What are the pros and cons of starting a gluten-free bakery business?
A gluten-free bakery business has a few pros and cons, which you should be aware of before getting started.
Here are the high level benefits and drawbacks of a gluten-free bakery business:
|• Flexibility||• Motivation of employees|
|• Ability to start your business from home||• Longer Sales Process|
|• Meaningful business connections||• High employee turnover|
|• High customer retention rates||• Taxes|
|• Scalable||• High overhead expenses|
|• High margins||• You may need to charge sales tax|
|• Easy to encourage "impulse buy"||• Customer churn|
|• Amazing perks and discounts||• Time commitment|
|• Unlimited income potential||• Difficult to build trust with your customer|
|• Predictable income stream||• Impatient customers|
|• Higher likelihood of getting referrals||• Learning Curve|
|• Simple business model||• Equipment Breakdowns|
|• Greater Income Potential||• Technical issues can be frustrating|
|• You get to do something you truly love||• More challenging to earn passive income|
|• You get to inspire others|
|• You establish yourself as an expert|
|• Can build solid foundation of clients|
|• Low maintenance customers|
|• Results and revenue happen quickly!|
You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
• Ability to start your business from home
It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
• Meaningful business connections
You never know who you will meet or get to work with for your gluten-free bakery business. This could be the start of an incredible business opportunity!
• High customer retention rates
Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your gluten-free bakery business becomes an integral piece of their every day lives.
With businesses and processes changing daily, there will always be demand for new features, products and services within your gluten-free bakery business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.
• High margins
The gross margins for your gluten-free bakery business are typically around 56%, which is considerably high and allows you to grow your business and manage costs easily.
• Easy to encourage "impulse buy"
In the gluten-free bakery business, you have a much higher chance of encouraging your customers to buy on impulse - you can easily alter the price, placement, packaging, and promotional value to influence the decision of your buyer.
• Amazing perks and discounts
Working in the gluten-free bakery business comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.
• Unlimited income potential
With your gluten-free bakery business, there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.
• Predictable income stream
With a gluten-free bakery business, your income stream is typically predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!
• Higher likelihood of getting referrals
The gluten-free bakery business is all about referrals, which is a very effective way of attracting and retaining customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.
• Simple business model
A gluten-free bakery business has the advantage of a simple business model, which makes launching and building the business more seamless.
• Greater Income Potential
When you start your own gluten-free bakery business, you have the ability to make as much money as you want. You no longer work for someone else where at any point, you could be let go or get a pay cut.
• You get to do something you truly love
With starting a gluten-free bakery business, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.
• You get to inspire others
Your gluten-free bakery business is an outlet that encourages and inspires others, which can help you get through the challenging parts of starting a business.
• You establish yourself as an expert
Starting a gluten-free bakery business helps to establish yourself as an expert in your niche. In return, people are more likely to trust you, refer you to friends/family, and support your business.
• Can build solid foundation of clients
It's unlikely you will have one-off jobs with the gluten-free bakery business. Typically, you can contract work with clients and be their go to when it comes to anything gluten-free bakery business related. If you do a good job for them, they will be likely to keep using your services and refer you to others.
• Low maintenance customers
In this industry, customers are known to be very appreciative and low maintenance. This can help with your stress levels and allow you to focus on growing your business.
• Results and revenue happen quickly!
Unlike other businesses, it can be relatively quick to start seeing results and revenue for your gluten-free bakery business. As long as you follow all the steps to validate your idea before launch, you are likely to see immediate results and ROI.
• Motivation of employees
If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.
• Longer Sales Process
A gluten-free bakery business can be a big time and money investment for your customer, so it's important you plan and predict a longer conversion funnel and stay in communication with potential customers.
• High employee turnover
In the gluten-free bakery business, employee turnover is often high, which can be quite costly and time consuming for your business. It's important to try and avoid this as much as possible by offering competitive pay, benefits, and a positive work environment.
As a gluten-free bakery business, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.
• High overhead expenses
With starting a gluten-free bakery business, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.
• You may need to charge sales tax
If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article
• Customer churn
With a gluten-free bakery business, people can cancel their subscription - which can make income unpredictable. It's important to focus on your churn rates and trends so that you can prevent this as much as possible.
• Time commitment
With starting a gluten-free bakery business, all responsibilities and duties will be in your hands. Although this is not necessarily a negative thing, it's important to understand that your work-life balance may be a bit unbalanced at times. This can place a strain on friends and family and add to the pressure of launching a new business.
• Difficult to build trust with your customer
With a gluten-free bakery business and any online business, there is little physical interaction, which means it can be a lot more difficult to establish trust and clout with your customers. You'll need to go the extra mile with your customer to grab their attention as soon as they reach your site + assure them that your brand is legit and trustworthy.
• Impatient customers
Your gluten-free bakery business may offer an engaging user experience for your customer, but it's important to note that customers expect a lot when it comes to your product, and are more likely to become impatient with you and your product if there are any errors or bugs.
• Learning Curve
When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.
• Equipment Breakdowns
Starting a gluten-free bakery business involves quite a bit of expensive equipment. Over the years, your equipment will be damaged, will break down, and will need repairing which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.
• Technical issues can be frustrating
A big part of starting your gluten-free bakery business is the ability to work through technical issues. If you struggle with the technical side of things, you may want to consider outsourcing this responsibility to save yourself the time and frustration.
• More challenging to earn passive income
One of the disadvantages of starting a gluten-free bakery business is that it's much more challenging to make passive income. Typically, the amount of revenue you bring in is limited by the amount of time you have in the day and there is a ceiling to your earning potential.