I'm throwing this out for conversation and maybe some inspiration. Currently there is a local bakery for sale. The previous owner passed away last year and the bakery was closed and put up for sale. I've had contact with the seller and I have worked with a local business group about a potential purchase. As of right now, I'm interested in buying the bakery but I would need to give up a good stable job with excellent benefits. I would also be given up a lot of my time I spend with my three son's ages 3,6, and 7. The bakery specialized in making and selling cheesecakes for wholesale to restaurants. I have mastered cheesecakes but I struggle with my decorating skills. I was curious what other bakery owners have experienced with owning your own business. Is it worth it to give up a good job and take away from family time? I've never worked in a bakery. I have taught myself everything I know by trail and error and through the inter-net. I don't want to get stuck being an owner who doesn't have the time to take care of the business side of a bakery. BTW I have recently read a book called the E-myth. I highly recommend this book to any current business owner.
So you want to give up a good job with excellent benefits and lose what time you have with your children to start a venture about which you know nothing about. Sounds like a plan to me!
I worked in a very small bakery (3 people including me) and it's the reason why I don't ever want to own one. Taxes, insurance costs, licensing, health department codes and compliance, food expenses, overhead, spending all your time at the bakery, equipment failures...etc. I saw so much behind the scenes that it turned me off from ever wanting the hassle. And it wasn't that the bakery wasn't successful..in fact the owner had so much business she eventually burned out. She didn't want the extra expense of expanding and what joy she got from decorating eventually soured since she was just grinding out cakes every week. I never want to not enjoy what I do, but I can see how it happens.
Since you really have no experience in the business, most banks and investors will be very cautious about loaning money to you. And unless you're independently wealthy, you will need one for start up costs at least!
I certainly don't want to douse anyone's dream, but unless you buy the place and hire someone who actually has experience to run it while you keep your job and work at the bakery on the weekends, I personally think it's a BAD idea. This is not the kind of economic environment to be taking chances with your children's security. But this is my opinion.
I have to agree with carmijok. If there was a fire burning in your belly to own a bakery then, maybe. We all know that most small businesses fail, generally because they are undercapitalized.
You would need to have at least 12 months of all the $ you need in the bank - payroll + taxes, rent, benefit $, money for property taxes, repairs + an emergency fund. Any money that you currently contribute to the household income would need to be stashed in this fund also. Do you have that kind of $ stash in the bank right now?
You're not going to get a loan in this economy. We're trying to refi some investment property and have barely been able to do that . We have an investment portfolio, money in the bank, insurance, and credit scores over 800. It's a tough economic environment.
And while people do buy treats in a down economy, the treats are increasingly in the <under $5 category. Like a slice of cheesecake, not the whole thing.
Seriously, if you have a good job, *with benefits* and young children, hang onto all of that. If you or one of the kids gets sick, you're going to need those good benefits.
If it were me I wouldn't do it. I could never give up my "real" job to do caking full time, for the reasons you mentioned. And we don't even have children yet.
Most new businesses fail in the first five years. It's even worse now in this economy. In my own town I there was a bakery that opened and closed six months later. There is just so much to running a business and running it well. You need to start with the basics and work up a business plan.
I know you're doing the cheesecake thing, so why don't you stick with that? If you are able to sell from home or rent a commercial kitchen then I would do that instead of trying to do it full time. If you really want to expand it why don't you move to selling online? Also, if your decorating skills are not great, why don't you expand into other desserts? There is a member here, scp1127, who has a dessert delivery business. She doesn't do a lot of fancy decorating but she does focus on awesome-tasting cakes. Look her up and check out her website. It is possible to do cakes without having a lot of decorating experience. Not everyone is looking for a cake with the "bells and whistles." Some people just want a cake where the taste smacks you upside the head.
Don't get discouraged because there are many ways to fulfill your dreams.
Success is best measured by how far you've come with the talents you've been given. Where would the world be if nobody took a chance?
Inspirational quotes from a book are all good and well, but for those of us who have at least one of our feet on the ground (not referring to you OP), this is a huge gamble with very bad odds.
I don't know about you, but when it comes to my financial security and losing time with family, that's not a risk I'm willing to take.
I have three children almost the same ages as yours (3, 5 and 6). That alone is a reason why my advise to you would be a big no. At least for now. What you have now seems to benefit your children in all ways (income, healthcare and time/attention).
Why don't you use this time whey your kids are young to practice on the skills you want to improve and research/learn about starting and running a business so that when the day comes where you have more time for yourself again, you are strong in all areas and ready and know what you're getting yourself into. This will not be the only opportunity to buy a bakery.
When my dh and I closed our restaurant, I had such a sense of freedom and relief it almost was more than I could stand. It had been years of 16-hour days, nights, weekends, holidays - - you name it. This is why I've hesitated to open my own cake shop. I enjoy spending time with my family and being able to come and go as I please.
That being said, I am currently in the process of opening my own cake shop. But my situation has changed - - we just became Empty Nesters and I've come to realize that the world won't end and we won't go bankrupt if I say "no" to someone or decline an order.
If you've never owned a business, you're in for a rude awakening and I would advise you to wait a few years. But if this is your dream and you want this more than the air you breathe, you have to go for it. Long story short, we can give you our opinion all day long, but the decision is still up to you.
Does your family depend on the income and benefits from your current "good job"? Unless you have another source of income/benefits which will cover your intial loses - the timing of this, both from the viewpoint of the current and projected economy and the time spent with your family, does not make sense. I don't read that this has been your dream for years, etc. so not feeling the passion that you must have to put in all the hours in owning your business, but maybe I'm not reading that right.
Of course, if this is your passion, you have another source of income and can justify spending 14-16 hours a day, 6 days a week apart from your family for the next year - go for it!
Spuddysmom summed it up well and she's NOT exaggerating at all. 14-16 (sometimes 20) hour days, 6 days a week as the owner. You do EVERYTHING.
It sounds like you've done some research on this- and I can tell you are very interested in it.....but maybe you are rushing just because there is an oppurtunity to buy a bakery. If the bakery wasn't for sale right now, would you still want to open up a bakery? Don't be rushed into something just because an oppurtunity presents itself. If it's what you really want, you will find a way when it's time.
I have recently started a business, but it's from home...and slow going now, because I am building on experience. I do cakes on the side, and I love it. I spend a lot of time b/c I work 9-5, and then go home and work on cakes or designs....but I am not ready to give up the state job yet.
My advice would be to work on the side until you are ready to open a business, if and when you are completely ready - you will find a way to make it work. Don't jump into something because there is a ready bakery for sale right at this moment.
I have to agree with several of the posts here. I have a small bakery and I provide for several coffee shops in my area.I wanted my own business thought I was ready. I had been making desserts for friends and family for years. Then an oppertunity fell in my lap and I snatched it up. Little did I realize the how unprepared I was for the world of business. Let me run you through my "normal monday through friday routine". Sunday night about 10pm I head to the shop to bake and I'm there until 6am. At 6 my delivery person i.e. husband comes and picks all of the day's orders. I head home to get 5 kids out the door for school ages 17, 12, 10, 9, an 6. At 9 i'm back at the shop to prep for the next day. At noon its off to pick up my youngest and home for all of the "mom stuff". Through out the afternoon I check emails and return phone calls if needed. Help kids with homework and then dinner and bed for me about 5 or 5:30. Saturday mornings while the kids sleep in I go buy my supplies for the next week. I have done this routine for 3 years now and let me tell you I am now on the edge of burn out and have taken time off to decide if I want to continue baking.
I have missed family vacations, kid's activities, and watching my kids grow up. While my business has shown a profit for the last 3 years and is still growing, I have come to the hard realization that I have taken a loss in other areas.
I'm not trying to be a downer just wanted to share my personal experience.
Having been a real estate broker, mortgage broker and business owner for the past 11+ years, I will just give you the heads up that you WILL NOT be able to get any sort of a reputable business loan without 2 years historical documentation of Profit-and-Loss statements showing a profit beyond the anticipated mortgage and expenses on the business. It does not matter how perfect your personal credit is (of course they want that too), it does not matter if your personal income could take the hit for the monthly expenses (especially if you have to give that income up to run the storefront). What a commercial lender is looking for is the sustainability and profitability of the business as an entity in and of itself. So if this venture would require a commercial loan of any kind, that might be the deal breaker. If you do have this data or can put it together, you might want to call around to commercial lenders in your area and see what specifically theyre going to be looking for before you even consider going any further. Its an inquiry on your credit bureau but you need to know before making any kind of offer.
My advice to any home baker expecting to open a storefront on borrowed funds someday needs to be keeping all of their sales records and expense documentation and actually begin running that business with PNL Statements/Balance Sheets etc as if you were a storefront 2 years before you consider getting any kind of commercial loan. Commercial lending is not governed the way that residential mortgages are. You might find private lenders willing to back you but I assure you, it will be at a very high cost and you should know/understand the terms of that mortgage inside and out. HTH
Thanks to everyone who responded. Most of the replies to my post are pretty much the same I've been reading and hearing from others during my research for the past year. There are very few if any institutions handing out business loans these days. There is an option to lease the bakery but that gets into a whole bunch of other uncertainties. My personal finances are very strong but I've been unwilling to tap into them at this time. My current job is good with great benefits but the State of Michigan is making quick changes to that. I'm also topped out at my position and my work has become incredibly stagnant. I guess you can never blame a guy for wanting to have something better. One interesting fact I kept coming across during my research was why bakeries fail. It can become a trap you don't realize your in until it's too late. You make some things for friends and they all tell you, "you should do this for a living." Soon you own a bakery doing what you love but your putting in long hours everyday all week long. Within a couple of years you hate the whole bakery idea because you find you have no time to take care of the business portion of the bakery and you have very little time to spend with friends and family. Is there a way around this trap? Is it better to form a partnership? Is there a way to 'idiot proof' your products so anyone can make them and you can concentrate more on the business aspect of your bakery? After all, you are a business owner and your ultimate goal should be to make money. I decided a couple months ago that owning a bakery wasn't the right thing for me and my family at this time. Just recently, I found out the current owner of this bakery is considering opening up and I'm being recruited to help out at my convenience. This could gain me some of the bakery experience I need. This is what prompted me to post my comment and revisit owning a bakery.
YES! Definitely take advantage of even a part-time opportunity. This can give you a "behind the scenes" look at what goes on in running a bakery. You might decide you want to stick with what you're already doing with your baking.
You are very smart and no matter what, you will figure out a way to make this work. I understand where you're coming from, especially about the government job. Sometimes you just get worn out and want a change. But at the end of the day I also love my "real" job and since it is a very technology-based position, there's no way I could leave it and then come back to it if something didn't work out.
Good luck to you, and let us know how it goes!
I want to tell you my first thoughts would be not right now. Unless you have lots of money to support your family and also pay your overhead for the new business it is going to be a true challange. And the time that is involved.
Lots of time. Time being super busy, and time being totaly board worried that you did the wrong thing.
I was lucky that I had a business partner. The location was on her property (zoned commercial) and was the cutest little bakery and cake/candy & supply store. My partner had such an eye for decorating and her husband for building, as a master carpenter.
She was there all the time and I was there days with her vaction coverage and did baking at night when my husband was home to watch my kids. The cost of day care for after school was more than we would make some weekends.
You never know when business will be so busy that your working night and day to keep up, and then other times the only cars in the drive were ours. And the only time that someone would seem to show up is If we had to run to get supplies or to the bank or something. Then we would be seeing the person pulling out of the drive while we were getting ready to turn in.
We were lucky when we started by also buying an existing bakery but did not like the location due to distance and also because of the reputation of the former bakery. So we moved everything to the new location and did well for 9 yrs... most of the time.
Don't feel bad or rushed.. Bakeries and bakery equipment come along all the time.. we have been trying to get rid of all our equpment for almost 5 yrs. We feel we would do better selling the whole thing rather than auction pieces and parts... so you will be able to set up what you want where you want down the road after all your kids are either in school, or out of school. By then you will be able to save enough to cover expenses. and time to practice your skills.
Bakerys don't sell that fast... we have come down in price without any offeres except from people who want tus to list stuff on auction sites.
good luck to you ....