Home Based Business To A Retail Location...

Business By love2makecakes Updated 3 Feb 2012 , 8:50pm by jason_kraft

love2makecakes Posted 30 Jan 2012 , 5:20am
post #1 of 12

I currently have and run a licensed home based cake shop with a separate commercial kitchen. Recently I have been considering purchasing a building in my small town to run a more retail shop and offer other goods, such as cookies, bars, coffee, sandwiches, etc. We do not have any bakeries in town that are not custom order, we do have a grocery store though where you can get a cake anytime...

I realize the time that will be going into this venture is a considerable amount more than I am currently spending and as I have small children that is really something to think about for me. What happens if my kids are sick and I need to be there for them, but now I have this everyday business that I need to be at too?

The reason for the change is that I have been in business for 3 years now and have made about the same about of money all 3 years... While I still get new customers and have a lot of returning customers I feel that I could do much better with a retail location. I have a very small town and to be quite honest I make most of my money for out of town wedding cakes more than anything. I have very little in celebration style cakes as no one really wants to pay for them and frankly it is not worth my time to make a cake that one only wants to pay $40 or less dollars for. I feel that with a retail location I could possibly start making smaller cakes at lower prices if I do 5 (or whatever) at a time instead of 1 custom cake on a given weekend.

How do you (those that do have a retail shop) handle the everyday business? Do you bake and freeze all on one day, do you bake every item fresh everyday? Maybe you just have some advice or can think of something I may not have already. I can't seem to decide if I want to do this or not? Do I want to take on the addition overhead? I'm completely terrified of failure when what I currently have is working.... just not excelling. (I must say that I do not advertise either and work a lot via word of mouth mostly).

Am I completely kidding myself into thinking I wont have to work 15 hours a day for 7 days a week???

11 replies
step0nmi Posted 30 Jan 2012 , 5:47am
post #2 of 12

i know this may not be answering the question you want/need...why not raise the price and create a minimum to see if you could make more? I would rather have 2 larger orders than 5 multiple orders that create the same thing. i think Indydebi or Leah always puts it into perspective that way icon_wink.gif

scp1127 Posted 30 Jan 2012 , 6:01am
post #3 of 12

I don't think you have taken your home based business to its fullest potential.

To prepare yourself, you should try to be at capacity in your current situation. This is good practice to give you more business experience.

A red flag, even though you may not have meant this, but you mentioned that your area does not support you. Be aware that just because a town does not have a particular shop, it may mean that the town cannot support it. An all-inclusive business plan is where you will find your answers.

Also, a buildout is between $50K to $100K, the higher side if the store was not already an approved food service establishment. It will be difficult to impossible to get a loan, so you would need this money in cash.

jason_kraft Posted 30 Jan 2012 , 6:31am
post #4 of 12

What is your marketing strategy for your current business?

gvsridhar171 Posted 30 Jan 2012 , 8:27am
post #5 of 12
Quote:
Originally Posted by love2makecakes


Am I completely kidding myself into thinking I wont have to work 15 hours a day for 7 days a week???




You need marketing assistance to your business. You can hire marketing assistance who will deliver results for you. You can get them in elance.com or freelance.com sites. Check this out and make an experiment for one day or so by spending little money and once you see some success, then entrust this responsibility.

Another important requirement for you is a website. Do you have website of your own ? If you don't have visit ngofrfastincome dot com site ... they are sponsoring websites for individuals and small businessmen for a period of six months. All details are explained there. Perhaps this may help.

love2makecakes Posted 30 Jan 2012 , 1:29pm
post #6 of 12

Thanks for the responses.

scp1127 - You are probably right as I currently am able to take just the cakes I want... I can be selective on my cakes because I do not have the overhead to pay out from every cake other than costs for that certain cake (well and of course utilities and such). For my own personal productiveness I really feel that with a business out side of my home may be a good option for me. This would allow me to take on more day of the week stuff. Right now I barely have any orders that are on Monday-Thursday... At the same time I have never gone out to the businesses and marketed myself either. When you work at home though there is always so much to be done that I have a problem concentrating on when I am working on a cake or something. (My own issue I guess). Also when I say that they do not want to pay me that $40 for a cake... I really do not want to do $40 dollar cakes anyway, so it doesn't really bother me. I do know that there is another baker in town that has a licensed commercial kitchen at home, but has a retail flower shop. They have no problem getting orders, but they are older and have a certain style which is just completely different then mine. Which I use to my advantage with the younger bride!

Over and over I hear from people... "I had no idea you were even there! How long have you been in business?"

jason_kraft - That was my first mistake really. I did not have one when I first started. I had the cash to build a kitchen, I had the room in my home, I had a separate entrance already and I had the ability to decorate cakes. As I was a mom at home I thought, this will be great! I can stay home and make money all at the same time! Ha ha, but one can't work with the kids running around all day and staying up till 2am isn't working either. Plus like I said I have gone stagnant in my business, its just not moving forward. I have started a business plan for this venture now though so I can get a clear idea of what my plans are for the future.

Yes, I do have a website and much, much more cakes than the cakes I have on here..,. I have not posted pics in years I think on here.

I should also say that I have a partner that wants to go into this with me. She does not decorate cakes, but can bake and do other things like that. We do have the cash to take this to the next level; however, I do not think I have thought all this threw enough which brings me here.

annie84 Posted 30 Jan 2012 , 1:39pm
post #7 of 12

I opened a storefront in September and things have been going really well. I am the only custom cake shop with a storefront in town. I sell cupcakes, muffins and scones on a daily basis with all cakes being special orders. I have everything baked fresh each day. I get requests on a daily basis for cakes for that day or the next. I turn them down 100% of the time. I just don't have the time or the man power to get them done on short notice. It is a constant struggle getting across to customers that the cakes that I make are CUSTOM. Making one really nice cake for $150 is so much more worth it to me than making 5 not so great $30 cakes.

The store is open Monday-Saturdays. I started out working 15 hours a day, 6 days a week with probably about 5 hours on Sundays. I now have employees for about 20 hours a week plus a college co-op student. So now I'm working about 12 hours a day, 6 days a week. Sometimes more if I have large orders. I am in my mid 20s, single, no kids. My parents are retired and have been a tremendous help, will come in and run the store for me if it's ridiculously busy or if I have somewhere I need to be. I would not have been able to do this without the support system and I can't imagine doing it with children but everyone is different.

Hopefully this gives you a tiny bit of insight into what it's like to run a storefront location

jimagination Posted 3 Feb 2012 , 5:41pm
post #8 of 12

Annie84, I so could use your help. My sister and I have been running a home bakery and supplying restaurants, etc, so we decided to open a store front in our town. Everyone in the town is so excited and we have had everyones support, especially with bthe trying to revitalize the town and not having a small town bakery for at least a century. We will be opening (hopefully) barring construction is finished etc, in the middle of March. All of a sudden, I realize, how do we know how much to make per day? Can we sell the stuff that didnt sell the day before? It seems like your hours, days and products will be similar to what we will be offering. I know this seems really stupid, but this all started as a hobby and then turned into doing cakes for friends and family and then on a made to order basis. I was so relaxed with this and now all of a sudden I am freaking!!!!!!

jason_kraft Posted 3 Feb 2012 , 5:52pm
post #9 of 12
Quote:
Originally Posted by jimagination

All of a sudden, I realize, how do we know how much to make per day?



This should be covered in your business plan, you should already have a good idea of what your operating and overhead costs will be. For the labor cost component you need to plan when you will do your baking (and how much to bake, based on your research of your target audience, market demand, demographics, competitors, etc) and what hours you will need front of shop coverage, then multiply those total hours by an overestimate of hourly wages in your local market. The combination of operating, overhead, and labor costs will tell you how much you need to make to break even, a good goal would be pricing so you can earn 20% above that.

Quote:
Quote:

Can we sell the stuff that didnt sell the day before?



Depends on your recipe. If a day-old product is not up to your standards, don't sell it. The cost of waste is one of the things you need to factor in to overhead.

jimagination Posted 3 Feb 2012 , 6:03pm
post #10 of 12

Oh, it is all in writing in our plan and makes perfect sense on paper, but what if nobody comes. I know everyone keeps saying they will, but like i said, I am freaking. I am so afraid that we will make too much and it will sit there or not enough and people will want what we dont have. I know once we get going for a while we will get an idea of what [people will buy and can adjust from there. And our numbers that we need to sell to make a profit are rather low (we got a great space and all bakery equipment at a really low price) But what do we start making in teh beginning- a little of everything until we see what everone buys?

love2makecakes Posted 3 Feb 2012 , 7:12pm
post #11 of 12
Quote:
Originally Posted by jimagination

Oh, it is all in writing in our plan and makes perfect sense on paper, but what if nobody comes. I know everyone keeps saying they will, but like i said, I am freaking. I am so afraid that we will make too much and it will sit there or not enough and people will want what we dont have. I know once we get going for a while we will get an idea of what [people will buy and can adjust from there. And our numbers that we need to sell to make a profit are rather low (we got a great space and all bakery equipment at a really low price) But what do we start making in teh beginning- a little of everything until we see what everone buys?




This is part of the same reason I am so nervous about moving into a retail location. Right now if no one orders this week or that week, I'm okay because I do not have the overhead. But if I were running a shop and baking things everyday and no one came in to buy then I will be wasting and spending money on product, plus I would then need to pay for a building, insurance and all the other stuff (a lot, I know) that comes along with it.

I also took to heart how annie84 answer my question, that is one of my exact reasons for deciding that now would not be a good time for me to do this.

I also decided that scp1127 is probably right and that I can take my own home business a lot further before moving up.

I did not write a business plan 4 years ago when I started, but I am currently writing one so that I can now move forward in the future and have a goal to work towards.

jason_kraft Posted 3 Feb 2012 , 8:50pm
post #12 of 12
Quote:
Originally Posted by jimagination

But what do we start making in teh beginning- a little of everything until we see what everone buys?



That's what market research is for...you need to get in touch with your target market well before you open to understand their buying habits and which products they prefer. You can also hold free tasting events, preferably with a limited number of people in a structured environment with feedback collected by a marketing professional. This will help you determine what your most popular products are ahead of time and how much to bake.

Quote:
Quote:

And our numbers that we need to sell to make a profit are rather low (we got a great space and all bakery equipment at a really low price)



Most of your expense will probably be labor costs...for example if you bake 2 hours every day and need to staff the shop for an average of 7 hours every day at an average wage of $10/hour, that's $2700/month in wages alone.

Quote by @%username% on %date%

%body%