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Making a profit - Page 4

post #46 of 71
this is a great thread!

indydebi, you have been my role model for a while now.
you have made a great point in your post. I have been wanting to open up my little bakery for a while now. I'm a single mom of 2 kids barely making ends meet and I do cakes on the side out of my kitchen at home. I need the extra cash and I enjoy every minute of cake making. My family is pushing me to open up a place, but with what and who's money?

Don't get upset. i'm one of those property managers that you don't like so much. My boss builds the warehouse and offices and rents them out. I manage them.
business has been catastrofic, and we have lost a lot of tenants. there are also many of them that cannot pay their rent and I'm the one who has to harrass them for collections. My heart goes out to these people who are working their patootie off to make an honest living.
I HATE MY JOB!!! but it pays my bills. I'm the girl who wants to be on the other side someday. with my own little bakery shop.

I wold love to work for someone in a bakery as an assistant, (I would be a terrific help in your bakery)but that doesn't pay very well and I wouldn't be able to support my kids and my mortgage.

After reading your post I think my fear of opening one up has sunk in even deeper. But I really do thank you for the eye opener. Now I know what to expect and what to plan for.
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post #47 of 71
I just started selling cakes on the side less than a year ago. I hate the fact that I don't have a "legal" kitchen in my home. So I'm taking the plunge. I am trying to get a business loan, and if that doesn't work, we will try to get a line of credit against our home.
My "steady" income (hopefully) will be teaching "Kids in the Kitchen". I figure that if I have 4 children at a time, I only have to teach 3 groups of kids 4 sets of lessons to cover the minimum payments. Then I can sell cakes and cookies to make profit. You need to find something that "covers" your butt (like Indydebi has a great cookie base to cover rent.. I think that's what I remember), and then the rest of it is awesome.
I had thought about store-front, but here in Calgary the MINIMUM is $7000 a month rent. I had thought about buying a second house to operate out of, and rent out the main floor and convert the basement, but I still would need $4000 a month. And quite frankly, I take one month in the summer and go to my parent's home in Ontario with the kids. And I take a week off at Christmas, and a week off at Spring Break. I tried to justify all of these vacations and still have a separate space, and I just can't.
I want to be around for my kids. I enjoy putting down a cake and snuggling with my DS and DD. If I have to work until 2 in the morning, I really don't want to be driving home to get into bed just to wake up at 7 with the baby. I have a living room that we don't use that is being converted into the playroom, and the playroom will be my new kitchen. So really,I'm not losing any space to the new kitchen, just making use of a room that is "wasted" right now.
i think that what you really want to do and how you do it totally depends on where you are in life. I am fortunate enough that I can have a month with nothing, and not really worry about it. My DH would support me in practically anything I wanted to do. Now, if I wanted to run away and be a circus clown that might be a bit different...
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post #48 of 71
If our business stays the same, we will sell about $750,000 our first year. ( We are in our 8th month), and we are making a profit of about $450 a week. You read that right. We invested over 1/2 million dollars in our store, and if it were in a dopey little savings account we'd be making more money than we are working 80 ish hours a week.

Here's the strange part. We are considered a HUGE success. We can pay our bills as a young food-related business.
Honestly, I would never advise anyone who really NEEDED to make money to go off and start a bakery.

You need to know your costs on everything to the penny before you even think about it. You need to have 3 or 4 months worth of operating capital in reserve. ( For us that means around $100,000)

You don't need to go as big as we did, but even smaller businesses require proper capitalization. Most businesses don't fail becasue of profit issues. Most young businesses fail because of cashflow issues.
Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
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Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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post #49 of 71
wow, the businesses really eat up the profits huh?

in my first year, i had a partner, we sold close to 100K in our first 9 months, out profit was 13K each BEFORE income taxes.

the next year she was gone, you can't blame her...who wants that?...the next 2 years was tough...that's when i got behind on my sales tax payments.

that's when i decided the only way i could make a go, is have no morgage payment or rent for a shop.

that's when i sold my house, paid off the bakery with the equity, took whats left and bought this distressed property i live in now....the little house is barely livable...but it's getting better the more i work on it.

i just wished i was 15 years younger.,,,or had a cyborg body to transplant my brain into (i'm a nerd..lol)

i could raise my price again, i have gone up 50%...not 50 cents...50 cents on a dollar, since i opened...i dunno how much the market will bear around here.

and i'm considered a success too...go figure, i drive a 92 escort with no air conditioning...(it just goes and goes)...because i'm saving every penny to fix my building....oh well, i guess i coulda married that old old rich dude that kept hanging around the shop last year....but too much hair in his ears....and i'm pretty sure if ya marry em ya gotta kiss em.... tapedshut.gificon_sad.gif
post #50 of 71
$100,000.00 with just two people working should make you a mint. My labor costs alone have been in excess of $100,000.00 for the first eight months.

Because our bulding was 100 years old, and I have all new, mostly imported from Europe equipment, my payoff is much higher than normal. We pay 3500 in rent, and then have to pay another 2600 in mortgage. The fittings for my gas stove alone were $1900, and our bar is 26 feet long and covered in imported marble. Did I mention it's made out of Mahogony ? Yep, that's 45 grand right there.

My husband was really committed to building a dessert palace, and we did, but that means that for a while, we are eating peanut butter.
Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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post #51 of 71
I feel so at home here! you are great sharing so much personal info. but I think it would be very helpful for those who want to jump into a business...these are things to really think about. I didn't, I jumped in and can pay the bills (Thank God) but like I said, my employee makes more than I do. I am excited/stressed to break even.
eventually I hope to make an actual nice profit.
hope hope hope.
post #52 of 71
Quote:
Originally Posted by txkat

$100,000.00 with just two people working should make you a mint. My labor costs alone have been in excess of $100,000.00 for the first eight months.

Because our bulding was 100 years old, and I have all new, mostly imported from Europe equipment, my payoff is much higher than normal. We pay 3500 in rent, and then have to pay another 2600 in mortgage. The fittings for my gas stove alone were $1900, and our bar is 26 feet long and covered in imported marble. Did I mention it's made out of Mahogony ? Yep, that's 45 grand right there.

My husband was really committed to building a dessert palace, and we did, but that means that for a while, we are eating peanut butter.



I just wanted to say thanks for sharing such personal financial information with us. I know that when I finally open a storefront, I probably won't be inclined to share (simply because the competition could be reading and I'm the paranoid type) - so I think it's great that your desire to help others outweighs any risk of divulging such privileged information.

The fact that you and Debi are on such opposite ends of the spectrum in terms of your business gives us two opposing views - which pretty much covers all the bases.

Just wanted to say this - because I don't think you get enough recognition. You are definitely my "role model". icon_wink.gif
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post #53 of 71
Quote:
Originally Posted by PoleKitten

Quote:
Originally Posted by txkat

$100,000.00 with just two people working should make you a mint. My labor costs alone have been in excess of $100,000.00 for the first eight months.

Because our bulding was 100 years old, and I have all new, mostly imported from Europe equipment, my payoff is much higher than normal. We pay 3500 in rent, and then have to pay another 2600 in mortgage. The fittings for my gas stove alone were $1900, and our bar is 26 feet long and covered in imported marble. Did I mention it's made out of Mahogony ? Yep, that's 45 grand right there.

My husband was really committed to building a dessert palace, and we did, but that means that for a while, we are eating peanut butter.



I just wanted to say thanks for sharing such personal financial information with us. I know that when I finally open a storefront, I probably won't be inclined to share (simply because the competition could be reading and I'm the paranoid type) - so I think it's great that your desire to help others outweighs any risk of divulging such privileged information.

The fact that you and Debi are on such opposite ends of the spectrum in terms of your business gives us two opposing views - which pretty much covers all the bases.

Just wanted to say this - because I don't think you get enough recognition. You are definitely my "role model". icon_wink.gif



You're very sweet. icon_redface.gif I share this kind of information largely because I see a lot of people who "dream" of having their own cake business here, and I've got to tell you, some days it's a dream, and some days it's a nightmare.

I live in a state that licenses home decorators, who keep the market rate on cakes lower than it should be, so you have to really work hard to establish a reputation to get paid what you're worth.

You have to advertise A LOT. We spend thousands each month on advertising. It's not something you can go into part time if your planning on really making a living. Honestly, if you have young kids, either go to work for someone else, or keep it as a home based business. The math is a lot easier that way.

Spend the time and money to get a really first rate web site. Brides are creatures of the internet, and it is your wedding business that will pay the bills in the long run if you're only doing cakes. That is the thing I regret the most is not having a GREAT website for the bakery and a separate website for the cakes before we opened. Now I am so busy I am having a hard time getting it updated. A good website alone with good search engine optimization will get you a dozen or more orders a month. Know your market and price accordingly, and you'll have yourself a nice little income stream.

We get loads of attention and press coverage. The chamber of Commerce is going to name us new business of the year. The Museum is doing a " Sugarland" exhibit with our dummy cakes. We're busy most days til midnight. All of that is great, but what I'd really like is a freakin' day off with my husband.

Okay, I am crabby tonight. Time for me to go home, so I can be back here at 8 AM.
Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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post #54 of 71
Quote:
Originally Posted by txkat

$100,000.00 with just two people working should make you a mint. My labor costs alone have been in excess of $100,000.00 for the first eight months.




yeah, but now i'm alone, and it has been hard to find good help...i think i finally have, so i'm investing time to teach her.

my old partner was FAST...she was like a machine, i might be almost as fast as her now....since i've had the whole workload to take on by myself.

i need to find some stuff that's less labor intensive....like cookies, but these people around here it's kinda hard to get em started on buying new stuff....i made up some really good recipes last year....i'm gonna try to give it a go again.

do you advertise on cable?....i was thinking about it....a friend of mine owns a photography studio...she got an advertising package for 1800.00 a month, they really made her some slick commercials ...that much isn't in my budget, i was kinda thinkin of a 15 second spot with the front of my shop....with a few quick sentances .....later though, cause until i get my new gal trained i couldn't handle all the workload myself.

i was also thinking of buying an ice cream machine and offering homemade ice cream in pints...just pour it while they wait, to go with their cakes, what do you think of that idea?
post #55 of 71
You need to have the commercial be of your cakes/sweets. I wouldn't want to buy just by seeing the outside of someones shop. Their treats is what would lure me in.

icon_smile.gif
post #56 of 71
I come to Cake Central because I love making special occasion cakes! (have a sea shell one coming up for my wedding anniversary in a couple of weeks!!)

I have found this to be one of the BEST FORUMS in terms of how helpful everyone is here (this has not been true of florist forums at all - those who work from their homes are frowned on very heavily and thought of very openly as hobbyist!! icon_sad.gif I don't see myself that way at all.

This year I launched my silk wedding flower business and there are so many similarities between my business and a wedding cake business.

I have a wonderful 4 bedroom home and it's just my husband and I so one of the bedrooms is now my floral studio. Since May of this year, I've done 17 weddings and loved (mostly!) every minute of it.

After reading this thread, my dream of opening a wedding flower shop doesn't sound so great after all. I'm ok with that. Dreams have to have a bit of reality too. I realize just how lucky I am to be able to do my work from home. I could never do cakes from home so this was my way of still being part of a wedding business. I love it!! I've used all my wedding sales to help this business grow and I feel pretty fortunate.

I really do admire those of you have taken on such a huge responsilility and cost in opening a bakery. Wow!!

Isn't it wonderful to have such a passion in life that you will just go for it?

Because my business shares similarities, I read here and learn from you. Thank you so much for that.

I wish everyone continued success and the ability to follow your passion.

I'll be sure to post my anniversary sea shell cake in September.

Roberta
post #57 of 71
Quote:
Originally Posted by littlecake

Quote:
Originally Posted by txkat

$100,000.00 with just two people working should make you a mint. My labor costs alone have been in excess of $100,000.00 for the first eight months.




yeah, but now i'm alone, and it has been hard to find good help...i think i finally have, so i'm investing time to teach her.

my old partner was FAST...she was like a machine, i might be almost as fast as her now....since i've had the whole workload to take on by myself.

i need to find some stuff that's less labor intensive....like cookies, but these people around here it's kinda hard to get em started on buying new stuff....i made up some really good recipes last year....i'm gonna try to give it a go again.

do you advertise on cable?....i was thinking about it....a friend of mine owns a photography studio...she got an advertising package for 1800.00 a month, they really made her some slick commercials ...that much isn't in my budget, i was kinda thinkin of a 15 second spot with the front of my shop....with a few quick sentances .....later though, cause until i get my new gal trained i couldn't handle all the workload myself.

i was also thinking of buying an ice cream machine and offering homemade ice cream in pints...just pour it while they wait, to go with their cakes, what do you think of that idea?



Gelato is 40% of our walk in business. So ice cream can definitely be a money maker. You can even buy an inexpensive 6 pan case for around $2500 and have a nice display with six flavors and make very decent money, because the labor involved in making ice cream is super low. The machine does all of the work.

TV is a gamble for advertising. Almost everybody has a TIVO like entity and doesn't watch commercials anymore. From that standpoint radio is almost better, because you can't skip ahead, and people tend to listen to it in real time.

Our most effective advertising has been in the local " lifestyle magazine" Ours in called Chapel Hill Magazine. You can get nice big picture ads relatively inexpensively, and it's a high quality visually oriented magazine.

We have a magazine here called " Baby and Child" that has been good for us, too. people spend crazy amounts of money on kiddie cakes around here.
Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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Scratch bakers of the world UNITE !!
Inrideo ergo sum ~ I snark therefore I am.
Cake or Death?......Cake Please!
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post #58 of 71
Hi there. Yup, I totally don't watch TV commercials. Hate them. Skip ahead, or the TV doesn't get turned on. Or else it's on the Kid's channel with NO commercials. Pretty stuck in the car, though. And someone else said that they trade goods for air time. Or if the station is doing a big function you could provide cupcakes or cookies or something like that.
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post #59 of 71
This is a great post. I really have to go count the cost before i buy/open a bakery.
post #60 of 71
Thanks to all of you awesome shop owners for your frank sharing and advice! I, like many, are weighing the risks of opening a storefront in a great little town square area. The shop is on the best corner of the square, super easy access, about 1500 square feet and was a coffee shop previously so people are used to coming there for their daily coffee and snack. It's also kitty corner from the county courthouse so there are always people about. It's got a basic kitchen area but we would need to build out a bit, add a hood and all equipment. Last years tax records show that they took in about $13000 a month just before closing. Did I mention that a huge museum is coming in 2010 that will be less than a mile from the square? In so many ways this feels like the right time to make a move but the problem is that we don't have much cash to put into this as it's caught us off guard. We would have to find a loan and I'm worried that right now that would be near to impossible.

By the way, the lease is $2000 a month and I am trying to figure out whether it would be better to keep offering just custom cakes or go to a more pattiserie style shop with coffee service and the occasional wedding cake - kind of like Miette in San Francisco (www.miette.com)

This has given me so much to think about!
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