What Does It Really Involve? (Long)

Business By saberger Updated 2 Jun 2009 , 8:28pm by saberger

Deb_ Posted 20 May 2009 , 8:03pm
post #31 of 135

Does the $3700 month rent include utilities (water, electric, gas etc)? Don't forget insurance, taxes etc.

I have to agree with K8 and indy and Pinkz (hopefully I haven't forgotten anyone)...........Owning a storefront *bakery* and owning a *cake decorating business* are two very different things.

I think you really need to sit back and ask yourself if you are ready for a FULL commitment. Remember you will NOT be an employee that can work 8 to 5 each day and then go home and forget about the bakery. You will be consumed by this business, you will have to be to make it a success.

I own a Salon, I have 9 other stylists working for me. I've been in the business for over 25 yrs owning my own for the past 14. Guess who the last one to leave the salon is each day? Me.

I cannot hold anyone else accountable for the success or failure of my business except myself. Owning ANY business takes a LOT of hard work and a LOT of hours. It's never 8 to 5.........ever.

How many hours per week is the current owner working?

-K8memphis Posted 20 May 2009 , 9:10pm
post #32 of 135
Quote:
Originally Posted by dkelly


How many hours per week is the current owner working?




All of them no doubt.

saberger Posted 20 May 2009 , 9:51pm
post #33 of 135

I stopped in and saw her again this afternoon. I get the financials tomorrow. She made it clear to me that she has turned down business regards to fondant. She doesn't deal with it. People want fondant cakes...she turns them down. They want classes teaching ho to use fondant...she turns them down. She has had requests for kid parties...she turns them down for lack of energy. We did not talk numbers but more about where the income is coming from and sustaining this kind of biz. and just trying to figure her out.

I hear all of you! I REALLY do. I am not afraid of challenges or hard work or anything else. Just because I don't like having to deal with finances doesn't mean that I won't get over that and learn. There are MANY things that I do that I really don't like doing, but I do them. We all do. And I can get over my fear of it.

Obviously I would pay my sister....we would have to figure out what she wants and being of sound-business mind, she will most certainly tell me.

I guess I will find out more of the nitty-gritty number stuff tomorrow. Anything that is a red flag? Besides the obvious $ loss?

Now, tell me more about a business plan, please. Is that were I put down cost vs expense & what I see happening in a certain time period? There are defintely areas that I can bring in more business.

By the way, she has no problem with me shadowing her AND introducing me to her customers during a transition period. We did talk about the store hours and that since it is a retail location she believes that the shop has to be open at some point, but I can set any hours I want. The two days that she really gets walk in is on the weekend, otherwise even though she is open, she doesn't have much walk-in biz. Hence her survival on custom cakes. She does not advertise...has had no need since her customer base is by word of mouth and she turns away biz.

saberger Posted 20 May 2009 , 9:54pm
post #34 of 135

By the way, was there anything you wished you had known BEFORE starting your business?

littlecake Posted 20 May 2009 , 10:58pm
post #35 of 135

are you fast at decorating?

speed is HUGE.

i was slow as christmas for a couple years.....

in order to turn a profit you must be pretty speedy...the time really gets away from you....i'm pretty fast now....i can decorate a triple tier buttercream wedding cake in about 90 minutes....i believe i read indy said her time is about the same as mine.

sheet cake take me around 10- 15 minutes....you can get it down to a science after awhile.

but my point is...you gotta make a lot of cakes to pay the overhead and end up with a little bit of money for yourself.

i do this for a living, it can be very rewarding....and it can also drive you to madness.....

it's all about thursday friday and saturday...esp. saturday.

that rent is scary to me too....let us know what you decide.

saberger Posted 20 May 2009 , 11:10pm
post #36 of 135

"decorate a triple tier buttercream wedding cake in about 90 minutes"

Wow! What exactly does that include? flowers & design? I think I am pretty fast, but I have never timed it. That would be fun to do....beat my clock! Ooh I am going to start doing that!

-K8memphis Posted 21 May 2009 , 12:29am
post #37 of 135
Quote:
Originally Posted by littlecake

i can decorate a triple tier buttercream wedding cake in about 90 minutes....i believe i read indy said her time is about the same as mine.

sheet cake take me around 10- 15 minutes....you can get it down to a science after awhile.




Just straight decorating or setting it up and icing it too?

krissycupcakes Posted 21 May 2009 , 12:50am
post #38 of 135

ok so i didnt read all the posts cause theres so meny but heres my 2cents, think about the average price of the cakes you will sell and depending on how meny people you will have workingwhat you will be able to produce in a week minimum then think if thats going to cover your expences ie. rent, food costs, staff. i mean its alot of work and as nice as your cakes might be will you be able to make what there worth people are cheap alot of the times!

littlecake Posted 21 May 2009 , 2:09am
post #39 of 135
Quote:
Originally Posted by k8memphis

Quote:
Originally Posted by littlecake

i can decorate a triple tier buttercream wedding cake in about 90 minutes....i believe i read indy said her time is about the same as mine.

sheet cake take me around 10- 15 minutes....you can get it down to a science after awhile.



Just straight decorating or setting it up and icing it too?




icing it too.....of course some designs take longer.

i feel like the lions share of my time is taken up talkin to people tho....

-K8memphis Posted 21 May 2009 , 2:34am
post #40 of 135

Yeah, you gotta chat people up--takes time.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~


I figured out that on a $6 a serving cake if you keep a third for ingredients which is a giant margin but anyway--you'd need to do about 1,000 servings a month to pay the rent. So if you had additional overhead of $3700 monthly, utilities, insurance, phone, computer, equipment, loan, taxes etc. you'd need to cover 2,000 servings every month to break even--before payroll.

I mean sure you can do sculptures & stuff & make more money but they often take more time too. Time you might not have because of the 2,000 servings you gotta relentlessly hussle out the revolving door.

The quality of your work goes down with the added responsibility and the crack whore overhead eating your life out. By the quality I mean how you gonna get the brain power to create? You can do the standard cakes and do them well but there would be little trailblazing. I don't have that much brain left to spread it around that thin.

To me $3700 rent is the second or third bakery you get not the first one unless you get you a dynamite business plan and several employees.

en-passant Posted 21 May 2009 , 5:33am
post #41 of 135
Quote:
Originally Posted by saberger

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.




You do realize that running a kosher facility entails being closed on Saturday? It's one thing when 90-95% of your custom comes from the Jewish community, but a whole 'nother story when you're making wedding cakes and birthday cakes for non-Jews.

When I was in the process of renovating my premises and opening my bakery EVERYONE at shul nagged me to 'get kosher'. I talked to the Reb for about five seconds and decided not to. Saturday is my biggest day of the week.... most get married on a Saturday, most kids' parties happen then... and on Saturday I have my gretest percentage of walk-ins. I would be bankrupt by now if I had opened a kosher facility.

littlecake Posted 21 May 2009 , 12:29pm
post #42 of 135

you can't have a bakery that's closed saturdays....you'll go broke, i make 90% of my money on saturday.

saberger Posted 21 May 2009 , 2:52pm
post #43 of 135
Quote:
Originally Posted by en-passant

Quote:
Originally Posted by saberger

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.



You do realize that running a kosher facility entails being closed on Saturday? It's one thing when 90-95% of your custom comes from the Jewish community, but a whole 'nother story when you're making wedding cakes and birthday cakes for non-Jews.

When I was in the process of renovating my premises and opening my bakery EVERYONE at shul nagged me to 'get kosher'. I talked to the Reb for about five seconds and decided not to. Saturday is my biggest day of the week.... most get married on a Saturday, most kids' parties happen then... and on Saturday I have my gretest percentage of walk-ins. I would be bankrupt by now if I had opened a kosher facility.




I didn't know that you have to be closed on Saturday. That SUCKS!!!! There is no way that I would do that. I was just about to research that today. icon_cry.gif

saberger Posted 21 May 2009 , 2:55pm
post #44 of 135

Here is an update:

Square Footage:
The main store is 1,500 square feet. I also have an easily accessible 500 s.f. basement for extra storage.

Lease Length:
10 years (7 years remain > 2 years+/- years plus a 5 year option)

Rent:
$3,400 per month (includes basement)
This includes ALL triple net charges such as garbage, sewer, taxes, basement space, etc.

Gross Sales:
$250,000 per year and growing

Net Profit:
$75,000+ per year

The person said that if I wanted more information after this, then he would send me the financials. I said I was seriously interested in it and I wanted them, so I should get that in a couple of days.

-K8memphis Posted 21 May 2009 , 3:11pm
post #45 of 135

Two people bring in $5000 every week?

It's her and one employee right?

She is making a little more than joe blow pastry chef for the amount of time she's got to be putting in to pull in five thousand dollars a week. It ain't exactly a cash cow. I've made more than that (on an hourly basis)working for other people and this in Tennessee.

You don't need 1500sf+ to do cakes.

You need to negotiate a rental agreement from her, share the space. She wants to teach, she doesn't want to decorate. She needs help with the load. If you guys can marry your strengths and leave enough room for each other's egos and entrepreneurship you could do it.

By yourself this might be a good deal after you've been in business for three to five years.

No, I vote no.

saberger Posted 21 May 2009 , 3:23pm
post #46 of 135

K8 - PLEASE don't bash me over the head for this, but $5000/wk is good or bad? I assume it is bad? I am REALLY not trying to look like an idiot here, but I am sure I come off that way. Wouldn't part of putting together a biz plan include potential biz? Wouldn't that bring in more of a profit? Do you vote no because it is too much time, too much $ without enough return, or what? Again, please don't hit me for asking this.

She has readily admitted to me that she turns down business - there is a LOT of business that she doesn't do because she doesn't want to do this and doesn't want to deal with it. She had two assistants before, but let one go. I spoke to her husband and he made it clear to e that she wants out. No partnership. I might be able to work out something with her and have her teach the classes there, but no partnership.

mkolmar Posted 21 May 2009 , 3:24pm
post #47 of 135

My added advice would be to call your insurance company to see how much insurance will cost you to cover your business as well as car insurance (this usually triples when a car is being used for a business).

Everyone has given wonderful advice. The thing that concerns me most about your post is the hours you want to work. You need to add many more hours to that in order to run a business. (My DH who owns a computer business -no store front and does other businesses computers only- his average work week is 80+ hours. I know that it's not a bakery, but being an owner means working really long hours.) I'm sure your probably willing to do so though since it sound like it's your dream.

Another thing to think about is who will help you decorate if you get hurt or sick and can't fulfill orders?
What will be your backup plan if your DH and sister no longer want to help you down the road? If your sister decides she wants out and she has stake in the business what would the agreement be?

Did I read your post right about her making a $16,000 profit on the business? Is that $16,000 after all the expenses are paid and if so does that include her paycheck or not? That doesn't seem like much profit to me, but then again she's only been open for a few years and is probably just now seeing a profit.

Once again, this is not meant to discourage you, but these are things you need to figure out before hand.
Have you talked to anyone about financing yet or done a business plan?
Make sure to do that business plan first and have a lot of info. so that way you look well prepared to those you'll speak to about financing.

Joyfull4444 Posted 21 May 2009 , 3:31pm
post #48 of 135

Saberger, did you look or read the link to the thread that K8memphis gave you?

If you haven't, you really should. The thread is about a gal opening a bakery and the work that was involved.

saberger Posted 21 May 2009 , 3:43pm
post #49 of 135

The net profit is $75K. And I did check the link. I had actually come across that awhile back. So, correct me if I am wrong but is the main concern about the amount of hours it will involve and if I am willing to do that? (not meant confrontational-just inquiring)

saberger Posted 21 May 2009 , 3:45pm
post #50 of 135

I actually joined SCORE last night in order to get help with creating a business plan. In the meantime I am writing down my goals and ideas and concerns.

ccr03 Posted 21 May 2009 , 4:56pm
post #51 of 135

Okay, so here are my thoughts.

1. My sis & BIL have their own equipment rental company - in the process of moving into a retail store. My BIL works ALL WEEKEND LONG! I now it's a different business, but he spends hours delivering the equipment/setting up and such. His bro and dad help and we chip in from time to time, but he is always working. In our case (bakery), yes there's the baking and decorating. Well, as someone mentioned theirs also the sales/marketing (creating flyers, building & maintaining a website, creating a business card, trade shows, etc.), customer appointments/tasting, ordering supplies, maintaining equipment, cleaning the kitchen/storefront/bathroom, hiring employees. No way are you gonna fit all of that into a 8-5 workday/week.

2. Marketing - I'm big on this b/c it's what I studied. You say SHE turns away business. Not to sounds cruel, but who says you will? People may not like your style of doing things or whatever. Plus are you gonna always want to work under her current business model? I would hope not. You have to stragetize on how to slowly phase her business model out and yours in w/o alienating customers and bringing in new ones.

3. It's been said on her over and over - with any business, you HAVE to have a business frame of mind first AND then the talent. All the talent in the world doesn't mean anything if you don't know how to administrate it.

Just some things to consider - for whatever it's worth.

mkolmar Posted 21 May 2009 , 5:55pm
post #52 of 135

Ok, $75,000 profit is a lot better than the $16,000 I thought it was. icon_redface.gif

Yes, my main concern would be the hours. A business is pretty much all the time even on the days closed you will be working, weekends---what are those, holidays--those are busy times too so be prepared to be working or dead tired on the day you have off.
You totally have the cake decorating talent. I'm not questioning that at all. If your willing to put in the hours your dream may be obtainable. There are a lot of variables when it comes to a business start digging and getting every little bit of info you can under the sun and go to a lawyer before you move on it.

I hope everything works out for you.

saberger Posted 21 May 2009 , 6:24pm
post #53 of 135

Thank you. I did talk to the people at OK Kosher Certification - REALLY helpful. You are right about having to be closed on Sat. if I want to make the bakery kosher. HOWEVER, there is a way that I CAN proceed with my Passover goods and sell them there without going kosher. So, all is NOT lost with that. I am actually going to proceed with THAT no matter what the outcome is with this bakery. YEAH

I will most definitely talk with a lawyer, esp. if I have several people going in on this for funding (not sure about that part yet). I KNOW there is nothing that I can assume will be or will happen or anything.....all MUST be legal and I need EVERY little thing considered.

littlecake Posted 21 May 2009 , 7:10pm
post #54 of 135

have you ever thought of just starting from scratch yourself?

it might be cheaper...and maybe you could find a smaller place that would rent for less....i started my place from scratch in 02 for 28K.....you do not need that much room just to do cakes...k8 is dead on about everything she's said.

it is kinda fun starting from scratch....

littlecake Posted 21 May 2009 , 7:17pm
post #55 of 135

i hate to ask...but did you ever mention what they were asking for it?...i guess i musta missed it...

saberger Posted 21 May 2009 , 9:54pm
post #56 of 135

I did find a place that was half the rent, but the oven didn't work, I would have to bring it up to code and I would have to start from scratch. Scratch is not a bad thing, but it IS a lot more work I think. If this doesn't work out, that is fine.....I will just wait until it is a better time and continue to build my name. It is just that I REALLY want/need to be legal by September.

The asking price is $125K.

-K8memphis Posted 21 May 2009 , 10:54pm
post #57 of 135
Quote:
Originally Posted by saberger

K8 - PLEASE don't bash me over the head for this, but $5000/wk is good or bad? I assume it is bad? I am REALLY not trying to look like an idiot here, but I am sure I come off that way. Wouldn't part of putting together a biz plan include potential biz? Wouldn't that bring in more of a profit? Do you vote no because it is too much time, too much $ without enough return, or what? Again, please don't hit me for asking this.

She has readily admitted to me that she turns down business - there is a LOT of business that she doesn't do because she doesn't want to do this and doesn't want to deal with it. She had two assistants before, but let one go. I spoke to her husband and he made it clear to e that she wants out. No partnership. I might be able to work out something with her and have her teach the classes there, but no partnership.




Isn't $5000 a week a lot of money to you? And likely in January it will get quiet but not to worry too much because in December you were hauling it in to make up for it. You will need more than one other person to keep this off the ground

Say for example every cake you sell is an $800 cake. You have to sell 6.25 of those every week to make your $5000, if there's 4.3 business weeks in the month that means you have to deal with 26.875 brides every month, plus be setting up appointements and dealing with 26.875 brides for the next month. You've got 6.25 deliveries every Saturday

You have to order the ingredients and supplies from several different places, you have to run by several different stores sometimes--do you have kids? And Snarks, don't bite me I'm just saying kids need some of their Mother some of the time.

But unless you go big like Snarkette or cater like IndyIndy your overhead is going to eat your life up and will never be sated.

The owner is burnt out. Wonder why.

I vote no because this operation is too big for you right now--too much money--too many sq ft--and you're coming off as if you are allergic to working the hours you're gonna have to put in to make it work. You need to want to be a business woman to run that store which probably is why the owner wants to bale.

That's one of the biggest reasons I never jumped off the cake business cliff ('cause I can't do it from home) is because I don't wanna be a business woman I wanna be a cake artist. I don't think I could do both very well.

So I vote no because you're not ready, it's too big and it's too much money.

She cannot be a making $75K a year and gonna sell that for $125K something is all wrong isn't it Snarks and Indy???. She must owe big time on equipment huh?

You need to shadow owner chickie for a week--walk in her mocassins from the time she opens till the time she closes.

littlecake Posted 21 May 2009 , 11:43pm
post #58 of 135

it's really not as bad as you'd think.

i think you could get A LOT more bang for your buck starting from scratch...

what is your vision for a place?....do you just want to do cakes?....or cookies and stuff for walk ins?

i only do orders...when i first opened i had cookies and dessert bars cupcakes and snacks for walk ins...but there was alot of waste at the end of the week.....and there is more of a profit margin with cakes.

i'm sorry if you already mentioned it...this has been the busiest week of the year so far with graduation and 4 weddings this week, i'm kinda fried.

-K8memphis Posted 21 May 2009 , 11:59pm
post #59 of 135
Quote:
Originally Posted by littlecake

it's really not as bad as you'd think.

i think you could get A LOT more bang for your buck starting from scratch...




Me too.

Quote:
Originally Posted by littlecake



what is your vision for a place?....do you just want to do cakes?....or cookies and stuff for walk ins?




Quote:
Originally Posted by saberger

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).


littlecake Posted 22 May 2009 , 12:37am
post #60 of 135

since you are asking for opinions, i wouldn't rule out sheetcakes...i know peeps think they are not "artistically challenging"...but DUDE!...they are SO FAST, and the profit margin is really good with sheetcakes, since they ARE so fast....i do gobs of them,

you are really creative, you could really come up with some cool designs.....and truthfully, when you are trying to pay the bills....artistically challenging turns into nerve wracking pretty fast, esp. when you're tired from putting in so many hours.

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