Going From Home To Shop... How Long?

Business By aligotmatt Updated 9 Jun 2008 , 3:17am by snarkybaker

aligotmatt Posted 5 Jun 2008 , 1:58am
post #1 of 13

Here's the story. I'm entering year 3 of this home business, and it's going spectacular. I'm booked up through November, and almost booked up for april and may '09. really spectacular. I've had to turn down some really big and beneficial to my business orders because I can only sustain so much at home... I had a business want to buy 26 dozen cupcakes EVERY DAY and I had to turn it down, because I just can't do that from home, EVERY DAY. And, home licensing won't allow to sell to someone else to sell retail. bah.

I've been adding up the number of orders I turn down weekly (from being overbooked or otherwise unable), and the amount that a leased or purchased space would cost, and I could move into a space, hire 2 employees, take all of the business, and come out way higher than what I'm making now.

so, I'm working on this business plan to get a loan and get all of this going. I've talked with a real estate agent and I'm working all of this out, there are no barriers at this point.

Here's the questions... I'm going back to work out a contract with the restaurant mentioned above to get that order and I need a timeline....

How long from the time I submit my business plan do you think it will take me to open my doors? The space I am looking at was a short order grill restaurant, so it has the hookups, but no equipment for me...

Also, this seems so silly to ask, what is a reasonable 'start up' cost? Right now, I just use 2 $400 fridges from Lowes, and my regular electric oven. Can't take them from home... sure I'm going to need more...

I'm also thinking about trying to be open for foot traffic... how does that change things?

I also can't find anywhere that will give me an estimate on insurance without a set location?? I would want it all on the shop, fire, theft, flood, liability, workers comp... Anybody own a building (this is what we want to do) that wants to share that cost?

Anything I'm missing?? THANKS!!!

12 replies
beccakelly Posted 5 Jun 2008 , 3:21am
post #2 of 13

just something to think about:

if you are in a commercial space there's a good chance you'll be required to have commercial grade equipment, which means $$$$. think about work tables, at $150 each, how many will you need? if you are doing that much volume you will need a large 20-40 qrt mixer (could cost thousands), and I wish i had two of those now! a commercial grade oven (could also cost thousands), a commercial grade cooler/freezer (walkins cost thousands). I spent $500 just on ingredient bins since i needed a place to store those 50 lb bags of sugar and flour. how many shelving units will you need? doing that many cakes requires space to store them and your pans. i have two shelving units and am starting to run out of space. do you want to buy a couch and table for a comfy area to hold consults? if you have employees they may require you to have a separate men and womens rest room.

i'd find out what equipment your state/city requires you to have and go from there.

just some stuff to think of! if you can buy used equipment then you'll save a lot of money, but it will still pile up!!

sari66 Posted 5 Jun 2008 , 3:22am
post #3 of 13

I'll give this one a bump but indydebi is a great wealth of info on this so maybe she'll answer or pm her?
Good luck with furthering your business! icon_biggrin.gif

marysgobaa Posted 5 Jun 2008 , 3:52am
post #4 of 13

I just opened a bakery, about a month ago, and it took me about a month from the time I started the lease, to the time I opened to get everything set up. But i have been planning for about 3 months, and making phone calls. If you go to the secretary of state's website, you can click on your state and find all your legal certificate documents there. If you go to your health department and fill out their paperwork, you can set up a date for inspection. If you have foot traffic, you'll need to [probably] have a bathroom. The rule in West Virginia is 15 or under seats, one bathroom, more than 15, male and female bathroom. No carpet allowed in eating areas [this was a real problem for me, as the whole place was carpeted!]

As far as commercial equipment goes, I tried to find what I could that was NSF approved, but I have a regular Kitchen Aid mixer, and regular appliances [the oven is actually from my mother's kitchen, since the commercial oven deal fell through last minute]. Be aware that you will probably encounter some unexpected bills. I locked myself out, so there went 80 dollars, and the plumbing bill to hook up the 3-compartment sink and dipper well for my ice cream scoops was 2 grand!

There may be a Small Business Administration office close to where you are with some people who are there to help you will everything. They even have workshops explaining exactly what you need to do.

I'm not going to lie to you, I think I was more afraid of this than what was really necessary. I am 18 and was able to do this on my own; you should probably have at least $15,000 ready to invest in start-up, and still have more for the first couple months. Right now I'm not doing any advertising, but I am able to pay the bills, but there isn't much left over.

Oh yeah, and as far as insurance goes, I've had a lot of banks and people the ladies at the bank know send me their rates, but I went with State Farm since I know the people there, and it was a much lower rate than the privately owned places. I am paying around 30 dollars a month for insurance, and it covers everything as far as assets, liability [and 2 million on death]. I have no employees though, so yours may be a little higher.

Sorry so long, but I hope this helps!

PS- I always click the "notify me when a reply is posted" box, but I don't think I've gotten any notifications, ever. Or maybe I have and just don't know how to view them. Anyway, if you have any questions that you think I could help you with, feel free to PM me!

gateaux Posted 5 Jun 2008 , 3:53am
post #5 of 13
indydebi Posted 5 Jun 2008 , 6:58am
post #6 of 13

Find a local commercial kitchen designer to work with. I did. She basically did the designing for free since I bought the equipment from her. She found me a 8x8 walk in refrigerator for only $1200. 20 qt mixer for $1000 (and I've seen some CC'ers find them cheaper than that, even); my $15K comm'l dishwasher only cost me $7K.

The reason is that since she is in the business of comm'l renovation, she can pick up good used equipment when she has clients that re-do their kitchens with brand new equpment (i.e. churches, schools, large chains, etc.). She was also VERY aware of local health dept codes and requirements, and made sure I had all the necessary equipment while at the same time, crossing off stuff that I didnt' need.

You will need more shelving than you think. Even with 6 shelves inside the 'frig, I have 6 shelves in the kitchen/storage area and I'm picking up more via craigs list this week. And I wish I had space for a couple of more work tables.

If you work with an insurance agent who does a lot of commercial work (and most of them "should" have this background since comm'l ins is where the big commissions are), he should be able to give you at least a ballpark figure. Tell him you're not looking for an actual "quote" (defined as "this is the dollar figure I expect you to charge me when I give you the go-ahead to issue the policy"), but just a ballpark figure so you can insert it in the biz plan. He can look in his files and see what some of his other food industry customers are paying. Yes, it will vary based on building, location and actual need, but if he can't give you a ballpark, then you need to find a new agent.

My agent had just picked up a company that specialized in food industry businesses, so that worked out VERY well for me. (I even referred a fellow CC'er to my agent, and he was able to help her out with her insurance for her new shop, too!)

My start up time is probably an exception but it took almost two years from loan approval to hanging the 'open' sign. Some things I ran into .....

- I had painted the front room of my first shop space when the landlord called and needed to move me to another space ... they needed my store for an expansion of another tenant. Rewriting and negotiating lease took about 3 months of delay.

- Before building permits can be issued in my state, architect-approved plans must be submitted. Kitchen designer drew up preliminary plans and submitted them to an architect she works with. It took him 5 weeks to do his thing, THEN submit them to the state, which took surprisingly only about 10 days to get approval. So over 6 weeks just in architect time.

- Contractor had a TERRIBLE time getting permits from my small city. (My address is Indpls, but I live/work in a small community outside the Indpls city limits.) Contractor told me, "They have 12 permit requests ahead of you ...." so I thought it should take, what ...? a day or two? Evidently they have a very slow typist because it took over 10 days to get my permits!!!!!!!!!! Then halfway thru the build-out, we went thru the same thing when it was time to get plumbing permits.

- Contractor estimated it would "....ony take 10-12 days" to get the build out done. That was before he realized how long it takes to get permits; before factoring in Thanksgiving and Christmas holiday time; before he realized we were dealing with a gov't entity right before and after an elelction where most of the incumbants were cleaning out their desks post-election. My "10-12 days" ran into over 8 weeks.

- Expect your costs to run higher than estimated. There will be construction issues that are unexpected (Ever watch "This Old House"? There are ALWAYS surprises in a renovation!). My fire extinguishers and fire system were not included in the estimated equipment/build out estimates (I thought they were); grease trap was omitted from the equipment list and contracting costs (add another $1000!).

- Being a caterer, my equipment requirements are probably more than you need, but I spent $28K on contracting and $45K on equipment. The most expensive piece of equipment is the exhaust hood that goes over my range, ovens and deep fryer .... it's $1000 a linear foot and I needed 8 feet of it. This is the one piece of equipment that was non-negotiable in pirce (they know you HAVE to have it). But since it houses the fire safety system over the gas stove and deep fryer, I've no problem having it brand new and properly in place! (My parents had 2 house fires by the time I was 14, so fire safety is one of my hot buttons.)

I'm happy to share my biz plan so you can see the format I used and the type of info included in a plan. Just PM me your email.

Pics of my kitchen are on my Flickr site (link in signature below)

indydebi Posted 5 Jun 2008 , 7:06am
post #7 of 13

Forgot to add: I know some folks use home appliances in their kitchens. I owned 2 microwaves that I used for the biz (sometimes I have to take my own microwave with me to an event) and the kitchen designer said I needed to get a comm'l grade microwave. She tells me the story of a client of hers that had a fire in their kitchen. They had a non-commercial mcrowave in the kitchen. Even tho' the microwave had nothing to do with the fire, the insurance company denied the claim because there was a piece of non-comm'l approved equiopment in the kitchen.

So if you're thinking of going this route, check with local laws, requirements AND with your insurance agent. If your agent says "oh it's ok!", then make him issue it in writing that you ARE covered with non-comm'l grade equipment in use.

Because fire safety is a big thing with me, and because of this story my designer told me, there is NOTHING in my kitchen that is not NSF approved and/or comm'l grade.

wgoat5 Posted 5 Jun 2008 , 12:17pm
post #8 of 13

Wow Debi that is a world of information..

But I just wonder if there are exceptions to the exhaust hood.. I just talked to a sweet lady in Georgia who said she didn't have to have a exhaust hood installed in her leased space because she didn't do anything but cakes and it wasn't open to the public.. Also because of that she doesn't get inspected by the health dept. she had to go through the Dept of Ag.
She also uses reg. ovens..

So I guess diff. rules for diff. states?

indydebi Posted 5 Jun 2008 , 12:31pm
post #9 of 13

Having a hood depends on what equipment you have. If there is grease, you need an exhaust hood, because at one point, the designer said if I didn't roast meat in the ovens .... if it was cakes only .... then she could justify no hood over the ovens. but being a caterer, I couldn't commit to that.

I think if you have gas appliances, you need a hood (but don't hold me to that one).

And I think it all ties in with fire potential, since the hood houses your fire safety system.

wgoat5 Posted 5 Jun 2008 , 12:39pm
post #10 of 13

Thanks ya icon_biggrin.gif

btrsktch Posted 5 Jun 2008 , 2:53pm
post #11 of 13

Yes, I am dealing with this now as well, and Indydebi is correct, you only need a vent hood if you cook with grease or gas.

You can get around that by only having electric convection ovens (make sure your electric capacity can support this!) and by using electric hotplates for the sauces and things that need minor cooking.

melodyscakes Posted 8 Jun 2008 , 4:47am
post #12 of 13

I know all this is overwhelming....but I always look at the lost business, and try to figure out how to fix that....getting a shop would help with that. I had a small kitchen for cake in my basement...pain in the butt. try to carry a huge wedding cake up old basement stairs, that got old. plus I didn't have enough space.
I actually rent my new space and lucky for me it was a bakery and the owners wanted to retired. it cost me $2000.00 to move in, which is different then what you are talking about. anyway, I say go for it...I did and would never go back to the small home kitchen again. overhead is higher, but so is the profits. icon_smile.gif

keep us posted

melody

snarkybaker Posted 9 Jun 2008 , 3:17am
post #13 of 13

Business is going spectacular for a home based business is a good thing, but a home based business is a completely different animal than a retail bakery. For example, your company that wants to buy 26 dozen cupcakes...You open a shop hire some help and now to pay for your rent, labor and payback your construction costs, you need to charge $1.90 wholesale instead of $1.25 per cupcake. Since They were going to sell them for $1.95 they might be interested. When you go from home to retail, you are changing your market. If your business is going really, really well, you might actually want to just knock down a wall and rehab your kitchen.

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