What does it REALLY involve? (long)

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

saberger Posted 22 May 2009 , 2:01am
post #61 of 135

Not trying to ignore your posts, I will respond to them......

I have a question. There is certain info that I want from them.....am I allowed to get it? And what else should I make sure to get? I want a copy of the lease; tax returns for the past 2 yrs; list of inventory; profit & loss statement; operating expenses; and their books.

shorty56 Posted 22 May 2009 , 3:05am
post #62 of 135

i decided to give my input cause i was in a similar situation not too long ago. i had the opportunity to buy an established cake business for 75k. she would have stayed on to transition me, i would have gotten all her brides, equipment, recipes, everything, much like your person is offering you.

in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.

you're looking at 125k in debt to buy the biz, then over $3000 a month in rent. that is a LOT of baggage. i know that if i were in that situation, it would weigh me down.

good luck with your decision, but i vote no as well. for much less $$ and a little elbow grease you can establish your own place. i think you'll find it much more manageable too, to start small.

saberger Posted 22 May 2009 , 11:37am
post #63 of 135

doesn't establishing my own place require not only the location, but then purchasing the equipment as well?

Deb_ Posted 22 May 2009 , 12:03pm
post #64 of 135

Yes sometimes you'll need to purchase your own equipment but it will be a lot less then $125k.

I don't know, after reading through this again, I'm nervous for you.

You'll need to come up with $125k just to purchase the business, so you'll have that monthly payment on top of the $3400 a month for rent.

Like k8 said this business opportunity sounds more like a *moving up* business, not a *first* business.


To me this is just too risky.......especially in this economy. There has to be a reason why this woman is trying to sell, and I don't think she's being 100% truthful with you. (Don't trust that the numbers she's showing you are the real deal.)

Do you know what she purchased the business for? (I think you could find this out at your town/city hall.)

indydebi Posted 22 May 2009 , 12:24pm
post #65 of 135
Quote:
Originally Posted by saberger

doesn't establishing my own place require not only the location, but then purchasing the equipment as well?



.
I'm a caterer so I have more equipment than you would ever need and I spent only $45K. Everything was new except the walk-in-refrigerator (a steal at $1200!), my mixer ($1000) and my dishwasher (a $15,000 outfit that I got for only $7000). You probably won't need a 6-burner stove, a food warmer or a deep fryer, so you'd be able to get equipment for WAY less than I spent.

alanaj Posted 22 May 2009 , 12:27pm
post #66 of 135

There is an absolute treasure trove of information in these 5 pages. I have to say that I vote with some of the veterans here in thinking this is "too fast, to furious" for what you're really looking to do.

I rent a commercial kitchen to have a legal business and to me, that was even a huge step. It's dollars that have to be made up for in labor. I do everything myself but am looking for a part-timer. I repeat, I am renting. With the amount of time caking takes (which I love) I simply can't imagine having to run a full-fledged business, which entails everything from taking out the trash to repairing broken front doors to keeping inventory on that scale straight. Hours tick by... Lord, my husband would end up leaving and I wouldn't notice he was gone for a week! J/K I went to a college that was 4 years of intensive business courses, no general ed. and have written a boat-load of business plans. That right there is enough to keep me at bay for awhile.

Good luck in what you decide but I would definitely heed the advice of K8, Debi, dKelly, etc., etc.

alanaj Posted 22 May 2009 , 12:28pm
post #67 of 135

By the way, your cakes and cookies are beautiful. icon_smile.gif

Luvsthedogs Posted 22 May 2009 , 12:47pm
post #68 of 135

Don't know if you've thought about this or not.....

If you have a business you also must have a contingency/succession plan. If you get sick or have a family emergency that goes on for a while you need to know who will take over for you and pay those fixed costs that keep on coming.

I used to work with business start ups in another state and more often than not people have a talent/idea/craft that they excel in and don't want to or don't know how to handle the business side of things. I suggest you contact your local SBDC (Small Business Development Center) and ask for a consultation. They can help you with a business plan that spells out what your known expenses will be (and believe me, there will be unknown ones, too) and what your revenue should look like to break even and make a profit.

Good luck to you!

Brownie1954 Posted 22 May 2009 , 1:04pm
post #69 of 135

Hello....
I just want to add my two cents worth. As everyone has already said, do your homework. Think of every angle you can, on what it will take to run this business. You will be surprised....Just when you think you have it all worked out, something else will come up to consider. You'll have the rent, utilities, phone service, credit card machine charges, maintenance of equipment, maintenance of the building, insurance to take care of. Get all the initial excitement of this out of your system, then settle down and really think about it. Be careful too...when someone tells you that they will do this, and this is the way this has worked, be careful. People are full of goodwill, when half of what they say is crap. I don't mean to knock anyone you are dealing with....But all too often, what is said, to what is really done, are two very different things. People will say anything to get out from under something....
This is only my opinion, but K8 can't be more correct. You will have a hard go of it, if you think you won't put in long hours. Yes, there are days when you can work 8 to 5:30, but don't bank on it being a regular thing. If you really want to make it work, you will put in those hours. When I had my shop, there were many times I was ready to lock up, only to have a customer come to the door. I never turned someone away. You will get orders that will keep you there until they are done. You have to have your product restocked for the next day, ready to sell. It doesn't get done when you do home.....
My biggest concern is the fact that you need to get real serious about doing it all. You need to know what is going on with the finances, EVERYTHING. You simply can not run a business when you don't have your hand in the till for everything. Good luck to you!

saberger Posted 22 May 2009 , 2:05pm
post #70 of 135

I spoke with a friend of mine (finance person on Wall Street) and she is going to sit down with me and go over all of the financials and teach me about what I am looking for and what are potential red flags. I spoke with her this morning - she knows the biz that is for sale and agrees with its potential (she has been a customer there for many years and knows the owner). She is also going to connect me with a biz lawyer.

I AM learning the biz end. I AM learning and trying to put together a biz plan. And I AM NOT making ANY decision until I see numbers. I still haven't gotten them. I am still waiting for those. I do have questions about where there expenses are going, whether they flat out own all of the equipment, what their debt is and all of that.

So, although I would prefer to have somebody else do all of that (after all who WOULDN'T), am doing it. I am not going to wait around for some knight-in-shining-armor to take care of it for me. I will learn dabnabit and know EXACTLY what I am doing. Plus, I think this is a test to see if I REALLY AM interested in doing this...because if I AM, I MUST know this stuff, right?

Too much, too fast.....quite possible. My DH has been looking into buying a biz for a few years, so this isn't an entirely new concept....we just weren't actively seeking it out. Now, having said that, I will learn what needs to be done and what needs to be known. I have been trying to educate myself about all of this and I SOOOOOO appreciate all of your input and feedback.

Keep it coming. I believe that everything happens for a reason and that it is high time for m to learn about the biz end of stuff. Even if this doesn't work out, then I am more prepared for next time and possibly starting from scratch. But I think the key thing is: I AM LEARNING IT!!!! icon_smile.gif

saberger Posted 22 May 2009 , 2:06pm
post #71 of 135
Quote:
Originally Posted by CindyD333

Don't know if you've thought about this or not.....

If you have a business you also must have a contingency/succession plan. If you get sick or have a family emergency that goes on for a while you need to know who will take over for you and pay those fixed costs that keep on coming.




I hadn't point blank thought of that. It has been in the back of my mind, because I still haven't seen the numbers on this place. But that is very important....thank you for pointing it out to me.

saberger Posted 22 May 2009 , 2:08pm
post #72 of 135
Quote:
Originally Posted by alanaj

By the way, your cakes and cookies are beautiful. icon_smile.gif




Thank you.

saberger Posted 22 May 2009 , 2:10pm
post #73 of 135
Quote:
Originally Posted by shorty56


in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.




That's it?!?! WOW!! Maybe I should look into this at the same time....can't hurt right? This is going to seriously sit in my mind. Thank you for sharing it with me.

saberger Posted 22 May 2009 , 2:29pm
post #74 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...

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.




Thank you for taking the time to respond to this forum with so much to do!! icon_redface.gif
My vision is to get rid of the pies and tarts. I am not interested in that. That would be replaced with decorated cookies, cupcakes, cake truffles, choc. covered oreos, personal mini cakes, and my brownies. Not all at the same time necessarily...I have to figure that out, but that is the goal. Mind you, her main retail business is on the weekends, so that is when I would offer most of those. Around holidays I would offer my gift box set via orders and some readily available. Also, I would offer BC and fondant cakes (wedding & occasion); my Passover goods; and then classes and parties. I am not looking for a sit down place...I don't want to deal with that PLUS it would be required to have 2 bathrooms, which it doesn't have. And I am not interested in dealing with it. The majority of the biz is custom cakes.

Does that answer it?

shorty56 Posted 22 May 2009 , 2:32pm
post #75 of 135
Quote:
Originally Posted by saberger

Quote:
Originally Posted by shorty56


in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.



That's it?!?! WOW!! Maybe I should look into this at the same time....can't hurt right? This is going to seriously sit in my mind. Thank you for sharing it with me.




you asked earlier about getting your own equipment. my space was a photographer's studio before i rented it, so it was basically an empty rectangle with carpeting. i had to do EVERYTHING! plumbing, electrical, flooring, all new equipment, and i STILL did it all in just two months for less than 25k. all of my equipment was new, 20 qrt mixer, big freezer/fridge, double deck convection oven, grease trap, etc. we saved some money by doing the flooring and painting our selves.

you can see in the before pic the space in the back was just empty green carpet. the space in the front was ugly tile and paint.
LL
LL
LL

ccr03 Posted 22 May 2009 , 3:02pm
post #76 of 135

wow - shorty! that looks GREAT!!!!

ziggytarheel Posted 22 May 2009 , 3:16pm
post #77 of 135

I've been devouring these sorts of threads since I first starting lurking on this site. I'll never own a cake business of any sort, but I love cakes and baking and I've helped with start up businesses. I love figuring out this stuff.

So I'll say as someone who has probably read every thread on this subject for about 2 years, I think you need to "get real" about a few things.

The first thing you need to know is how fast a decorator are you? If you are slow as molasses, you aren't ready for this yet. A set up like this, with its expenses, will require that churn out a LOT of cakes.

The second thing you need to know is what is profitable in this type of business. Some items are simply not worth offering. No profit in them.

The third thing is you need to figure out what a reasonable price is for what you will be selling to compare it to your full monthly operating cost. I would listen to the folks who tell you that you need to figure out how many slices of cake you have to sell a month to break even. Is that even possible? And if it is possible, how soon would it be possible? What would it require to make that happen?

The fourth thing that comes to mind is how are you going to make your monthly payments when you don't sell enough? How quickly will you be bankrupt if it takes a couple of years to manage to break even?

Even with great equipment that can help you bake large quantities in a short amount of time, there is no automation for your decorating. How many servings of cake can you manage to get out the door in a week? Do you know?

alanaj Posted 22 May 2009 , 3:21pm
post #78 of 135

Shorty56--GREAT space. It's made me wistful... icon_smile.gif

alanaj Posted 22 May 2009 , 3:30pm
post #79 of 135

saberger, you said you've been researching through the forums so you may have already seen this but it's a good one so I'll post the link. I especially liked Indy's post on page 2. Hope it helps.

http://www.cakecentral.com/modules.php?name=Forums&file=viewtopic&t=600727&postdays=0&postorder=asc&&start=0

-K8memphis Posted 22 May 2009 , 3:48pm
post #80 of 135
Quote:
Originally Posted by saberger



My vision is to get rid of the pies and tarts. I am not interested in that. That would be replaced with decorated cookies, cupcakes, cake truffles, choc. covered oreos, personal mini cakes, and my brownies. Not all at the same time necessarily...I have to figure that out, but that is the goal. Mind you, her main retail business is on the weekends, so that is when I would offer most of those.




The crowd that comes in for pie, tarts and pastries will not be replacing those items with cookies & cuppies. You'll be loosing those folks.

You need a bigger vision for this location. It's backwards. You are trying to put your vision on an existing space designed for something else.

You have to generate foot traffic if it's the anchor store for the shopping area.

saberger Posted 22 May 2009 , 4:34pm
post #81 of 135
Quote:
Originally Posted by alanaj

saberger, you said you've been researching through the forums so you may have already seen this but it's a good one so I'll post the link. I especially liked Indy's post on page 2. Hope it helps.

http://www.cakecentral.com/modules.php?name=Forums&file=viewtopic&t=600727&postdays=0&postorder=asc&&start=0




NO!!! I hadn't come across that one! AWESOME!!! I have read through Indy's post and will continue in a bit (still have calls to make). THANK YOU for posting that. There is definitely info I can use.

Since I said I would keep you updated: I just spoke to a biz lawyer and real estate lawyer. Got good info and was assured that I am on the right track with the info I am requesting and wanting. Placed another call with SCORE to connect with someone. AND found the business plan template at SBA and went through the workshop thingy to understand it better.

Progress....progress....*pat on the back*.

mbt4955 Posted 22 May 2009 , 4:37pm
post #82 of 135

Here's another pat on your back. icon_smile.gif

saberger Posted 22 May 2009 , 5:25pm
post #83 of 135

icon_smile.gif

Ladiesofthehouse Posted 22 May 2009 , 5:50pm
post #84 of 135

Here is a blog I like to read that shows someone starting a cake/dessert storefront from scratch in California. If you read back through the archives to where she started, just try to add up in your mind the $$$ her family has saved her by doing all the work. Plus note how she frequently talks about being sleep deprived and her storefront isn't even open yet. Her cakes and desserts are awesome, but I am wondering how the money and business end of things will progress. I wish her well!

http://www.mysweetandsaucy.com/

alanaj Posted 22 May 2009 , 7:49pm
post #85 of 135

Great blog!

-K8memphis Posted 22 May 2009 , 8:09pm
post #86 of 135

Y'know what though? Making it a coffee shop would totally work. Your sister could run the coffee end of it--put out some tables--cater to the croissant crowd bring 'em in! You do the cakes and...why aren't there enough johns? I cannot believe that got constructed to code these days with only one john.

20 years ago they prevented me from opening a cake shop (no eat in trade) 'cause of only one john.

You gotta be kidding me?? One bathroom--incredibly shortsighted. Put in a bathroom!!!!! That will totally work!!!!

edited to say--see people would like to watch you work too. It'd be like reality Duff same bat-time same bat-channel/bakery. icon_biggrin.gif

indydebi Posted 22 May 2009 , 8:58pm
post #87 of 135
Quote:
Originally Posted by k8memphis

Y'know what though? Making it a coffee shop would totally work. Your sister could run the coffee end of it--put out some tables--cater to the croissant crowd bring 'em in! You do the cakes and...why aren't there enough johns? I cannot believe that got constructed to code these days with only one john.

20 years ago they prevented me from opening a cake shop (no eat in trade) 'cause of only one john.

You gotta be kidding me?? One bathroom--incredibly shortsighted. Put in a bathroom!!!!! That will totally work!!!!

edited to say--see people would like to watch you work too. It'd be like reality Duff same bat-time same bat-channel/bakery. icon_biggrin.gif




Number of restrooms could depend on local laws, so check them out. I know a lady who ran a restaurant with one uni-sex restroom. It was a small place, so maybe the restaurant capacity makes a difference.

Also check into handicap accessible requirements. The reason I don't have any eat-in space is because (a) I'm not a restaurant and (b) I didn't want to spend the $9000 to move the private-restroom-just-for-me from the back of the shop, to a front-of-the-store-with-handicap-accessible.

FromScratch Posted 22 May 2009 , 10:49pm
post #88 of 135

Yes... # of bathrooms required depends on how many seats you have. In NH you only need one restroom for up to 24 indoor seats and two restrooms for 25 and up.

-K8memphis Posted 22 May 2009 , 11:10pm
post #89 of 135

Tennesse is nothing if not huge on plumbing. If a little plumbing is good a lot of plumbing is better. I guess the only thing we dig more than plumbing is taxes.

Deb_ Posted 26 May 2009 , 7:22pm
post #90 of 135

Hi saberger, just wondering if there's any news on the bakery.

Deb icon_smile.gif

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