Could I impose on all you wonderful bakers for some advice? I'll try to get to the point but there's a lot going on.
Here's some background on me:
About 10 years ago I got about half way through my Baking and Pastry Arts certificate at Diablo Valley College in Walnut Creek, CA. Then I got pregnant with my first child and had to stop school. For the last 10 years I have done cakes and catering for friends and family and have pursued sugar arts as a hobby. We moved from Northern California to Northwest Arkansas 4 years ago and since then I have done many cakes, some custom desserts for people in their homes for dinner parties and taught a few classes to friends in my home kitchen. For the last 3 years I have provided a major dessert buffet for our non-profit school's annual fundraiser. This year it was 1600 pieces. A lot to do out of my home kitchen with now 3 children in tow! Even though I did have special permission from the Health Dept. to do this buffet as a parent and PA member I am now getting some major requests for cakes and pastries and someone has asked me to cater an event in August for 300 Wal Mart people. Here in Northwest Arkansas, where Wal Mart is based, that is a HUGE opportunity.
SO whether or not I continue depends on my getting legal...right away. Arkansas obviously does not allow home bakeries. The problem is that there are no open commercial kitchens here and so far no church kitchen or caterer has been willing to rent to me. Still looking but I've called literally dozens of people.
Also, there is a very cool space available in the Bentonville town square that would be the perfect retail bakery. It is right on a prominent corner, kitty corner from the county courthouse with easy parking and right off the main street through town. The square is going through a great revitalization and a major multimillion dollar art museum on 100 acres is opening in 2010 that will be just a few blocks away from the square. There are the usual festivals, farmers markets, ice skating rink in the winter, etc... Okay, can you tell I am salivating over this space?
It is about 1500 sq. ft. and the lease is $2000 a month. Landlord is willing to negotiate the term of the lease and would help with some of the build out, painting, etc... Don't know if he'll come down on the price but I'm going to ask. It was previously a coffee shop so people are used to coming in there all the time. It also has a kitchen area already, even though the equipment is stripped. There is an existing grease trap and water in the front and back of the kitchen. There are 2 beautiful ADA spec restrooms. Utilities ran the coffee shop about $200 a month. They were pulling about $13-$15K a month before they closed. They closed for personal reasons and not because of lack of business. There is no vent hood and I would need at least a small range for fillings so of course I'd have to add one.
So here are the problems: I do not have much capitol (maybe about 15K) and I'm assuming (maybe wrongly, but I doubt it) that we will not get a bank loan right now. We could also pay the lease out of our home budget if we had a couple of bad months but obviously could not sustain the costs of a bakery for a prolonged period. Eventually I want to offer limited morning pastries, ready made case cakes, tarts and custom cakes. I realize that this is a lot of production for just me and I do have a potential partner who could help with both the start up costs and the production. So do I lease the space and just open "softly" at first and do custom cakes only for a while until we can open to the public? Or do I try to get this thing off the ground on a shoestring? Am I even good enough to be entertaining these thoughts?
I should mention that there are only a couple of other bakeries in the tri county area, 2 of which are 20 miles or more away.
I am just at a loss right now and need some direction. If you've made it this far - thanks for reading my ramble!!!
Your cakes are beautiful, and I'm assuming they taste good, so I'd certainly buy from you! It sounds like you have a very good chance of making this work, and the space you found sounds wonderful.
Although I've never started a business, I used to work selling wedding cakes (not decorating -- I wish!) and I was also responsible for some of the office work, including accounts receivable & payable, payroll, and helping with taxes. I learned that there is a LOT more to running a business than most people think. You've clearly thought about the expenses of leasing the space, but there are a few other things that immediately come to mind:
You're an excellent decorator, but how much do you know about running a business? If it's not a lot, I'd recommend hiring someone (an attorney or other business professional) to guide you through every step. Visit the Small Business Administration for help, too.
How much of your hard-earned money will have to go to taxes? This includes business income taxes, payroll taxes / self-employment taxes, license fees, etc.
Are you prepared to devote every waking hour of every day to your business? Or can you afford to hire employees to take some of the load off you?
I don't mean to throw a lot at you, and you've probably already thought it through. But I've seen a relative destroy two businesses recently because he knew NOTHING about running a business when he bought them, and I'd hate to see the same thing happen to you. I really do wish you the best.
Thanks Saffronica! No, I need to think of everything that my prevent success so I appreciate your feedback
I used to be an office manager so I do know the basics of running a business but it was a very different type of biz. I also sold Pampered Chef for years but I realize running that is nowhere near at the level I would be with this. My DH is an IT consultant so we pay self employment tax, quarterlies - you name it, we're taxed on it. AND we already pay a ton for private health care with a high deductible. I know I will definitely need to work with a bookkeeper and probably at least one employee or two if the partnership doesn't end up happening. DH will handle web related stuff and my possible partner was a marketing exec. and would help me even if we aren't in biz together. Still, most things would fall to me and that's ome of the things I worry about. I have 3 children whom I DO want to see once in a while
A lot to think about...
You might want to pick up a book on how to open a bakery. I know half.com and Amazon have a couple. From what I've read in such books is to plan for between $100,000 - $300,000 to get started - especially if your space doesn't come with equipment. You might want to take a bakery owner out to lunch to pick his/her brain. I've done that and this baker was more than willing to help me (especially since I wouldn't be one of her competitors) She even let me spend a few days at her bakery. It was an eye opener and I found it's about a lot more than making great cakes. For now, if I were you, I would find a place that would let you bake. Sometimes other bakeries are. Here are some books on Amazon that are pretty good: How to Open a Financially Successful Bakery : With a Companion CD-ROM by Sharon Fullen and Douglas R. Brown, Start A Cake Business Today by Paula Spencer, The Baker's Trade: A Recipe for Creating the Successful Small Bakery by Zachary Y. Schat
Thanks Sweetriley! I appreciate the book list and I'll check those out! Yes, even though the space is beautiful it would probably still be my preference to just find somewhere to bake out of. I'm still looking and praying for the right answer
Even though you might not use it, fill out a business plan. It forces you to think of each of the areas in depth and answer the questions honestly with facts. There is no emotion involved and it basically steps you though opening the business per se.
This is THE best advice that I was ever given.
Thanks Lisa! Yes, I have one in process! It's SLOW going