Where To Begin?

Business By amberlee416 Updated 21 Mar 2012 , 8:10pm by goodvibrations

amberlee416 Posted 19 Mar 2012 , 2:10am
post #1 of 5

I have wanted to start my cake business for quite some time now, but I have bad credit due to my husband losing his job when the factory closed and my job couldn't pay the bills. We have no savings due to that same reason. I have no formal training on baking but I have the skills to do it. I have management experience. I have tried to start the business out of my home but I cant get it going, no one seems to want to pay the prices I have to charge. I have tried with prices so low it gives me next to nothing as a profit. It seems like they think because its out of my house it should be cheap.

I know without a doubt that I could make this business work, there are not many choices here for specialty cakes we only have walmart and kroger there is one bakery but they are more about the donuts and only have stock type cakes. I am seriously considering going to school for baking and pastry as well as getting some formal business education.

How would I go about getting the financial backing I would need to start my business? I am worried about going to school then never getting to utilize it, and be in the same position I am already in. Where do I begin? This isn't some split second decision I am making, I have wanted this for years.

4 replies
Karema Posted 19 Mar 2012 , 2:42am
post #2 of 5

I'm almost in the same boat at you. I have horrible credit and I don't have the money to open a bakery but I'm still in business. I work out of a kitchen at a church for now but I'm waiting to hear from a commercial kitchen so I can use their space. I take it one day at a time. Sometimes I feel like I'm going to slow but I'm doing what I can, it's better than just sitting there doing nothing a being a quiter. I bake cookies and cupcakes and I charge just as much as a bakery. I began by just baking and selling and then I had to move and realized I was doing it wrong. I took a business course at a non for profit organization. I learned how to write a business plan and the financials. It was a huge help. I then began to by stuff that I need each week. My husband sells my product at work and sometimes he walks around to beauty salons and sells lol. My mom sells them too and I finally have my product in a store. I love what I do even though I don't have a shop yet. I will one day but I just have to keep that in mind. I sell cookies and cupcakes and sometimes I make $300 a week and for me that's ok. I take about $150 of that and buy things for the business like cards, a printer, packaging etc. I then take about $50-75 buying supplies. Once I have everything as far as marketing I will be able to save that $150 to put in the bank. I also have a business bank account that I put money in once a week. I have to save money bc I have to save so that when I want a loan I have something to show that I can bring to the table. My mom got me in touch with a lawyer that does pro-bono work to help people fix their credit. You can do this if you really want it. Just remember when people tell you that you are charging too much money just remember why you are charging that much and where that money is going. I would rather sell 12 cupcakes for $36 than 36 cupcakes for $36. It means less work for me and that I stay in my target market. Good luck and keep your head up.

jason_kraft Posted 19 Mar 2012 , 2:46am
post #3 of 5

With bad credit, debt is really not an option unless you have collateral like home equity, but that's risky and you would still have a high interest rate. The other alternative is raising money by selling equity in your business.

If you can legally run a bakery out of your home kitchen (some states allow this, some states don't) you may get better results by focusing on a different target market, maybe more affluent areas and/or commercial customers instead of individuals. But there is some up front cost involved in building a successful marketing strategy and buying ads. You may just need to lower your standard of living and save for a while until you have an emergency fund for your personal expenses plus enough in your business account to run the business comfortably.

scp1127 Posted 19 Mar 2012 , 3:57am
post #4 of 5

My commercial kitchen is the ground floor of my home. My prices are double and triple those of my competitors. It is your mindset, not the customers'.

If you have doubts, it will be reflected in how you come across. Practice your pitch in the mirror over and over... and believe in yourself and your product.

Example: "I would love for you to come by and see my commercial kitchen (working area). It is in my home. I am licensed, insured, and I have a huge investment in my craft. You will be able to see where and how your cake will be created. When can we meet?"

Now if your home is unkept, I can't help you.

goodvibrations Posted 21 Mar 2012 , 8:10pm
post #5 of 5

I did a few things to get my business going that all worked. First I have a family member who works at an operations center for a bank that has locations all over my town. I do their "birthday club" cakes. They have a set price per cake, $40.00. I can do whatever I want with each cake regarding size, flavor, techniques, etc. Good way for me to add pix to my "portfolio" and get my cakes out out to folks. I don't charge for delivery so that was my major selling point at first. It was always a pain for them to have to leave work to go get a grocery store cake. Also no one in their company is ever left out because they send me a birthday list in January and send adjustments as people are hired and fired. Any special cakes are charged at my regular rate.
From that I got a mortgage lender who asked me to deliver small cakes to his top 100 clients on their birthdays. Same thing I get a list in January.
I'm not making much $$$ from those two companies so I've turned down oppurtunities to do it for others. I will, however, continue to do it for the original two companies because I've gotten LOTS of orders bcause of them!
As far as your pricing and people thinking you should charge less because you work from home.....the total opposite is true! Our cakes are custom, one of a kind! Flavors, sizes and personal interaction that you would NEVER get from Walmart or Kroger. People tend to believe that home bakers bake from scratch whether you do or not. Let em think it. I like to stress the idea that I do no more than 400 servings per week so that I can give you the time and attention that you need regarding emails, tastings, etc.
Lately there has been a huge market for first birthady cakes. Those moms go NUTS! I work with a local photographer. She finds out the birthday theme and buys a smashcake fom me to match. Takes pic with the baby tearing into cake and the mom uses it as part of birthday invitation. Then I get the order for the birthday cake. Can't believe what those mom's will spend trying to "keep up with the Joneses".
Last and certainly not least, advertising. Facebook page completely free! We have a local online classifieds sorta thing. It's only @200.00 per year and you can tweak your ad whenever you want. Mine very clearly shows my prices, flavors and plicies. I ask my potential clients to look it over to avoid any pricing issues that could come up otherwise. Weeds out the bargain hunters from the very beginning.
Check it out. "Woodlands Online" Cakes by Vicki
It can seem very discouraging at first. Hang on though. Before you know it you'll be turning down orders. Sounds crazy but turning down orders has helped me in the longrun. They perceive that I'm in demand and place orders much furthur in advance to insure a spot.
Nothing can beat putting out a good product, to insure happy customers and great "word of mouth"!

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