Donut Business

Breaking into the Donut Business

The donut business can be a great opportunity for earning a living and becoming self-employed.  Donuts are easy and cheap to make and they are usually sold for close to ten times their value.  Here are some tips for entering the donut business:

Get Experience

To be successful at any business, you need to understand it from the inside.  Therefore, a good way to get started in the donut business is to spend a few months working at a donut shop.  The pay will be terrible but the experience will be well worth it.  Although the donut business is not complicated, being a success at it still requires a lot of work and thought, so you should know what you are getting into before you sink your own time and money into it.

You Can Start Small

If you aren’t the kind to jump in wholesale into a new business or if credit problems prevent you from buying a store, you can start small in the donut business.  You can find a location that is underserved, such as at a fair or a busy corner, get your license and open up a stand there.  You will need donut making equipment, unless you want to go with the homemade feel at first, but once you have some success doing this you will find that getting to the next step is easier both financially and psychologically.

To Franchise or Not to Franchise

One of the early decisions you will have to make is whether to franchise or not to franchise.  That is, do you buy a franchise from a recognized brand or do you try to make it on your own.  There are advantages and drawbacks to each approach.  A franchise is like painting by numbers.  They will give you all the steps that you need to go through in order to create the store and the name recognition will bring customers to your store right away.  On the other hand, you will have to pay them a certain amount and there will be some restrictions on how you can organize your store.  You may not even be able to have your store where you want it.

Going it on your own allows you to decide on everything, but you will have no road map and no company moniker to help you succeed.  Everything that you do will depend on your ingenuity and resources and you may find that you are in competition with a franchise if your location becomes successful.  On the other hand, your autonomy allows you to adapt much more quickly than your lumbering competitor and to offer localized service that your corporate competitor may have overlooked.

Location, Location, Location

One of the keys to opening a successful donut business is finding the right location.  You want to find a spot where you can get free foot traffic and advertising just from people going by.  The best donut businesses find spots where people are on their way somewhere else, but find themselves tempted to go in.  Sit at the location you are thinking of opening and watch during a week.  How many people go by in the morning?  Do they look like they could use a donut or has someone else already met their needs upstream?

Diversify

In addition to your basic donuts, you should also look to diversify your menu as time goes by.  Perhaps you can make sandwiches in the afternoon when the donut demand falls off.  Look to collaborate with other stores to cross market your donuts with their products.  Offer customers a drive through or late night fresh donuts so they can have them fresh in the morning.  Find what works and exploit it to the fullest.

In addition, don’t forget to keep the quality up—a donut shop without quality donuts is a business with a gaping hole at its center.