Please Help, I Need Advice

Business By Linda5606 Updated 22 Mar 2008 , 11:19am by Tona

Linda5606 Posted 21 Mar 2008 , 2:43am
post #1 of 8

i'm looking at becoming a licensed home bakery. to be legal i will need to spend around 9000. my husband and i are capable of carving, sculpting, gumpaste flowers and buttercream. i have been doing some cakes and have gotten good reviews. my concern is will i ever be able to recoup at least a good portion of the put-up money? does anyone have any advice or experience with this?

the good part of it is that we work together and have a tremendous interest in cakes and we have a good time working together and talking cake and traveling for cake reasons

any advice?

7 replies
stsapph Posted 21 Mar 2008 , 2:53am
post #2 of 8

I would try to see if you could rent out a kitchen first to get licensed. Some states allow this, but I don't know if all do. That way they have the equipment, so outside of pans and ingredients, there shouldn't be any upfront equipment costs. You would still have to get your own license, and the kitchen might want you to get your own insurance, but it would be a good way to at least see how much you could potentially make and maybe save up for your own kitchen. HTH

stsapph Posted 21 Mar 2008 , 2:53am
post #3 of 8

I would try to see if you could rent out a kitchen first to get licensed. Some states allow this, but I don't know if all do. That way they have the equipment, so outside of pans and ingredients, there shouldn't be any upfront equipment costs. You would still have to get your own license, and the kitchen might want you to get your own insurance, but it would be a good way to at least see how much you could potentially make and maybe save up for your own kitchen. HTH

funbun Posted 21 Mar 2008 , 3:12am
post #4 of 8

You need to figure out how long it is going to take you to recoup that money. Do you want it paid back in 2 years, 5 years or ??? Figure out how much you need to make a week to pay this back and include your overhead charges like gas and electricity.
In short the first thing to do is get a business plan together and do research in your area to see if you can even sustain a client base in your area.
When I started I didn't have all the research I needed and it cost my alot of lost $$$. But if you can make it work and are ready to work your tail off GO For IT!!! icon_biggrin.gif
I do not regret going into business for myself but it is a huge commitment that you really need to think about and be informed about before you jump in and start throwing money around. icon_biggrin.gif

Good Luck and I wish you all the business you can handle and a little more to make you crazy busy! icon_wink.gif

littlecake Posted 21 Mar 2008 , 4:05am
post #5 of 8

the great thing about being legal in your home is no overhead.

if you were renting a shop that 9 grand would be used up in no time.

if you're serious about working the biz, you'll make it back....are you gonna do it full time?

CoutureCake Posted 21 Mar 2008 , 5:44pm
post #6 of 8

I'm going to be the one who isn't afraid to say... "Take that $9000 and double or triple it..." Even for a home based licensed kitchen. A gal near me spent $30,000 on their renovation/equipment for a licensed kitchen and we're anticipating about the same by the time all is said and done because I'm purchasing used equipment to keep costs within reason. Do a search for "(local) restaurant auctions" and you'll come up with a few companies in your area that do this. It will help save you a ton as long as you're savvy with your purchases (aka kick the tires). The thing is, it's not just the structural changes and equipment, it's other things as well that are going to add up. For example, you'll need an NSF mixer and anything you use that sells an NSF option.

As for recouping your investment, it all is going to depend on how soon you want to start earning a paycheck. If you aren't afraid to give it some time before you start getting paid for your work, you'll recoup your investment a LOT quicker than if you start getting a paycheck right away with the cakes. By this I mean that you take in $500 for a wedding cake, $250 goes into supplies to make the cake alone, $$ for incidental expenses (power bill, heat, etc.), then the rest goes to pay the bank with enough operating capital left in the bank so that you can afford to take a last minute order or purchase a new/used piece of equipment. Also, you've got to be savvy about your purchasing habits in buying low and selling high. Flour prices are going up, you've got to charge appropriately for hedging what the market will be at the time of the wedding, not the present. For example, if a bride calls about a cake in two weeks, the price of flour isn't NEARLY what it will be come August. You've got to plan ahead for it. Same goes for watching the other commodities markets (milk, eggs, butter, flour, sugar, fruits, etc.)..

Also, the first year, PLAN that you aren't going to have much income from sales at all. Do some bridal shows to get your name out there. The 2nd year in business you'll start getting nibbles enough to come CLOSE to breaking even with what is going out vs. what is coming in for orders, and by the third year you'll start to get a routine. Plan that for five years you aren't going to see much in your own pocket even though you ARE going to charge competitively/upper end for your area. Your cakes are going to provide a niche called Personalized Customer Service. Don't be afraid to say your competitive edge is that when a bride calls, they'll be talking to YOU, not whomever was available to answer the phone and doesn't know their order.

Think strategy but not setting precidents with your donations because you don't want to be stuck in a not so good situation for the long term by making a poor short term decision. For example, the Boy Scouts want a cake, great organization, it's going to be $XY. If you choose to make the donation, you take the money, and write a check back to them for an amount you feel comfortable with donating. That way when the American XYZ organization comes to you asking for a donation of an ultra expensive cake you are not bound to give it to them free. After all, they pay their fundraisers a HIGH percentage of the money earned instead of that money going to the cause itself. OR, you can set parameters for what groups you give discounts to. For example, I give a slight discount to Military Personnel, Fire/Rescue Personnel, and FFA chapters/members who furnish active ID's (bunker gear or a jump pack is an acceptable ID LOL).

Give yourself 5-10 years before things really get comfortable again in terms of what is coming in and what is going out. This can be lower depending on how good of a marketer you are and business person. Always bring samples/cards for the catering staff, DJ, and reception staff, coordinators, and bartenders. THEY will give you FAR more referral business than a bride ever will!!! Also, don't be afraid to recommend other businesses to brides that you've seen do a good job. One little "customer service" type thing that I do is I'll take a few pics of the empty reception hall to email or put on CD for the bride. It's something that no one thinks of taking pictures of but are nice to have in the long term because you get to see what your reception site looked like all freshly decorated (in other words, you're going to take pics of the cake to CYA that it was delivered correctly and not the cake after the caterer moved the table).

kakeladi Posted 22 Mar 2008 , 10:39am
post #7 of 8

I certainly hope by now you have read the thread "Am I taking on too much?" in this forum.
There is a ton of info that will apply to your situation.

Tona Posted 22 Mar 2008 , 11:19am
post #8 of 8

If this is your dream. It will work. You have to be smart do the reserch and follow a well thought out plan. The plan is the most important part. Good luck

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