How Can I Possibly Make Money With This?

Business By Mug-a-Bug Updated 15 Apr 2011 , 1:39pm by Mug-a-Bug

Mug-a-Bug Posted 3 Apr 2011 , 9:37pm
post #1 of 19

I just assumed that if I got good enough with my cakes that I would be able to open a bakery icon_confused.gif Now that I've been looking into it, I'm shocked to find out it's CRAZY expensive! (A commercial space in my area is about $50,000+ per year).

I would never be able produce enough cakes to even cover the cost of leasing a space, much less actually make a profit. I really want to just make cakes and not have to sell bagels to cover the rent.

Now DH and I are considering building a small shop in the backyard (which isn't huge), and that's crazy expensive too icon_eek.gificon_cry.gif

I don't want to rent a commercial kitchen thumbsdown.gif That would really just take the fun and freedom out of it for me.

I'm wondering what everyone else is doing, (maybe living somewhere that has cheaper commercial space?) Anyone actually making a profit? And, thoughts on my backyard bakery would be appreciated as well.

18 replies
jason_kraft Posted 3 Apr 2011 , 10:59pm
post #2 of 19

It's certainly possible to make a profit with a retail bakery, even with such high rent, but as you've probably realized you need huge sales volume, and much of your profit will probably be from wholesale orders to subsidize the retail overhead.

If your state does not have a cottage food law your best option is probably to rent a commercial kitchen...yes, you will give up some fun and freedom, but if you want to make money in this industry you'll have to make some sacrifices. If you're not willing to go full throttle I would recommend sticking to making cakes as a hobby and giving them away, waiting for your state to get a cottage food law (and petitioning your government reps), or working for an established bakery.

beck30 Posted 3 Apr 2011 , 11:30pm
post #3 of 19

Me and my DH is using the back room of our house to make my kitchen, and let me tell ya we have worked so hard already and havent even started with water and drain lines. Its alot of work. I have been wanting this for 4 years now, I even took a break because I never thought I would be able to do anything with it, but now Im willing to do what it takes. I am going back to school in May for a business degree. Im gonna take some art classes too. If this is what you want dont give up. Its alot of work but it will be worth it. Im still at the beginning of my venture but It feels great to see the progress in moving forward.

indydebi Posted 3 Apr 2011 , 11:41pm
post #4 of 19

unfortunately, no matter what branch of the food industry one wants to get into, its going to be costly. A commercial oven or a 3-compartment sink costs the same whether you plan to bake/wash one cake pan or 100 cake pans.

I often argue (good naturedly) with my photographer friend(s) who can pack up their whole business in a backpack and just go. One was trying to encourage me to go after destination weddings in Ireland, New York, etc. I said, "Kinda hard to squeeze an oven into my carry on bag!"

That's why its tough for any food industry to get a biz loan .... the high "fail rate" is due to the extreme overhead the food industry owner must carry and the high volume of sales that is required to sustain that overhead.

KMKakes Posted 3 Apr 2011 , 11:48pm
post #5 of 19

So how does renting a commerical kitchen take the "fun and freedom" out developing beautiful cakes? (Asking because I was thinking about renting one.)

kelleym Posted 4 Apr 2011 , 2:52am
post #6 of 19
Quote:
Originally Posted by KMKakes

So how does renting a commerical kitchen take the "fun and freedom" out developing beautiful cakes? (Asking because I was thinking about renting one.)



1. You have to rent it when it's available, which may or may not fit into your schedule.
2. Depending on what kind of storage is available there, you may have to pack every single piece of your equipment and ingredients with you every time you go.
3. You may find that when you get there, you have to clean the mixer and the counters, on your dime, before you can even get started.
4. In my state, with our current laws, the food products are never allowed in your home. You must do every single part of the cake in the commercial kitchen, including the decorating, any toppers, any gumpaste flowers, and any figurines. The product must go from the commercial kitchen to the customer.

I used to go to my commercial kitchen at 9:00 or 10:00 pm after my 3 year old son went to sleep, and when I could get a slot on the schedule. I would pack my ingredients, my pans, and my supplies in a big laundry basket. I would get there and clean the dirty stand mixer, and then wipe the dead bugs off the kitchen counter. I would cook into the wee hours of the morning, then pack it all up and come back home, and yes I violated the rules by bringing the cake back to my house, because I didn't have anywhere else to put it. I lasted less than a year doing this.

So Jason is right - using a commercial kitchen takes the fun and freedom out of it, and it's as expensive as hell. And shame, shame, shame on every state that does not have a cottage food law to allow people to legally start at home.

jason_kraft Posted 4 Apr 2011 , 3:12am
post #7 of 19

To be fair, there are some good commercial kitchen rentals out there. Our current rental facility includes space for all our equipment and ingredients and a walk-in fridge and freezer, several large ovens, and a ton of prep space. We very rarely have a problem where the last tenant has left the kitchen dirty, since the landlord (who is also a baker) is very good about cracking down on that and fining people who don't clean up after themselves.

It is a pain having to go out of the house to bake and decorate the cakes, but no more so than having to commute for any other job.

scp1127 Posted 4 Apr 2011 , 3:23am
post #8 of 19

Why should a state be ashamed to not have cottage food law? I have spent multi thousands of dollars on my commercial kitchen, and I don't believe in two sets of rules, one for bakeries and restaurants and one for the home baker. I know my health depts agree that there should not be two sets of rules also.

KMKakes Posted 4 Apr 2011 , 4:26am
post #9 of 19
Quote:
Quote:

I used to go to my commercial kitchen at 9:00 or 10:00 pm after my 3 year old son went to sleep, and when I could get a slot on the schedule. I would pack my ingredients, my pans, and my supplies in a big laundry basket. I would get there and clean the dirty stand mixer, and then wipe the dead bugs off the kitchen counter




This would make me furious. Besides that, now I am thinking that a commerical kitchen may be scary to get into as well. It sounds like that place should have been inspected more often.

My concern would be that will someone possibly use my supplies, accidently damaged my product, etc. Commerical kitchen rental....hmmm....

scp1127 Posted 4 Apr 2011 , 5:21am
post #10 of 19

To the OP, just remember that rent in those areas is indicative of what you can expect in traffic. So your opportunity to make money is there, just the startup costs are higher than other places.

jason_kraft Posted 4 Apr 2011 , 9:57am
post #11 of 19
Quote:
Originally Posted by KMKakes

It sounds like that place should have been inspected more often.



In our county (Santa Clara County, California) each tenant is inspected separately by the health dept to ensure they are following proper food safety procedures. There are a good number of tenants so inspectors are usually on site at least once a month. In counties that operate this way, the situation kelleym describes should not be happening.

That said, in many areas the capabilities for food safety inspection are sorely lacking. IMO the real shame is that most states are missing an opportunity to improve food safety and spur small business development by implementing a revenue-neutral cottage food law, with additional fees and taxes on cottage food businesses funding more inspectors and more culinary business incubators at the county level.

Instead, many states are essentially saying that as long as you give us a token annual fee and add some small print on your label, food safety is not our problem, and once you outgrow your home kitchen you're on your own.

Quote:
Quote:

My concern would be that will someone possibly use my supplies, accidently damaged my product, etc.



All the supplies in our rented commercial kitchen are locked up. Our designated space in the fridge and freezer is not secured, but it is clearly labeled, and if someone does take our property the landlord does her best to correct the situation.

Mug-a-Bug Posted 4 Apr 2011 , 10:36pm
post #12 of 19

Thanks for all the replies. thumbs_up.gif Does anyone know how I would go about petitioning my state for a cottage food law?

jason_kraft Posted 4 Apr 2011 , 11:02pm
post #13 of 19

Which state are you in?

Mug-a-Bug Posted 4 Apr 2011 , 11:17pm
post #14 of 19

Colorado. Thank you Jason, for your valuable input.

Sorelle Posted 5 Apr 2011 , 12:27am
post #15 of 19

I have recently written my congressman and sent him a copy of Utah's cottage food law. I'm not sure if this is the place to start but I hope to find out soon.

jason_kraft Posted 5 Apr 2011 , 12:34am
post #16 of 19

Contacting your state senator and house representative is probably a good start. In this economic environment, if you can pitch the idea as providing additional revenue for the state (for example, by allowing more "under the table" businesses to operate legally and pay taxes) you should have a better shot.

sandeeb Posted 14 Apr 2011 , 10:46am
post #17 of 19

I have a cake shop in my yard with a kitchen and I also sell cake supplies. I have been doing this for 20+ years and it has worked out very well for me. My husband, not a contractor or builder by trade, built my building. My building is 16' x 40' with the kitchen being 16' x 16'. It is set up according to our local Board of Health regulations. We have made a profit every year since we started, although not much at first but we are doing fine now. It's the perfect set-up. Here at home, can go out at any time to work, it's great. We only take '' made to order'' cakes but we still have supplies to generate income. Both my husband and myself are retired except for the cake shop and he helps me with cakes and waiting on customers. Couldn't be a better deal. The overhead is low and the shop always pays for itself plus a profit. Two other bakers rent my kitchen and both have separate business names and board of health certificates for my kitchen.

amcakemaker2011 Posted 14 Apr 2011 , 7:00pm
post #18 of 19
Quote:
Originally Posted by Mug-a-Bug

I just assumed that if I got good enough with my cakes that I would be able to open a bakery icon_confused.gif Now that I've been looking into it, I'm shocked to find out it's CRAZY expensive! (A commercial space in my area is about $50,000+ per year).

I would never be able produce enough cakes to even cover the cost of leasing a space, much less actually make a profit. I really want to just make cakes and not have to sell bagels to cover the rent.

Now DH and I are considering building a small shop in the backyard (which isn't huge), and that's crazy expensive too icon_eek.gificon_cry.gif

I don't want to rent a commercial kitchen thumbsdown.gif That would really just take the fun and freedom out of it for me.

I'm wondering what everyone else is doing, (maybe living somewhere that has cheaper commercial space?) Anyone actually making a profit? And, thoughts on my backyard bakery would be appreciated as well.




If you know where a church is you could see if they would rent out their kitchen for you. That is what i am going to do with my church when i actually start my business. Right now i am just charging for materials on cakes that people want me to make for their special occassion.

Mug-a-Bug Posted 15 Apr 2011 , 1:39pm
post #19 of 19
Quote:
Originally Posted by amcakemaker2011

If you know where a church is you could see if they would rent out their kitchen for you. That is what i am going to do with my church when i actually start my business. Right now i am just charging for materials on cakes that people want me to make for their special occassion.




That's actually not legal, at least not in my state. Any kitchen rental would have to have commercial grade appliance and pass a health inspection, etc. Thanks for the idea though icon_rolleyes.gif

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