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Will my state's new Cottage Laws put me out of business? - Page 2

post #16 of 79
Thanks, that tells me so much icon_smile.gif
post #17 of 79
Thread Starter 
Thank you everyone, you have been very helpful.

My lease is up for renewal in July, as well as my insurance, so I have a lot of thinking to do at this point. I have a retail storefront that I open 3 days a week to sell baked goods like cupcakes, baked donuts and cookies. It is really convenient for me to bring the decorated cakes with me for people to pick up at the store. The sale of the everyday baked items really pays my bills because the decorated cakes, although lucrative, can be up and down depending on the season, holidays, etc.

I am really bummed at this law passing though because I am already seeing people selling off their Facebook pages in anticipation of the law going into effect so soon. And from what I have seen they are not paying very good attention either because the first person I ran across was selling cream cheese frosted cupcakes out of her living room and the law states those are perishable and restricted.

Also a local business owner got the great idea to open up her busy playland store to Saturday garage sales where you purchase a table for $15 and you can sell your used stuff. She is encouraging everyone to sell baked goods as well. She is advertising in the community asking what they want to see sold there and even stopped in my store recently asking me what sells best in my bakery. I know she is just trying to be friendly, but sheesh--she is cutting into my customer base here!

The 2nd saturday she was open I saw 1/2 the traffic I usually do and had a lot of waste that day.

Nobody in town can decorate cakes like me, and that has always been my niche, but I do not see how I can make this fly with the inconsistent income just from the decorated cakes.

Thanks again everyone.
post #18 of 79
I wish you well.
post #19 of 79
Definition of commercial: engaged in commerce. This would mean that all operating under CFL would be in that category, not a private home situation. And just like any debate, people find a statistic to support the cause, not to de-bunk it.

Plus, like Jason said, people don't report "grandma" for a food related illness.

Again, CFL wreaks havoc on the eco-system, meaning economic (pun intended). It goes against everything that makes business fair. If you stay on CC long enough, you will see the total lack of business skills of many who call themselves a business. This is because they are either operating under CFL or illegally. The numbers they put out in the market are so far off that it skews the supply/demand, cost/revenue, and prifitability/unprofitable numbers of everyone in the industry.

Look at how many times we see ridiculous number from people here on CC. Even if it's a generic box mix with shortening frosting and fake vanilla, there is no way that person can cover true business expenses. If a license of several hundred a year and a build-out of a decent kitchen were invested, the person who makes that investment is more likely to have educated themselves on basic business issues and has at least some understanding of COGS.

Also, it is a proven fact, given by the IRS Criminal Fraud Division, that these tiny home businesses are the highest group of "businesses" with unreported income. So that CFL license just breeds more tax evaders. I'm not saying this is intentional, but most don't keep records and many just don't have it when the due date comes. With no requirement to be licensed, the state doesn't even have the recourse of not renewing a license for unpaid taxes. And sales tax... what about that? There's another thing that inexperienced home busionesses with no business knowledge just don't bother doing. In most states, there is a tax on delivery even if there is no tax on unpackaged food.

Anything that upsets the economic climate in any industry will have an effect, so as I stated earlier, you just need to focus on your business being something that the CFL's can't do.

I like what costumeczar stated. Many people will not like the fact that these merchants are still basically unlicensed and more important, uninspected. A good explanation on your website will open the eyes of consumers and prompt them to ask potential bakers about licensing and inspections.

I can be considered a home baker, but with a 1200sf bakery, my little home kitchen is bigger than most retail. The sky is the limit with a full license. I can even cater.

Look at this as an opportunity to re-think your business plan and you will probably end up with a better, more profitable business because you had to re-arrange a little.

I used to own a marketing company for small businesses and I double majored in accounting and economics. I have also owned three very successful start-up businesses. If anyone in this CFL predicament, again, which I oppose on economic grounds, I will be happy to give some help in a pm.

The good news, again, like costumeczar stated, is that the CFL proprietors will saturate their own market and eventually, only the "fittest" will survive.

And please don't get me wrong. If CFL is legal in your area, you should take advantage of the opportunity. I oppose the form of business, not the people who are lucky enough to take advantage.
post #20 of 79
Quote:
Originally Posted by Amberwaves

Nobody in town can decorate cakes like me, and that has always been my niche, but I do not see how I can make this fly with the inconsistent income just from the decorated cakes.


If there is not enough of a local market to support your retail shop even after pressing your advantages (have you looked at wholesale?), then your best bet may be to give up the lease and become a CFL business. But don't take my word for it, you need to tear up your business plan and start over to determine what makes sense financially.

The CFL may not be fair to those who have already invested in commercial space, but reducing overhead for entry-level businesses (within reason, I still don't believe in completely waiving inspections) benefits the market in the long run by reducing costs, making premium products more accessible to more people, and increasing tax revenues (assuming competent enforcement). As a CFL business I wouldn't be surprised if you ended up working fewer hours with a higher profit margin, even if your income drops off.

One can look at a non-CFL business environment as the more "unfair" situation due to artificial barriers of entry with no gradation in terms of compliance between a bakery that makes $5K a year and one that makes $5M annually. That just doesn't make sense...but then again neither does a carte blanche food safety policy.

Of course lack of business knowledge -- especially re pricing -- is a big problem when you make it easier to enter the market, and to my knowledge no CFL has addressed this issue by requiring at least a minimal level of training in this respect (as many do with food safety), so it falls to peer groups like CC to spread this information.
post #21 of 79
Thread Starter 
One of the things I disagree with concerning this CFL is that there are no guidelines as far as food safety other than restricting a few types of frostings and fillings. What good is it to have even those few lame restrictions when there is no way to enforce them? Is the already understaffed health dept going to troll on Facebook day in and day out to find all of these sellers--then what? Taste each cupcake? Without inspecting their kitchen, how will anybody know how the food was prepared?

True story: The "cake lady" that was here when I moved into town had been making cakes, catering receptions and events and basically providing food for every major event that happened here. All without ever receiving any training, no license or permits, working out of her home kitchen under the radar and never paid a cent of tax on all the money she collected over the years. She way, way undercharged for everything because the only overhead she had was the cost of ingredients, so nobody turned her in because they wanted her cheap services.

She told me when I moved to town and started the process to become legal she knew her time was up because if I became legal they were going to require her to follow suit and she didn't want to do that.

So she sold me a lot of her equipment and said in a way she was relieved because she had had several close calls over the years and she was ready to quit.

Twice she prepared milk based chowder for a crowd of 50+ people and had the chowder spoil because she had no clue that she needed to cool large batches in flat containers. She had no training in food prep or holding temps so she thought it was OK to just cool it overnight in the stock pot in her fridge. Nobody had ever inspected her kitchen, so she was clueless that her really old, very used home fridge wasn't keeping the temp cold enough.

One time she was providing banana cream pies for a large luncheon and cooked all the filings in a large pot, then stuck that in the fridge overnight. She said the next day she assembled all the pies and delivered them and got the call that they were all spoiled. She also didn't know about large batch cooking and holding temps for meat, so her chicken banquet for the year-end police dept party didn't go so well when the entire police force was fed chicken with blood in the middle of it.

It was common for her to babysit grandkids while preparing a wedding cake in the kitchen while feeding and taking care of the kids. She was a clean person, so I am sure she washed her hands, but what about her long fingernails after changing the diapers? She didn't know that those fingernails can harbor deadly e coli bacteria from the feces in the diaper.

This is a person that has been baking and cooking for most of her adult life, but didn't have any training in food safety so she had no idea how truly sick she could have made people.

I think it is wrong that as of June 25th anybody with an oven can follow in her footsteps and bake and cook to their heart's content and sell food to an unsuspecting public without repercussion.
post #22 of 79
I think you're in really difficult position and you have some very valid concerns.
My suggestions:
As mentioned by a PP make a very big deal on your website, in your storefront, etc about the fact that you are licensed and inspected and WHY that is so important.

Do you have a hometown or local newspaper? Can you see about having them come do an article/human interest story on your business. Again, stressing how your products are not only delcious and beautiful but possibly safer.

Visit the wedding venues. Get on their vendor lists. Hopefully they will only accept cakes from someone who is licensed. See which ones tell brides they only accept cakes from licensed bakers/bakeries.

Join the Chamber of Commerce.

Good luck!
Tact is telling someone where to go so nicely they can't wait to take the trip!
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Tact is telling someone where to go so nicely they can't wait to take the trip!
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post #23 of 79
Amberwaves, here's another way to look at this change: your town has now opted for the $1.00 per hour labour rate instead of the mandated state minimum wage. In the long run, this will occur to those cottage bakers who can count. In the long run, people who can't produce sanitary food will lose business. In the long run, even home bakers will not put up with demands for fancy cakes at 25 to 50 cents a serving. In the long run, people may come to you for decorating lessons.

In the long run, either the local board of health or the IRS will start taking names at that playland store's Saturday tables. Because baked goods are not by any stretch of the imagination "used", right? It could well rebound for that playland store owner, should one of her tables be selling unsanitary food on a regular basis--her business liability will be challenged, right? She could even lose her business, if some official determines that she is really running an uninspected, unlicensed restaurant when inspectors see people eating those cottage goods onsite. Stay away from that situation as long as you live in that town and remember "what goes around, comes around".

In the short run, you will have to figure out something else. As a business you have access to wholesale prices for bulk ingredients. Can you expand to artisanal sweet bread or some other unique product? Can you try to compete for contracts with local school/hospital/nursing home? Can you expand to gluten-free baked goods than can be shipped? You stand a chance of making your business survive in the short run.

If you are the only competent decorator, then you retain an edge over everybody else in town whether you sell retail or CFL. I wish you the best.
post #24 of 79
Which state is this?
post #25 of 79
Quote:
Originally Posted by BakingIrene

Amberwaves, here's another way to look at this change: your town has now opted for the $1.00 per hour labour rate instead of the mandated state minimum wage.


It does not follow that introducing the CFL in a state would automatically bring the market price down to the equivalent of $1/hour. It makes things more challenging for established players (and CFL bakers who know what they are doing) since you will have some businesses underpricing, but you have the same issue without a CFL, those businesses would just have been operating illegally.

Both home-based and commercial bakeries continue to flourish in states that have had CFLs for some time now, so your point doesn't hold water.

Quote:
Quote:

In the long run, either the local board of health or the IRS will start taking names at that playland store's Saturday tables. Because baked goods are not by any stretch of the imagination "used", right? It could well rebound for that playland store owner, should one of her tables be selling unsanitary food on a regular basis--her business liability will be challenged, right?


Issues with unsanitary food or unpaid taxes would be taken up with the provider of the food, not the person who rents out the tables (assuming they protect themselves in the rental contract).

And to be honest, if your business is that threatened by people selling baked goods in a flea market, you are probably targeting the wrong customer segment.

Quote:
Quote:

In the short run, you will have to figure out something else. As a business you have access to wholesale prices for bulk ingredients.


Home bakers who have business licenses have the same access to wholesale prices for ingredients.

Quote:
Quote:

Can you expand to artisanal sweet bread or some other unique product? Can you try to compete for contracts with local school/hospital/nursing home?


Excellent advice, the way to compete in a crowded marketplace is by pursuing untapped markets via new products and/or new channels.
post #26 of 79
The original poster spelled out the specific case: small town, her shop is open 3 days a week, the unregulated food is already known to be underpriced. Small towns with such an attitude are a hard place to make a business succeed. Amberwaves, I guess your only option while your shop is still open is to donate your leftovers and keep track of the weekly losses. Make sure you get a tax receipt for the retail value of the donation.

Regarding CFL: What works "on the average" across a state over some years of experience will not really help one specific vendor who knows her market pretty well, and who seems to have accurately asessed her new competition. She doesn't have the private wealth to be able to lose money for a year before things turn around.

The fact that HER local cottage competition isn't even interested in learning the rules is a serious local warning. And she has one month to make a huge major business decision.

Amberwaves, you know your local market. If people are that eager to get dirt cheap baked goods, then sooner or later they will find out that "dirt" cheap is not merely a turn of phrase. I bet you have already heard that the flea market baked goods are not sold from picnic coolers or from tables that are cleaned at the start of each market session...

If the playland shop owner encourages people to sell food at her business that is eaten onsite, she will have to prove that she is not a restaurant in need of certification and inspection. If her business is the distribution point of an outbreak of salmonella or hepatitis or listeriosis or other disease that is spread by food, then she will bear the consequences. These diseases must be reported by hospitals to state boards of health so there is less chance of covering them up (as opposed to turned stomachs from your predecessor). The natural answer to the question of "where did you buy that food" will be "XX's table at YY's playland"...

Amberwaves, I guess there is one other idea to think about. If somebody else in your town wants to open a bread bakery for 3-4 days a week, then you could consider sharing your lease. You and the other baker would have to agree to work on different product lines so that both of you can make a living. Maybe it will take two of you to keep your small town eating clean healthy baked goods.
post #27 of 79
Thread Starter 
I think I may have caught a break. I went at lunch and talked with my lease holders at the corporate office. When I explained the situation she said she will have to talk with her manager to make a decision, but they may be able to change my lease to a month-to-month basis. At least that way if things are going really bad I won't have months and months of lease I am committed to paying.

My husband had a good suggestion (as did some other posters)--he said to just concentrate on the unique things I offer that someone else may not be skilled enough to make. I make a 3 layer maple pecan pastry that people are crazy over, but up until now I have only offered on Saturdays. I also make several flavors of baked donuts and experiment with unique flavors like lavender, cardamom and caramel apple that have been very popular but I was limiting them to Saturdays only so I could bake brownies, choc chip cookies, etc.

I have taught myself how to make really good Gluten Free bread and until now just sold that by word of mouth. I think if I advertised it I could really sell a lot of it and it is definitely something that not everyone can make.

I also make highly decorated cookies, but until now they have not been my focal point because they are so time intensive. I charge a lot for them, but they are definitely something that grabs people's attention and not everyone can make them. If I advertised those I am certain there are people that would be willing to pay for them for their special events.

On the plus side if I do spend less time and money on the more common everyday baked goods I can advertise to hopefully pull in more of the decorated cake orders until I get all this figured out and see exactly how this is all going to affect my business.

Thank you again everyone.
post #28 of 79
Advertise what you can sell as opposed to others. Contact people on Facebook and let them know they can't sell certain items from home.

Make unique flavored items that people will talk about like you already do. I found a poundcake recipe that had a simple syrup flavor with ginger and thyme. Something like that is intriguing to people.

Put your items that are the cheapest to produce on sale to get more people in. Try and end of the day sale to get rid of your extra items like some cookie places do.

Try to find someone to share the space with or lease out the kitchen on certain days, with you there at first, and if you trust them they can help offset your rent costs.

Ask people for ideas for new items. One of my recipes that people raved about at a get together I had was Monkey Bread. I told them how easy and cheap it is to make your own using biscuit dough from the store.

If you live in an area with a particularly large ethnicity try to learn some of their favorite desserts from their homeland.

Some of these ideas may sound silly, but it's good to think outside the box.

You shouldn't loose too much business, eventually it will come around when people learn their lessons about cheaping out and buying some sloppy bad tasting cake delivered in a shopping bag from a stranger's kitchen.
post #29 of 79
SoFlo, where do you get your information?

There is no reason to be so nasty about people who legally work under CLF. This in no way means that they produce nasty sloppy cakes delivered in paper bags. The problem is that they are talented.

Where do you come up with such crap posts? This is getting old and Iwill call you out on them.

I don't agree with the whole concept of CFL, but I certainly know for a fact that these bakers are my legal peers and they have every right to take advantage that CFL has to offer.
post #30 of 79
Quote:
Originally Posted by scp1127

SoFlo, where do you get your information?

There is no reason to be so nasty about people who legally work under CLF. This in no way means that they produce nasty sloppy cakes delivered in paper bags. The problem is that they are talented.

Where do you come up with such crap posts? This is getting old and Iwill call you out on them.

I don't agree with the whole concept of CFL, but I certainly know for a fact that these bakers are my legal peers and they have every right to take advantage that CFL has to offer.


Susan, SoFloGuy is very new but has racked up quite a few posts. I may be wrong, but it appears to me that in his quest for visibility he sometimes isn't as careful as we would prefer. I've read many of his posts and he's got some good things to say; I hope he sticks around but is more careful about what he adds.

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