Hey everyone... thanks for checking out this thread for me.... I need a sounding board.....

I've been working on my business plan and my financial statistics for weeks now trying to decide if I can afford to open a shop and keep my house... I will be unemployed from my favorite full time job at the end of the October, and I know that there is plenty of business out there!! So these are some of the options I am faced with... and could really use some words of wisdom!! FYI.. before you ask... Im starting medium size for equipment... so I would need to upgrade some electric here and there but my oven does NOT need a commercial hood... Already decided I would rather get two of those than spend thousands on a hood!

1-- Rent a place in a shopping strip halfway between my home and my bosses shop for $1000 a month.... 1000 sf --I would consider it because it's close to her turf and I could retain some of her customers... it's closer to my house, so less wear and tear on the car... it's on a highway and it's got great parking... But, it's next to a grocery store (No bakery) a Caterer and a florist.... so I could snag a lot of referrals from those two businesses...

2-- Rent the house next door to me downtown for $700 a month.... 1200sf it needs some work, but in PA I can have a home based business if I don't have a lot of traffic coming and going... And no animals... pros are mostly personal... close to home, no commute, less wear and tear on the car... Can help my kids with homework, let the dogs out at my house, and hey... trust my neighbor for once in my life... LOL... I can see how it would lay out... I would keep paper supplies upstairs.. have a consultation area in the living room, and line the dining room with fridges, install a table for my new oven and make room for my mixers... It would be a place to grow out of.... It's also close to the bypass that runs around the city, easy easy access-- it's downtown so I get a lot of traffic nearby-- BUT i also have lots of off-street parking in a quiet cul-de-sac.... so it doesn't feel like the city... I have a 55 gallon pond out front and a 250 gallon pond out back.-- and real old trees too... so it's not like being in the city and having to parallel park or worry about traffic tickets...

3-- Follow my parent's advice and invest in a property closer to my bosses place... $130,000 about two miles from the #1 option above.. again a house with house type issues-- but it's an investment... something i could sell if I don't make it...

I just don't know what to do-- can anyone shed some words of wisdom for me??

In any business, it's location, location, location. If it were me, I'd go for the 1000 sq ft in the strip mall. Next to a caterer and a florist?? omg, you'd be a fool to pass up all the referral business you'd get from these guys!!!

I'm in a strip mall between a restaurant and a Dollar General. My D&R wedding cakes (drop-n-run cakes) are three times what they were last year! And it's all due to foot traffic from these two businesses and gen'l foot traffic thru the strip mall.

I definitely can understand the convenience of being right next door to home .... I'm only a 3 minute drive from home to the shop so I really know the convenience. But I'm telling you, you just can't put a value on the REAL value of being in a great foot traffic location, with businesses next to you that are just a natural draw to your business.

well, if it was in a suburban area with lots of traffic, I would be more interested... but it's in the country halfway between here and nowhere... and it doesn't really do that much business... not that much foot traffic... I'm really torn becuase if it was such a good location it would have rented out 3 YEARS ago when the last tenants moved out!! It's been vacant for years! Also, the caterer or the grocery may not want another food vendor there?? I don't know though, since there isn't a bakery in the grocery and the caterer does not do cakes?? I can't see why it hasn't rented, except, location, location, location. =I

Thanks tho, looking forward to lots of good things from here!!

do you already have customers?

well this is just MHO...but if already had customers, i'd look into adding a kitchen onto my home, i think you're allowed to have that in pa.

i HATE HATE HATE paying rent every month!

theres a lady here in the next county that added like 500 sq ft on her house and does a pretty nice little biz.

if not, i guess i'd go with the strip mall too....does it need much work?

debi is right! Start off on the right foot and bring them cupcakes with cards/flyers.

If you have extra stuff periodically, float it their way!

When deciding on a location for a commercial enterprise, you should take into consideration how long of a lease you can get. Although the house next door has some advantages, what kind of lease is the owner willing to give you? Can you get a 5 year lease with an option to renew? If you had to move your business after just a few years, which go by very quickly, it could be a headache and financially a losing proposition.

The location, location, location issue is an issue if your business plan includes walk in / retail sales. If you're all appointment based, then having a retail location doesn't seem quite as important- though the referrals from nearby locations would certainly be nice.

There's a downside to locking into a 5 year or multi year lease, you should consider...what if your business grows at a pace that means you need more space but are stuck in a single location. What if it doesn't grow at all? A good business plan anticipates barriers to success and builds in contingencies for rainy days.

I'm all for starting small (and flexible), building a customer base and buzz about your product and then growing from there. In the current economy, luxuries go by the wayside much faster than not.

Presumably you have $ saved for when you are out of work or someone to help pay the bills. It can take quite a while before you start making money when you have the overhead of a store / space to pay for and no economies of scale on smaller products.

Not to be discouraging, but unless you've got some expendable capital stashed somewhere (6 months of living expenses is a good plan for anyone to have on hand), you might consider looking for another job while you invest time and energy into starting up a new business.

Here's a thought, I am searching for a commercial kitchen to work out of, and it has been suggested to me, to contact a caterer, and see if they are willing to rent out kitchen time to me. This may work for you until you gain enough clientele to become established in the area. If the caterer in the strip mall were willing to do this, it would benefit both of you. They would be able to offer more services(cake) and you would have steady orders, and get your name and reputation out there. It would also give you time to think things over, make a good decision during these scary economic times, you'd still be making money and minimizing your financial risk.

That's a great suggestion. FYI adobe, here is a website that lists some places that are available, the list has grown quite a bit:
http://www.commercialkitchenforrent.com/

In the absence of finding a space on that site, I'd highly recommend asking other restaurants, gourmet shops, etc that have a licensed kitchen (health or ag) and that you think might work for your scenario, even with a bit of re-design. Smaller places are really struggling right now and having the added income stream would be of some help. And you get to not have to worry about taxes, licenses, phone bills, (some) utilities, repairs and maintenance, etc if it is an all inclusive deal.

Personally I would go for #2. The kids and close to home (REAL close!!!). I know that if I am up until 2:00 in the morning, the last thing I want to do is be driving across town to get home. Even 15 min is too much at that hour!!! It gives you time to get your business up and running. And what exactly is WRONG with a location that rents out for that little that it hasn't rented out in 3 years???? My vote is close to home. but that's just me.

I know a lot of it depends on your volume, but i found that when I moved into a comm'l kitchen, I didn't spend NEAR the hours in the kitchen that i used to. It just doesn't take you as long when you can whip up cake batter for 200 servings in one batch; when you can bake ALL layers for ALL tiers for a cake for 200 in one baking batch ... less than an hour; when you can put them in a zero-degree freezer and have them cooled and ready to ice inside an hour; when you have tons more storage space with easier access; when you have a comm'l dishwasher that washes and dries your 20-qt mixer bowl, beater, spatulas, etc., in 55 seconds. The efficiency of a comm'l kitchen is nothing like you can imagine.

the latest I've ever been in my shop was about 9:00 and that was on a weekend that I had 3 wedding cakes at the end of a very busy week. And it was only the one time.

This week I have a booking for 140 dz cookies; plus a short cocktail gig at a dept store; plus a drop off catering; plus a wedding cake to drop off (all on Saturday).... and I'm outta there before 5:00 every night with plenty of goof off time during the day..... I don't even get there before 10:30 a.m.

It's hard to imagine, but you can't really assume the kind of hours you'll spend there, based on what kind of hours you're putting in at your home kitchen. It's SO much different!

I'm so interested in this thread. I have so many questions!!!! In the interest of not maintaining this thread, can someone direct me somewhere else? I have lots of questions concerning timetables, commercial rental workings, and how to make it work for me. If anyone has the time or can direct me somewhere, I would greatly appreciate it. Thanks

Debi, what you said really hit home for me. The time is been a big factor for me in my deciding what to do. I was wondering though, do you have other employees that work in shop, or do you only have employees that help out as servers an such? I know that it would just be me, except at events where I would have servers. Thanks!

Oh how I know the deifference between commercial (the grocery store where I can decorate 90 cakes a day) and the cute little cottage (Where I only get about 15 done in a day!)

I'm leaning towards retail and commercial but We will see in two weeks when I go to the bank... the house next door rented out, so that's not an option anymore!!

I have 2 high school girls who come in after school to make cookie dough balls and/or to bake the 300-a-day cookie order. On catering day, me and my 16 year old can handle the cooking (amazing how much you can get cooked in a short time in a comm'l kitchen!) and I have folks come in to load the van and serve the event, then come back to unload and do dishes (which takes about 20-30 minutes).

during the summer, my 2 girls worked 10:30 to 3:00, about 3 days a week. I had 3 other girls comes in 2 days a week to stock up on cookie dough.

Thanks, Debi for all the help and advice you offer!! I think that every hour that goes by I change my mind thirty times --- Yes, It's time to go for it--- No i'm crazy!! -- Ya, why not... Business is there--- No, i'm crazy!!

Some of the things that pull me back from opening are-- 401 k plan that has a loan outstanding-- penalties if I withdraw =(
Medical insurance... to keep it, I have to work 20 hrs a week.... it's flexible hours, but it kills my neck and shoulder to crank out 40- 90 cakes a day....
Embarrassment-- I don't like the thought of having points against my credit if I have to apply for a bunch of loans.. and I don't want to get turned down!! It's something to be proud of-- Every job I have ever applied for, I have been offered. Some I turned down, others I took, But It's always been offered... I STILL can't believe that I'm being laid off!!! It's really shaking me up from the inside out!!

Stability is another issue... I mean, I know with the grocery store, that they will be there tomorrow, and next week and next month and next year... it's a good stable place to work..... And what if I have to go crawling back to them in 2-3 years... I won't make what I make now with a type of tenure after 11 years, so that makes it very scary, as my safety net will be gone....

I'm like a fish out of water just flopping around!!

holy cats!!!! 90 cakes in a day?

WOW, i thought i made a lot of cakes!

i haven't had a safety net for 25 years....it's really not that bad.

i think if you can make 90 cakes a day....you could take over the world....

keep us posted how things turn out for you.

Thanks... ya it's an outlet for me to be a roboto for a few hours there... I use four turntables in a row and do them all identical.... 4 with pink roses, 4 with blue ballooons, four with fall leaves, 4 with buds, etc.... It's all auto pilot for me... and at the end I just count em up.... Tues it was 92-- 7" single and double layers.... UGH