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Expanding from home based to retail - lots of questions

post #1 of 6
1/19/12 at 6:27am
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I'm seriously researching to see the viability of expanding my custom cake shop out of my licensed home kitchen to a retail establishment in a shopping center.

I have a location in mind and even saw the inside of it a couple of months ago when I was peeking in windows and the owner was out front. He asked some questions and said they've been wanting a bakery in there for a long time and said he would offer several months free and even a reduced rate on the lease because the space is more square footage that I'd really need...

Anyway... spoke with my accountant/tax attorney yesterday and he said at this point, he thinks I'm at the point where it would be a win win for me to move forward and was so unbelievably helpful.

So all that to say my husband gave me the go ahead last night to research two options. Converting my home garage to an actual store and a retail store front.

I have calls in to the bank I used to work at for regarding small business loans and to the licensing and inspections board for information on requirements.

I can figure out the "must haves" by law. But would LOVE to pick the brains of some of you who have taken this step already and whether successful or not, things that you learned in the process that were invaluable that you would be willing to share.

I'd also LOVE LOVE LOVE to see some photos of your shops if you would be willing to share.

You can pm me here or send an e-mail directly to me. You can find my contact on my website (in my signature).

Thanks in advance! I can't wait to learn from those of you who have gone before. icon_smile.gif
-Stacey
Truly Custom Cakery, LLC

Website: http://www.trulycustomcakery.com

Facebook: http://www.facebook.com/TrulyCustom
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-Stacey
Truly Custom Cakery, LLC

Website: http://www.trulycustomcakery.com

Facebook: http://www.facebook.com/TrulyCustom
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post #2 of 6
1/19/12 at 6:47am
With a retail shop, the labor involved in just keeping the shop open (not to mention baking and decorating) will be a significant cost even if you get a break on the rent, so make sure to take that into account when updating your business plan.

You also need to look at what kind of advantage (if any) a retail storefront will give you as a custom cake shop with a $200 minimum, unless you plan on also stocking non-custom products on a regular basis, in which case you may find that you will be less profitable in the long run with the shop.

Also you may run into zoning issues with converting your garage to a store with signage that gets regular customer traffic.
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The Bakery Business Perspective
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The Bakery Business Perspective
An experimental blog with new content every Tuesday!

Recent Articles: The Magic Pricing Formula • Copyright Law
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post #3 of 6
1/19/12 at 8:11am
Congratulations! If the zoning works out for your garage, what a great place to start!

Having my things organized well has been a challenge but it has made a huge difference in my little space! Make sure you plan for some office/work type space as well as cake space. Not to mention a cozy spot to meet with clients!

What an exciting time for you! Good luck and let us know how it goes!! icon_smile.gif
Live well, love long, play hard and laugh... well, long and hard.
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Live well, love long, play hard and laugh... well, long and hard.
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post #4 of 6
1/19/12 at 2:53pm
That's exciting! We are just a few weeks from opening our shop, so we are right in the middle of all that!

Do you plan to sell bakery items in your shop, or are you just continuing custom cakes? The reason I ask is that if you don't plan on having cupcakes and such for people to walk in and purchase, you'd probably be better off with converting your garage rather than leasing in a shopping center.

There are SO many things that go into opening a shop, it's hard to know where to begin on what to share! The main thing I can think of is that if the space you are looking at isn't already built out for a food establishment, expect to pay A LOT to build it out. Ours was a salon, so we had quite a bit of build out. The biggest expense is probably going to be plumbing and electrical. Also, find out all you can about fire code and what is going to be involved in getting the space up to specs for that.

The vent hood is another big expense. Every city is a little different on how strict they will be, but our fire marshal is strict and required us to get the ANSUL system with fire suppression, which is a lot more expensive than a vent hood without ANSUL.

For build out, hire a good general contractor who knows the area and knows all the ins and outs of code, etc. It's worth the money.

That's the major things I can think of for now. Sorry so long!
Before you ask- I'm licensed, inspected, insured, and all that jazz.
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Before you ask- I'm licensed, inspected, insured, and all that jazz.
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post #5 of 6
1/21/12 at 8:33pm
I will PM you but it is way more expensive then you think! Way more work than you imagine....we are about 7 months into having a storefront and it's been crazy. We see a lot of potential but it seems so far away.
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post #6 of 6
1/21/12 at 11:49pm
Plan on a raw buildout to be $75K to $100K. You will need this in cash because a bank will not loan without substantial colatteral, if at all.

Call in an experienced licensed plumber and see very quickly what it will cost. If the floor is concrete, you will have to jack hammer the floor to run the floor drains. The electrical will be multi thousands.

I am opening a shop, but it will be retail only with the products produced in my current commercial kitchen. In this case, only the surfaces must be up to code. Plus cleanup area to code, restroom, but that's it. Minimum investment with minimum cash outlay.

My fixtures alone are in the thousands just for decor and display. I have everything purchased and stored and it is still an undertaking. Just be careful. If you don't have a business plan, or don't know how to do a business plan, this is a red flag. If you don't have the experience, please get it first before you have so much to lose. A defaulted lease may be able to attach your home and force a sale. Don't underestimate your residual obligation if it doesn't work out.
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