Amazing Opportunity! I Need Your Help!

Business By Tiers_Of_Joy Updated 8 Mar 2010 , 4:13pm by Chickycakes

Tiers_Of_Joy Posted 6 Mar 2010 , 2:40pm
post #1 of 24

Hello all, I have a crazy opportunity that just got dropped in my lap this last week and need your advice!

I met with the owners of a very prestigious catering business/banquet hall in town. They are interested in bringing me on-board as their cake decorator. I will be going along with some others from their kitchen to a (Wisconsin) safe foods course March 22nd and after that I will be licensed in their kitchen and will make cakes for those clients who are having events in their banquet hall. I won't be allowed to make cakes to deliver to other places for liability issues, but for events on their premises, I'll be the cake lady! I believe the way it will work is that I will run my own business (as opposed to being their employee). I will set my prices and charge them for my services, then they will do their own mark-up to charge their clients. The clients will pay the catering service and then they will pay me. I will use their kitchen for the preparation of the cakes (and possibly other desserts in the future) since after March 22nd I'll be licensed in their kitchen. I will buy my own food supplies/ingredients. I will use their equipment...mixers, ovens, etc. and my cake pans are my own that I will purchase as needed for my own business.

Up until this point I've made cakes out of my own kitchen for friends and friends of friends.

This opportunity is absolutley too good to pass up. But I want to make sure I'm covering all my bases and need all of your ideas/suggestions/questions. I'm preparing cakes for tasting at a bridal show that will be in this banquet hall next week. I've ordered new business cards (the owner told me to only put my info on the cards...nothing like "in association with the Ludlow Mansion", so it seems I'll be representing my own work and my own business thru this show and thru my work with and for them.

I'm trying to organize all the things that go along with small business start up...saving receipts, logging (roughly) my costs and profits, etc. After I am licensed in their kitchen I'd like to register my business name with the state and after that am I a small business owner?? This is where I need your help to make sure I'm thinking of everything. At this point I won't be operating business for my OWN clients out of their kitchen...only for those clients who are going to this hall for an event, and as such my cake business will be limited. Perhaps in the future they'll allow me to rent their kitchen to sell cakes to my own clients, that's something I feel I should "work towards" after I've developed a good working relationship with them in their kitchen.

I feel this is an opportunity to gain practice and to get my name out into the community. This business has a reputation for high quality and to be attached to them in any way in an amazing deal!!!

Throw things at me to make sure I'm considering every detail please! My hubby and I are kinda stressin' over the possibilities this could afford in the future!

23 replies
ttehan4 Posted 6 Mar 2010 , 2:54pm
post #2 of 24

Thats great. One thing that came to mind when I read your post was that if you can only make cakes for their banquet events how many cakes do they need in a week? Will they offer enough business to make the same or more money than doing all the cakes you want on your own?

1234me Posted 6 Mar 2010 , 3:21pm
post #3 of 24

I am with the above poster, how many cakes will you be doing each week? What if they dont' need cake that week, are you respomsible for helping them with their catering business? What if your best friend wants a cake - will they allow you to make it? If so, can you make it in their kitchen and charge your friend for it, or will you have to sale it to the friend through them?

leah_s Posted 6 Mar 2010 , 5:58pm
post #4 of 24

OK, and I sincerely mean this in the nicest way, you need to take off the rose colored glasses.

You work on their premises, they control your work (can't make cakes for others), I'm thinking they will tell you when to come to work. Those things make you an employee and they're trying to treat you as an independent contractor. They will get in trouble with the IRS and you will be left holding the bag as far as pay BOTH your portion of the social security and payroll taxes AND their portion also.

This is a great arrangement for them, since all the risk is on you.

Also, this could be a cash flow nightmare. YOU have to front all the money for supplies and equipment such as pans and only get paid after the customer pays the kitchen and then they pay you. So what happens if the customer's check bounces? Or the credit card is declined? Who "eats it?"

Do you meet with clients? How would you quote a price to them since the kitchen is adding a markup? And if you don't meet with brides how do you design the cake? Or do you let someone else create the design and you have to do it? Again this crosses the line between employee and contractor.

What liability is created by delivering cakes away from this venue? You're gong to need liability insurance anyway.

Seriously, if you want to take this it needs to be either a job as an employee, or dictate your terms right up front. Don't count on them "granting" you a different arrangement in the future. If you're scheduled for training in 2 weeks, then you're holding the cards so to speak. Have a contract to rent their kitchen and then be free to do your own thing.

tonedna Posted 6 Mar 2010 , 6:14pm
post #5 of 24

I agree with Lea. Other considerations...Are they letting the costumers knows who is the company making the cakes. Or are they taking the credit for the cake.
I think that I would much prefer them to send the clients to me and me paying them for the use of their kitchen in an as needed basis. Instead o me working for them. Then, what about the mark up they are putting?
Edna

Julie53 Posted 6 Mar 2010 , 6:33pm
post #6 of 24

I also agree with Leah! This is not going to really benefit you if they don't have any bookings... And it does sound like you would be an employee and they are telling you what you can and can not do. I would look at renting the kitchen from them to bake if you want, or look for another rental somewhere. If it sounds too good to be true, then it probably is. Look out for yourself. JMHO icon_eek.gif

loriemoms Posted 6 Mar 2010 , 6:38pm
post #7 of 24

I agree with Leah as well...and it does sound a little fishy to me. Why won't they hire you as a paid chef in the kitchen? If not, then they can hire you as a "contractor" and they would pay you directly for each cake like any other customer. I have a number of caterers I do that with. Exclusive to me sounds like employee!! How would you file your taxes? and I agree, would you bring in enough cakes (is it just one cake a week? two? five?) I would also make sure I have a very good contract with them, and get paid BEFORE you start an order!

Price Posted 6 Mar 2010 , 6:43pm
post #8 of 24

I don't understand why the owner doesn't want anyone to know you are associated with them? That doesn't make sense to me. Is the Bridal show only for people who are booking their wedding with the venue? If not, what if a Bride wants you to make her cake? How do you explain you can only make it for her if she books her reception there? Wouldn't that say you were associated with the venue? I think you might want to make a long list of questions and get some good answers before entering into this arrangement.

costumeczar Posted 6 Mar 2010 , 9:25pm
post #9 of 24

They're trying to avoid paying thier taxes. If they hire you, they have to pay some taxes on your behalf. If they don't, you get to pay all of your own self-employment taxes which is a bigger amount for you in the end. Technically, if you go to work for them for a regular number of hours per week, you do the same job all the time, and you do this for an extended amount of time, you're considered a permanent employee and they're supposed to be treating you like that on their payroll.

They're trying to play fast and loose with the regulations, but I just heard a similar thing where someone got fired and she was told by the employer that she couldn't file for unemployment because she had been a "temporary" worker. She came in full time for years, did the same job for years, and when she told the unemployment office her story the employer got hit with a ton of fines for not reporting their unemployment insurance/social security/etc.

I'd insist on being on their payroll if you are going to be working for them on a regular basis.

JGMB Posted 6 Mar 2010 , 9:31pm
post #10 of 24

Welcome to CC, Becky! It seems like you're getting good advice from the seasoned professionals here, so tread carefully. I hope it works out for you!

SuzyNoQ Posted 6 Mar 2010 , 10:06pm
post #11 of 24

That sounds awseome!! I see you are from WI I am too.

Loucinda Posted 6 Mar 2010 , 10:23pm
post #12 of 24
Tiers_Of_Joy Posted 6 Mar 2010 , 11:01pm
post #13 of 24

Thank you all for your critiques...your advice is just what I was looking for, as I am new to this business!! I do need to still ask lots of questions and get a contract drawn up. A few more details...

Right now I only do cakes as a hobby...I saw this as an opportunity to get my name "out there" and an opportunity to get into a commercial kitchen. The owner told me I was absolutely free to keep doing cakes on the side, but if I do them in my kitchen (like I do now) that they wouldn't be liable for that in any way...obviously. The reason they didn't want me to deliver cakes outside of their banquet hall was for liability issues. They don't want to be held liable for something I make, even though it is made in their kitchen...I do not yet carry my own insurance and they would be liable for cakes that I make for them that they serve to their clients. This does muddy the lines between my being a "contractor" or an "employee". That relationship is the one that I need to completely understand before I move forward.

We didn't talk about me renting their kitchen for my own business purposes, but I thought about asking them if I could, and then carry my own insurance. That way I could promote my own business (licensed and legal), make cakes for my own clients and also make cakes for their clients, thru them....

Keep your comments coming! I don't want to go in with rose colored glasses and end up getting burned in the end...that's why I'm asking all of you!!! THANK YOU!!!!

Cakebelle Posted 7 Mar 2010 , 7:23pm
post #14 of 24

I agree with everyone here too. You need to really iron out all the details with the owners. Good luck!

lifeisgood Posted 7 Mar 2010 , 7:42pm
post #15 of 24

The other thing I would ask is sometimes with banquet halls you can bring your own cake in. Do the clients have to use you or is it optional?

indydebi Posted 7 Mar 2010 , 7:50pm
post #16 of 24

agree with leahs and tonedna. As I was reading your post, I swear a knot was building in the pit of my stomach. It's a great example of an EMPLOYER who wants all of the control and none of the (financial, tax) responsibility.

They want YOU to supply everything needed (like a separate business) but you can't sell to anyone else (like a separate business)? icon_confused.gif

Their suggestion of doing business this way represents more than just some tax evasion.....it says quite a lot about how they view doing business and THAT would scare me off more than anything.

indydebi Posted 7 Mar 2010 , 8:24pm
post #17 of 24

Re-reading your post, Im doubly worried now. This place sounds very smart in that they are trying to set things up to LOOK like independent contracting by setting up the agreement using SOME of the independent criteria. Smart like a con man!

Quote:
Originally Posted by HappyBecky

I won't be allowed to make cakes to deliver to other places for liability issues, but for events on their premises, I'll be the cake lady! I believe the way it will work is that I will run my own business (as opposed to being their employee).


If you cant make cakes for other places, how is that running your own business?

Quote:
Quote:

I will set my prices and charge them for my services, then they will do their own mark-up to charge their clients. The clients will pay the catering service and then they will pay me.


Setting your own pricing CAN sound like independent contracting, but not combined with everything else they are setting up. I took a job at a corporation where I negotiated my salary. I set my price and I charged them for my services .. but when all was said and done, I was the employee!

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I will use their kitchen for the preparation of the cakes (and possibly other desserts in the future) since after March 22nd I'll be licensed in their kitchen. I will buy my own food supplies/ingredients. I will use their equipment...mixers, ovens, etc. and my cake pans are my own that I will purchase as needed for my own business.


They are supplying the place and the major equipment and they THINK by making you supply your own cake pans and supplies that this makes you an independent. Close but no cigar.

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I've ordered new business cards (the owner told me to only put my info on the cards...nothing like "in association with the Ludlow Mansion", so it seems I'll be representing my own work and my own business thru this show and thru my work with and for them.


They dont want you to put your name on there so that it doesnt look like youre an employee. Why would they even mention it unless they thought people might think shes an employee? What own business are you representing if youre not allowed to make cakes for anyone else? Youre not allowed to sell to the general public, under this agreement, so that means you dont have a business . It means youre NOT an independent contractor since they are controlling who you can sell to . I dont care how many cake pans you supply!

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. I'd like to register my business name with the state and after that am I a small business owner?? .. At this point I won't be operating business for my OWN clients out of their kitchen...only for those clients who are going to this hall for an event, and as such my cake business will be limited.


First, you wont have a business. You are working for (otherwise known as an employee) of this venue, so there is technically no business name to register. Your cake business wont be limited . Its flat out restricted.

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Perhaps in the future they'll allow me to rent their kitchen to sell cakes to my own clients, that's something I feel I should "work towards" after I've developed a good working relationship with them in their kitchen.


What clients? You can only make cakes for this venuefor THEIR clients.

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I feel this is an opportunity to gain practice and to get my name out into the community.


Get your name out there all you want .. you cant sell a cake to them unless they become a client of this venue. Not YOUR client . THEIR client. The venue is controlling who you can sell to.

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This business has a reputation for high quality and to be attached to them in any way in an amazing deal!!!


But do they want it known that you are attached to them? They specifically told you to keep it quiet via the biz card. Im assuming its ok with them that you TELL people you work for them . Just dont set it up to LOOK LIKE you work for them.

Oh, baby, these guys are good! Too good! Run, Forrest. With scruples like this, Id be SO outta there!

leah_s Posted 7 Mar 2010 , 10:49pm
post #18 of 24

Agreed, Debi. The more I've thought about this, there more I have to say, this is NOT an "amazing' opportunity. It's a total and absolute trap. These people, whoever they are, are smart and shady.

costumeczar Posted 7 Mar 2010 , 10:52pm
post #19 of 24
Quote:
Originally Posted by leah_s

Agreed, Debi. The more I've thought about this, there more I have to say, this is NOT an "amazing' opportunity. It's a total and absolute trap. These people, whoever they are, are smart and shady.




Especially shady.

Postal_Cakemaker Posted 7 Mar 2010 , 11:11pm
post #20 of 24

I hope after all of this expert advice you'd say no way!!!

Tiers_Of_Joy Posted 8 Mar 2010 , 3:45pm
post #21 of 24

Hello all...I thank you for your suggestions, comments and concerns! After analyzing this situation and doing a lot of stressing(!) I've come to the conclusion that I should not pursue this at this point in my life. I took all of your comments into consideration, as well as my family/home situation right now as well!! I need to be at home with my small children for now and hope to one day down the road be able to pursue just the right opportunity for me.

Thanks again! You can all rest easy on my behalf! icon_smile.gif

I do hope to make myself a "regular" here on these forums in some capacity...for now just as a cake hobbyist! icon_smile.gif

leah_s Posted 8 Mar 2010 , 3:53pm
post #22 of 24

Being a mom is a more than full time job and the toughest one around. You can wow the other moms at birthday parties and school functions. Enjoy caking!

Tiers_Of_Joy Posted 8 Mar 2010 , 4:05pm
post #23 of 24

Thank you so much Leah!!!

Chickycakes Posted 8 Mar 2010 , 4:13pm
post #24 of 24
Quote:
Originally Posted by indydebi


Oh, baby, these guys are good! Too good! Run, Forrest. With scruples like this, Id be SO outta there!




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