Nervous But Maybe I Just Need To Do It..

Business By trinijulie Updated 4 Feb 2010 , 6:23pm by TitiaM

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trinijulie Posted 30 Jan 2010 , 5:45pm
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I'm not sure what to do. I've been baking/decorating cakes for a little over a year. It started off with me wanting a cake for my daughters first birthday--a friend of mine got one from the ONLY bakery here in town that did fondant work and she paid close to $200.00 for it. We went to her party and I saw the cake (beautiful) but I thought to myself I could do this. I took the Wilton classes at my local Michaels and with the help of ALOT of kind and very helpful folks on here and on Youtube was able to make my daughter a Ladybug cake for her 1st Birthday--looking back on the cake now I can see how lop sided and amateurish it was, but I thought I did the best job EVER when I was done with it icon_smile.gif

I truly enjoy decorating cakes and have been hooked ever since. I work full time and usually do about 2-3 cakes a weekend--I don't take on anymore, there's just no way I could do it. Well hubby is complaining that all of my cake stuff is taking over the house-- it really is getting ridiculous--not to mention the phone calls and emails from friends- and friends of friends seems to be flying in. I never imagined it would get to this level. I literally have to say no alot of times. I was just doing it out of my kitchen and no longer feel comfortable doing this.

I went looking around for a shared commercial kitchen with no luck,, but while doing so I meet the nicest girl that opend a Gourmet Cupcake store a couple of months back ( I see her ads on Tv and in the neighbourhood paper) she said that business is booming for her and that I should just lease my own space and turn it into a kitchen, that's what she did when the cupcakes where taking over her home. She gave me the phone number to her leasing agent, I called him up and now I have have a space-- should I choose to lease it. I'm excited, nervous you name it! My husband and close friends are telling me to go for it. The space is pretty cheap and I've been looking around online for kitchen equipment and the prices weren't too bad. I also have a TON of stuff that i've pruched in the past year and a half.

I spoke with someone at the health department and got alot of information as to the steps that needs to be taken and I also have a very close friend that owns a couple of restaurants here in town that has been very helpful too. I'm still very nervous about all of this and it seems to be happening at a very fast pace. KWIM ??...

22 replies
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bengals Posted 30 Jan 2010 , 5:56pm
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sounds like fate to me, you only live once take the risk and go for it icon_biggrin.gif

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cylstrial Posted 30 Jan 2010 , 6:14pm
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That sounds awesome! Just stay focused and make sure that it makes financial sense.

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Renaejrk Posted 30 Jan 2010 , 6:16pm
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Sounds like everything is falling into place! I would go for it! Of course just make sure all your ducks are in a row and all the official paperwork is taken care of, but other than that this sounds like a great idea!

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revel Posted 30 Jan 2010 , 6:37pm
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Your cakes are fabulous! If only i was half as good! If i were in you position i'd go for it!

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trinijulie Posted 30 Jan 2010 , 6:47pm
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Thanks for the positive vibes guys icon_smile.gif One think I know for sure is that I will have to start REALLY charging for the cakes I make, I have ppl give me enough money to cover supplies-- if I do quote over, it's not by much at all. And I still get some friends of friends who haggle with me and say "such and such said you were really cheap" Well hello!! I am. I already know pricing is going to be the hardest part of all of this for me-- I still have soooo much to learn,, I guess I still feel NEW to all of this and I feel bad highballing the price. As a matter a fact I had a friend tell me " You cannot exptect to charge what a PROFESSIONAL baker would charge-- you just started doing cakes" Oh yes she did... icon_smile.gif

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snarkybaker Posted 30 Jan 2010 , 6:48pm
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If you post on this board, you are going to get an awful lot of " Hooray for you...follow your dream" type advice, but the truth of the matter is that you need to sit down and write a business plan. Do the math!!! Do the math!!! Do the math!!!

You can literally bankrupt yourself and ruin your family's finances for a good decade if you jump before you do the math and know what you are getting into.

95% of women-owned small businesses fail in the first 3 yrs. Even the venerable IndyDebi ended up closing her business ( which the SBA would consider a business "failure") inside that window. Now she was smart, and had a solid Plan B. Do you?

Unless you can spend about 70 plus hours running a business for the first couple of years, you really should either try to find a job decorating, or stay small enough to work out of your house. I'll bet money the cupcake baker is broke in 18 months. This isn't an easy business and no one here is doing you any favors by encouraging you without telling you to spend your time and money to open a food service business. The hours suck and the money isn't all that and a bag of chips for 95% of people in the industry.

Get a SCORE mentor, write up a business plan, try to get a bank loan for your business, and get back to me in 6 months. Then I can tell you whether or not opening a retail bakery is a good idea.

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trinijulie Posted 30 Jan 2010 , 7:10pm
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Snarkybaker- thank you for your advice, definitly food for thought icon_smile.gif I seriously cannot keep doing it out of my house I just have way to my STUFF-- baking pans, airbursh machine, edible printer and the list just goes on and on.. I don't have anywhere to store all the cake related tools and such that keep accumulating and NEED. I don't want a store front,, I'll just be renting this space to bake, store my stuff and that's it. I was going to pull from savings to pay for the Oven and Fridge ect.

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Renaejrk Posted 30 Jan 2010 , 8:02pm
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Snarkybaker - You are so right! So many of us on here that don't run a business like that get excited for someone with what seems to be a great opportunity - LOL. There is so much involved and you really have to make sure you KNOW what you are getting into!

OP - I hope you are able to do what you love and make money at it! I think the rental space/kitchen opportunity is definitely a much safer venture than having a storefront bakery - that is what I'm looking into. But like Snarkybaker said - make sure you really do the math & all the research so you don't get into this and just break even! That would really stink to go to all the trouble and then have to shut it down because you are not making any profit - or worse - losing money! Don't be discouraged though, just make sure you have ALL the facts before you decide. Good luck and I hope everything works out well for you!

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indydebi Posted 30 Jan 2010 , 8:36pm
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Originally Posted by trinijulie

I don't want a store front,, I'll just be renting this space to bake, store my stuff and that's it

The process and the costs are pretty much the same.

I didn't have a store front, per se. If I had turned it into a full retail shop, it would have cost me a couple of display cases and that's it. Otherwise the expense to set up a full kitchen and the overhead is the very same, whether it's by appt only or a retail bakery shop.

In the food industry, the idea of "just a little" business or a little space is almost an unreasonable assumption. The licensing and equipment costs the same, no matter how your run the front part of the business (appt only or retail).

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loriemoms Posted 30 Jan 2010 , 10:03pm
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I know its a big dream and I dont want to burst your bubble, but I agree, you need to sit down and do the math and figure out if this really what you want. Just because you dont have the room is not a good reason to go into a shop, either just a back room or a full retail shop. Like Deb said, its almost the same cost. And it isn't just an oven and a sink It is thousands and thousands and hundreds of thousands of dollars to get set up. Are you ready to put yourself in debt for 100-300 thousand dollars? Just to renovate a space to code can you run 100K, no including extras. and WHY do you want to do this? You aren't going to make any money the first few year. I just completed my fourth year, entering my fifth year now and this was the FIRST year I made ANY money. And it wasn't very much. I would have made more working as a cake decorator at Walmart, and if I counted how many hours I worked, my hourly rate would have been less then mim rage! So make sure you have a good hunk of savings to live on during the first few years. And like someone pointed out, make sure you are wiling to work a LOT of hours! During non wedding season, I work 50-60 hours a week,. During wedding season, its double that. I take a week off for July fourth and for christmas. Thats it. My goal this year is to have Sundays off. (I dont get any days off now) There isn't just baking to do with a business, there is paper work, customer service, payroll, building maintance, networking, planning, banking, and more!

Again, I dont want you to lose site of what you want, but man once you sign that lease, you are locked in and can financally ruin yourself in a very short time if you are not prepared for what lies ahead!

Good luck!

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AmandaLP Posted 31 Jan 2010 , 2:29am
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Since you have a contact, why not talk with the woman who opened her cupcake shop? See if you can work out an arrangement with her to sell custom cakes? She gets more business, since she can sell cakes along with the cupcakes, and you get to use her facilities.

Or, see if there is a bakery hiring for custom cake work, and do that for a bit.

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loriemoms Posted 31 Jan 2010 , 2:38am
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Originally Posted by AmandaLP

Since you have a contact, why not talk with the woman who opened her cupcake shop? See if you can work out an arrangement with her to sell custom cakes? She gets more business, since she can sell cakes along with the cupcakes, and you get to use her facilities.

Or, see if there is a bakery hiring for custom cake work, and do that for a bit.

You know that is a great idea!!

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cheatize Posted 31 Jan 2010 , 2:48am
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My concern is that you aren't charging for your cakes now- just the cost of supplies, correct? What happens to all those cake requests when you start charging? Will all those people disappear? Shoot, if I knew someone who would make me a cake just for the cost of supplies, I'd call them all the time. LOL

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mamawrobin Posted 31 Jan 2010 , 2:50am
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I agree that opening your own shop just because you have too much stuff isn't a good reason to do so. I'm remember a cc member not too very long ago (sorry I can't remember who she is) that leased a building, spent money renovating, got licensed, etc. then ran out of money and wasn't able to open after all. Just be careful to have all your "ducks in a row" and "do the math" as the others have said.

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mkolmar Posted 31 Jan 2010 , 3:16am
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Sounds like a great opportunity, but I'm gonna jump on board with the other members who say to crunch your numbers first This is a HUGE life change if you decide to go through with it. My DH owns a business. We thought he was busy before the business...HA HA HA HA HA. He has absolutely no time now. For the past 6 years he has more than quadrupled his clients from his first year of business. He works a MINIMUM of 80 hours a week. Since this past November he has worked over 100 hours a week. It's stressful in more ways than one. We have 4 little kids who hardly ever get to see him. My DH is at the point he's willing to give it all away actually and start doing something different, but can't because he has a family to support.
Since his business has started 2 of his friends have outgrown their houses and opened up a cheaper leased locations. They both went under in less than 3 years. Their finances are now horrid and they pretty much are screwed for awhile. If they would have crunched numbers and did a business plan it might have helped, but who knows they still could have failed either way. It's a crap shoot some time with business. You can be booming one day and the next something happens and you are in a dry spell for a short/long time. To prepare for the unexpected you need to have over a years worth of money saved to get you through the tough times. Honestly, most businesses don't make any money their first year and often more years after that also.

I don't want to scare you from an opportunity but I could go on and on about all the negatives and what if's of owning your own business Just make sure you have a business mind set also before considering opening.

Good luck in whatever you choose to do.

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sugarandslice Posted 31 Jan 2010 , 3:52am
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As someone else alluded: you don't even know if there is a market for your cakes at full price. Sure, you're over-booked for your "costs-only" discount cakes, but you said yourself that some people were baulking at paying any more than cost - perhaps you need to think about whether you're in a market which will sustain properly-priced cakes. And it's not just a matter of covering your costs plus paying yourself an hourly rate (which it is at home); you need to think about rent, taxes, loan repayments, insurances (yes, more than one!), marketing etc etc the list goes on.

It sounds like you have a small family; are you really at the point of wanting to be out of the house for the number of hours you're going to need to put in?

I'm in a similar position to you in that I do cakes from home and have a small family. However, I do charge full-price for my cakes and make a little money towards the family income.

I did a night course in running a small business (highly recommend you do this) and the information I got there was invaluable. In doing the course I realised that I am not in a position to expand to a set-up outside my home until my kids are older and I can give it the time it will take to make it successful.

Perhaps consider building a shed in your back yard or garage to store your cake stuff

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Mensch Posted 31 Jan 2010 , 8:33am
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I posted this in another thread. There are most likely things I have forgotten/repressed, so you other bakery/storefront owners chime in.

These are just overhead costs, not even counting any baking ingredients.

monthly costs (some of these are once a year, or even just 2-3 times a year):

rent, insurance, loan payments, electricity, telephone (land-line + cell), broadband, website costs, cleaning supplies (floor cleaner, glass cleaner, universal cleaner, paper towels, dish soap, hand soap, hand disinfectant, dish detergent/drying detergent for dishwasher, toilet paper, toilet cleaner, mop, broom, dustpan, laundry detergent), credit card machine + fees, company credit card fees, assorted bank fees, sidewalk salt, alarm system costs, accountant/bookkeeping, garbage collection, office supplies (paper, pens, paper clips, staples, post-its, scissors, mat knife, paper rolls for cash register/credit card machine, ribbon for cake/pastry boxes, stamps, envelopes), edible image ink cartridges/sheets, packaging (cake/pastry boxes in different sizes, bread bags etc), cost for yearly HD inspection, garbage bags, advertising/marketing (business cards, brochures, website), bridal show fees, fees from city planning office for sidewalk signs, telephone catalog ad, take-away cups/lids for coffee drinks, light bulbs

basic start-up:

purchase of premises, renovating costs (plumber, electrician, carpenters etc), oven, ventilation system, telephones, refrigerators (3 are required); including a special 'dry' fridge for fondant cakes, freezers (2 are required), 2 hand sinks, cash register, credit card machine, double sink, commercial dishwasher, commercial espresso machine (2-group), commercial coffee mill, take-away cups/lids for coffee drinks, 20 qt standing mixer, safe, broadband, locksmith, alarm system, computer, printer, scanner, edible image software and printer, website costs, digital camera, phones (both cell and regular), office supplies (stapler, staples, paper, pens, paper rolls for register/CC machine, ribbon for cake/pastry boxes, stamps, envelopes), food handlers license (for me and all employees), cost for HD inspection, display cases, trays to display product, SS work bench (2½ meters long, special order), trash cans, garbage bags, recycling bins, marketing materials (business cards, brochures, magazine ads, website), work chairs (pony chairs, 2), counters, shelves, AC unit, rolling rack, microwave, hot plate, sidewalk signs (plus fees from planning office), signs on building (plus fees from planning office), flags, packaging (cake/pastry boxes in different sizes, bread bags, etc), telephone catalog, all different kinds of bowls and spatulas etc, hand mixer, storage containers, food processor, lighting fixtures, light bulbs, telephone catalog ad,

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trinijulie Posted 31 Jan 2010 , 2:28pm
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Thank you ALL so much! I got some very useful advice and many of you brought up some points and different angles I hadn't even thought about. I'm going over to the health dept to meet with someone (someone gave me a specific person to get in contact with) to go over things in dept. I facebooked the chick with the Cupcake shop last night, just to ask about her start up cost and such (figured I'd ask her-- the worse she could say is it's none of your business) She said she spent less than $4000--she got alot of her stuff from craigslist and as I knew from before her rent is $450 a month. I will be paying $275 a month for my space--honestly I think cost wise I would break even, if not less than if I rented someone elses' kitchen at $20 a hour. Also, she said I'd have to get a plummer to install the sink and electrictician (both of which I have already in the family) and that the other stuff-- for our state was so cheap and easy she couldn't even believe it! She's moved here fro,m California (our state is Kentucky) I will not have to take out a small business loan to do this, I will be using cash .. Really, I would like to make cakes LEGALLY and sell them for what i know they're worth, my state does not allow that from your home kitchen, my home owners association WILL NEVER allow me to put up something in my backyard and even if they did it would not fly with my husband lol,lol. We would totally buy another house if we could convert the Basement to a kitchen for me to make cakes but then we would have to move downtown and that wouldn't work out for our family either. The Safest thing I feel is for me to create my own kitchen, I might even be willing to rent shop time to another local at home baker in the same position as I am ( pay it forward icon_smile.gif. I'll keep you guys posted. Thank each and everyone of you for your advice..

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cakesweetiecake Posted 4 Feb 2010 , 5:38pm
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Lots of great advice given in this thread. Let us know how it goes.

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sullymel13 Posted 4 Feb 2010 , 6:01pm
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I think everybody has had some great advice. I haven't done too many cakes, but already have that twinge to want to go into business. The first thing I would do is to start charging double or triple of what you are charging now (at cost). See if the orders are still flying in! I'm sure you have the talent and the drive, but like everyone else has said, there are so many other factors! Make sure you have a market before you start investing your cash!

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tiggy2 Posted 4 Feb 2010 , 6:09pm
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Whatever you do, don't sign a long term lease until you know there is market for your cakes at full price.

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TitiaM Posted 4 Feb 2010 , 6:23pm
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I would still do a business plan. I have the possibility of purchasing a building which is partially rented. The rent of the two other spaces would cover the mortgage payments. The third, empty space is set up for a kitchen--plumbing, electrical and hood/vent in place. It sounds like a good deal, but I'm still working on a business plan. (actually two, one for the cake business, and one for the rentals.) It has been an eye opening experience, and will give you a better idea of whether it will work or not. I'm not going to move forward with it until I've finished the business plans. (of course, my business major hubby would have major fits if I did! icon_wink.gif )

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