Ask for the rest of my money??

Decorating By luvmykids2bits Updated 27 Nov 2013 , 6:42pm by BrandisBaked

bubs1stbirthday Posted 25 Nov 2013 , 2:47am
post #31 of 66
Quote:
Originally Posted by sixinarow 
 

I don't think anyone really cares if you get reimbursed for cost of supplies for cakes made for friends and family. Where it starts to matter is when you sell a cake that you KNOW you undercharged for to friends-of-friends-of-family. We all know there are those people who try to hide behind being a "hobbyist" but are really selling a lot of under priced cakes so they make extra money without reporting any of it. THAT is what makes legal bakers most upset. A few bad apples have spoiled the barrel, so to speak.

 

It's the extra money, on top of ingredients, that they make without reporting it as income. Legal bakers DO report it as income and have to pay taxes and insurance and make less profit because of it. Then those same people who are used to getting cheap cake freak out at a legal baker over prices that they find "overpriced" when it is really the other way around..the illegal baker has under priced cakes and made legal bakers out to be price gouging and heartless.

 

It's a lot of work to price out your exact costs, try out recipes to create a menu, set up a website, market yourself in a community, learn and abide by all of the local and state laws and regs, seek out and purchase insurance, register your business, keep track of expenditures..all before even getting to the fun part of baking and decorating a single cake. What doesn't make sense to me is how people can so easily dismiss all of that work by saying that a legal baker is overpriced when they haven't ever sat down to figure out any of the numbers themselves. What's heartless is telling a legal baker that we need to work for $4 an hour to compete with the illegal bakers prices because they haven't done their homework to price out costs and are not compliant with laws and taxes. 

 

I agree that helping your sister with a fence doesn't make you a fencer. But if your sister's neighbor's friend "hires" you to build their fence and pays costs of materials plus an extra $75..that is taking away from a legal fencer who went through all of the right steps to certify their business, pay taxes and pay their workers at least minimum wage. Do you see how that would make the legal person upset?

I see how your first sentence is untrue - I have seen people battling it out and saying that you are a business even if you make a cake for someone including family, cousins etc, and they reimburse your costs even if you are not paid for your time

 

I also see how your last paragraph supports my argument.

 

Also my husband and I do run a legal furniture production business so please do not assume you are talking to someone who has no idea on these matters.

kikiandkyle Posted 25 Nov 2013 , 3:28am
post #32 of 66

AIn some states and counties, accepting any reimbursement for your cake does make it a commercial transaction and therefore subject to public health department rules and regulations.

I don't think most users begrudge the hobbyist who makes the odd cake for a friend or family member for a small profit. It's when someone says they're just doing it as a hobby but they're making cakes for anyone who knows their name or knows someone that knows their name, drawing up contracts and having issues with payments and handing out cards and running a Facebook page etc. Your business can be your hobby, but it's still a business.

howsweet Posted 25 Nov 2013 , 4:06am
post #33 of 66
Quote:
Originally Posted by bubs1stbirthday 
 

I see how your first sentence is untrue - I have seen people battling it out and saying that you are a business even if you make a cake for someone including family, cousins etc, and they reimburse your costs even if you are not paid for your time

 

I also see how your last paragraph supports my argument.

 

Also my husband and I do run a legal furniture production business so please do not assume you are talking to someone who has no idea on these matters.


I'm not quite sure I understand your response to Sixinarow. I imagine she meant most reasonable people, not literally everyone. I may not understand, but I didn't think she was disagreeing with you. On a board like this people will argue on whether or the the sky is blue.

 

So, since you're in the furniture business....are there a lot of people selling furniture from home undercutting you? Are you having customers say, "I'd rather get this sofa from you, but only if you'll come down to one third of the price because that's what Joe Blow down the street is selling them for out of his garage"? Is that something that exists in your business?

bubs1stbirthday Posted 25 Nov 2013 , 5:30am
post #34 of 66
Quote:
Originally Posted by howsweet 
 


I'm not quite sure I understand your response to Sixinarow. I imagine she meant most reasonable people, not literally everyone. I may not understand, but I didn't think she was disagreeing with you. On a board like this people will argue on whether or the the sky is blue.

 

So, since you're in the furniture business....are there a lot of people selling furniture from home undercutting you? Are you having customers say, "I'd rather get this sofa from you, but only if you'll come down to one third of the price because that's what Joe Blow down the street is selling them for out of his garage"? Is that something that exists in your business?

 

 

No not at all - it is all the imports that we compete against, and they are sold in almost every business due to the low cost of purchasing them, they are a lot more of an issue than back yard operators for us - our biggest concern is trying to convince people that just buying the materials in Australia costs more than what a comparable (in size not quality) cheap import costs to buy. But that is another story :-)

 

We recently had a regular customer (my husband is a welder and so we also do small jobs for people) who brought us an ad for a part that he wanted (an actual cut out from an ad that someone had run in the paper) and wanted us to replicate it - we told him that we couldn't do it any cheaper without even researching it as we were not going to take business from another small business.

 

We completely understand that undercutting is not the way to go but we also understand that if people are going to buy their furniture from someone that is cost cutting us by a large amount then they weren't prepared to pay for the top quality items we produce anyway and will probably end up with a piece that will rapidly deteriorate.

810whitechoc Posted 25 Nov 2013 , 11:55am
post #35 of 66

Quote:

Originally Posted by sixinarow 
 

I don't think anyone really cares if you get reimbursed for cost of supplies for cakes made for friends and family. Where it starts to matter is when you sell a cake that you KNOW you undercharged for to friends-of-friends-of-family. We all know there are those people who try to hide behind being a "hobbyist" but are really selling a lot of under priced cakes so they make extra money without reporting any of it. THAT is what makes legal bakers most upset. A few bad apples have spoiled the barrel, so to speak.

 

It's the extra money, on top of ingredients, that they make without reporting it as income. Legal bakers DO report it as income and have to pay taxes and insurance and make less profit because of it. Then those same people who are used to getting cheap cake freak out at a legal baker over prices that they find "overpriced" when it is really the other way around..the illegal baker has under priced cakes and made legal bakers out to be price gouging and heartless.

 

It's a lot of work to price out your exact costs, try out recipes to create a menu, set up a website, market yourself in a community, learn and abide by all of the local and state laws and regs, seek out and purchase insurance, register your business, keep track of expenditures..all before even getting to the fun part of baking and decorating a single cake. What doesn't make sense to me is how people can so easily dismiss all of that work by saying that a legal baker is overpriced when they haven't ever sat down to figure out any of the numbers themselves. What's heartless is telling a legal baker that we need to work for $4 an hour to compete with the illegal bakers prices because they haven't done their homework to price out costs and are not compliant with laws and taxes.

 

I agree that helping your sister with a fence doesn't make you a fencer. But if your sister's neighbor's friend "hires" you to build their fence and pays costs of materials plus an extra $75..that is taking away from a legal fencer who went through all of the right steps to certify their business, pay taxes and pay their workers at least minimum wage. Do you see how that would make the legal person upset?

Thank you Sixinarow, as a legal baker with a registered kitchen, legally employing my staff and paying them the award wages you have clearly stated the situation I face everyday.

MimiFix Posted 25 Nov 2013 , 12:31pm
post #36 of 66

As human beings we each rationalize our own behavior. This allows us to behave in ways that others may find unacceptable. 

 

For the purposes of this discussion, it's unfortunate that hobby bakers refuse to understand the impact of their actions and how it's detrimental to legitimate businesses. 

howsweet Posted 25 Nov 2013 , 2:03pm
post #37 of 66

A

Original message sent by bubs1stbirthday

No not at all - it is all the imports that we compete against, and they are sold in almost every business due to the low cost of purchasing them, they are a lot more of an issue than back yard operators for us - our biggest concern is trying to convince people that just buying the materials in Australia costs more than what a comparable (in size not quality) cheap import costs to buy. But that is another story :-)

We recently had a regular customer (my husband is a welder and so we also do small jobs for people) who brought us an ad for a part that he wanted (an actual cut out from an ad that someone had run in the paper) and wanted us to replicate it - we told him that we couldn't do it any cheaper without even researching it as we were not going to take business from another small business.

We completely understand that undercutting is not the way to go but we also understand that if people are going to buy their furniture from someone that is cost cutting us by a large amount then they weren't prepared to pay for the top quality items we produce anyway and will probably end up with a piece that will rapidly deteriorate.

So in your furniture business you compete with other businesses that have to make a profit to survive. This is not how the cake business works. It's a broken mess due to people without a sense of ethics like you used in the welding example. As Mimi explained the thinking , they probably see my referring to undercharging as unethical silly.

howsweet Posted 25 Nov 2013 , 2:17pm
post #38 of 66

A

Original message sent by MimiFix

As human beings we each rationalize our own behavior. This allows us to behave in ways that others may find unacceptable. 

For the purposes of this discussion, it's unfortunate that hobby bakers refuse to understand the impact of their actions and how it's detrimental to legitimate businesses. 

And it's not as if we're making it up. If it wasn't literally effecting me and others, it wouldn't bother me nearly as much. It would be nice if people who are unable to understand the economics, would just have a heart and listen to the desperate pleas. And some will turn around and mention their goal is to one day have their own shop. Good luck with that after making it a non feasible business model.

-K8memphis Posted 25 Nov 2013 , 5:07pm
post #39 of 66

i don't think the different angles are lost on any of us--i think we all get it and we all make our choices--look at what the additional cottage laws are doing now--pandora's box is under new managemnt and is having their grand opening--

 

the deck has been stacked against the smaller bakery businesses for a long time--this is nothing new or shocking

 

it's a tought business to be successful in for a lot of reasons including this one and it's part of the price of doing business

kikiandkyle Posted 25 Nov 2013 , 8:37pm
post #41 of 66

AThe thing people forget is that a cheap import business will quickly disappear if it doesn't make a significan profit, but there are decorators out there who will keep churning out cheap or worse, subsidized cakes for years. At least when you buy a cheap piece of furniture it's likely to be of terrible quality, and you quickly learn that you're going to have to put your hand in your pocket if you want something decent. There are bargain cakes out there that are worth ten times what was paid for them, and the clients that buy them have no clue.

BrandisBaked Posted 25 Nov 2013 , 8:49pm
post #42 of 66

AGetting berated probably isn't going to make hobby bakers sympathetic to the plight of the legal caker.

MimiFix Posted 25 Nov 2013 , 10:07pm
post #43 of 66
Quote:
Originally Posted by BrandisBaked 

Getting berated probably isn't going to make hobby bakers sympathetic to the plight of the legal caker.

 

This is a forum to discuss issues. Besides, hobby bakers don't need an excuse to ignore "the plight of the legal caker."

-K8memphis Posted 25 Nov 2013 , 10:26pm
post #44 of 66

Quote:

Originally Posted by MimiFix 
 

 

This is a forum to discuss issues. Besides, hobby bakers don't need an excuse to ignore "the plight of the legal caker."

 

 

i don't think there's a lot of opportunity to ignore it if they habit this cake board.

bubs1stbirthday Posted 25 Nov 2013 , 10:28pm
post #45 of 66

Quote:

Originally Posted by howsweet 


So in your furniture business you compete with other businesses that have to make a profit to survive. This is not how the cake business works. It's a broken mess due to people without a sense of ethics like you used in the welding example. As Mimi explained the thinking , they probably see my referring to undercharging as unethical silly.

No actually we compete against businesses with short term goals, ones that are helping their own countries work force be closed down one business at a time - it is the same in every country where cheap imports prevail.

 

Quote:

Originally Posted by kikiandkyle 

The thing people forget is that a cheap import business will quickly disappear if it doesn't make a significan profit, but there are decorators out there who will keep churning out cheap or worse, subsidized cakes for years. At least when you buy a cheap piece of furniture it's likely to be of terrible quality, and you quickly learn that you're going to have to put your hand in your pocket if you want something decent. There are bargain cakes out there that are worth ten times what was paid for them, and the clients that buy them have no clue.
 
They may be cheap in comparison to 'own country' made items but people have to and do replace them regularly and the profit margin for companies is far far greater. For example my FIL is an excellent welder and engineer, he designed a top notch engine stand and tried to market it to tool shops - one of those shops told him the chinese ones that they sell for $119.00 cost then in total to get to the shop $19.00, so a mark up of $100.00 - yes these items are cheap and will most likely bend the first or second time you use them and people will be heading to the shops to buy another one but they still buy it.

 

Take a look around at any large business and try to find items made within your own country, the profit margin on imports is huge and for this reason they will continue to put local businesses out of business.  

MimiFix Posted 25 Nov 2013 , 10:29pm
post #46 of 66

Excuse me, Kate. There are other interpretations to the word "ignore." Or are you just trying to be cute?

-K8memphis Posted 25 Nov 2013 , 10:32pm
post #47 of 66

i don't know--i just meant the subject comes up like clockwork--i don't see any offense in saying that--i think i only know the one definition--

jason_kraft Posted 25 Nov 2013 , 10:57pm
post #48 of 66

AYou can't really compare a high barrier-to-entry business that sells durable goods created by globally-sourced labor with a low barrier-to-entry business that sells extremely perishable goods. There are different business models, different competitive landscapes, different ways of dealing with profitability issues, etc.

bubs1stbirthday Posted 25 Nov 2013 , 10:58pm
post #49 of 66

I also think that perhaps when you work in an certain industry you do become (and understandably) a bit over senseitized - to the man who has a legal business mowing lawns, when you pay your nephew $20 to mow yours, you are taking his business : to the professional dog minder, when you pay your neighbours 15 year old to  feed your dog when you are away for the night, you are taking their business and to the professional cake maker if your friend makes you a cake and you say here is the money for the ingredients and throw in an extra $20 you are taking their business.

 

At the end of the day the once off people are not the ones that do your business any harm and at the end of the day perhaps the cake wrecks actually help you attain clients that would normally use a back yard person

 

I specifically said I was not looking for someone to explain the error of my ways - there are some that will agree and some that will disagree with what I said but if you live in a glass house please do not throw stones - unless you have never paid a niece/nephew/neighbours child etc to help you out with something then you are being hypocritical.

 

People who run a business with the intention of making a profit (whether they do or not) should legalise themselves but if on occasion you do something for someone and they reimburse you for your expenses and happen to throw an small amount your way for your time (and I am talking a small amount) then I think that is just the way things work and always have.

howsweet Posted 25 Nov 2013 , 11:31pm
post #50 of 66
Quote:
Originally Posted by bubs1stbirthday 
 

No actually we compete against businesses with short term goals, ones that are helping their own countries work force be closed down one business at a time - it is the same in every country where cheap imports prevail.

 

 

Take a look around at any large business and try to find items made within your own country, the profit margin on imports is huge and for this reason they will continue to put local businesses out of business.  

So in your furniture business you don't compete with other businesses that have to make a profit to survive? You averted answering and brought up a separate issue.

 

Quote:
Originally Posted by bubs1stbirthday 
 

I also think that perhaps when you work in an certain industry you do become (and understandably) a bit over senseitized - to the man who has a legal business mowing lawns, when you pay your nephew $20 to mow yours, you are taking his business : to the professional dog minder, when you pay your neighbours 15 year old to  feed your dog when you are away for the night, you are taking their business and to the professional cake maker if your friend makes you a cake and you say here is the money for the ingredients and throw in an extra $20 you are taking their business.

 

At the end of the day the once off people are not the ones that do your business any harm and at the end of the day perhaps the cake wrecks actually help you attain clients that would normally use a back yard person

 

I specifically said I was not looking for someone to explain the error of my ways - there are some that will agree and some that will disagree with what I said but if you live in a glass house please do not throw stones - unless you have never paid a niece/nephew/neighbours child etc to help you out with something then you are being hypocritical.

 

People who run a business with the intention of making a profit (whether they do or not) should legalise themselves but if on occasion you do something for someone and they reimburse you for your expenses and happen to throw an small amount your way for your time (and I am talking a small amount) then I think that is just the way things work and always have.

After the last couple of posts I wouldn't even know where to begin anyway.

kikiandkyle Posted 26 Nov 2013 , 12:18am
post #51 of 66

AThat's the point - if it's an occasional thing that you do just as a favor for a friend or relative - no big deal. It's when you are going beyond that that the issue comes up.

AZCouture Posted 26 Nov 2013 , 12:20am
post #52 of 66

A

Original message sent by kikiandkyle

That's the point - if it's an occasional thing that you do just as a favor for a friend or relative - no big deal. It's when you are going beyond that that the issue comes up.

No kidding, I can't believe this concept is so hard to understand by so many.

liz at sugar Posted 26 Nov 2013 , 12:25am
post #53 of 66
Quote:

Originally Posted by bubs1stbirthday 

 

I specifically said I was not looking for someone to explain the error of my ways - there are some that will agree and some that will disagree with what I said but if you live in a glass house please do not throw stones - unless you have never paid a niece/nephew/neighbours child etc to help you out with something then you are being hypocritical.

 

I agree with this!  I am not a fan of hobbyists undercutting professionals, by a long shot.  But I'm sure lots of members here who are professionals bypass other professionals, often unwittingly.  Do you do your own taxes?  A professional bookkeeper or accountant could have helped you with that.  Design your own logo?  There's a pro for that, too.

 

If you live in a small town and run a business, you get really good at patronizing other small businesses, even if it costs more.  I try to spread the love around, and it pays off in return.  :)

 

If your market is over-saturated with hobbyists, the only choices are to try and differentiate yourself (high end flavors/designs and a licensed/inspected kitchen) or to let them have the business.  I don't think you can save people from themselves.

 

Liz

howsweet Posted 26 Nov 2013 , 1:23am
post #54 of 66

AThat doesn't hold as an analogy for unwittingly bypassing professionals. Doing your own taxes is like making your own cake. So is designing your own logo. Is doing my own hair unwittingly bypassing a professional?

Part of the difficulty is trying to reason with people who simply don't have the knowledge base to even discuss this, but I'm not trying to protect anyone from "themselves". I'm not even sure what that's supposed to apply to in this discussion.

The people unable or unwilling to grasp this issue is who I'd like to protect myself from.

bubs1stbirthday Posted 26 Nov 2013 , 1:52am
post #55 of 66

Quote:

Originally Posted by howsweet 
 

So in your furniture business you don't compete with other businesses that have to make a profit to survive? You averted answering and brought up a separate issue.

 

It is the same issue.

We compete against businesses with as I said a short term goal, not to survive but to make lots of money in the short term then ultimately as people lose their jobs due to the import trade, the clientele basis will decline and a lot of these companies too will fail, so no they do not appear to want to survive for any great length but to merely make money for the short term and then move on.

 

After the last couple of posts I wouldn't even know where to begin anyway.

 

You could begin by accepting not everyone will agree with you.

liz at sugar Posted 26 Nov 2013 , 3:11am
post #56 of 66

Quote:

Originally Posted by howsweet 

That doesn't hold as an analogy for unwittingly bypassing professionals. Doing your own taxes is like making your own cake. So is designing your own logo. Is doing my own hair unwittingly bypassing a professional?

Part of the difficulty is trying to reason with people who simply don't have the knowledge base to even discuss this, but I'm not trying to protect anyone from "themselves". I'm not even sure what that's supposed to apply to in this discussion.

The people unable or unwilling to grasp this issue is who I'd like to protect myself from.

 

I'm sorry, I guess I should have phrased that differently to make my point.  There has been more than one post recently about bakers who have hired a friend of a friend to design a logo or website, when they could have hired a professional.  Same thing on accounting services.  My bad on that - got two trains of thought mixed up, and didn't type what I was thinking.

 

As for saving people from themselves, I was referring to professional bakers trying to educate undercutters.  It doesn't matter how many times you repeat these lessons, some people won't get it.  You won't save them from a life of frustration and cake poverty with your pearls of wisdom.

 

As in every industry, some businesses aren't worth pursuing in certain markets.  After a year or two in business, you will get an idea for the pricing strategies of your competitors.  If everyone else is undercutting, it becomes the new norm.  If you find yourself in that situation, you can either find a business that would be viable in your area, or keep banging your head against the wall.  You can only change your behavior, not the behavior of others.

 

Liz

BrandisBaked Posted 26 Nov 2013 , 4:02am
post #57 of 66

A

Original message sent by MimiFix

This is a forum to discuss issues. Besides, hobby bakers don't need an excuse to ignore "the plight of the legal caker."

My point is valid. If you (the collective "you", not necessarily you personally) want to educate someone, they are less receptive when they are put on the defensive.

jason_kraft Posted 26 Nov 2013 , 4:07am
post #58 of 66

A

Original message sent by BrandisBaked

My point is valid. If you (the collective "you", not necessarily you personally) want to educate someone, they are less receptive when they are put on the defensive.

Everyone has a different opinion of what constitutes "berating" and the threshold at which they are "put on the defensive". The only way to avoid offending anyone in a discussion like this is to refrain from posting completely.

If the relatively tame posts in this thread are enough to cause someone to avoid creating a business, that's probably a good thing considering the demands of true entrepreneurship.

AZCouture Posted 26 Nov 2013 , 4:47pm
post #59 of 66

Threads like this make me think of this. 

http://www.huffingtonpost.com/Mickey-goodman/are-we-raising-a-generati_b_1249706.html

Norasmom Posted 26 Nov 2013 , 5:09pm
post #60 of 66

You should definitely stay a hobby baker, especially since you love your day job.  I like that I had requests from friends to purchase cakes so I legalized my kitchen and figured out how much to charge.  After doing so, I know that I have no desire to ever own a bakery or do more than a few cakes a month, and NO weddings.  I am fortunate to live in a wealthy area and don't have problems with charging appropriately.

 

 There's nothing wrong with being a hobbyist.  If you undercut as a hobbyist I'm not sure you would put much of a dent in the huge cake businesses in your area.  Multiple hobbyists undercutting in one area, however, is a different story.  I do think you get what you pay for in life, though.  I'm a stickler for hiring insured businesses myself.

 

As for the $5, I would let your "friend" know she forgot.  Just send a polite email saying you need to pay the grocery bill for the extra $5 in ingredients.  It's $5, not $50.

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