Risks of a Bakery Business?

Every time you venture into a business, you cannot discount the fact that there will always be risks involved. Even in the bakery industry, there are certain risks that have to be accounted for and that you should be aware of as an entrepreneur.

One of the risks in bakeries is a health risk. The simple baking trays if not handled properly will be detrimental to the health of a worker.  Most would scoff at the idea that baking trays can be a source of imminent danger in bakeshops. You should mind these trivial matters because if you do not give control measures to these, these might end up stinging you in the future.

The bakery business

The business of bakeries includes commercial facilities that are in producing bread and snack products. There are also small local bakeries that bake croissants, artisan pieces of bread and other delectable pastries. Both types of business endeavors can face the same risks but it is to be noted that there are also opportunities and risks in small bakeries that are not shared with larger facilities.

Price fluctuations

There are raw materials that are used by bakeries which are subject to extreme fluctuation in prices annually. According to a report made by the Bakeries Industry Snapshot in 2011, the price of wheat can dramatically change by up to a staggering 40 percent in the course of one year. The same goes for the price of vegetable oil. On the other hand, the price of natural gas is also volatile in that it can alter by up to at least 25 percent within the span of a year. These sudden shifts in prices can severely affect the financial position of an entity unless of course the cost is passed on to the public or consumers. One of the best ways to minimize this kind of risk is by negotiating a contract for a price that is fixed for these raw materials.

Limited growth

According to surveys, the US market for baked products is already being served a large percentage of both small and large bakeries. The willingness of the public to pay a higher price for specialty baked products or pastries is largely dependent on how the overall economy is doing. In a reliable source, it divulged that the growth in the bakery industry is limited to the population growth in the area. Most of those who are engaged in the bakery business grow by purchasing their competitors or controlling a major portion of the competitor's business venture. One way in order to improve the growth in the industry is to offer artisan bread which is not readily available in other places and at the same time catering to the diets of people in the elite class.

Opportunities

If you think small bakeries will cry foul of their status over the larger companies, you are wrong. There are advantages in a small bakery. It is easier for small bake shops to bake and offer gourmet breads at much higher profit margins since they need not switch over large automatic bread making production line in order to accommodate a small run of a special type of bread.