saberger Posted 20 May 2009 , 2:49am
post #1 of

I am searching through the forums trying to read as much advice as I possibly can about owning a biz because......I came across a bakery for sale today. Go figure! Weird, but exciting. Since I hadn't planned on anything like this, and I really hate the whole $ thing (I know...shoot me now), I only thought of a few questions to ask and to throw on my husbands plate. It is a well established place and the price seems good. They would definitely share all records with me. Needless to say I walked out of there ready to scream "WHOO-HOO". But I also knew how crazy it would be.

Now, I know that I need to get the records, which I think I will stop by tomorrow to talk some more and try to get. That is an obvious for me. She basically does wedding cakes with some side pastries (which I would like to replace with cupcakes and decorated cookies). I know that I can decorate as well, if not better, PLUS there is room to hold classes (which is another thing that I want to offer along with parties).

My DH is the biz end of it......he will look at all of the $ stuff to see if it is a sound investment. What do I have to think about? I know I sound like a flitty broad, but I HATE dealing with $!!!!!! And before you want to smack me over the head (because I already do).....I spoke to my sister about this and said she would go in on this with us if we pursue and since she has worked in the food industry and is great with $, she could handle the biz end of it. This way I can just decorate, right?

I have heard about endless hours and LOTS of work, esp. the first year. But if this is already established, what do I have to do? Seriously! I need to know EXACTLY what I would be getting myself into here if we were to do this. Otherwise, I want to get it out of my head and continue along the path that I had set for myself. Keep in mind, that I have been trying to find a kitchen to rent to be legal by September.

Is this a sign from somewhere above that I should be doing this? I mean, so many things seem to have been falling into place for me lately....but I do NOT want to fail or go into this naively!!!!

Please, please, PLEASE....put me in my place and tell me.

134 replies
mkolmar Posted 20 May 2009 , 4:19am
post #2 of

My advice is to slow down and seriously think about what you are doing. This is totally exciting and may be the right thing to do, but think about a few things first. The agreement between you and your sister on paper saying who does what and who gets what if a split is to occur? Are you (or your DH) good at accounting and marketing type of work? Are you ready for very long hours. How much money do you have saved up? It usually takes over a year before anyone turns a profit in the food business so you need to have enough saved up for business and home bills for that.
Also, make sure a lawyer looks at the papers. My DH almost bought a business when he found out those clients and papers where pretty much what the business use to do and no longer did. The books looked good on paper until he dug further and realized he would have lost out big time.
Why is this baker selling? Hopefully, her answer will give a little insight.

I hope everything goes really well for you. Stay positive and think straight (not to sound cold-but try to keep your heart out of it).
I hope this doesn't come across as negative. My DH owns a computer business and it is a blessing and a curse at the same time.
I hope everything works out and becomes more clear for you. thumbs_up.gif

en-passant Posted 20 May 2009 , 4:24am
post #3 of

Established or not, you're still looking at endless hours of sleep....

Slow down, take a deep breath, get a grip. Make a business plan. Talk to the employees, talk to the bank, talk to your lawyer.

Are you willing (and able) to work for free for the next few years? Is the health inspection up-to-date? Are there any new rules/regulations that will result in a costly renovation?

saberger Posted 20 May 2009 , 11:56am
post #4 of

This is a relatively new facility and it is up to code and all of that. But that is a good point. There is only one employee at the moment and I could talk to her about it.

Today, I am going to try to find out more. But here is the question again......why long hours? I assume that I have to bake & decorate. What am I missing? I could do marketing....I am good at that. Also, my DH and sister are FAB with $, accounting, and all of that. She worked as a manager in food biz before so it isn't new to her. I want a couple of people to look at the paperwork to make sure I don't miss anything.

Nothing you are saying makes me feel bad....I REALLY appreciate it! I need more of it. And this is a HUGE decision. I was even wondering if she would be willing to help me learn her store (is that reasonable?).

Would there still be a big wait for profit if there is already an established clientele of @ 16,000?

Luvsthedogs Posted 20 May 2009 , 12:08pm
post #5 of

Check out this blog: http://buildingabakery.blogspot.com

She provides a lot of info about what she's done with her baking business.

A couple of things you may want to know when making your decision: Why is the owner selling the business?
How's their reputation?
Will the current owner be opening a new baking business once they sell this one?

Kiddiekakes Posted 20 May 2009 , 12:10pm
post #6 of

You are foolin yourself if you ever think that owning your own business doesn't mean long hours!! When you are talking about your hard earned money in a company which relies on you and family to make a profit....you will work the long hours..It doesn't matter that you hate dealing with money...you have to stay involved...I hope a few other CC'ers can chime in like Indydebi and help you see more of the business side.Aside from that...do all your homework on the place and if it still seems like a good investment..Go for it!!

-K8memphis Posted 20 May 2009 , 12:44pm
post #7 of

Ok I'm chiming, KiddieK, but you're not gonna like it.

Quote:
Originally Posted by saberger

This way I can just decorate, right?

I have heard about endless hours and LOTS of work, esp. the first year. But if this is already established, what do I have to do? Seriously! I need to know EXACTLY what I would be getting myself into here if we were to do this. ....but I do NOT want to fail or go into this naively!!!!

Please, please, PLEASE....put me in my place and tell me.




<This is written in a conversational tone>

Honestly if you want a business-you have to be a trailblazer. Your spirit of wanting others to tell you is in itself telltale that you're not the kind of person to do this.

You have the dream but you want your husband and sister and us to do the dirty work. Nice work if you can get it.

No there's several other things besides decorating that you'll have to do.

There are people out there right now reading this who are sucking all the air out of the room--"Oh my oh my K8's being harsh", they are thinking. That might be one way to look at it. But business is nothing if not unrelenting sandpaper harsh. I on the other hand am being for real which is what is needed to launch and run a successful business.

If you can set this up and keep yourself further insulated from reality go for it. I just feel from what you've written that you've got a ways to go. Keep at it-- you can get there if you want to. If you don't want to go into this naively then regroup because you're there.

Just some business start up thoughts for you.

cylstrial Posted 20 May 2009 , 1:06pm
post #8 of
Quote:
Originally Posted by CindyD333

Check out this blog: http://buildingabakery.blogspot.com

She provides a lot of info about what she's done with her baking business.

A couple of things you may want to know when making your decision: Why is the owner selling the business?
How's their reputation?
Will the current owner be opening a new baking business once they sell this one?




That's a cool blog! But man, is she a poster or what??

grama_j Posted 20 May 2009 , 1:07pm
post #9 of

One GOOD thing you have going for you is that the business is already established....... now it is up to you to ferret out things like their reputation, why they are quiting, have they laid off any enployees, or is the one that is there the only one besides the owners ,etc......... you did not say how LONG they have been in business. Is it a store front where people can come in off the street ? You HAVE to have a hand in the money end of the business..... the fact that you have help, is just a bonus.... I'm soooo excited for you...... I had my own hair salon a few years back, and it was some of the best memories of my life...... don't let anyone pee in your corn flakes........ you get the information you need and GO FOR IT !!!

-K8memphis Posted 20 May 2009 , 1:32pm
Quote:
Originally Posted by grama_j

...... don't let anyone pee in your corn flakes........




Here's the deal, when someone does pee in the corn flakes and the plumbing repair is $2000 and the rent is past due and the bank account has enough for one and not the other but why pay the rent if you have no water, then you gotta roll up your sleeve and pick those suckers out of the pee and keep on going. Then go decorate the wedding cakes.

saberger Posted 20 May 2009 , 2:46pm

K8 - I am in NO WAY offended!!!! Keep it coming!!!! Seriously! And you are absolutely right.

Do I want to deal with finances? Yes and no. I guess since I have never REALLY been forced to, I have been able to sidestep it. Do I want to....yes...I would like to learn and not be so intimidated by it and learn how to do what is necessary. Do I want to...no...I just want to decorate. Sound wishy-washy? TOTALLY!

I went and spoke to her some more and here is the deal: she never wants to decorate another cake....she has had it. Wants to teach baking. It was always her intention to sell this biz after a few years (which is why she had built it to look SO nice and everything). Everything is included, even the recipes (except for a few personal items).

She would stay and 'teach' me the routine of her place and make the transition to making it my own. I approached her about a partnership (so she can be free to do what she wants and I can make sure this is what I want) and she said that no one had presented it to her, but it is something that she will definitely think about and present to her DH.

She did look at my pics and thought I could definitely handle the decorating - even sad that I am better than she is. Also mentioned that she turns down a LOT of orders for fondant since she only deals with BC.....big plus for me since I do both.

30% of her biz is retail/walk-in and the rest is custom orders. She has no current contract with any place for wedding cakes. She will provide me with her customer database and sign ANY kind of no compete agreement that I want. Also she mentioned that it is common for a person to be at a restaurant (I think they may have owned one before?) for a week to see EVERY transaction that takes place to get a good idea of the flow of money in the joint.

Lease expires around August 2010. That would obviously have to be discussed to continue with this.

I asked her about the hours involved. She mentioned that the long hours come from doing everything yourself (finances, books, advertising, cleaning, baking, decorating, etc). If I were to have help, like my sister, then that would eliminate hours for me to work. (Is this correct?) I KNOW there are hours involved.....but is it something where I can work from @ 8am till 5:30? Obviously with some overtime in places. Her store hours are already 9 - 5:30 Tues - Fri; 9-4 Sat; 9-12 Sun; closed Monday.

How am I doing?!?! I really DO want to learn all of this. I spoke with a friend of mine (BIG business man) and asked if he would be willing to check over this for me....no problem.

I am eager to learn and a relatively fast learner. But in all honesty, CC is my school. I have learned most of what I know here and trust ya'll a LOT! I may be ignorant, but I AM TRYING o change that.

K8.....keep it coming PLEASE!!!

saberger Posted 20 May 2009 , 2:53pm
Quote:
Originally Posted by grama_j

One GOOD thing you have going for you is that the business is already established....... now it is up to you to ferret out things like their reputation, why they are quiting, have they laid off any enployees, or is the one that is there the only one besides the owners ,etc......... you did not say how LONG they have been in business. Is it a store front where people can come in off the street ? You HAVE to have a hand in the money end of the business..... the fact that you have help, is just a bonus.... I'm soooo excited for you...... I had my own hair salon a few years back, and it was some of the best memories of my life...... don't let anyone pee in your corn flakes........ you get the information you need and GO FOR IT !!!




Reputation is outstanding. Only main competition is two towns over and very $$$$. She laid off one person last year for two reasons: economy and then found out that she had to redo a lot of what was being done. It is a destination place for sure. There is a sign out front, but you really have to know that it is there. From what I can tell (I would have to check her books for this), she doesn't really advertise.

Also, I figure that since I would be adding decorated cookies, cupcakes, and a line of Passover goods (if I can get rabbinical supervision), that would help (esp. since there is a temple near by). In addition, I would offer classes and b-day parties.

I get the financials by tomorrow.

Lineah Posted 20 May 2009 , 3:00pm

If your "iffy" over the hours then you might want to reconsider. You may want to look at the volume of orders that they do in an average week, and then the volume that is done during their peek season. I say this because if you are the main decorator and you have to dish out 30+ cakes a week, or for just a saturdays order, you are going to be working more hours than just 8-5. And that's considering help with baking, mixing color etc. Then you also need to count in time for your consulting on orders, and the possiability of doing all the extra, cleanup etc. Owning a business is very hard work and lots of hours that are not the hours that you are open.
Just a thought, 'cuz you need to be willing to work the long hours, as opposed to going in and pulling 60-80 hour work weeks and thinking that this is not what you signed up for.
JMHO

PinkZiab Posted 20 May 2009 , 3:03pm
Quote:
Originally Posted by saberger

I can work from @ 8am till 5:30? Obviously with some overtime in places. Her store hours are already 9 - 5:30 Tues - Fri; 9-4 Sat; 9-12 Sun; closed Monday.




Ummm I hate to tell you, but if you plan on OPENING at 9:00am (meaning customers can walk in the door and buy something), you need to be there a LOT earlier than 8am to have all of your retail baking done and the display cases filled. I have friends who own a large well-known italian bakery in NJ... granted they do the full range of pastries, danish, bread, etc. But they have people there baking AROUND THE CLOCK. yes you heard me, 24 hours a day (they are open 7 days a week). Even if you only want to have cupcakes and cookies and a few cakes for retail, you need to have a few hours in the morning to get that stuff ready to be in the cases by opening time. A cookie shop I know in NYC (ONLY sells cookies) has their main baker start 4 hours before the shop opens (and this is JUST to bake... the doughs would have been mixed in the days before by the chef).

And also, if you think because the store closes @ 5:30, that means you get to leave at 5:30, you are, again, in for a rude awakening. You need time to clean up, mop the floors, wrap and store everything, and reorganize for the following day (especially if you are working solo). Don't forget inventory and placing supply orders and all of the other non-baking activities that you'll need to get done every week.

I HIGHLY encourage you to trail with this woman for at LEAST a full week (meaning you get there at the same time she does and do not leave until she is walking out the door) to see EVERYTHING that is involved. It's really the only way you'll know for sure.

-K8memphis Posted 20 May 2009 , 3:08pm

<highfive> Cool.

But you gotta get enough steady work that produces income to pay your sister. Payroll sucks (paying it that is). Quickbooks is not hard--once it's set up & you know how to use it.

Pay your husband, not so much. He keeps his day job & keeps the roof over your head right?

If 30% of her deal is walk-in you don't really wanna mess with that do yah? You could make it up with doing more cakes but you gotta weigh that out.

Doing all decorated work and parties is a different line to follow. Geez 30% walk-ins is a lot --that sounds pretty good but you gotta make the stuff and work the counter too.

I'm betting her figures are not gonna fly. It's the part where she says it was her intention to sell the bz after a few years? Really? Why? Who goes into business to sell out in a few years?

From what you've said, it sounds like another employee is needed to reduce the effects of potential burn out (owner's go it huh) So the bz has to be brisk enough to support another employee so then you'd have two.

saberger Posted 20 May 2009 , 3:08pm

Ok...that is good to know. I do have someone who would come in to help me. But that is definitely something to consider....unless I make it by appt only and close out the retail? Would that be an option or would that be shooting myself in the foot?

-K8memphis Posted 20 May 2009 , 3:15pm

If you can make up 30% of the receipts some other way.

This sounds like a cute retail place. If you are doing strictly decorated cake you don't need a cute retail place. By cute retail place I mean with location location location to draw in the impulse crowd. I mean sure you want a cute place but you're paying for the location--if you don't need it and it's by appointment why pay the higher rent?

-K8memphis Posted 20 May 2009 , 3:16pm

How much is the rent? Well rather I should say how much is it compared to someplace else that doesn't have the foot traffic aspect since you don't want that.

PinkZiab Posted 20 May 2009 , 3:19pm
Quote:
Originally Posted by saberger

Ok...that is good to know. I do have someone who would come in to help me. But that is definitely something to consider....unless I make it by appt only and close out the retail? Would that be an option or would that be shooting myself in the foot?




Of course it's an option--people do it successfully--but you have to have enough money to keep your head above water until the custom biz gets off the ground. Even then, you're still not working a 9-5 job (especially if you're the only one doing all of the baking and decorating). I did my internship at Pink Cake Box (by appointment only custom cakes). Besides herself, Anne has a paid full time staff of 6-8 people, plus 3-4 interns in on various rotating schedules. The production manager (baker) would usually come in at 5am or so and leave by 2-3pm. ALL she did was bake and make buttercreams and fillings. The rest were all decorators. I believe the earliest started around 8 and we were the last ones out of there, usually by 6:30, but that was when it was a good week. Thursdays and Fridays were almost always late nights because most of the cakes were due for the weekend.

In some ways appointment only is easier than retail because, other than tastings, you don't have to deal with customers. But it's still long hours and a lot of work.

PinkZiab Posted 20 May 2009 , 3:31pm

I just realized that both of my responses sound like I am trying to discourage you, which I am SO not trying to do. I think I just want you to realize that in no way, shape or form is running a bakery or custom cake shop a 9-5 gig, and that no matter how much help you have, when you are the boss, long hours are inevitable.

As I said earlier, I really think you should trail this woman for a solid week to get a better sense of things. be there when she unlocks and turns on the lights, right until she is ready to go home. Keep us posted!

saberger Posted 20 May 2009 , 3:55pm

I am NOT discouraged no way and no how!!!! Nothing you say can scare me or hurt me....unless you tell me I suck and even THEN I still probably wouldn't be hurt icon_wink.gif okay, maybe a little. This is what I need and what I am asking for. I do NOT do well with sugar-coating unless it is in cookies. I can tell you EVERYTHING and ANYTHING you want to know about music and the music business and I will be brutally honest otherwise why ask for help. DON'T HOLD BACK!!!!!! really.

I could definitely trail her. She seemed to even encourage it. Now, I did find a place to rent at $1500/month - not up to code and very small (actually used to be the same place this woman rented prior). AND I would literally be starting at ground zero. Her rent is @$3700/month

She has been in biz for over 16 years, but moved herself into this location with the intent to sell it in a few years. Apparently she had the volume of biz and needed the space.

Paying my sister? NEVER!! icon_wink.gif She and I would have to figure that out for sure.

-K8memphis Posted 20 May 2009 , 4:30pm
Quote:
Originally Posted by saberger

Her rent is @$3700/month




<thud>

<smelling salts>

Three thousand seven hundred dollars a month?

Ok. So $3700/month ok.

Just super rough figures---So you have to bank about $8,000 a month in kiss good bye fly out the window expenses give or take. So you gotta do about $16,000 every month in receipts of cakes cookies & cuppies give or take to break even in a perfect world. I'm not good at factoring in payroll so there's that too. You better keep the 30% walk-ins, Cake Buddy and forget sleeping.

No fricken wonder she's burnt out.

PinkZiab Posted 20 May 2009 , 5:00pm

lol, funny I didn't even bat an eye @ $3700... this is New Jersey... that's actually quite reasonable for a turnkey operation, depending on the size.

-K8memphis Posted 20 May 2009 , 5:06pm
Quote:
Originally Posted by PinkZiab

lol, funny I didn't even bat an eye @ $3700... this is New Jersey... that's actually quite reasonable for a turnkey operation, depending on the size.




That was not my point though, PinkZ. My point is that that's a ton of cake to shovel to keep up the expenses. $3700 is not turnkey it's one month's rent. That's like $45,000 a year in rent alone. You're talking hundreds of thousands of dollars of cakes to be able to maintain a place like that.

And our op chickie is allergic to balancing her own check book--deliver me!!!

icon_biggrin.gif

saberger Posted 20 May 2009 , 5:28pm

K8 you are too funny!!!! I won't take offense because you are totally right. But, the price of cakes are also higher here, so doesn't that count for something?

-K8memphis Posted 20 May 2009 , 5:34pm

Ok two things to consider--you don't have to reveal on the internet here--but how much do you charge and how did you do last year? Multiply that out to get $45,000 in rent and then double that and you're getting warmer.

There are killer places here to rent for those prices but one decorator is not going to carry the load and sell some cookies and cuppies on the side. You will be a full blown business woman like Snarkbuddy.

PinkZiab Posted 20 May 2009 , 5:50pm

Oh believe me I know... there's a reason I haven't opened my own place since my partner and I split. I'm just not doing the volume to maintain a commercial storefront right now and I'm not sure what direction to take my career.

It's doable, but again you need to have someone look at her books (and don't assume that everything you see on the books is 100% accurate... let's face it, people aren't always 100% honest even with themselves! lol and you need to examine the biz VERY hard.

Again a lot falls back to, if you are going to be the sole decorator/baker, can you alone do all the work that's needed to produce the volume you'll need to keep the biz going? If not, will you be able to afford payroll for additional employees. Other than the purchase price for the business, do you have enough cash to sink into it that you can keep the business running for a few months-to-a-year if things are slow and the cash flow isn't there. Even if it is an established biz, a change of hands is sometimes a detriment, especially if you plan to change things up. A lot of people like "their" bakery.

Just more to think about.

indydebi Posted 20 May 2009 , 5:56pm

k8, you've been giving incredibly good advice. saberger, please listen to everything being said.

As I read this thread, I hear someone who is in love with the idea of being in business, of being able to say she owns a business, but in reality wants nothing to do with "the business" side of it. Are you looking to buy a business, or find a place where you can "play" with your cakes? And I don't mean that harsh ... I'm trying to jolt you into reality here. I see someone who wants to hand the business side off to someone else, the management decisions to someone else, wants to work 8-5 .... that's the mindset of an employee, not a business owner.

your sister is not going to do your books for free forever. At some point, you'll need to hire a CPA or accounting firm for tax reasons (unless your sis IS a cpa, then I stand corrected).

You said you can do some marketing. Sales and marketing is almost a full time job. I've been working in some type of sales/marketing position in the corporate world for over 25 years, so I can confidently say, yes, I AM good at it .... and I don't have time to devote to it like I should. If you are going to be the only decorator doing all of those cakes to pay that $3700, you're going to have zero time to get out and do the sales you need to do.

I also got a big "thud" in my chest when I saw the monthly rent. Regardless of whether that is the norm in your area or not, that's a lot of moola to have to be accountable for every month. How many cookies before you PROFIT $3700? Business plan. Write. A. Business. Plan. It will be a big eye opener for you.

Payroll is no joke. You're pretty much paying someone "on spec" ... they are in there making the cookies, cupcakes, etc., and you HOPE someone comes in and buys them. If they don't, you STILL have to make payroll. $8/hour x 40 hours a week = $320 x 4 week = $1280 + $3700 in rent = $4980 a month right off the bat.

We're not trying to kill your dream. We want to give you lots of things that you have to consider NOW before you're financially committed. We want it to work for you. But you have to go in with eyes wide open. And even then, you're going to miss stuff. We all did.

Juds2323 Posted 20 May 2009 , 7:41pm
Quote:
Originally Posted by k8memphis

http://forums.egullet.org/index.php?showtopic=40758&hl=

Good thread.




I read this thread. It was insane. But I also searched the bakery and it looks like it has closed it's doors.

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