I have a storefront that is taking off and I need help. 2 and 3 am are taking their toll. I have found someone willing to come in and work and they do great work.....better than me!! But I am wondering what's in it for her since she is baking from home for friends, etc. She just doesn't do a lot of volume. She doesn't charge much at all....but I am thinking at what I can afford to pay her as a new business owner...how do I pay her enough and still make money on the cake? Does this make any sense? I am thinking of an hourly wage as part time....but I don't want her to run off with my contacts if things don't work out.
Any advice from someone who got off the ground and has been there done that would sure be appreciated~apologies if too vague....sleep is lacking.....
AWhere are you located? What is your pricing and order volume? How many 3am nights do you have per week? How much are you paying yourself per hour and how much of a profit margin do you have?
I began as a home-based business and moved to a retail store front. If you cannot do all the work yourself you must hire people to help or you will fall apart. Pay at least the typical wage in your area for bakery help. I have no idea what Jason's questions (especially the last one) have to do with this question; don't let those sidetrack you from hiring an employee.
AI'm trying to get an idea of what OP's costs are, how much she could afford to pay an employee (and how much profit would be left over for herself), and if she is undercharging in which case she should increase her prices and reduce volume instead of hiring someone else.
If the OP is undercharging, then raising her rates will certainly be a positive step. But reducing volume is counter-productive to growing a business. And how much she can afford to pay an employee is secondary to how much she must pay to get decent help. If there's no profit left over for herself, that knowledge should be filed under Typical Small Business Issues.
Original message sent by MimiFix
If the OP is undercharging, then raising her rates will certainly be a positive step. But reducing volume is counter-productive to growing a business.
That's assuming OP wants to grow her business at this time. If her goal is to balance supply and demand while keeping overhead low then reducing volume is the way to go, especially if her margins are low.
And how much she can afford to pay an employee is secondary to how much she [I]must[/I] pay to get decent help.
Agreed, my questions were aimed at determining if OP can afford to hire an employee in the first place.
In the IT world when we get requirements from customers it's often helpful to take a step back to understand why the customer has made the request, what problem they are trying to solve, if the requirement will solve that problem, and if there is a different approach to solving it. Often the customer is not clear on what problem they are trying to solve, so it can take some investigation to reach the core of the request. The same approach can be applied to many situations that involve helping someone else with an issue, even if it's not related to IT.
Jason, I appreciate your explanation and actually like your method of problem solving. But on a practical level the OP needs to get some rest and figure out a better business plan. A quick fix is hiring someone to help with the workload.
I'm on the side of raising prices to even out volume until you can decide if you want to grow or not. Some people don't want to grow - they just want to maximize their time and talents without the headaches of employees. I have learned that you need to be slow to hire, quick to fire.
If you are worried about your possible employee running off with your contacts and such, maybe you could just sub-contract out cakes to her instead of hiring her as an employee.
Thanks for giving me some food for thought everyone and for the tough questions. I opened a unique little shop in a small town about a year ago that is a coffeehouse/deli/bakery. It fills a little niche that no one else does. All three arms tend to support the total concept...none support it totally; around 33% each....but the bakery part is definately starting to take off more than i can keep up without some really late hours. I have one other full time employee plus my husband; with school kids coming in the afternoon for clean up. I wear a lot of hats as CEO and being the only baker is taking its toll. As for pricing, there is really no other local bakery other than Wal-mart, which i am much higher than; pricing at 70% profit after costs. I have checked pricing on nearby city bakeries and we are competitive....BUT then there are local home bakers that are priced way under me (such as my potential new hire). As to profit margin, we ARE making money as opposed to losing it, and business is growing....we are not where we need to be yet to fully support our family but we are not where we were and we feel very good about the future. So I really do want to grow and don't want to turn away business...but i am learning there is a cost to my family that i really can't keep paying, and thus the desire to hire someone to help and balance things out for me.