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Struggling to see any point to business :(

post #1 of 13
Thread Starter 
I did a business course recently, I decided I was making lots of cakes so I might as well be making money from them, anyway... upon doing all the cash forecasts etc I've discovered that to make a wage of £80 per week, I need to be making 6 8 inch cakes at £40 every single week. which would take me a lot of hours, and therefore put me on an hourly wage of about £3. The problem is, I cant go much higher than £40, because thats what everybody else charges. Except one who is even slightly cheaper (who's quality is questionable, but I've still lost out on orders to her). I'm just struggling to understand how any of the cake decorators in this town are making money, their prices are all about the same, I'd imagine their costs are similar, I just dont get it. I'm feeling so down about it today because I dont see any kind of light at the end of this tunnel. I just dont know what to do. I've absolutely decided this is what I want to do with my career because I absolutely love it. I doubt I'd love it on £80 a week for 6 cakes! Would anyone in the UK care to share any details on their finances with me? How do you make money from just cake decorating? Is it just my area? or does everyone have this problem? I wasn't expecting a full time income or anything like that, but something I could call a profitable business... icon_sad.gificon_sad.gificon_sad.gif
post #2 of 13
Its hard to say about pricing as it does vary from area to area but you do need to make sure you are charging for your time and make sure there is profit in the cost of the cake too, not just a charge for your time. As far as I can see the most money is to be made in wedding cakes as there is simply so much time involved in them you can charge more and they are generally bigger cakes too. I think it does take time to get a business up and running and there will be ups and downs (last month wasn't great for me as it was all small orders but this month I have my first wedding cake to do so I'll have made over 3 times more than I did last month). I don't really look at it as wages, I look at how much money I can take out of the business as at the end of the day that is the money in my pocket not just the money I charge for my time (which I agree really isn't enough!) Its not like a 'normal' job where you would be paying yourself a regular wage you'll be getting the money out of the business so if the price was split into three (costs, charge for time and profit) you would be taking out £160 a week not £80 if you were just paying yourself wages - does that make sense?

Have you also looked at reducing your costs? Seeing if there is a cash and carry where you could get some ingredients cheaper? I also get my free range eggs delivered from a local farm which is much, much cheaper than the supermarket and they are lovely eggs too.
post #3 of 13
If you can sell 6, 8" cakes a week, the time it takes to produce them isn't that much. You bake, freeze, then finish later. It's the marketing you need to do in order to sell those 6 cakes.
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Answers to the most often asked questions re: SPS. SPS instructions are on Page 15 of the Sticky at the top of the Cake Decorating Forum. Supplies can be ordered from Oasis Supply, Global or BakeryCrafts.
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post #4 of 13
Hi Jennifer,

I'm pretty far away so I won't attempt to discuss price.

Here are some thoughts:

Some places are saturated.

Some people don't report taxes, making them more profitable at a price point. You can't compete with this in a small area. Some also don't realize they are making no money. Again, you can't fix that.

Here are some ideas:

Is there a larger town or a place less saturated nearby? My home town cannot support my pricing so I have to go about 10 miles down the road.

Can you branch out to a product that is not offered? This can set you apart in the market and you can always offer your cakes and let that side of the business grow more slowly. I started my business thinking it would be mainly cupcakes because that is the current national craze, but only about 10% ended up being cupcakes. I am still offering many products, but it is all research for expansion. But I now know what the area wants from me and it has been much different than my original ideas. One year ago I would have never believed that 25% of my business would be in confections. I have another 25% in buffets, both dessert and candy. I didn't see that coming.

So I guess what I'm trying to say is to open your mind to other possibilities... the old, "find a niche or a need and fill it". This one method I use to plan my business expansion: Look at bakeries in larger cities. Search the list. What are they offering? can you see a trend that is in this area that hasn't made it to your smaller area. For example, I'll bet my city, in general, has never heard of a macaron. But There is an opportunity for a market that no one is filling. I just better be good enough at it to convert my customers to addicts. Kidding.

Good luck and keep researching. Don't give up. This research, trial and error, failure of a plan... all go into a process that will eventually evolve into a profitable plan. At least you aren't one that has just done it anyway and lost because of poor planning. Just by you post, it is evident that you will find a way to make this work. It will just take some more time. But it will be a better business model when you finally find your niche. Susan
post #5 of 13
Pay attention to Susan, her advice is invaluable... It takes time but you can definitely create a good solid business. Best of luck to you.

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post #6 of 13
I understand where you are coming from! I live in a small town and was trying to keep my prices in line with others but got very tired and discouraged when my husband pointed out that I was making about $1.00 per hr. I stopped decorating for about 3 months and I thought about giving up but decided to give it another try. I know it sounds strange but I went up on the prices of my cake drastically. Before my cakes ranged from $35.00 {gasp} to 140.00. Now my range is $89.00-$425.00 depending on the decorations. I made a website on intuit.com for $11.00 a month, had some business cards printed with my website on them for $19.00 then went to the hair stylist in town that I knew most of the "money" people went to bearing free sample cupcakes and my business cards. She has sent me many customers and now I can count on the fact that every time I have a cake order go out it generates new orders. I am now dealing with people that don't try to haggle down the price but for some odd reason seem to feel good about spending the $ because they feel like they are getting something most people don't. People call and say" I love the cake you did for Susie but I want something bigger!! I'm still not getting rich but I don't have to kill myself trying to justifiy why I continue. I'm not discouraged and I no longer feel like a slave laborer!! Sharon
post #7 of 13
What about trying Wedding cakes Jennifer? I think birthday and novelty cakes require a lot of work but people aren't willing to pay for.

Or maybe trying a different businees strategy so you target customers with more disposable income?
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"Taste your words before you feed them to people."
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post #8 of 13
Most birthday and party type cakes are VERY time consuming as far as decorating goes. People want 3 tier cakes with fondant figurines to serve 15 people for $25. Wedding cakes on the other hand are more profitable. More baking and icing for sure but people who are getting married expect to spend more on that "once in a lifetime" cake. If you spend 1 hour baking, 1 hour cooling, 1 hour icing plus how ever many hours it takes to make figurines, flowers, sculpting etc in addition to ingredients on one 8" cake you really aren't making any money.

Like scp1127 suggested, market yourself in a nearby town that may not have many bakers or that has more disposable income. Combine that with Leah_S advice on doing stuff in advance. Plus buy what you can in bulk or wholesale and you should do okay.
If you can't find time it do it right..how will you find time to do it over?
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If you can't find time it do it right..how will you find time to do it over?
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post #9 of 13
In many areas there should be plenty of room for a mid-market bakery for birthday and event cakes, targeting people who are looking for something better than the grocery store but don't need (or can't afford) an extravagant multi-tier cake.

This market segment can be quite profitable, especially if you offer a competitive advantage or niche appeal in addition to higher quality, small batch baking -- you can upsell people from the grocery store by focusing on quality, and you can capture downmarket traffic from the high end as people cut back due to the economy. At the peak of our business we would average 10-12 small cakes per week at a prices in the $50-150 range.
post #10 of 13
I completely understand, Northern Ireland is pretty much one big town when it comes to business and just entering my 2nd year myself Im frustrated at actually starting it as a loss with zero wages in the last 12 months after all the startup costs last year, meaning I put in hundreds of hours for not even a single owners withdrawal! (Especially when so many locals dont even declare the extra income Grrrrrrr!)
However (I say with a smile) I dont want to compete for the lowest price cake, two months ago I decided to charge a premium without undercutting any of the city bakeries, I feel I can almost match them in creativity and finish but I offer something more with my cakes, for birthday cakes I make a mini version or memorable keepsake which I give free of charge and for wedding cakes I give two little chocolate cupcakes for the bride and groom to share on their wedding night after such a crazy day. This creates exclusivity and thus demand, when demand is higher than your availability you can up your prices another notch. Youll feel guilty or like youre crazy for asking so much and some enquirers will scoff at the price and make you question the decision but as your brand improves your name alone will hold huge value, people will be proud to have gotten one of your cakes and when they show it off on Facebook it makes me really proud and I really realise why I love making cakes so much!
Think of something original you can offer with your cakes, a t-shirt with I got a Jennifers cake! on it.....
HTH icon_smile.gif Dont let it beat you icon_smile.gif
post #11 of 13
Hi There

I am based in Brighton, UK, and have been doing my cake business for about five years now with breaks for children being born but I can honestly say pricing is one of the hardest things in the world to get right and I stumbled across your post because I am trying to reassess my pricing and wanted to see what other people are up to!

There seem to be a glut of people setting up and undercutting. It is happening so often now that I think pretty much every order people are have asked for some kind of deal. I have also lost a couple of orders lately on price even though I know I am very much middle of the market for this area. On the other hand I did a very fancy birthday cake recently where I know the other bakery offered to do it for more than £100 less than me but she went with me because she liked the quality of my work so people don't always work just on cost.

I would agree with what other posters are saying here that you should price correctly and ignore to a certain extent what others are doing. Make sure you know what your basic ingredients and equipment costs are for your recipes and then work out time spent and profit margin on top. I try to aim for a 30-40% profit margin on cakes though this is harder with celebration cakes but there is some margin for movement in it. You are always going to lose some to people who will charge next to nothing but do you really want to be doing a cake for hours when you are making nothing or worse still, a loss?

I truly believe you are better off charging properly for your cakes and doing fewer but better quality cakes ie why slave over eight small cakes when one larger wedding cake would yield much better profit and not leave you depressed at the end of it? You are never going to be able to compete with people charging so little for a cake and the likes of Waitrose, Tesco etc where cakes are factory produced so don't even try. Market yourself as a bespoke cake maker offering a high quality, hand made and personal service. It takes time but people will respond to that. Marketing is most of the battle as one other poster said here. You need to get out there on facebook, twitter, any free wedding/business directories you can and get yourself known.

I am not sure where you are based but £40 seems very cheap for a cake. Just having a quick glance at my ingredients and for an 8" rich chocolate cake it is £12.35 before fondant, board cooking costs, my labour and decoration! Fruit cake is even more.

I hope this is helpful but if you want more advice or fancy a chat pm me!
post #12 of 13
Thread Starter 
Wow, I had meant to reply to this after the first 2 comments, then I hadn't checked back since. Sorry to all you helpful people icon_smile.gif I'm taking all your comments on board, one of my new customers who I'm now friends with on facebook gave me a bit of a pep talk too. I think I'm just going to price my cakes higher and see what happens. I remember seeing someone on here say I'd rather make 1 £500 cake, than 5 £100 cakes, and thats what I seem to be reminding myself of constantly! I think you're right, a lot of people dont declare the tax, and the people that are cheaper than me that are official, even I (who cant see a lot of good in my own work) can see that I am better than them. Crazy-Gray thats a great idea about adding in the little extra things, I've just been thinking about that today! My starting thought was to get some orders in offer something like a 6 free cupcake coupon, and make little keepsakes for peoples cakes, I recently made a friend a little fondant plaque which was a reproduction of something she liked on her cake she wanted to keep but couldnt get it off in one piece! My mum actually said she would pay for me to go to a wedding fair (I dont think she has any idea how much it would cost) but I'm terrified of going there because I'm not that confident in myself really... icon_cry.gif I have decided one thing, I will not give up icon_lol.gif I have finally found something I love, and people actually want me to do for them. I cant give that up now!!
post #13 of 13
Best of luck Jennifer. For the wedding booth, I can only suggest to just do it. None of us are confident at first. We all fear failure, but with planning, you will be fine.
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