Possible Business Opportunity- Need Advice And Suggestions

Business By Sweettooth1120 Updated 6 Nov 2009 , 7:06pm by Ruth0209

Sweettooth1120 Posted 1 Nov 2009 , 7:21pm
post #1 of 10

A friend of a friend is opening a new bakery. He himself is new to the bakery business. I mentioned that I do cakes. I am not licensed but would love to be. At first its going to be basic bakery items, coffee, etc. I am going to meet with him to talk cakes.He mentioned something about me being a subcontractor, as opposed to an employee. I would come in and use their kitchen and ingredients and make a cut off the cake.

What sort of arrangements do others decorators have? besides being employees or working at the bakery. What sort of suggestions or questions should i go in there asking?

9 replies
CakeDiva73 Posted 1 Nov 2009 , 7:28pm
post #2 of 10

Does he mean you get a cut off the cakes you make or the cakes that sell? Because if you are working on straight commision, make sure it's enough to make it worth your while...... how much is he selling cakes for?

Is this just fancy wedding-like cakes or regular cakes for desserts, etc. Because if you are the decorator and he is in charge of taking orders and pricing, paying for ingredients, you are pretty much his employee, only it sounds like he doesn't really want to pay you - just a 'cut'. Which might not be bad if he's charging alot and the cut is generous - but it could go the other way, ya know?

I would try and clarify. For me, personally, I wouldn't care for the use of me as the 'house' decorator because I am way more possesive of my business. But with that comes all the other crud like overhead, advertising and ingredient costs so if you don't care about it being yours, then talk more about the money end of it to see if it's lucrative for you both. Congrats!

Sweettooth1120 Posted 1 Nov 2009 , 7:38pm
post #3 of 10

Thanks for the comments. He isnt even open yet and i think, from our conversation, he is going to have a house decorator for your basic buttercream sheet cakes and round cakes. I would provide them the opportunity to sell custome 3D type cakes.

I dont have a business yet. My thoughts are perhaps this could be the opening i need and could maybe get licensed. Maybe offer this service in exchange for getting paid on the cakes but using their kitchen.

Ruth0209 Posted 1 Nov 2009 , 7:46pm
post #4 of 10

You'd probably be better off with an arrangement where you make the cakes in his kitchen, he buys them from you for whatever price you agree to, and then they belong to him to sell. No waste for you, with all that risk on his side. You can figure out a price that accounts for the fact that you're using his bakery.

As an old HR person, I should also point out that if you use his facility, supplies, equipment, and ingredients, bake what he asks, come in when he tells you to, etc., you're probably considered an employee by the IRS regardless of what he wants to do. A lot of businesses get into trouble trying to avoid paying income taxes/unemployment taxes/workers' comp/etc., by claiming people are contractors when they're not. On the other hand, if you are independent of any supervision by him, come and go on your own schedule, sell to others (don't work for him exclusively), set your own prices, have your own business entity, etc., you're probably really an independent contractor who is just renting space from him.

Just be careful, be clear, and get it in writing. I'd talk to your accountant to make sure you've got it right for you and for him.

cakesdivine Posted 1 Nov 2009 , 8:22pm
post #5 of 10

Exactly what Ruth said!

HarleyDee Posted 1 Nov 2009 , 9:48pm
post #6 of 10

Ditto what Ruth said. I have been in talks with a cafe that just opened, and it's sorta the same arrangement you're talking about. They have their own in-house baker for their desserts, but they want to start catering also, and they want me to be their wedding cake person. From what I understand (and we have only had a few short conversations, nothing serious yet) they would ask me what I would sell the cake to anyone else for (I am already in business), they would mark up, and then I get my price and they get whatever they marked it up. Sorta like I sell to them wholesale and they re-sell it retail.

indydebi Posted 1 Nov 2009 , 10:04pm
post #7 of 10

Definitely what Ruth said. Two accountants and my attorney had conversations about what constitutes contract labor. You can't just CALL someone contract labor to avoid paying payroll taxes, etc. There are definite rules, guidelines and definitions to it.

ziggytarheel Posted 1 Nov 2009 , 10:10pm
post #8 of 10

Yep, I've recently read very brief summaries of court cases determining if someone is actually and contractor or an employee. If you supervise, pretty much you are the employer. This applies to other liability issues as well as worker's compensation insurance.

The stuff you end up needing to know that you never thought you would!

minicuppie Posted 6 Nov 2009 , 11:25am
post #9 of 10

It is early...let me clarify this before I put my foot in my mouth. You are going to sell wedding cakes to his catering biz (for your full price) and he will mark it up from there?

* it IS early...that was harley's post.

Ruth0209 Posted 6 Nov 2009 , 7:06pm
post #10 of 10
Originally Posted by minicuppie

It is early...let me clarify this before I put my foot in my mouth. You are going to sell wedding cakes to his catering biz (for your full price) and he will mark it up from there?

* it IS early...that was harley's post.

I had the impression from the OP that it would be bakery items. She'd make cakes that would be cut and sold by the slice or even as a whole cake. I assumed it was more like a pastry item as opposed to a decorated cake, but I could be wrong. I was up 'til 3 this morning, so I'm a little blurry myself. icon_eek.gif

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