Ok, I'm still trying to plan for a future bakery business. My main product will be cakes, but it will also consist of coffee, breads, and pastries. I'd also like a small customer seating area for morning dining. I have decided to try to finance a portion of the expenses with credit cards(about $20,000) and the rest with a small loan(about $50,000). For those that are in the process or those that have done this, would this be enough to get started as far as the build-out, equipment, furniture, etc. I know there are alot of things that varies but is this amount realistic?
Thanks a heap,
Cynita
I also do catering and my equipment quote was $57,000 (worst case scenario). however, I'm betting the only equipment in my quote that you may not need is an 8-burner stove and a deep fryer. I also have a walk-in refrigerator quoted.
Build out is in the $20K range, which includes flooring and upgrading the wiring to accomodate the amperage required to run the equipment.
As you plan your space, remember that you are paying square footage rent for your dining area. I, personally, don't like the idea of paying rent just so people who have mastered the art of nursing one cup a coffee for 2 hours have a place to "hang out". Be sure your volume of eat-in customers justifies the cost of the size of your dining space.
Also with a dining space, you are most likely to be required to have a customer accessible restroom that is handicap accessible (as opposed to just a regular restroom in the back of the kitchen for you and your staff). This can add to your costs. You will also need to buy tables & chair and other dining room accessories.
Your air intake/outtake ratio needs to be factored differently when you have a dining space as you will need to keep the customer area cool all the time, to offset the heat generated from your equipment. This can be a hefty cost, too.
I am probably going to go against the flow here and say DO NOT USE CREDIT CARDS! The Bible says "The Borrower is SLAVE to the lender." Do you really want to be a slave to Am-Ex? 
Save up your money and then start your business. What would happen if, God forbid, your business went belly-up and then you were stuck with $70,000 in debt? Something to think about....
This is just my opinion, but I wouldn't use credit cards. You'll be paying back forever with interest rates!
Can you not get a business loan or something for the total amount? I know you're still paying interest, but it would not be as much as if getting a lump sum on a credit card?
I'm no where near building a shop. But I agree and would stay away from credit cards. Unless you can keep up with the charges and faithfully pay off every month, then I wouldn't do it. Having been in credit card debt, I won't do it again. I charge nothing for my business. Not even small things. Everything comes out.
I think that you would probably get a better interest rate with a loan. But the loan market is sooo weird these days. I'd just go and sit down with some banks and talk things over. I believe you'll need a business plan also for a business loan. But I'm not sure on that. Maybe someone else can comment on that.
Yeah, the loan departments are very funny when lending to food start up businesses. I just suggested to try and cut the loan amount down hoping for a better chance at getting the loan. I know credit cards could get you in a heap of trouble, and I am sooo glad to hear yalls point of views. I think I've been scared straight.
Cynita
I have been trying to open a bakery/cafe for about 2 years now. I also live in Florida (Wellington). The rent here is so expensive. I am looking at $4500-$5500 for 1100 sqf. Having just a bakery will never pay the rent. I priced out all my equipment needs from ovens to capuccino makers, walk in freezers and display cases - not bad, brand new about $27,000. THe rest of the buildout about $70,000. The problem is can you sell enough to pay for all your expenses. I was looking at about $11,000 a month in expenses. AUGGGGGHHHH!
Capital one gives new business from 8months to 1 year free interest on loans. You can't get better than that. So, yes, I would do credit cards and I am going to if I can find a space that won't bankrupt me. Good Luck with your new place. It is so exciting!!
I'm here in the south florida area and certain areas are very expensive. I was looking for a nice upscale area but there's a catch to that. Upscale areas are more expensive. I looked around in some moderate locations but it just doesn't seem like I'll pull the right market, but those are the areas where the rent could be somewhat reasonable For instance, South Beach here is a hot spot for south florida but to lease a space on south beach could run about $7,000 to $10,000 a month. Some pricing that I received was in a moderate location not sure if business would do great, but the rent was $2,000 for 1400sq. ft. So, it's a catch 22.
Cynita
same here, I can go to a lower income area and pay half the rent, but the population there shops at walmart. they would not want to pay $11.00 lbs for gourment cookies. heck, i wouldn't. but that is the kind of place i want to have. so im am stuck.
it would have been so much easier if we could run our business from home in FL.
Your city may have a Small Business Program that can help you with what you need in order to start your business: how to write a business plan, taxes, insurance...maybe even have small business loans for women and/or minority owed businesses.
Capital one gives new business from 8months to 1 year free interest on loans. You can't get better than that. So, yes, I would do credit cards and I am going to if I can find a space that won't bankrupt me.
sounds good ONLY if you can pay that portion off in the first year. eventually it will catch up to you and cause financial issues. i dont think cc's are a smart idea for the set up costs of a business. i think one business loan is the best in the long run (lower interest). cc's are ok for small monthly expenses that can be paid in full each month. i definately wouldnt want to be a slave to that kind of debtor. i understand your frustration in the cost of getting started (i feel your pain, i really do!) but there has got to be a balance between saving for 40 years to get enough cash and racking up the credit cards....hang in there!
Your city may have a Small Business Program that can help you with what you need in order to start your business: how to write a business plan, taxes, insurance...maybe even have small business loans for women and/or minority owed businesses.
i think this is VERY good information.
Yeah, the loan departments are very funny when lending to food start up businesses. I just suggested to try and cut the loan amount down hoping for a better chance at getting the loan. I know credit cards could get you in a heap of trouble, and I am sooo glad to hear yalls point of views. I think I've been scared straight.
Cynita
You're looking at almost a catch-22 here. On your business plan that you will need to present to the bank, you will list your expenses and income to show how much money you need. If you come up with loan needs of $75,000 and only request $50,000, they are going to ask you where you are coming up with the diff. It's conisidered a bad thing if you need $75K and only have $50k.
Credit card debt would be considered another liability on your balance sheet and they will look at how you can pay them $50K and pay the $20K in CC's.
Ask for what you need ... have the numbers ready to justify it. You can get turned down for asking for too little just as easily as for asking for too much.
It is VERY possible to ask for $100K and they approve you for $75K (happened to me).
Thanks melysa, I will hang in there until this dream of mine is manifested. I have been working with the SBA/small business developement center who has been great help, but still ain't nobody gonna just hand over $70,000, there is still a great deal of work on my behalf. Also, SBA don't give loans just gaurantee them. SBA kinda just guides you along the way; you still have a heap of homework on your own.
Cynita
Indy, I know that a business plan plays a major part in being approved for a loan, so I know that I must definitely have myself together when I go to them. I talked to a company that writes plans and I was thinking about having them kinda help me since the person that I spoke with said that they do the market research and other research that is necessary to give you an airtight plan.
Cynita
Indy, I know that a business plan plays a major part in being approved for a loan, so I know that I must definitely have myself together when I go to them. I talked to a company that writes plans and I was thinking about having them kinda help me since the person that I spoke with said that they do the market research and other research that is necessary to give you an airtight plan.
Cynita
SMART MOVE 
I'm sure it will be worth the investment.
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