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Making a profit

post #1 of 71
8/25/08 at 9:08am
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Man. I've been licensed this year so keeping more careful records about profit and spending.

I'm finding that although I feel like I'm charging enough money, my profit levels really aren't what I'd like to see for the amount of work I put into the cakes. Especially once I count in insurance and other expenses...it goes lower...by the end of the year once I count in mileage and internet access and the laptop I just bought, I probably won't have much profit at all! (Good for taxes I guess...)

How can this be? I know I end up getting alot of party cakes, which average $100-$200 a pop, rather than weddings which can be $500 and up. But like for instance, I accidentally combined July and August figures since I went on vacation but...just did those and I got $1482.00 in income, but ended up spending $963.62 in costs!!!! (That counts my quarterly insurance payment). I know its probably uncouth to share that, but its different every month (and that was over two months but I was away for two weeks of it) but I want to know if I'm doing something wrong?!

How do you guys make a living anyway, those of you, like Indydebi? How do you pay your people and your rent and put food on your table?

I don't mind too much as this is "extra money" for us, not a way of life... but I sit back and look at the numbers and I'm like..."Man...I thought I was doing better than this."

I did have a really good month but I got some wedding payments during that month. Next month should be decent because I have a big wedding coming up then.

I guess my problem is I don't get many weddings?
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post #2 of 71
8/25/08 at 9:36am
I understand exactly what you are saying. I stay fairly busy and just hired an employee because of that. I am curious what people have to say about this topic. I think the first year is tougher because you spend much more money getting started. I definately do not spend 1/5 of the money I needed six months ago. Anyway, I am wondering the same thing right now.
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post #3 of 71
8/25/08 at 1:19pm
Any business advisor will tell you not to expect a profit for at least three years.
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post #4 of 71
8/25/08 at 1:32pm
Don't expect to make any money the first few years..shoot,if you are breaking even, you are doing great! (my first year I had a loss of over $5000.00 and my accountant said that was a low amount!) As you build up materials like cutters and your laptop and things like that, and build up your skills (you will get faster at doing the cakes) and find resources for materials that are cheaper and get more cake orders that will allow you to buy in bulk, you will do much better!!!! I just did my third quarter stuff and I was shocked to see I had spent 30K this year on materials, insurance, equipment, etc....I turned to my DH and said Gads, where did it go?? It does add up!!! I doubt this is something you get rich on, you just gotta love it I guess.
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post #5 of 71
8/25/08 at 1:35pm
YOu know I've heard about not making a profit in teh first 3 years too, and as hard as that is to swallow - it makes sense.

When you start out, you have TONS of start-up costs, still building the customer base, and testing out the market.
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post #6 of 71
8/25/08 at 1:40pm
Quote:
Originally Posted by ccr03

YOu know I've heard about not making a profit in teh first 3 years too, and as hard as that is to swallow - it makes sense.

When you start out, you have TONS of start-up costs, still building the customer base, and testing out the market.



Yeah, but then you discover you don't have big enough equipment and you have to buy a larger mixer and hire someone to come help...

I think it takes 20 years to make a profit..I am curious, Hey IndyDeb, you making a profit?
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post #7 of 71
8/25/08 at 1:46pm
If your doing this out of your house the three year thing doesn't exist. I would work on to see if you can cut the cost of recipes, or raise prices. It's the evil of business cost of manufacturing VS the selling price of the product.

Mike
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post #8 of 71
8/25/08 at 1:49pm
Quote:
Originally Posted by Mike1394

If your doing this out of your house the three year thing doesn't exist. I would work on to see if you can cut the cost of recipes, or raise prices. It's the evil of business cost of manufacturing VS the selling price of the product.

Mike



I am curious why, Mike. Is it because running it from the home is more expensive? Or you dont get the same volume of busiess?
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post #9 of 71
8/25/08 at 1:55pm
Quote:
Originally Posted by loriemoms

Quote:
Originally Posted by Mike1394

If your doing this out of your house the three year thing doesn't exist. I would work on to see if you can cut the cost of recipes, or raise prices. It's the evil of business cost of manufacturing VS the selling price of the product.

Mike



I am curious why, Mike. Is it because running it from the home is more expensive? Or you dont get the same volume of busiess?



Starting from home more than likely it started as a hobby. Not to many wake up one morning, and say I'm going to make pastries for sale. So you already have somewhat of a cliental built up. You have most of the equipment. There is no building to convert over. You will have some costs of converting a house over depending on restrictions. Not compared to an actual bakery though.

Mike
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post #10 of 71
8/25/08 at 2:00pm
So you are saying you would make a profit faster when running it from home? The big drawback from running it from home for me is you have to use a regular oven, instead of a nice big bloget or something, that will bake a ton of cake in an afternoon. So you can't take as many orders. And you can't get a big fridge so you have to buy your eggs by the dozen instead of by case...cant buy flour in bulk, etc. that all adds up no? There are a lot of companies like pfeil and holing that won't give you free shipping if are a resident (not their fault, its because UPS and FedEx etc charge more for delivery to a home then a business)..things lke that. I think its a wash...
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post #11 of 71
8/25/08 at 2:26pm
Quote:
Originally Posted by loriemoms

So you are saying you would make a profit faster when running it from home? The big drawback from running it from home for me is you have to use a regular oven, instead of a nice big bloget or something, that will bake a ton of cake in an afternoon. So you can't take as many orders. And you can't get a big fridge so you have to buy your eggs by the dozen instead of by case...cant buy flour in bulk, etc. that all adds up no? There are a lot of companies like pfeil and holing that won't give you free shipping if are a resident (not their fault, its because UPS and FedEx etc charge more for delivery to a home then a business)..things lke that. I think its a wash...



Now you didn't say HOW MUCH profit you wanted to make LOLOL. No you can't do volume from a home kitchen. Remember though the more volume you have, the more expense you have. To open from an exsisting building is going to cost 100G minimum. To open from home is going to cost 1G. That is a lot of cake to make up that difference.

I buy my eggs from Sam's for .11 a piece in a 1/2 case.

Mike
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post #12 of 71
8/25/08 at 2:43pm
I would have to respectfully disagree with you Mike.

I am at home but because of local regulations I had to have the same equipment and requirements as any other bakery in town so we built it. I am in debt and I hate the stress of the bills but there was no other way to go if I wanted this business.

I didn't have a steady clientele and still don't. Sometimes I am swamped, other times nothing.

I am thinking about an inexpensive place to rent because at home there is a major lack of visibility, there are no walk in customers, etc.

I think the three year thing can apply depending on how much you had to invest, not whether you are home or not.

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post #13 of 71
8/25/08 at 2:47pm
I am just learning how it is possible to make more money than I at one time could have imagined...and to spend more money than I ever imagined I could in 1 month.
Tastee Bakes

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Tastee Bakes

Speak ill of no man, but speak all the good you know of everybody
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post #14 of 71
8/25/08 at 2:54pm
Quote:
Originally Posted by Lenette

I would have to respectfully disagree with you Mike.

I am at home but because of local regulations I had to have the same equipment and requirements as any other bakery in town so we built it. I am in debt and I hate the stress of the bills but there was no other way to go if I wanted this business.

I didn't have a steady clientele and still don't. Sometimes I am swamped, other times nothing.

I am thinking about an inexpensive place to rent because at home there is a major lack of visibility, there are no walk in customers, etc.

I think the three year thing can apply depending on how much you had to invest, not whether you are home or not.

icon_smile.gif



I'm curious as to what your making. Now this is going with my experience of MI regs. I'm not going to be producing anything that is fried. I also won't be having the high BTU of a commercial oven. Yes if your having expenses like that your costs are going to be roughly the same. That scenario is not the norm though.

Mike
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post #15 of 71
8/25/08 at 3:05pm
I think it just depends on your area. I had to have a totally separate space, all commercial equipment.

I make cakes and cookies primarily, cheesecakes and pies. I don't have equipment to fry, I don't even have a cooktop or stove because I would have had to buy a hood and those things are super expensive!

Maybe in other places you can have home appliances, that would have been nice! icon_rolleyes.gif

I think it will take me 3-5 to really show a profit especially if the economy doesn't improve for a while. icon_wink.gif
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