Hi everyone,
I have been offered an opportunity to become a legal bakery but I wanted to discuss it with y'all first. The other day I took a cake to work and everyone loved it. One of the nurses loved it so much that she came to me and wanted us to go into business together. She said we could start off with a specialty cake shop and work our way up to something like an English Tea House. She even wants to call it "Lazy Susan's Tea House".
Now, I would LOVE to have my own business but here's the catch. I told her that I had absolutely NO MONEY to put in to a business. She told me not to worry about it. She said that she would fund it and I would provide the talent and then we would split the profits 50/50.
Before I do this I want y'alls opinions and advice. Does this sound like a good thing? Would you do it? Should I do it? Is 50/50 fair? She's going to call me today so we can get together and discuss it.
Please help! Thanks,
Lazy_Susan
You definitely need to get with an attorney that specializes in the formation of businesses. This needs to be a lawyer separate from hers. They will be able to give you specifics of what you need to know for this type of arrangement.
Is she going to be an active member of the business or just a silent partener? Because I would think eventually you would get tired of doing all the work for 50% of the profits but I have no business sense and would get my bil the financial wizard to help me if I ever wanted a business! 
I agree with dodibug and the others. Make sure you get it in writing. There are a TON of details to be discussed with a lawyer in that arrangement.
And a lot of numbers to be crunched- She gets 50% of the total sales? Until the initial investment is paid off? And after that?
What kind of money is she willing to invest? Will this cover what you really need to do it the way you want? Start-up costs, marketing & advertising, overhead, etc?
What part will she play in making business decisions? Will you be able to set your own pricing?
These are just a few off the top of my head...
Wow! Thanks everyone. I have a lot to think about.
Actually 50/50 of the profits is a great deal. She is taking all the financial risk. If you make a go of it, she wins. If you don't, she stands to lose a great deal of money but you don't lose anything except your time. Definitely get a laywer and figure out a business plan so you know how much money she will have to invest. You also need to make sure there is a buy out clause so that if she decides she wants out you get first dibbs on buying her out.
The buy-out clause is probably the most important. What if she wants out and you don't have the money to buy out her half? what if she sells her half to someone that you can't work with?
Also how will decisions be made? If it's a 50/50 deal, then what do you do when there is a conflict in opinion? What if you need a specific piece of equipment but she doens't think it's important and won't ok the money for it (and vice versa)? When I set up the LLC, my attorney talked at length about the problems of 50/50 partnerships .... he advised STRONGLY that someone had to be in charge and have the final say. (WHich is why my LLC is sole-owner LLC .....ME!!!!!!!!!!)
Does she want the "fun" of saying she owns a business or will she consider her investment a "loan" with a profitable interest rate / return for her investment? When does her financial contribution not trump your labor and talent contribution (i.e. you want to avoid the "well, it's MY money we're using!" conversation).
Attorney ..... go directly to an attorney. Do not pass Go ... Do not collect $200 ..... just go straight to your attorney.
And one more thing .... does she REALLY understand how much it takes to open up a legal bakery /kitchen? It's not like running to sears and buying a double oven and a refrigerator. Be sure she understands you're talking about quite a few (QUITE a few!) thousand (THOUSAND!) dollars.
Thank you for all your comments. I think I might be changing my mind about this whole thing. I would love to have my own cake business one day but I don't think this is the way to get it. Perhaps I will look in to renting a kitchen some place to get my license. Y'all gave me a lot to think about and I think I want it to be just me.
Thanks again
Indydebi is way to wise! Listen to her.
Yes and I want to add, people don't have a clue how many hours go into running/working a bakery/cake shop. If I had a financial partner there would be very little money left over to split. But there would be a lot of work to be done.
And the failure rate is enormously high for this type of business. Because you can bake and decorate a cake doesn't mean you can run a business. Of course I hope you'd be very successful!!
Most people think, "cake decorating is fun! I'll start a business". In the beginning after they stick all their money into the bakery, they find out it is 24/7 and the pay is not that great... Main reason for business failure!
Anyone who owns a real bakery will tell you it is hard, demanding work and in order to be successful it has to become your lifestyle.
I have had a full line bakery, a Tearoom, wholesale bakery business and currently just cakes. Why? because the other components of the business just didn't work out. giggle
mpc
Now I know for sure that I don't want to do this!! She called my cell phone while I was sleeping (I work nights so I sleep during the day) and left a message telling me that she was at her sister's house having a party. She wanted to know if I would make a cake and bring it over 
She said that way her family could get a taste of our product!
- 1. She didn't mention anything about paying me for the cake
2. I'm not going to drop what I'm doing to make a cake and rush it to her party
3. I need more notice and more time than just a couple of hours to make a cake
4. She obviously has no idea what it takes to make a cake
Sheeeeesh!
.....she was at her sister's house having a party. She wanted to know if I would make a cake and bring it over .... that way her family could get a taste of our product!.....
Good call!
I will always give credit to my neighbor who gave me the kick in the butt to take this biz to a new level. However, she dropped out of the idea very quickly when she realized it was a lot more than the "fun" part of organizing and cooking. She didn't factor in the price research among suppliers, talking with suppliers, buying supplies, maintaining a website, advertising, responding to inquiries, doing the samplings, buying equipment, creating the order forms, the legalities to set it all up, having to buy a van and commercial insurance and keep track of sales and write a check for sales tax and keep records and files and .... well, you know ... the BUSINESS side of things!
She just thought it would be "fun" to plan some parties! (bat eyelashes and bob head left to right like an empty headed blonde!).
She is my biggest supporter and even works for me at weddings once in awhile. But she had no real idea.....
I'm very happy I discussed this with y'all first. I feel much better now
Hopefully you will get to open your own shop soon.
Hopefully you will get to open your own shop soon.
Thank you very much! I hope so too. I would like to have just a Specialty Shop like what Duff has. I don't want the type of bakery where customers walk in to buy a cake or pastries out of a case. Not that there is anything wrong with that. It's just not what I think I would enjoy.
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