Shop Vs/ Home Bakery

Decorating By sweetneice Updated 29 Jan 2009 , 3:54am by sweetneice

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sweetneice Posted 25 Jan 2009 , 1:11am
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Hey all! I'm thinking of leasing a space for my own cake shop. I have outgrown my little kitchen and my clientele has picked up tremendously! For those of you who have made the transition, was a profitable & joyful move for you? I'm just a little nervous to finally have a shop, but my DH insists that I need a bigger space as well as my clients asking when I'll get one because they think I'll make a killing! icon_biggrin.gif I think my biggest concern is the overhead. What do you guys think. My DH, or fiance shall I say (getting married June 20th YAY!) wants to pay for everything because he says he believes in my product and I do great work, but I still don't want to kill his bank, even if he is ok with it. I have this thing about money..........I only use it when I have to and I love to keep it when I can! icon_lol.gif icon_wink.gif What's your thought on this scenerio before I start looking?

29 replies
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MnSnow Posted 25 Jan 2009 , 1:30am
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I guess if you have the client base, overhead wouldn't kill you..then go for it!!

Put some numbers down on paper and look at it that way. Look at expenses, potential income and growth, possibility of hiring help, cost of upkeep, utilitites, supplies, insurance, and all that's involved and look at it in black and white. If it isn't scary, then do it!

I have thought of renting and setting up a store front, but for me the numbers are too scary yet. For me, until the numbers get less scary, I will stay where I'm at for now.

Good Luck to you

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TheCornerBakery Posted 25 Jan 2009 , 1:39am
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Hi CakeNiece,
Congrats on your business growing to the point of thinking about having your own shop.

I am speaking from my own experience and what overhead is here in Orlando.

I am just coming off my first year in business and here is a cliff notes version of the 1st year.

I have a 600 sq. ft space in a very nice location outside of Orlando. It took roughly $25,000 for the buidout of the space from a retail shop selling dance clothes to a kitchen. I didn't need a exhaust system over my oven (direct vent outside) or a grease trap with the 3 compartment sink since I don't cook with that type of food.

It took another $25,000 for working capital and buying smallwares, inventory, advertising and my cake mobile graphics.

If you read my other post previously the only two things that really caught me by surprise is the the "clique nature" of wedding planners/the kick backs the receive for putting your name out to the brides etc.

and secondly is and might be news to you but people baking from home lowballing prices.

Overhead is around $3000 per month.

I hope this helped you and anyone else that might join in the discussion,

Best of Luck with whatever choice you make,
I saw your gallery and your very talented icon_biggrin.gif


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indydebi Posted 25 Jan 2009 , 3:10am
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I find that when going from home to retail, there is a little sticker shock involved. Things you take for granted in a home environment and you just don't think about as far as commercial setting.

- Check and see what the going rate for comm'l rent per square foot is in your area.

- My number were similar to the above ... my $12,000 construction quote that promised a 10-day turnaround ended up taking 8 weeks and $25,000.

- I spent $45K on equipment (but I'm a caterer, so I have a few more pieces than you'll need).

- Things that weren't included in the original quote and expections:
.....Dumpster expense
.... fire extinguishers, recharging and 6-month inspection.
.... $1000 grease trap plus the $350 to install it
.... $50 for a mop bucket (that STILL pi$$es me off that a stupid bucket costs that much!)
.... $700 for commercial grade soaps for the dishwasher, the 3-compartment-sink, handwashing sinks (2), floors, degreasers, sanitizers, window cleaners, etc.
.... permit delays due to holiday and just plain slow moving gov't offices
..... $600 for architect approved drawings that added 6 weeks to the delay

- You intellectually understand you will have a biz phone line, trash pick up, utility bills, etc., but it still hurts when you realize you are NOT using your home phone, your free city trash pick up and hubby isn't going to pay the electric bill out of the household account anymore.

- Commercial insurance rates are WAY more expensive than personal insurance rates.

Definitely start putting numbers on paper .... if you have $3000 in monthly overhead, you should plan on $7500 MIN in monthly sales to cover it.

Those of us who have gone thru the process will tell you that friends are GREAT for telling you to "oh go on! take the plunge! open a shop!" but they are no where to be seen when someone needs to write the checks. So do some good research so that you know what you are about to get into.

It's a fun adventure!! thumbs_up.gif

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klutz Posted 25 Jan 2009 , 3:50am
post #5 of 30

Great wedding date choice...that one worked for me!!

Anyway, mostly ditto to the above, but some of it really depends on your area. I set up in a rental space with minimum equipment, an oven, sink, counters, and a couple refrig units. It probably only ran about $10 -$20,000. We got a lot of used equipment and saved some $ there. The rest we have just tried to add gradually, as we needed it and as cash flow allowed. Definately think about how many clients you have, and how much need there is in you location. The other big thing is advertising, at least initially, to let everyone around you know you are there.

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leah_s Posted 25 Jan 2009 , 1:43pm
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The first thing you must do is put together a detailed busienss plan. That helped me make the decision - not to open a retail shop, and stay in my nice (low cost) licensed, inspected, insured, legal home kitchen.

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sweetneice Posted 26 Jan 2009 , 8:33pm
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Thanks guys! I'm going to be looking at the numbers and expenses. My mind is leaning toward waiting a little longer, since I can keep more of the profit in pocket instead of paying for a location, especially since we are planning on buying our first home together after we marry. That seems to be alot and as someone posted above, friends will tell you to go ahead but I have to pay the bills myself! Lol! Good advice!

On the flip side, I'm going to have to do it now anyway, and with the prices of real estate becoming negotiable, now may be the best time to do it. Do you think that the store front bakeries get more clients than us home bakers? Just a very helpful deciding factor. Thanks , Oh Michael thank you for your kind words. Klutz, I hope that day is the most special day in the world!

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leah_s Posted 26 Jan 2009 , 11:01pm
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Tough call, but I've been doing this at home for almost 10 years. I've written two business plans, applied for money once and backed out at the last minute. When it comes time to sign on the dotted line for that big loan it gets scary.

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Redlotusninjagrl Posted 27 Jan 2009 , 12:46am
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Well I don't have much to add to this as I am very newly interested in cake decorating. But when I got married, I didn't even consider a cake from anywhere other than a well known local bakery. I probably paid more than I needed to, but at least it was something I could trust. I know that with a bakery, there are certain heath codes that have to be followed and I can check the last rating the store received. There is a level of professionalism that a store front brings no matter how much a "homebaker" puts into a cakedecorating room/basement. And of all my friends, the only time someone has actually paid for a cake that was not from a bakery was when it was a naughty cake. So I believe that a store front will provide more business.

Now on the flipside, unless you are buying a storefront outright, I am not sure that you are going to be getting a steal. Of course, I imagine it all depends on the area in which you live and the area in which you choose. There are a lot of things to consider that most people starting a business don't realize. Luckily, many people with experience have posted some of those things. You have to consider how to set up the business to protect yourself and your investment. Investing in a prepaid legal service is a fantastic idea. If you don't know about this service you should check it out. I have Metlaw through MetLife. If you don't have an accountant friend who will willingly give you advice, you should seek advice from a smalll accounting firm. I had a friend who opened a reptile store who ended up completely broke and almost went to jail for failing to pay sales and payroll taxes. Speaking to each of these professionals can give you some insight into things you may not have considered.

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iletmn0 Posted 27 Jan 2009 , 3:58am
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I'm actually in a similiar situation as the original poster. I currently rent space from a friend who owns a restaurant and am now finally ready to have my own space. After years of searching I've finally found my almost perfect's a retail loft in a artsy light industrial area. The rent is cheaper than a retail location.

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Terri05 Posted 27 Jan 2009 , 4:16am
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I would contact the Small Business Administration in your area They have everything you need to set up a buisness plan, advertising, building costs, etc. and will work with you to make sure that you find the area that works best for your business. They will even help you do your application for a small business loan if you need it. They were very helpful to my sister and I when we wanted to set up a small ice cream store. We found out that the area we wanted to open at would not support our overhead. They helped us find the right area, work out a budget, start-up, etc. for a 1 year projection. We could have made a huge mistake if we hadn't had their help.

P.S., a small ice cream and coffee shop opened up where we wanted and it closed in less than 6 months...dodged a bullet on that one.

Good Luck!!!

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sweetneice Posted 27 Jan 2009 , 4:17am
post #12 of 30

Thats great! Good Luck with everything!

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sweetneice Posted 27 Jan 2009 , 4:19am
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Terri, what great headache you avoided! Thanks for the tip!

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VickiChicki Posted 27 Jan 2009 , 4:27am
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Hi! I did cakes from my home full-time for about 6 years and then took a full time job with full benefits and a nice salary working as the food service director for a very large church. I continued to do cakes for the members of the church. People kept asking me "Why aren't you doing this as a business on your own?" They would say - "You are wasting your talents here." SO, I took every penny of my retirement money, quit the job and bit the bullet and leased a very cute and very visual little shop in the center of an historic district. My business took off from the moment I opened the doors and has been going "gangbusters" ever since - so much so that I had to hire help! Well, all that is well and good, but I have to ditto what was said above - you just about have to double the amount you take in to cover all of your overhead. I never dreamed the cost of doing business was going to be so high. I am slowly learning how to scale back on certain things and learning what advertising has paid off and what to cancel - but there are many months I am hanging on by a thread and praying I have enough to cover all of the expenses.
On the plus side, I definitely think I have attracted more business being in a visable spot AND I am so much more organized having everything in a commercial kitchen setting and things are right at my fingertips. I also love what I do and me and my baker's assistant have a lot of fun every day. The only down side - really - is dealing with the finances! That tends to stress me out more than anything. I don't mind the work or the long hours - it is the money thing. AND it is true that you do face the fact that your "home-based competitors" are able to charge lower prices and often able to beat you out of a sale - and that hurts for those of us who are just trying to make it in a commercial setting - not wanting to charge higher prices - yet forced to do so to stay in business. SO - I just say all of the above to say it is a lot to consider!
Best wishes for a happy upcoming marriage and on your decision!

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sweetneice Posted 27 Jan 2009 , 4:34am
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Thank you for all your help and well wishes Vicki!

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j-pal Posted 27 Jan 2009 , 5:17pm
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If I had to do it all again... I've done it from home "illegally" until it took over our lives and home (and we were turned into the HD). We opened a "legal" shop in the lower level of my parent's home. I had 1200 square feet and we did all the renovating and work to bring up to code. It probably only cost us about $3000 to do the work. The rent was cheaper than a commercial site, but it was still more than I'd paid before. I had all the other "business expenses" as listed above by other posters. As the business grew, I had to hire help. In order to pay the help, I had to take more business. I worked all the time, I couldn't turn down orders because I had to pay the bills. We had no life and my "passion" became a "job".

I loved getting the "stuff" out of my home. Home was home and work was work. I loved having a "shop". I hated the hours. I hated not being able to take a vacation. I hated that when I paid myself, I also had to pay the government about 2/3 of my wages!

I can't compare myself to a "storefront" type of business, but I can tell you that I never hurt for orders. I kinda had the best of both worlds, in that I didn't have to have "hours" and a staff person to man the front for walk-ins, but I still had a "shop".

I have several friends "in the business". The ones that are doing the best are the ones who took an out-building or a separate garage and had it renovated and approved. They're at home, but not at home. They don't have to have set hours, and their over-head is minimal. If I had to do it again, I would absolutely do it this way. Don't get me wrong... every time I see a little shop in a cute part of town, I go, "Ooohhh, that would make a great cake shop!!"

Oh ... it also depends on if you have children! Very important... a husband/boyfriend can understand what's keeping you... but kids are harder. My kids suffered because of our schedule in trying to run the business. If I didn't have kids, it would've been a whole different story!! I think it's possible to have a career and kids, but boy it's tough... most jobs you leave at the end of the day and go home to your family. When you own your own business, it doesn't always work that way. Just another thought to consider.

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cakesbydina Posted 27 Jan 2009 , 6:15pm
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I think it's great to work from home. I have four kids and if I had a shop I would never see them. Not to mention the stress of paying the bills a shop would bring. From home I take orders when I have time and turn down ones when I am busy. My cakes taste great and look fabulous and i get tons of free adveritising my uploading my photos on Facebook. I also get referrals from friends and family. It would be nice to have a shop but this is a business I love and a shop would only complicate things and make it a demanding job with money worries. You can have a thriving business from home and reap all of the benefits of working from home as well. Keep the money you make as you should instead of handing it out to pay for shop. If your cakes are worth anything, you'll get business regardless of doing it from home or not. Get a website advertise online FREE and stay in constant contact with family, friends nad neighbors.

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tarheelgirl Posted 27 Jan 2009 , 6:15pm
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I work out of my licensed kitchen at home. We are fixing to convert our unfinished attached garage into a full kitchen to get the stuff out of MY kitchen. I work by word of mouth and advertise a couple places. So far its best way for my family during the day my kids are in school and I work during that time. Shops do bring in more business but look at the things you have to deal with. I personally am not ready for that and am just fine doing it the way I am. I could do it this way for a very long time and have no problem with it.

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indydebi Posted 27 Jan 2009 , 6:22pm
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Originally Posted by 4littlewops

I have four kids and if I had a shop I would never see them.

You cannot measure the time it takes you to do a cake in a home kitchen to the time it would take you in a commercial kitchen.

I did 6 tier cake that took me 7-9 hours just in baking time in a home oven. I could bake the entire cake in a couple of hours in my commercial kitchen. It would take 10 batches of icing in my little KA, but only 1 batch in my 20qt mixer. So while it took 9 hours JUST TO BAKE this cake at home ... I could have the whole thing baked, iced, decorated and ready to go in 9 hours or less in a commercial kitchen.

My biz is doubling each year and I never go into my shop before 10:00 and I'm outta there no later than 5:00 everyday, with only 3 days of exceptions, where I stayed until 8 or 9 a couple of nights to finish a heavy weekend of wedding cake orders. I've even managed to figure out how to get a real day off and not go in at all on Mondays.

After comparing the two, I just don't have the time to go back to home baking .... I get to spend lots more time with my family since getting a commercial kitchen.

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cakesbydina Posted 27 Jan 2009 , 7:27pm
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tarheelgirl....I'll second that! Time is too precious to be away from home when you are needed there all day. I get a ton of business, never pay for advertising and can work when I want which is usually while my son naps and late at night. I can be safe at home working until the wee hours instead of alone in a cake shop. I don't mind if it takes me longer to do a cake from home because I am home, with less stress, no employees to pay or expensive overhead and I can bake in my slippers while watching T.V. You can't beat it. You might be able to bake a cake faster in a commercial kitchen but you are also not earning total profit from that one cake by the time you pay all your commercial and employee expenses.

I would love to see pictures of your converted garage...great idea.

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tarheelgirl Posted 27 Jan 2009 , 8:05pm
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I usually do all my baking in one day and my icings the next. I am hoping to get a convection oven to cut the baking times down. But overall I am happy with what I have. I have loyal customers and each week new ones pop up! I would love to have a shop one day but for now this works!

indydebi.. I want to be like you when I grow up! icon_biggrin.gif thumbs_up.gif

And YES, I would love to post pictures when the garage is finished! We have just begun so it could take a while but will be well worth it!

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sweetneice Posted 28 Jan 2009 , 6:08am
post #22 of 30

Good points on both sides! I'm sure baking in a commercial kitchen is faster than here at home! Boy, would I love that! I do have children, as a matter of fact, I have 5, and the youngest are 5year old twins, so I do cherish the moments I have with them,especially since this is their last year before going to school. I think it's ideal to have a shop and I will definitely purchase or lease one, but after thinking on it a little more here's my conclusion............

I operate a LEGAL HOME BAKERY, so no problems there
My cakes turn out great and yummy, no problems there
Overhead....none problem there
If it aint broke dont fix it! Lol!
My only issue is how to keep getting new clients? I advertise in a few places and alot of my brides are by word of mouth as well as my other clients. Besides that, what can I do?

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cakesbydina Posted 28 Jan 2009 , 11:10am
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hold neighborhood tastings. Make petit fours of different flavors and serve them at a party. Get a facebook page so all your friends and family can see your work and you can keep in touch with them daily. They need to think of you constantly to remember you when they need a cake. Put flyers out in your neigborhood to offer cakes for birthdays. Get a website so they can place an order easy. This works for me and i have never paid a cent on advertising except $4.99 a month for a website. Enter a local contest and invite friends and family to cheer you on. They will see how well your cake stacks up to the big dogs. Make it your best creation.

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j-pal Posted 28 Jan 2009 , 5:43pm
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I tried most types of advertising at least once.

I had a phone book add - hated it. When people called because they found me in the phonebook, they were usually just price shopping. If I wasn't the cheapest, they'd move on, but only after asking 14 hundred questions and taking up tons of time! I did an unofficial "survey" when meeting with the brides... there was a question on my contract that asked where they heard about me... I had maybe 2 that came to me because of the phone add.

Bridal shows - fantastic. They're great for getting your product out there and getting seen by other vendors.

Internet - Website, facebook, myspace... all of those will help. I don't know where you are, but where I was, there were different area websites. I was on "The Knot" and a number of other websites/forums that were not local, as well.

Networking - Getting to know the area vendors was great!! When a customer comes in and says, "My venue, florist and photographer all highly recommend you," then the cake is already sold. In addition, we were part of 2 associations that specifically got together to network with other area vendors.

Brochures and flyers - helps at wedding shows, but not so much for just leaving hanging around or posted in different places. (just my experience)

Word of mouth - Priceless! It takes awhile, but word of mouth advertising is one of the best and cheapest method of getting word out.

Charity functions - If you have the opportunity to donate occasionally to a high-end charity event, it gets your work seen by a lot of people. Be careful, though, it could put you in line for getting multitudes of calls from a lot of places looking for free cakes for everything. I always did our church and school functions for free or for a very reduced rate... that's because I chose to. But I didn't necessarily want to be called on for EVERY single fundraiser in town.

Good luck!

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jamiekwebb Posted 28 Jan 2009 , 6:07pm
post #25 of 30

Just a question, but what exactly does it take to get licensed?

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sweetneice Posted 29 Jan 2009 , 12:40am
post #26 of 30

I had to apply for my business license and have an inspection by the health department

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jamiekwebb Posted 29 Jan 2009 , 3:09am
post #27 of 30

How bad was the inspection to go through? What all did you have to do? I am a pretty clean person anyway... just wondering. (VERY CLEAN PERSON actually)

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sweetneice Posted 29 Jan 2009 , 3:36am
post #28 of 30

Mine wasnt bad at all, I'm a cleany too! I just had to make to make sure my cake items were in a seperate area in my fridge, cabinets, etc, I had the proper thermometer in my freezer, That there were no pets, no bugs, shatterproof bulbs, etc. It only took her 15 mins and she was finished. I sweated for nothing! Contact your local health department.

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jamiekwebb Posted 29 Jan 2009 , 3:46am
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Well, that doesn't sound to bad. I don't have any pets, me freezer has a built in thermometer, I have a whole seperat cabinet just for cake stuff. Shatterproof bulbs? Like light bulbs? Huh, now that might be a problem since I have a chandelier (candle shaped bulbs) and can lights (flood bulbs). Hmm I will have to check on all of that. Can't find a number for my local HD though. I have looked the internet over and all I get is the department of health medical division.

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sweetneice Posted 29 Jan 2009 , 3:54am
post #30 of 30

They may be able to give you the right number. Just tell them you are looking for the health department's number and chances are they recieve the same call plenty of times and have the number on hand. Good Luck!

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