What Was Your Initial Start-Up Costs?

Business By simplysweet72740 Updated 3 Jan 2011 , 7:09pm by butterfly831915

simplysweet72740 Cake Central Cake Decorator Profile
simplysweet72740 Posted 3 Jan 2011 , 4:44am
post #1 of 9

I am interested in what your start-up costs and amounts were? I mean every little detail, from tip to building. I have to request an amount for the finance company, and every time I do the math I come up with a new number. If you arent comfortable giving me your totals, any suggestions would be appreciated. My building is 1500 sq ft. $400 a month in rent, I have to do the upkeep and install everything. All I need is financing. I have NO capital, so be honest with me folks what do you think my chances are? I do want to throw in I am going through a company that actually came to me because the county I live in used thier stimulus money to promote business and only a couple places have used them. Again THANK YOU and any and all suggestions are appreciated!!

8 replies
indydebi Cake Central Cake Decorator Profile
indydebi Posted 3 Jan 2011 , 5:25am
post #2 of 9

We can't really tell you. You need to do a business plan which will give you those numbers.

New or used equipment? Single or double oven? walk in or stand along 'frig / freezer? How many refrigerators? How many counters, storage shelves? Are you doing the build out yourself or hiring it done? What's the estimate from your contractor? Are they familiar with Health Dept Codes and the types of floors, walls and ceilings the HD will approve?

It cost me between $75,000 and $100,000 to open my shop. granted, I was a caterer and I had a few pieces of equipment that you won't need. The build out was quoted at $12k-$15k and came in at $28K. the "10-12 days" to do the build out went to 8-10 weeks. The architect fees (floor plans must be approved by an architect before a building permit can be issued in my state) were $600. The kitchen designer (who did not charge me her design fee since I bought the equipment from her) didn't factor in the grease trap, which was an add'l $1000 that wasn't budgeted.

Some people got started with under $5000. Some spent over $250,000. The range is infinite and it all depends on waht you're going to be doing.

Do the business plan. You've got a great rent rate. I paid $1500 for 1100 sq ft. in a small strip mall.

scp1127 Cake Central Cake Decorator Profile
scp1127 Posted 3 Jan 2011 , 9:54am
post #3 of 9

Have you gone to the health dept, planning commission, engineering dept, etc, to find out what is required? Start there. Get pricing from restaurant suppliers, contractors, etc.. Do you have any business experience? If you don't, and still want to pursue this, your next stop should be an accountant. You really need to know how to run a business or all the great cakes will not keep you open. You are talking about a storefront. If this fails, do you have to pay it back? Are you putting your house up as collateral? You did say it was a finance company.

You asked for an honest opinion on your chances. With no experience in this economy, not good. If you have run a business and are familiar with taxes, employees, fixed and variable costs, marketing, etc., then your chances are better. Just don't jeopardize your house, credit score, or future earnings unless you really know what you are doing.

And my experience was the same as Debi's... twice the cost and twice as long. My husband is a builder/developer as a second trade so we had a few less hoops to jump through. We did our own construction and it was still about $25,000. Our quotes were more than double that price, so it would have been about $50,000 if we did not have contractor's licenses.

cakenovice2010 Cake Central Cake Decorator Profile
cakenovice2010 Posted 3 Jan 2011 , 3:01pm
post #4 of 9

When I opened a retail store we purchased the building. I rented out the two top floors but the lower part was mine and about 2000 sq feet.

Someone told me, whatever you think you will need - double that and that's the real figure of your start up cost and they were pretty much right.

By the time I bought displays/supplies/inventory, fixed up the building, decorated, advertised signage etc.. it was about $100k. Yearly maintenance on the building including mortgage/damages/insurance was $36k just to carry the building and my mortgage payment was about the same as your rent payment.

Granted you won't be dealing with tenants but if you add up the total cost of displays, equipment, decor, furniture, paint, plumbing, ingredients etc.. I would cushion it with some extra about 6 months in wages to give you time to build up your client base or carry you through a slow season if needed.

I know it's really frustrating because you want to get started right away but take the time to do the business plan and continue to work on it for the most success. Very exciting times! Good luck icon_smile.gif

kelleym Cake Central Cake Decorator Profile
kelleym Posted 3 Jan 2011 , 3:32pm
post #5 of 9

I have NO capital, so be honest with me folks what do you think my chances are?

I don't know how it works with "free" stimulus money, but based on my knowledge of how banks are operating right now, if this were a loan, you would not get it. A bank doesn't want to be the one holding all the risk, especially in a risky business venture like this (and yes, a food business is a risky venture). A bank would require you to front substantial capital so that you have some "skin in the game".

jason_kraft Cake Central Cake Decorator Profile
jason_kraft Posted 3 Jan 2011 , 5:12pm
post #6 of 9

If you start your business without a retail storefront and stick to a commercial kitchen rental you can cut startup costs considerably. We paid less than $5K to start our business (in the SF bay area, one of the most expensive areas in the country).

If your business does well out of the rented commercial kitchen, you can use the profits to help pay for building out an actual shop.

simplysweet72740 Cake Central Cake Decorator Profile
simplysweet72740 Posted 3 Jan 2011 , 6:20pm
post #7 of 9

I really appreciate all your honest feedback!! I am seriously thinking about this, and have been planning it for 2 years now. I currently rent a place, and thought maybe it was time to expand! But just like you all said its risky and maybe I should just continue to rent!

Kaylani Cake Central Cake Decorator Profile
Kaylani Posted 3 Jan 2011 , 6:46pm
post #8 of 9

$400 is a great rent for 1500 square feet depending on where you live. Would you be in a good location? Where are you located?

The reason I am asking is that you may be located in an area where start up costs would be lower than quoted. The flip side of that is that your area might not be able to support a full time cake shop.

Business plans can be daunting if you have not prepared one before. Tory Johnson has a great website sparkandhustle . com & under resources there is an expert article on one page business plans.

If you are just dipping your toe in the water this would be a great place to start. If it still looks good after you complete it you can do a full blown plan.

I hope it works out! thumbs_up.gif

butterfly831915 Cake Central Cake Decorator Profile
butterfly831915 Posted 3 Jan 2011 , 7:09pm
post #9 of 9

Congrats on the possibility of your own shop!! What an awesome chance you have. I hope after you look at the business plan that you can make it work!!

Quote by @%username% on %date%