I know someone who owns a donut shop in our small town, who wants to incorporate my cakes, cookies and cupcakes into the shop. I now bake at home as hobby; most of my cakes are for friends and family. How should I work it out with her to get my cakes in? I do want it as a business name for my self. These are a few options I came up with:
1) Do a Kitchen Rental me pay her $15.00 an hour, I keep the sales, but she is looking to expand her sales?
2) Make my cakes there and sell them to her?
3) Put a sign up Hopes cake available and split the profit with her?
Or any other ideas would greatly be accepted.
If your state does not have a cottage food law that allows wholesale it would probably be best to rent space in the shop's commercial kitchen and set up your business according to the rules of your county/state health dept.
In this type of situation I recommend keeping the kitchen rental and the wholesale business separate. So you would pay her $X/hour for the use of her kitchen, and she would pay you for your products. You can either sell the products to her outright where she pays you up-front, or use a consignment model where you only get paid for products that actually sell.
Before you get started you need to put together a business plan, this will give you a good idea of your cost structure so you know how much you can sell your products for (either outright or consignment) and still make a profit.
My business plan is almost finish, I have been working on them about 2 weeks now. I am working on Health Dept. papers and I plan to do a home office where I can do paper work and keep some supplies at home. We do not have a cottage food law in Louisiana. I need to get with the donut shop and discuss a plan on how we can do business.