I'm somewhat of a newbie. I just started cake decorating in May of this year. I absolutely love it! I've been approached by many friends that have requested cakes or cupcakes so I've been thinking about starting up a small home based business.
Recently a friend approached me to see if I wanted to start up a home based baking business with her. She is a very good friend who loves baking but doesn't really like decorating. She would do the baking and I would do the decorating. I like baking but I find that I lack the confidence in baking. It is something that doesn't come naturally to me. But I love the decorating part. So it does seem like the ideal partnership.
I told her that I was interested but then I got to thinking, how would we split the profits? I know that baking is time consuming but depending on the type of cake or cupcake, the decorating could take twice as long. Is it fair to split the profits (if we make any profit?!) 50/50 ? Or is it more fair to split it 60/40? Is it wrong for me to think that I should be getting more because I'm spending more time?
Is anyone else in baking partnerships and if so, how do you share the duties or profits? Would it be better if I went out on my own? Is it bad to mix business and friendship? I really like this friend and I would hate to have anything ruin our friendship.
Thanks in advance for any advice.
First, is it legal to have a home-based bakery/business in your state?
Any kind of partnership needs to have things spelled out IN WRITING. I don't think a 50-50 split sounds right to me, based on the work load. Mixing batter takes 10 minutes tops and then throw it in the oven for 30-60 minutes. I can watch a couple of Seinfeld's while it's baking.
But decorating? On your feet, bent over a cake/counter, for 2-6 hours, depending on how detailed the design. The labor of decorating is the highest cost of creating one of our cakes.
If you want to do this as a casual thing, I'd set an hourly wage for each of you and draw that rather than split the profit from the cake. Because out of that "profit", you'll gonna take money to buy new pans, new decorating tools, misc equipment. And by the way, who owns what when it's all split up at the end and you two decide you don't want to do this anymore?
If she wants out and you want to continue ... how will you handle her "buyout" request? What if you don't hvae the money to buy her out? Does she take her cake pans and run? Does she sell her "half" to just anybody that you can or can't work with?
There's a lot more to it than "Oh let's make cakes together!"
Also ... my attorney said 50-50 partnerships NEVER work because SOMEBODY has to have the final say. You say yes and she says no .... how do you handle the stalemate? At the very least, it's needs to be a 51/49.
I live in Canada and in my city it is legal to have a home bakery in your own home. You have to meet certain requirements and have your kitchen inspected. I am going to contact the city to get all the specific details.
My plan was to just do this on a small scale as I have two young kids and don't want to do this full time. You bring up some really good points and things that I had not thought of. A very good dose of reality which is exactly what I needed!
Thanks again for your response indydebi. As always, you give great advice.
I don't have my own business, but I plan to someday. I can't legally open a home business in my county.
Here's my take on it. If it's legal to have a home business where you live why do you need her? You could open you own business for youself and work at the baking. Like Indy said you can do something else while the cakes are baking.
The profits would be yours alone and you can pick and chose who you bake for and when you back.
I think it's a bad idea if you can have it legally on your own. That's just my two cents. This is coming from someone who really wants to bake out of her home.
Good luck in your choice.
I have to tell you that I'm not big on partnerships in general. As they say, "Anything that has two or more heads is a monster." Particularly with a good friend. I think you're asking to compromise that friendship. Now, I realize I may be over-generalizing, but I have seen so many partnerships go south (including the one my husband had with his ex-business partner) b/c of disagreements about workload, compensation, etc., etc.
Do it on your own. Take less orders, but gain all the profits and little piece of mind that you're in control of the whole thing.
i agree, do it on your own. i have a friend and occasionally we work on a large project together, so not really a partnership persay. but when were finished, my dh always asks whether that was worth my time for the amount of money i ended up with, and it isn;t. just because 2 people are working together it doesn't mean it will take half the time. i prefer to work alone.
when we opened in 02 i had a partner, she was also my best friend...we met while working as decorators at another shop.
we had everything in writing, were equally invested and it was a 51-49 split.....i am more easy going, so i let her have the final say on things...it's like a marriage, A LOT of give and take...
2 years in, she decided it wasn't for her, i sold my house and bought out her part at 50 cents on the dollar.....
we're still best friends....i gotta say it was a lot more fun at work when she was there....but i'd never take anyone else as a partner....she is like a sister to me, and i knew her work ethic after working beside her so many years.
you really need to see what her work ethic is like, i've had partnerships in other business ventures and it was like dragging a dead body.....most people don't have the passion it takes to be committed to a business...for some reason they think they'll not have to work as hard if they are their own boss.
GOOD LUCK, i think in the right circumstances it can work, look at ben and jerry!
Thank you everyone for taking the time to respond and post your opinion. It really means alot to me. It is going to be a tough decision for me as I do value this friendship and don't want to jeopardize it. My husband thinks I'm crazy for even considering this partnership. I was leaning towards going on my own, but it is also nice to know that a partnership between friends can work under the right circumstances. I'm going to have to give it alot more thought...
Thanks again everyone!