For you storefront owners, how did you go about estimating your monthly expenses for your business plan?
How close to your estimates are your actual costs?
If you don't mind sharing, how much are spending on overhead (rent, utilities, ingredients, insurance, etc. ) and what's the breakdown?
I'm specifically interested in electricity, gas and ingredients costs as those are difficult to estimate. Please advise. Thanks!!
It's hard to guestimate because of the various factors. How efficient are your equpment(s)? Commercial rates in your area (which are higher than residential rates). Heat and A/C efficiency. Your volume. Are you baking with a full oven or doing onesy-twosy? Running a big mixer for one batch or a little mixer for 8 batches? Hand washing dishes in a 3-compartment sink (which uses a lot more water than my commercial dishwasher, which recycles water and does a load of dishes in 55 seconds). Size of your shop (affects heat and A/C). How good are you at turning your thermostat up or down when you're not in there (If I'm not going to be in the shop for a couple of days, I turn the heat down to 62 or 63 in the winter ... in the summer, I turn the air up to 74).
Advice I was given when I was putting this together was to take my household utilities times 3. This worked out about right for my elec. Gas was a shot in the dark (we don't have gas at the house), so I assumed the same for gas (came out ahead). Water was much lower than the estimate.
It really is hard to estimate some of this for the various reason Debi already mentioned...
When I started I didn't really use a formula, I just kind of estimated and fortunately I was very close on most of it. My shop is only 750 square feet and it is not in a strip mall which made the rent cheaper. I pay $600/month and from what I have seen from others on here that is relatively cheap. For utilities, I pay Gas & Electric - that averages about $450/month. I do not have to pay for Water or Garbage as that is included with my lease. Now...so far that seems cheap. What I learned after opening my shop is that the bulk of my approximately $5000 overhead each month is from Insurance, Ingredients & Supplies.
I don't cut myself a "paycheck" per say but instead I pay my Car Payment & Insurance through my business and have a couple of loans to pay from opening my shop. Advertising per month is about $200 and that is for The Knot & The Yellow Book. Then you have your phone, internet, cell phone and lots of other little things that may come up. What I've realized is that without the Wedding Cakes...I would have already closed by now. I do not know how a Bakery that doesn't do Wedding Cakes can survive, frankly...
I did not do a Business Plan to open my shop. Not that I don't think it's a great idea but I honestly wasn't planning to open so soon but the right opportunity came along so I went for it. It did mean that I had to do things rather quickly but I am working with a Small Business Development Center on my Business Plan now. If you can find a local Small Business Development Center near you it would be very beneficial and they can help you with some of these questions that you have. The cost is free because they are a federally funded program. Good Luck to you!
If you're collecting info on what expenses to try to guestimate, some that I neglected to think about were dumpster monthly service fee; fire protection installation and maintenance; if you have an exhaust hood, my insurance company requires a semi or annual cleaning (and written report to prove it); monthly accounting fees (for doing payroll).
Little things I had to get: Commercial mop bucket (it still pi$$es me off that those things cost fifty bucks! ). $1000 for a grease trap that wasn't in the original specs. $700 for commercial soaps (but they lasted me more than 6 months). Trash cans ... big one for the kitchen; small one with a lid for the bathroom (with a lid .... HD requirement).
You'll spend a lot more in gas if you pick up your own supplies because you'll be picking up more supplies. The more you can get truck-delivered, the better.
I hate spending money on the paper products ... paper towels for the bathroom and kitchen handwashing sinks, food safety gloves, parchment paper, wax paper, saran wrap, toilet paper, ziplok bags (use a LOT of these in catering), bandaids and gen'l first aid kit, blah blah blah. It's all needed, I just hate spending the money on it. This stuff adds up like you wouldn't believe.
Commercial mop bucket (it still pi$$es me off that those things cost fifty bucks! ).
DUDE!!!...while we're at it...how about the 30 qt (food safe) plastic buckets for icing....70 bucks for something that would cost 5 if wal mart sold them.
my extra USED 30 quart bowl was 300.00...JUST A BOWL....for the big mixer.
everything from electric to phone to internet costs a biz more...my home internet for broadband...39 bucks....at the shop 30 bucks more.
it sux...i don't charge businesses more because they are a business
sometimes i think the peeps who make the real money, are the ones who supply businesses.
i have a friend who has connections in hong kong...i been thinking of starting a "cute" cake box business....there aren't any that you can buy small amounts of.....all i need is money HA HA.
This winter, one of my employees did not get the bowl on just right on my 80 qt hobart. When she turned the mixer on, the beater bar hit the side of the bowl and snapped the outer rung off the beater. A new beater cost $300 including shipping....for the beater!!
You just never know!!
My add in the Yellow pages cost me almost $700 a month...the list goes on.
I don't regret my decision to get involved in this madness though!
holy cats! 700 bucks a month for a yellow pages listing!!! what does that get ya, a half page?
does it pay off?
It is a vertical column about 1.5" by 4". NOT a half page!
It is very hard to tell how much it is used. Now I worry how much the phone book is used at all...the younger folk Google everything. I also do that most of the time....one of those darned if you do, darned if you don't decisions.
It does give me a great presence and lets people know that I am here for the long stay and am a successful business.
classiccake - I dont have a degree and I'm not familiar with your area, but I do have experience in online promotions and can tell you that most young brides are searching online. Google Ad Words are WAY less expensive than yellow pages and can send people directly to your site. You pay per click, not per month, so you're only paying for what you get. you might want to look into it if you don't think your yellow pages are paying off
Sorry for hijacking this thread! I was just reading and had to say something
I just had this discussion with my rep and am moving that way...times do change things. I honestly don't remeber the last time this Grandma used a phone book.
Depressing thread! I can see how these costs add up quickly.
I lost my commercial kitchen that I was renting by the hour. Now I'm looking for something new. Renting someone else's kitchen is going to be a minimum of $400 a month. I found a small space literally across the street from my house that is $650 (for 1200 sq. feet). It's a perfect location for so many reasons. And the stuff on Craigslist is dirt cheap. So many businesses are closing around here.
I asked my girlfriend to get into the business w/ me. Now after reading this, I'm scared all over again!
My space is 1800 sq. feet, but since we don't know where you live it is tough to give you an idea of comparable expenses.
My electricity is 1200 a month in the summer, 600 in the winter (costs a lot to keep a kitchen cool enough to ice a cake when it is 100 degrees outside)
My ovens and water heater are gas. Our gas bill runs 250-ish a month
Water is about $300.
Insurance is about $600 ( property, liability, and workman's comp.)
Heck, I spend a couple hundred dollars a month on cupcake papers.
You should look up some industry standards for your industry segment in your area.
For example, SOP for my industry is 30%-ish labor costs, 20 ish percent food costs, 20-25% fixed operational costs. There is about 5-7% ephemera and an average net profit of 16% after taxes etc.