirements
Manufactured pet food is regulated by the FDA. Check this guide for an overview of their regulations.
Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Finally, local licensing or regulatory requirements apply. For more information:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
Operating a pet bakery typically requires a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a pet bakery.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a pet bakery
The most effective way to market pet bakery businesses that primarily sell through established retailers is by building relationships with more retailers. Pet bakeries that focus on online sales can market themselves through online communities, such as Facebook, Reddit, forums and blogs.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
A pet bakery business can set itself apart from similar businesses by building trust with customers. Signing on a board-certified veterinarian is one way to build trust. Another is to hold demos at retailer’s stores, which provide opportunities to educate customers.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Pet Bakery In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Anyone who is passionate about pets and nutrition may be interested in opening a pet bakery business. Pet bakeries usually start out selling through other retailers or online, rather than their own brick-and-mortar store. Because business owners don’t need to keep specific retail hours for customers, it’s possible to start this business up while maintaining another job.
What happens during a typical day at a pet bakery?
A pet bakery business owner spends much of their time creating and packaging pet foods, and marketing the foods their bakery sells. Marketing may involve running a site online, building relationships with retailers or both.
What are some skills and experiences that will help you build a successful pet bakery?
Specialty pet food must be carefully formulated, and each ingredient must be individually considered. Additionally, each line of food needs to take into account the unique needs of the species that it’s designed for. (For example, chocolate is poisonous to dogs.)
Pet bakery business owners, therefore, should be experts in pet nutrition. The Academy of Natural Health Sciences offers certificates in pet, canine, feline and equine nutrition, and Dogs Naturally Magazine University offers a pet food nutritionist certification. These certificates can help pet bakery owners learn about pet nutrition and other aspects of running a pet bakery (e.g. FDA regulations), but a certificate isn’t required. Owners can also learn what they need to know from books on animal nutrition and websites like the Pet Nutrition Alliance’s site. Books from other pet bakeries (e.g. Short Tails and Treats from Three Dog Bakery) can also provide insights and inspiration.
Pet bakery owners who want even more expertise may want to bring a board-certified veterinarian on as a nutrition consultant. Veterinarians, as an opinion piece on PetMD points out, have more training than certified pet nutritionists. Having a veterinarian help create pet foods will ensure they're nutritional, and it can help instill consumer confidence in the pet bakery’s brand.
What is the growth potential for a pet bakery?
Many pet bakery businesses start out small, selling their specialty pet foods in local retail stores or through a single website. As they grow, pet bakeries can sell their pet foods in more and more retail locations, including national chains like Petco and Petsmart.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
How and when to build a team
Pet bakery businesses that want to market their foods as being formulated by a veterinarian will need to have a consulting veterinarian from the outset. (Bringing on a veterinarian isn’t required.)
Most pet bakeries’ first true employee is a part-time delivery driver. Hiring a delivery driver lets the owner spend more time marketing the business and creating new lines of pet foods, both of which grow the business. Eventually, a pet bakery may have a small team that includes a delivery person, a salesperson, an operations manager, and one or two other employees.