Okay so I had my meeting with the man who I talked about earlier. He owns the Cookie Shoppe and said that he will maybe rent me his kitchen in exchange for personalized wedding cookies (photos coming soon, I haven't uploaded them yet)

Today I went there and he was Such a nice guy. But his plan was ALOT different than mine. He almost wants to become partners and have our business names combined on my cake stuff and wants to split the profit 50/50. I was a little taken back when he said that. So I explained to him that 50% is alot more than what I expected and I'm not sure how I feel about selling MY cakes under His name. But we talked about it more and it started to seem like a good idea. He sees this more as a way to expand his business. Remember, I'm just starting out and I think this is a great opportunity to just do what I love.

Here are the PROS:

He pays for EVERYTHING! I get to use all of his ingredients, his freezer, his fridge, his anything I want.

I can store ALL of my cake decorating equipment in his kitchen and put locks on the cupboard doors if I want to.

I don't have to pay any rent, any fees. So I don't have to put any money into this. (other than gas because his shop is across town)

I can come in and work anytime I like.

CONS:

The cakes won't be sold under my business name. It will be more like:
-Cookie Shoppe Cakes by Danielle
So my name is still in it but its not MY business

He gets 50% of the profits on all my cakes.

We haven't worked everything out yet so I don't know if he wants 100% or 50% of the profit for the wedding cookies.

I think he plans to underprice my cakes and cookies because he doesn't think people will pay that much. We haven't gotten to much into the prices because I told him I had to develop a pricing chart but when I told him that I think the cookies are worth $3.50-$5.00 a piece he just kinda said "Yea but those are internet prices, this is Erie"

I plan on pricing my cakes and cookies a little less than what I think they will one day be worth. Right now I have very little experience, I mean the cookie samples I showed him were the first time I EVER did wedding cookies, custom cookie cutters, chocolate dipped fortune cookies, etc...

I called him and said I can do this and this and this and then he wanted to see samples. Luckily, I am a very fast learner and everything came out so amazing. He completely loved everything.

His cookies are not as.... Detailed I guess as mine are. When I upload theh pictures you will see what i mean. I used custom cutters that i made, luster dust, TINY RI daisies and roses, etc. I paid close attention to every little detail. He said his cookies have more of a "homemade" look. They are VERY yummy, he gave me a whole bag to take home.

He wants to upgrade his business to my level of decorating and start offering wedding cakes and wedding favors.

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SO..... with all that being said. What do you think? I mean its definitely not what I thought it was going to be but I think it could be a good oppurtunity. Here are some things to think about:

I'm only 20 years old and I'm the WMI at A.C. Moore
I live at home with the fam & BF until he graduates from PSU
I make enough money from teaching and other things to get by and I save pretty much all of it.
I have no bills

The only thing I use my money on is cake equipment and cake classes in chicago

Thats my life situation, I pretty much live a very easy life. And I see this as a great oppurtunity to make money and make cakes more often.

Even though its not "starting my business" as it was originally suppose to be.
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Okay, I think I'm starting to ramble on.... So sorry if this is SUPER LONG. I'm gonna take a step back from CakeCentral and breath for a little bit.

What do you all think about this?

WOW! That is LONG! I appreciate anyone who actually takes the time to read that.

Wow! That's a tough call to make. On one hand you would not have any expenses - which as we all know can add up - but it's 50% profits and at a lower price. Figure out how much you would make an hour and it would work out financially.
Since they'll be sold as "by Danielle" it could help serve as a stepping stone to having your own business.
Was I even any help?

Wow! It does sound like a great opportunity. Sounds almost too good to be true....which always makes me wonder. But then maybe I'm just a skeptic.

Take some deep breaths and think it through. Do you know anything about his reputation or business.

Definitely get some sort of contract written up.

Well, right off the bat, is he paying for EVERYTHING? Flour, sugar, butter, fondant, petal dust, boards, etc.......and you guys split the cake fee 50/50 or you split the remainder after 'profit'? What about business you get outside of the shop - whether it be cookies or a wedding cake? If he is paying for everything for a cake that sells for say $40 and you are getting $20 - I would say that is a great deal. Also, he may be right about the price...you can make $ two ways - by selling alot for cheap or using a higher price point. Be prepared for that - there are so many more questions I have but either way, if you decide to move forward, be sure you have a contract signed. Things always sound great in the beginning and you want to be sure there will be no misunderstandings down the road.

It's hard because he is really giving you a great opportunity but you are also helping him so you want to be sure it is worthwhile to both parties.

I would be leary of signing any long time commitment until I saw how it was going to work out. You just have to sit down and weigh the pros and cons.

On one hand you are making cakes and money and have no overhead but on the other hand you are not having much input as far as the sale of the cakes. It seems like he wants to underprice your talent. Don't work too cheap. I would think that if he gets 50% of the cake money, you should get 50% of the cookie money.

Good luck with whatever you decide to do.

Diane

I think that you have thought this through and you might be looking a gift horse in the mouth - or so the saying goes... One day you may kick yourself for not taking this opportunity or you make kick yourself FOR taking the opportunity but how will you know unless you do it!!! I think that if the guy is as nice as you say that he would not object to some stipulations in writing. Like for example that you would give him 2 years lets say and then you can branch off on your own, and use your own business name etc etc. Think long and hard about this and if there are more positives than negatives you may be looking at a good thing - especially being so young! That's what I did (pros and cons ) about marrying my husband and the gamble paid off - almost 13 years and very happy What ever your decision is...good luck,and all the best!!! sue

I can agree with allot of the things being said here.....good pro's and con's about this situation. As someone having my own business....I would just make sure that you get it ALL down on paper where you both understand and agree on the terms. If this guy is not willing to do that, then I might be kind of leary about going into business with him. Your name for your business could be taken away from you if he gets it set up that he's on as the owner. Just be careful, do your homework and make sure you get it in writing!!!

Diane's Cakery

I had an arrangement similar to this last summer...they provided eggs, sugar, basic ingredients, and I paid them 20% of the total of the cake order. I have to be honest with you, I think 50% of the profit is WAY too much to be giving away, ESPECIALLY if he's going to underprice your stuff!!

Also, as noted above, when he says he'll provide "everything", I bet you he is not thinking boards, foil, dowels, petal dust, etc, etc, etc, etc, etc. Everybody here knows how that stuff adds up.

Try to negotiate yourself a better deal, and ask if you can arrange to have a trial period of (1 month? 2 months?) and at the end of the trial period, either one of you could back out with no hard feelings.

kelleym that trial period is a really good idea. I will talk to him about that. As far as the 50/50 goes:

My 50% is my labor and time
His 50% is the use of his ingredients, kitchen, electricity, etc...

So If I sell a cake for $300, I get $150 he gets $150.

Also he wants me to figure out how much cost goes into making each cake/cookie. So that would include dowels, cake boards, etc.

Thank you guys so much, you're giving me so many things to bring up at our next meeting. I really appreciate it.

Also... I get 40% off all wilton products since i'm a wmi. So I think that makes him even more willing to to pay for things like dowels, pillars, whatever.

Also, his 50% includes the cake boards and such as well.

50/50 is a lot...assuming you are doing ALL the work?

IF you do decide to take the deal or similar, make sure you have a clear contract that stipulates all the details and have a lawyer look through it for you.

You don't want to essentially sign your business away...

take caution, but if the deal will work for what you are looking for, best of luck to you!

I agree about the trial period to see how things are going to work out before you sign up for something long term.

I would do a trail period and see how it goes.... 50/50 sounds okay but you might want to be 70/30 or 60/40 but i don't think you will know until you try it and see how much the business brings in and etc.

durning the trial period i would figure out how much he actually profits of each cake.... i mean if he is paying for all the supplies-- he might only be making 50 dollars or something like that.

i also would make sure he didn't try to underprice.

hope that makes sense...

Seems to me like you'll be an employee in disguise.

- You work under his company's name
- You use his kitchen, ingredients, etc...
- with the help from you he adds cakes to his offerings and now become one of your future competitors

- he knows everything you use to make your cakes because he purchases all of the ingredients; if he so decides to in the future to end this agreement he can easily make the needed changes to make his cakes better than yours.

-if you don't have expenses...you don't have a business!

If it were me, I wouldn't be to quick to jump into such an arrangement. I would keep it strictly my name, buy my own ingredients, supplies, keep my own clientele, and just rent kitchen time. If you do it the other way, it just wouldn't swing right with the IRS...you wouldn't be able to claim the expenses but he would.

Danielle,

If you don't do this, what are your alternatives?

It would be a good idea to sit down and do the math. Figure out your profits for this venture and then figure out your profits for alternatives. If there are no alternatives then that should make your choice easier. Do not guess at profitability, do the math.

But as lots of people have stated, also get it this business deal in writing.

I may be missing something but this deal sounds insanely good....let's say he's using the triple ingredient charge.....so a $150 cake - would have normally profited her $100 but with the new arrangement, she profits $75 but gets licensed, etc. I would jump at this opportunity because yes, she is doing all the work but he is buying everything, paying for electricity, etc.. That is HUGE! And fair is fair, if you are getting orders and using his kitchen & goods then he should get his cut. I personally am thinking once he finds out exactly how much $ is spent on ingredients, boards, boxes, dusts, etc. he will rethink the % because I am not sure it is worthwile to him......who knows. Congrats -

I'm not using my business name at all in this deal. I was going to combine our business names but it didn't sound right. Cookie shoppe cakes by Danielle sounds alot better. And when we're discussing contracts I will try to work out something so that he doesn't ever "own" my name, and when I leave my name is to be removed from his cake business should he choose to continue that. Something like that. Nothing is definite yet

He has a business for a reason...he's obviously business savvy and knows that HE will benefit the most from this situation. If she is trying to be legal that is fine there are other ways to become legal instead of allowing someone to take advantage of your lack business knowledge. Like I said it wouldn't swing with the tax authorities especially the IRS. She technically doesn't have a business which she already stated she will be working under his licensed business name and licensed kitchen for no fee in exchange for doing the wedding cakes for his business which all sales would be recorded and transacted through his company name (couldn't be done any other way or else it wouldn't be legal) and might I add he owns not her. Since, she will be doing the cakes for a 50% commission or fee he (the owner) will even be able to deduct her portion as an expense because he had to pay her for her labor and time in addition to his %50 which he'll automatically allocate that between lease, utilities, insurance, food cost, etc... for those associated expenses. Then when it comes time to pay her taxes she'll be stuck paying unnecessary taxes to the IRS and state taxing authorities because she didn't make a wise business decision in the first place. Basically, what it boils down too is her profits would be much less than what they should've been in the first place had she not agreed to such arrangement.

If it is your dream of being in business for yourself doing cakes then do that!

As was also mentioned, keep in mind that you would essentially be his employee (who he doesn't have to pay employment taxes on!). You wouldn't be able to turn down work or set your own schedule.

Do you want to work for him or do you want to work for yourself?

On the other hand, if she works smart/fast she'll be getting paid more per hour than she would as a brand-new bakery employee. Part of what's going on here is that the shop owner doesn't pay for her inexperience while she's learning how to work more efficiently. And all the overhead-- rent, supplies, utilties, all that-- is someone else's expense, and she benefits cost-free from whatever marketing the bakery already does.

It's an interesting proposition.

Ok, I was on the fence with this, too. But after reading the posts and really getting a good feel from my gut, I would say thanks, but no. I think he ight be taking advantage of a young, less experienced business person.

Talk to a lawyer. Have them write up the contract for you. That would be the smartest thing to do.

It sounds like he wants to sell high end, custom cakes and cookies at Walmart prices to Walmart customers and you are the one who is going to feel the strain and stress. If you decide to do this, you need to insist on offering your high end versions at high end prices and maybe some less detailed options as well, at his prices. But to offer your fine work at low prices is going to set you up for prices woes down the road.

Say a prayer and go with your gut, it rarely lets you down. NOT YOUR HEART...your gut. I know you WANT to do this, but obviously something is bothering you about this deal if you're on here looking for help with it...Good luck to you! know you will do what you think is best.

from the business side;
He is the one at risk,
He already has a business and probably a reputation.
If you accidentally made many mistakes it is his name at stake not yours.
He has already paid for all the things necessary to operate the business.
He has the customers.

The problem I see is pricing product appropriately.
Small dollar amount cakes you will loose $$ , large wedding type cakes you will do good if priced right.

He is making you keep the labor costs down.

At your age I would have done it just for the experience. ANd you will get opinions of how you want to run your business by watching him.

mpc
www.mypastrychef.com

Well, I've read all the replies now and...
I would be very interested at your age in agreeing to a contract with this bakery as an opportunity to learn and grow and later establish your own business or perhaps a contract where your split gets better with time and volume of business.

I see that he wants you to make all the wedding cookies for free...is there a limit to the number that you are responsible for making? There needs to be a "cap" on that or you may not have time to pursue the cakes and other items!

I still see this as an opportunity that I personally would pursue with a contract that is reasonable and well spelled out to give you some protection. It may take awhile for the business to grow also.
Perhaps a 1 year renewable contract.

There is so much to think about here!!! This really does seem like a great opportunity, especially for somebody your age who might not otherwise have the resources yet to start her own business. A few things that you should probably look into:
1) You should definitely set a limit on the cookies that you're making at no profit!!! If your workload is over that cap, negotiate a reasonable percentage of profit that would then be yours-- 25% for any cookies over your set limit per week?
2) I understand what a few people were saying about you being a "glorified employee", but in your area could you be considered an independant business entity who is contracting services to this man's business? Instead of Cookie Shoppe Cakes by Danielle (forgive me if I'm getting that wrong, I'm typing from memory), could you sell them under something like:
Danielle's Business Name Cakes
from:
The Cookie Shoppe
That way you get to keep your name, and your business status, but he still gets the benefit of your work.
3) You should definitely have some control over pricing. Do your research, see what people in your area pay for your services, and stand firm. If he wants to offer lower-priced options, the two of you should agree on, say, three simple designs that you would be willing to sell at his prices, but with research to back you he should be willing to let you set your own prices on more complex designs.
4) You should definitely set up a grace period--1 or 2 months seems a little too short--it takes that long to work out the bugs in any new business relationship! But 4 to 6 months seems like a reasonable time-frame. If things aren't working out after that time period, you should be able to walk away without penalty.
5) Make sure that all of your original designs are yours to take with you when you do eventually part ways. Just as any of his designs, even if you do improve on the quality of them, should be his after you leave.

GET IT IN WRITING, GET IT IN WRITING, GET IT IN WRITING!!!!!!!!!!!!!!! No matter how small the detail, put it in a contract!

Good luck, and have fun!!! I think that if you're smart about this it really could be an amazing opportunity for you! Keep us posted!

A friend of mine moved her massage therapy business into a newly opened day spa here and they just put her business name on a window seperate from the big one with the spa name. When she pulled her business out of there several months later they just scraped her name from the window.

Personally, I'd be very hesitant about taking my business into anyplace where it would totally be controlled by someone else. This guy might seem just really nice but seems to me like he's not giving you much room to conduct your own business. I'd also run all this by someone with a good business/legal head and then have everything in writing before moving forward. I would definitely start out with a decent length trail period.