Is It Crazy To Start A Cake Business In This Economy?

Business By tootie0809 Updated 30 Aug 2009 , 5:44pm by cakesweetiecake

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tootie0809 Posted 27 Sep 2008 , 1:37pm
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I've been working on getting all the info, rules, requirements, etc. to get my cottage food license and start a home-based bakery. My husband and I are going to be adding a separate kitchen in our basement for my bakery. However, I'm trying to separate my enthusiasm for making this dream of mine come true with the reality of the economy and how bad it could possibly get. I know obviously no one out there has a magic crystal ball to foresee the future, but is this just stupid to try to start a business like this in times like this?

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Mike1394 Posted 27 Sep 2008 , 1:57pm
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Since it will be home based the cost is very cheap in comparison. The plusses you will recieve will be worth it alone. Why not you have very little to lose. You will come out on top even if you never sell a cake.


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-K8memphis Posted 27 Sep 2008 , 2:06pm
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Yes it is crazy, but that's why we do it too. Besides, while the economy is a mess, the people with the cash for the kind of cakes we should be selling will still have that cash. People still celebrate and we do celebration food right?

Even the folks who will never be 'regular customers' still have Mom's and Grandpa's who turn 70, 80 and everybody in the family gets together and chips in for a budget to honor them. Sometimes Grandma coughs up for her grandbridelette to get a pretty cake. Stuff like that.

The money is still out far... icon_lol.gif

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Laura102777 Posted 27 Sep 2008 , 2:43pm
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I agree with Mike and k8. People will still celebrate special occasions, and there will still be people with enough money to buy cakes. Not everyone will, but not everyone does now. You will just want to be really conservative with what you spend on your business, and make sure that you are charging enough to be profitable.

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GeminiRJ Posted 27 Sep 2008 , 3:38pm
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Going in with your eyes wide open will surely help! If there's a niche you can fill, try to play that up. If you're willing to work your butt off and get thru some lean times, I think you'll be fine. If it means putting your financial security on the line with nothing to drop back on, I would say to put your dreams on hold and see what happens in the next 6-12 months.

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littlecake Posted 27 Sep 2008 , 6:38pm
post #6 of 19

it's CrAzY...but my business is way up from last year, i didn't even have a summer slump...

i thought i'd get a break this week, since the fair is in town...but i actually was overbooked, and i've had to turn people away.

i believe indy said her business is up too...

well break time is over...i gotta get back to it!

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CoutureCake Posted 27 Sep 2008 , 7:50pm
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Part of starting ANY business involves a bit of being CRAZY!!!! 80+ hour work weeks, deadlines all falling upon YOU, vacations a thing of the past, dealing with _____zillas, etc. It's ALL crazy!!! OTOH, in a down economy is the PERFECT time to go into business provided you've got enough financial backing to get it going properly. Every good idea can be squashed if there isn't proper financial backing in the first place, WITHOUT taking out a loan!!! The thing is, if you can make it in a down economy you can make it in an up economy with being flexible on what the market will bear...

Focus on 100% financing... meaning YOU PAY AS YOU GO when it comes to purchasing equipment and making modifications without taking any loans and only a minimal one if necessary. The best way to succeed is when you OWN EVERYTHING. If the only additional payments you'll have is energy and materials you're going to have a lot easier time than someone who also has to come up with an extra $1000/mo to pay the bank during the tough months of the year (think Florists at Valentine's day vs. Florists in the middle of August)... Also, start hitting the restaurant/bakery auction circuit. True, there are no friends at auctions, but purchasing equipment at good auctions is your friend. I picked up my 2yo commercial oven for $145 this way!! (granted, it took a skid loader to move the thing, but I got my oven for $145!!!!!)

The other thing is there is not a such thing as an ideal time to get into business. You've got to understand a bit about economics, business management, accounting, etc. OTOH, more million and billionaires are made during "poor" economic times than during "good" times. It's all in how smart of a businessowner you are. The number one tag line I heard is "right now everything is on sale" thumbs_up.gif

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indydebi Posted 27 Sep 2008 , 11:25pm
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In my 50 years on this planet, it's NEVER been a "good" time to start a business, if you listen to all the "experts". icon_cool.gif It's also never a good time to have a baby, buy a new car, add on to your house, blah blah blah.

Statistically, more businesses are started in a down economy than any other time. Why? The hard working, talented people get downsized, laid off, the biz shuts down .... and they take their talents and become their own boss.

Yes, as someone mentioned above, my sales are up from last year. For cakes/catering only, sales are up 14% from cake/catering sales for all of last year. If I add in cookie sales, then the numbers are up 40% from last year. Wedding-cake-only sales have tripled over last years, percentage wise (last year, cake-only sales were 5.9% ... so far this year, they represent 17.9% of sales).

(So why do I feel broke all the time? icon_confused.gif icon_biggrin.gif )

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tootie0809 Posted 28 Sep 2008 , 4:39am
post #9 of 19

Thanks everyone for your thoughts on this! I really appreciate hearing some encouraging words from others who have been in my shoes before when deciding to start their own business. I'm actually working on some scaled-down plans for my kitchen so that I can make this happen even cheaper than I thought I could originally. Hopefully it will work so I can at least get started at a minimal expense and then make the bigger changes to my kitchen and equipment as I can afford them. Thanks again for the encouraging words everyone! icon_smile.gif

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pastrylady Posted 28 Sep 2008 , 5:49pm
post #10 of 19

While the economy is in a downturn people might put-off buying new cars, houses or appliances, but they'll still celebrate life's big events, and they'll celebrate with cake.

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Chefperl Posted 29 Sep 2008 , 6:22pm
post #11 of 19

I was thinking the same thing. My business is growing, and I just found out that I can not be legal, so I want to open a shop. I do have a niche and I am talking to people about investing. I found a great location at $950 a month. I just don't know the first thing about operating a business. I don;t think the economy plays a huge part of this industry. People are still wanting cakes and making weddings.
Has anyone seen the book about starting a cake business, i think they advertise on here. is it good?

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littlecake Posted 29 Sep 2008 , 6:25pm
post #12 of 19

It seems like the well to do always have money to spend.

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holoien003 Posted 29 Sep 2008 , 6:31pm
post #13 of 19

Most of your clientele has money....even in a bad economy the rich are still rich....they can afford your cakes.

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gateauxdamour Posted 6 Oct 2008 , 2:24pm
post #14 of 19

I own a catering company which I took over from my father when he retired. What I'm seeing now matches up with what he has told me usually happens in these economic downturns. Folks will still celebrate, just budget differently.

As things get tighter, we're seeing brides even arrange the ceremony time to accommodate a minimal reception menu. And traditionally, what's the "smallest" reception menu? That's right, cake and punch.

There are actually quite a few folks who are deciding to do a beautiful, over the top cake, punch fountain, coffee service, sculpted mints/chocolates and savory nut blends. So, far I've not seen any flinching on the increased cost of these items. They're just putting it all into perspective (as in, been to the grocery store lately?!).

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cakesbyamym Posted 6 Oct 2008 , 2:58pm
post #15 of 19

Doing ANYTHING in this day and age, economy, or otherwise, takes a great leap of faith. Nothing is ever a given or a sure thing. I began my bakery PT almost 3 years ago, and by February of this year, I HAD to leave my FT job or either give up the bakery, because I simply couldn't do both anymore.

With that being said, like others have mentioned, as long as you know going in that you will have many, many weeks of long hours...late free weekends....the occasional demanding customers....those that you will never be able to'll do just fine. There is an up and down side to anything, but if you have your heart set on something, I say go for it! You'll never know what you could've done if you never try. icon_wink.gif

I have been very fortunate to have great customers who are my best form of advertisement. If you offer a quality product that tastes as great as it looks, and take great care of your customers, people are going to buy from you. Whether the economy is up or down, there will still be weddings and baby showers to celebrate; birthdays and graduations come each year; so the market is always there. You just have to keep your name out there, so you're the first one that folks think of when they need a special occasion cake. icon_smile.gif

All the best to you!!!

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springlakecake Posted 6 Oct 2008 , 4:31pm
post #16 of 19

What is risky to one person isnt to another. For ME, taking out a loan for tens of thousands against my house (if I could even get a loan these days icon_eek.gif ) just is not a risk I would be willing to take. However, I am in the process of adding a commerical kitchen to my basement. I have scoured ebay, craigs list, sales (with help from my dad who is a great bargain hunter) and I think I will have my kitchen for $4000 or less. Of course my dad and DH are doing all of the building as well. So I am not taking out any loans. It feels much better to have this paid for. That way if i only make one cake a month for awhile, no biggie.

I think you just have to weigh the pros and cons. What is best for you and your family?

Plus didnt you say you had cottage laws where you live? Cant you just bake out of your home kitchen then?

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tootie0809 Posted 6 Oct 2008 , 8:46pm
post #17 of 19

Hey everyone! Yes, fortunately I am in a state that has cottage food licensing. The biggest "hurdle" for me is that I have dogs and have to have a completely closed-off kitchen where they are never able to get into the kitchen at any time. So I have an open floor plan with vaulted ceilings and my kitchen is right off my living room area, so we originally were going to put a separate kitchen in my basement, but for now we've decided to just put up a seperator wall so I can get licensed and start getting business in and then once I have some consistent orders coming in and feel comfortable that this will work, then I'll start in on the separate kitchen downstairs. I'm not looking forward to a funky wall in my kitchen and living room area, but once we do the kitchen downstiars, then we'll take that wall back out and it will be normal again.

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Mencked Posted 8 Oct 2008 , 5:17pm
post #18 of 19

I am also in the process of getting legal and like merissa, I'm paying as I go--I refuse to go into debt for this (Dave Ramsey would be so proud of me). I'm building it with profit from my last 5 years of home caking, and I've been on craigs list and ebay non-stop--great bargains can be found! I love doing cake decorating and baking in general. I had a huge, huge wedding this past weekend and I just kept thinking I love to do this!!! I can not wait until I can quit my my 9-5 and do my thing all of the time!

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cakesweetiecake Posted 30 Aug 2009 , 5:44pm
post #19 of 19

Very informative thread!

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