We are a growing cupcake business and started baking in another bakery's kitchen (you can't have a home food biz in WI). We are ready to strike out on our own, but we are having challenges figuring out the sales projections regarding how much growth we will have when we open a store.
If you have input we would love to hear it!
Thank you SO much!
You need to conduct market research for your area. Demographics, competition, overhead, construction costs to meet HD requirements, marketing costs... all are specific for any given area and any given building you choose to rent.
WOW, I just put up a similar post. getting more info here than in mine.
When we ran the numbers for opening a retail shop vs. renting a commercial kitchen, we found we would need to do 4-5 times the amount of business just to have the same level of profit. Since I have a full-time job in addition to managing the business (my wife does all the baking) we decided to stick to renting a kitchen. There is much less stress, and since we rent hourly and there's no huge fixed overhead cost we can be more flexible about how many orders we accept.
Making a projection is always a guess. But if you can keep your current sales level during your move, that should give you a head start. I began baking in my home kitchen with a permit from NY Ag and Mkt. Most of my business was wholesale so when I moved into a retail shop, I relied on that business to pay the bills.
The big change is.. how much work do I have to do for overhead before I see any money... where in a smaller operation, the profit can usually be seen in every order.