O.k. I have been renting space to bake my cakes and paying $300 per month. The drive is 30 minutes from home plus I have to work around their hours but no biggie we make it work.

Well yesterday while riding around my part of town which is where I want to work I found a deli that just closed down because they are moving. So today I call and inquire about the rent. Which is $750 which to me I think is an AWSOME deal. They are also going to sell their equipment not sure on that price but can scrap up the money to get my stuff. Since it is already a restaurant it will have all the electrical stuff and grease trap installed.

So to vent - I call my husband and I'm thrilled so I proceed to tell him I FOUND a place. Then I tell him the rent and he was like $750 AND A LONG PAUSE which told me right then to FORGET it because he'll never go for it.

I just want to know does this price sound reasonable or am I the one that is nuts?

If I had to take a part time job to make the rent while it grows I'd DO IT. So for those that think this a great deal tell me how you would present this in a positive way to the hubby? I already have a good bit of business and having to turn down sales so I know if I could do this full time with my marketing skills I could make this work.

so much for my excitement...

The honest naked raw truth? It ain't a good deal the way you are looking at it. There's fourteen thousand other expenses when you are 'it'. And that's just for starters.

$300 is a bargain!!!!

at the $300 place do you --
> pay utilities or are they included?
> insurance or is it included?
> pay for maintenance and repairs or included?
> pay janitor or included?

now at the $750 place -- ask those same questions.
I dare say they will come up YOU PAY for all of that.
so add that to the $750 and then figure how many hours and how many cakes you will have to make just to break even.

Thanks - for can you list some of the other things that would be needed? I need to know what other things I'll be looking at needing?

thanks again

This is an intangible that you cannot put a price on. And while it also carries the potential to be the hugest aggravation the company of the other folks provides security even if it is randomly. Like even if they are not always there with you.

Security

I think it so depends on where you are and where you want to take this biz.

If you want this to go full time, be your own boss, actually run your own full time biz, then it's a deal. (My rent is $1500 plus $48K for equipment plus $28K for build out.... build out from an empty room!).

When I moved into my own space, my sales are now up 142% from last year due to increased capacity and ability to draw in drive-by and walk-in biz.... something I couldn't do from a rented shared space.

If you want to keep this as a part time gig, then I'd stay with the $300 a month. If you're ready to take the big leap, then I'm in your corner and say go for it.

My name is listed as the only owner on my LLC, so hubby really has no say in whatever I do. I told him, "This train is leaving the station with or without you, so you need to decide if you're jumping on board or waving bye bye from the station."

But then I tend to be a pushy kinda broad!!

independent place:
rent
utilities (phone, elec, gas, water, sewer)
garbage disposal (most likely will have to contract someone like Waste Management)
dumpster rental
insurance
maintenance (that grease trap has to be serviced on a regular basis for example)
repairs
janitor
license(s)
inspection(s)
bringing/keeping up to code
all equipment (this includes every piece of anything from ovens to fridge to tables to chairs, etc.)
ingredients
consumables used to produce product
all packaging materials
signage (which gets $$$$$ fast)
advertising (yellow pages alone kill!)
any decor you install (paint, picture frames, lighting, etc.)
lawyer fees
accountant fees
TAXES
will also have dues for chamber of commerce and BBB and any other local business organizations

if you bring in help:
wages
workman's comp
TAXES - FICA matching, MEDI matching (the two together currently are 7.5%)

and the inevitable --
girl scout cookies, boy scout popcorn, school fundraisers which you will be expected to buy as a show of support

and...

the pro bono work -- the donations to charity that will be expected of you.

ok IndyDebi and others, what did I miss?
and can some one give her guesstimates on this?

Thanks so much guys this is helping. I do want to make this full time.

Right now I pay the $300 for rent, my own insurance, my license fees, and supplies. So it's pretty reasonable right now but it's just part time - mainly because I can't get in the kitchen all the time like I would like. The drive is 35 miles one way and I'd much rather work 5 minutes up the road.

The location I'm looking at is or was an established deli/catering company that moved to a nearby city to expand.

So please keep sending me the list of things I need to keep considering It's a big decision and I don't want to go in blindly or maybe just stay put....decisions, decisions, decisions.

The deli/catering moved to a larger facility in a nearby city. The location is good - there is no other bakery in my city for 30 miles. All of my business does come from this area (which I live) but I have to drive 60+ miles just to make one cake. I go bake on Wed or Thurs and then return the next day to decorate (since I'm part time at the place I rent) I cant' stay all day and get a lot done

oh yes, deposits.

since you are a new business, don't be surprised if you have to put down deposits for each utility and for the rent as well.

----

have you done a business plan?

have you calculated your profit where you are now?

have you REALLY calculated the time you'll spend and the $$$ you will have to bring in just to break even?

consider -- most business will not make a profit in the 1st twelve months -- they'll hopefully break even.

do you have a cash stash to fall back on when orders are thin?

are you prepared to put in the 12+ hour days it WILL require?

Instead of a part time job you prolly need to run a lunch counter to make it work.

How long was the deli there? One of the biggest deal breakers is the new codes you need to satisfy. New codes could mean huge overhaul of pumbing or electric or who know$. So check that out first.

Make up a chart with your expenses now and expenses if you had the deli space.


Doug has a good list going but also total up the amount you are paying in gas each month to get to where you work on cakes now add that to your now costs list... that will be significantly reduced unless you also used those trips to pick up your supplies.

The question that hasn't been asked yet. Are you making money? Can you support the move to a bigger building? NOTE the Deli. The Deli moved when the business out grew the building. Do you have the customer base to make the move?

Mike

Thanks everyone for all the input. I don't have to make decision anytime soon. Thank you all for the things that I have and haven't considered. I'm writing this all down and will start making calls and getting prices. If nothing else I might try and find another 'kitchen space' to rent where I can get more kitchen time.

I am making pretty good money right now but want to expand and just can't do it from where I am at. I do have a good following - thankfully my church members recommend me to everyone they know and business has been going great. Referrals are coming from everywhere.

So thanks again and if you can think of anything else I need to consider PLEASE PLEASE PLEASE LET ME KNOW. I really need this sort of advice and I'd rather ask those that know the business already.

You guys are GREAT.

Under "repairs and maintentance" there's also the things you NEVER think of.... I just laid out $2200 for air conditioning repair to the unit on the roof. No, this is NOT paid by the landlord!

Add to Doug's list your fire equipment ... hood, extinguishers and the semi-annual inspection/maintenance contract that is probably required by not only the fire marshall but your insurance company (I have to send a copy of my inspection report to them this month).

the one remaining stand alone bakery in my area has to run a lunch counter.

part time vs. full time...

are you filling ALL your part time and turning away orders?

will orders be enough to fill FULL time?

guesstimating you're doing about 16 hours/week now, vs. 50 to 60 or so full time (6 - 8 to 10 hr. days if not more!)

are you willing to branch out and do other pastries to be sure to have enough income?


suggest you go to this website:
http://www.score.org/index.html
and to their template gallery
http://www.score.org/template_gallery.html

and use some of the worksheets they have there (like the 12 month cash flow) to work the numbers on just what it will take to be successful

also check out the SBA http://www.sba.gov/

Thanks Doug for those LINKS....and all the great information you are providing...

Wait wait wait, you got any munchkins under the age of 13-14???

'Cause the new step child will not share, runs with scissors and demands all attention 101%+

You have plenty of cost to think of from most of the experts on this site. If I had decided to take the leap that you are considering I would add something enjoyable for customers that would draw them into your business and build up your cake business. What I am getting at is what goes great with cake? Ice cream, Coffee? I would maybe add these to my shop with a few of your cakes (for sale by the slice) to get people interested in not only the styles, but the taste. I am jealous. There is an old bar around the corner from my house that is currently being rented and is suppose to be a social club. It isn't working and I would love to turn it into a coffee, ice cream bar, cake store. I have to wait until he gives up. As you can tell my ideas for you are also my dream for me. I am sending you all my hopes and dreams that you get your own shop. Just think of not only the gas, but the time in travel that you would save. Walk in customers from your area would be great. Good Luck

You do need to put pencil to paper before making any emotional decisions. Then decide how much time you are willing to invest, that being said, do you think that ten years from now you will be saying, "I should have or maybe I shouldn't have started my own business?" The decision should be yours since you are the one doing the work, just make sure all your plans are written out and checked out by professional business manager maybe.

Here is my thought and maybe Doug can chime in on this, I know nothing about leases on business property, but I know in rental homes the landlord has the option to increase rent before renewal time. That may be something to also consider. Would you be able to afford a rent increase?
Good luck with whatever decision you make. I firmly believe that if the time is right and this is meant to be, it will all come together for you, if not, a better opportunity will present itself in the future when you will be ready, financially and spiritually. Good luck!!!!

Dldbrou, you're so kind in sharing all your hopes for yourself with Poshcakedesigns. So nicely phrased too. I hope for both of you that when the timing is right you are able to take advantage of a wonderful space and make it wildly successful. I think Dldbrou has a good point on the convenience items too. If you can find something profitable, that doesn't require more time, then maybe that can help fill a gap if the cake orders aren't bringing in enough. I like Doug's idea about the lunch counter too. Is there now a void from the deli moving? Maybe they've moved just far enough that some of their customers will be looking for something to fill that space in their tummies!

I'm with Sweet Confections .... I have to keep reminding people "I'm NOT a restaurant!" becuase I have no desire to make food "on spec"! Adds to my overhead and expense. I've seen too many places try to do the lunch counter thing and fail because it's too risky.

And you lose your focus. While you're spending your time every single day worrying about what foods to make for the lunch crowd, and how much to make, and how much you might throw out, etc etc., then that's time you're NOT promoting and growing the business that you started with .... your cakes. I do catering ... I KNOW how much time is involved in food prep. The smaller the food, the worse the time involved!

Decide what you want to do then focus on that. Fixing $200 worth of food on spec that ends up bringing in only $125 in lunch sales is not how to pay the bills.

Wow so much good info here.

my rent is 530 for 1100 square ft...(don't hate me)..

but

in the summer my electric bill matches the rent.

all my equipment,plumber, electric, grease trap. etc cost about 28 K...SCC said she was able to get started for 5K ...AMAZING!

alot of what you must spend depends a lot on they'll let you get by with....i had to buy a comm. oven, some places they'll let you get by with a regular one.

servicing the grease trap isn't too bad, rooto rooter comes out about once a year, about 100 bucks.

in my lease, i'm responsible for repairs too...a car hit the central air unit...yup, i paid for it, and the hot water heater, various plumbing problems.

i think it depends on what kinda commitment you wanna make, your heart will show you.

hey, maybe you could rent out the space sometimes and get 300.00 a month to offset the rent.

have you been inside yet? you'll save a lot on plumbing, since it's already a deli, how many sq ft does it have?

heck take a pic, i wanna see!

i like having my own place, i gotta tell ya tho, some weeks on the slow times, i don't bring home much.

ps. do you work pretty fast?...you'll have to make a lot more cakes to support the overhead...