Going down memory lane, how would you describe your first year(s) as a cake decorator/business owner? What challenges did you face? And was there a moment when you reached a point and realized, "this is really going to work. It's really going to work!"

What would you say were your best moves, and what were the not so smart moves?

Share your story if you would please.

I'm still new at this and there are days I can't believe I have undertaken this journey but I'm in, and I'm determined to succeed. So I would like to read the stories of those who've taken these steps before me and come out okay

This is basic, but a real, completed business plan will tell you if it's going to work. This is how businesses and lendors calculate viability.

I'm guessing I have seen 100 times, a thread started that states, "I'm starting a business and am ready to sign a lease. What is a business plan?". This is a huge red flag. If someone is looking for space, a business plan should have been started at least 6 months before, shorter if the investment is lower, such as home kitchens.

And I'm not talking about a rough draft with a bunch of useless speculative data. I mean the kind that has every competitor and related businesses broken down by product and price (and estimated cost), complete demographics, and total costs down to estimated utilities, from data collected from real numbers.

This is my third start-up business and I just started a fourth last week. After years of owning businesses, it gets pretty easy. For my new, unrelated, business, it took only a week to do a plan, but the startup capital was substantially lower than a commercial kitchen buildout.

For me, I had a rough beginning. A few months after I opened, my mom had a stroke and I had to put the business on the back burner for four months. But I timed the new efforts to a time of year when spending gets better and it took off, slowly, but with a steady build. I can actually control my sales by manipulating Google Adwords.

For my retail store, business plan completed, I am building a clientele that will have a large enough base to support the retail operation from day one. I have no desire to give my profits to a landlord until the business can support it. I'm in no hurry. Just like with the bakery, all fixtures, equipment, and decor are purchase with csh and stored. I will open debt free. This is a big factor in whether or not a business will be profitable.

So please don't think me mean or killing a dream when I post the hard facts of what is needed to open a business. With an 85% failure rate, higher for food service companies, it is important to plan, get experience, and get educated in areas of weakness. There really aren't any shortcuts but luck.

While I think a business plan is very important (and I have one), I don't believe a business plan is THE deciding factor for the viability or success of a business. For start ups, almost all if not all financial projections are just that projections. I'm sure of the thousands of businesses that fail every year, a good percentage of them would say they had business plans that projected that their businesses would succeed (and in fact looked like they would be viable) but the reality is not always that.

Your example of a family member's illness is one of the possible kinks that could throw off even the best business plan if other factors did not line up to favor the business.

It's often said that it's typical for businesses to run at a loss or barely breaking even during the first year. I would like to read about people's experiences during that time that the business is finding its legs. How did you encourage yourself or pat yourself on the back when things fell into place like your business plan said they would?

Dealing with customers is another example. I read a thread where the OP (who appears to be quite successful and more than likely has/had a great business plan) asked about ways to streamline the order process. Those things you don't get in a business plan, they're stuff you find out and deal with when you have brides every now and then who don't know what they want and would like to email you 70 times, request multiple consultations and want to drain you of your time.

How do or did you learn to handle brides or clients who come to your boutique/couture/cake studio wanting styrofoam cake tiers when your website obviously states you don't do them? Your business plan said to have that info on your website but the reality your business plan did not show was: folks often REFUSE to read these things-- even when a link is right under their noses.

My questions focus more on the reality of running this type of business, beyond the academic or the theoretic or rhetorical reponses like "a business plan is the answer."

Stats support that those who fail do so because of a lack of business experience and undercapitalization.

A business plan should include all policies. Yes, businesses adapt and change, but the initial investment and profitability will be in the plan. This is why investors require them. Numbers are numbers. They have no opinion.

And for many failed businesses, the business plan was incomplete, was full of speculative data, or in reality, did not exist in most cases. In most businesses where they were self-financed or privately financed, possibly by a relative, no plan exists.

For instance, where did you find your demographics? How much rent and overhead do your competitors have? Do you know how to find this? What research methods did you use to determine the location? What are the stats on the location? Have contractors been contacted? What is the range of the estimates that have been collected? What is is the buildout going to cost including overruns and time plus setbacks? What did the zoning board say? What are the costs of the HD requirements? What will the utilities run when compared to the insulation factors in each lication? Have you bought and tasted every competitors' products and charted them as to flavor, value, style and price? Have you realistically found where you fall in the mix? Have you worked backwards from your true market price to arrive at your COGS and profit? How many man hours are involved each month?d

Big one, how many cupcakes, how many cakes, and how many desserts do you have to sell at what margin to overcome all fixed and variable costs? Does the equipment and manpower have the capacity to do this volume? Are you going to be able to sell at your market price (determined by the market, not you) and do this volume?

I could go on and on. This is the information needed in a business plan. With proper planning, including policies, PR, branding, decor, packaging, accounting support, etc., viability can be verified.

Of course, you must have a product that is good enough to take the discretionary income from some other vendor (not just baking) and spend it with you. There is no new money just because you opened, it is just diverted. That is also preliminary research.

scp1127, I'm not contesting your knowledge or experience, neither am I saying you're wrong. What I'm saying is: my questions pertain to those things not in a business plan, that we often face in this type of business, and how people handled them. I'm looking more at the emotional aspects, the curve balls, the little triumphs that affirmed each person's decision to undertake these challenges, the unexpected, the no-one-could-have-prepared-me-for-this-until-I-got-in-and-experienced-it-myself type things.

Vgcea , I understand what you're asking for, I think-lol. I teach a business class for cakers. I usually end it with something like this. ...everything that we've spent the last four hours discussing is vital to your success. A business plan, capital, etc.,etc. However, some things aren't covered in a plan. Passion, tenacity, a genuine love of people, a natural desire to keep improving and learning. These are things of the soul and there are going to be days that what is inside you is what saves you. If you're a people person, working with your clientele will be easier than if you aren't. If you aren't, it will help to have an idea of how to handle certain situations. If there are any cake business classes available to you, take them. And I do mean cake business classes. The others really won't help you as what we do is very unique. I don't think anyone can cover much of this in a CC post, but there is help out there. When did I know it was going to work? Yesterday-lol! I've been in business for over 14 years. Two years ago my shop was completely destroyed by a tornado (in an area that never has had one). Insurance helped, but certainly did not cover everything. But I'm still here and not because of my business plan, or business capital or lack thereof. I love what I do, it's what I'm supposed to be doing. That passion and love got me through the horror of the loss, not my business plan. If this what you're supposed to do, you'll do it. But learn all you can. Pay attention to the signs. Hear, really hear what your customers say.Adjust when and where necessary. Your business should always be a work in progress. If it isn't it will stagnate.

One thing I've learned so far is the best thing to do is take it slow. If I rush into things, they don't usually work out, but if I really take my time to make decisions, taking baby steps instead of big leaps, I can keep control over my enthusiasm and the business. I never bite off more than I can chew. If the proverbial mouth feels a bit too full, I know it's time to slow down.
I also agree that having the cash to buy the items you need is MUCH better than getting them first. It takes the pressure off.
I also never listen to my "fans" who tell me I "should" do all sorts of things- from TV shows to wholesale items, to whatever. It's nice to get encouragement, but I need to also be realistic. I'm never going to be Ron Ben Isreal, even if I wanted to, because I have a family, I live where I live, and well, i'm just not.
I also never stop learning. I've changed my American buttercream recipe 6 times because I don't like powdered sugar bite and I needed to find something I was happy with. I have gone through every brand of fondant until I found my current recipe. It IS ok to change things up until you get what you want.
Another thought- investing in high quality equipment is never a bad idea. I have a pretty small business, but when something needs improvement, I update it with no guilt. I have a wish list and every year it gets smaller. Work smarter, not harder.
I have 3 Cake Safes and stress free supports. They were expensive. But there is NO point in making a wedding cake that can't make it to the venue in perfect condition, and there is NO excuse for making a cake that can't withstand the "bump test".
It is MY responsibility to communicate with my customers. To follow up, ask questions and never assume.
ok, i'm done!

vgcea~~Disclaimer: I'm not in the cake business. I was in medical equipment sales for 30+ years and have happily retired. I don't want anything to do with the business or competitive aspects of caking. I do it for fun. I read the Business Forum for fun.

scp1127 is my hero. Jason_Kraft is my hero. Indydebi is my hero. FromScratchSF is my hero.
All of these people continue to offer exceptional business advice that I respect. The biggest single thing about their posts that I admire is that each of them addresses the business of caking, not the emotion of caking.

Cake decorating can be learned quickly and started up with a small capital investment (i.e., a KA and your kitchen). Cakes can be sold "under the table" to earn extra cash. Cake decorating provides INSTANT FEEDBACK to the baker. This "rush" of good feeling can dilute common sense or wipe it out entirely.

The single biggest error I see over and over and over in these forums over the past 2 years is that bakers are seduced by this emotional, instant gratitification reward, and lose sight of the business aspect.

One of the reasons for a thorough, realistic, business plan is to divorce your emotional "want to bake" side from the "is this going to be profitable and support me and my family?" side.

Basically, if a new business start up does the due diligence needed, then the emotional side of the business will largely take care of itself. Posts that say, "I felt sorry for the bride/MOB/friend/stranger, so I went ahead and did a rush cake for $60 even though I had to cancel my weekend with my family", indicate a person that will probably not succeed in this business.

Cake is NOT a necessity. Cake is a luxury. In this tough economic climate, every baker needs to pay attention to the business aspects first, and the fun/rewarding/fulfilling aspects second.

You'll know you are on the right track and successful about 1 year to 2 years down the road when the numbers prove you are successful.

Thank you for commenting Apti. I have a lot of respect for the experiences and wealth of information you, and the people you mentioned bring to the forums. Again I will state PLAINLY and as CLEARLY as possible: I do not underestimate the importance of a business plan. A BUSINESS PLAN IS IMPORTANT.

The business forum has a good deal of information on the business plan and the UN-emotional aspect of cake business.

The purpose of THIS thread was to bring a different perspective, TO HIGHLIGHT THE HUMAN SIDE of doing business. To give people a chance to tell their stories as they navigated their first years in cake decorating. What was great, what wasn't, and when did people realize they were not crazy for choosing to go this route, that their dreams were actually becoming a reality?

Steve Jobs had his garage story, Bill Gates had his dropping out of college story. The Spanx lady had her panty hose story. Many CEOs have their story of how they took that one item to 50 stores until they got 1 retailer to accept to sell the item. I SIMPLY asked for each person's story and I get people wanting to teach me something. I didn't ask for advice for crying out loud. I said SHARE YOUR STORY. If you don't have one or don't want to share then leave the thread alone. Reading comprehension is not so fundamental I see.

I don't know how else to be clear beyond this, bolded words, CAPS, underlining and all. I really don't. I give up now.

oh.

sounds like you would like other successful bakers to reminisce about their early years.

Yes

Wow.

Ok, well for us we are still somewhat in the "Is this going to work" phase, but we are definitely seeing encouraging things! We have been in our storefront for about 4 months now, and we are seeing constant, steady growth in our sales. We aren't just exploding with business, but we are slowly but surely getting our name out there, and getting lots of good feedback! The shop is covering all of it's expenses (rent, utilities, materials, etc.) and we are well on our way to bringing home a paycheck. So I guess I am cautiously saying "Hey, this is going to work!"

I completely agree with what DDiva said about how necessary having a passion is! There are definitely days where the LAST thing I want to do is get up and go to the shop. But I love what I do, and when I push through those "I don't wanna" moments, I get a fresh burst of energy and get excited for all of the recipes I've yet to try and cakes I've yet to decorate!

It took us about 6 months to launch our bakery...my wife did the R&D on the baking side, while I took care of business planning and all the legal stuff to get us set up in a commercial kitchen. Things were slow for a couple months with 1-2 orders per week, but then we got our first review on Yelp, and the local food allergy support groups found out about us.

Business quickly accelerated from there, and we were able to reduce our advertising spend to zero thanks to word of mouth...due to the nature of our business I set a maximum weekly workload, and after 3-4 months we were consistently having to turn away orders.

In retrospect I should have done a better job reaching out directly to our niche market by networking with the support groups from the very beginning, I was more focused on online advertising.

Luckily I work from home in my day job and it has a flexible schedule, so I was able to take care of all the administrative overhead, procurement, customer service, deliveries, order planning, etc. and my wife was free to focus on just the baking and decorating.

Demand was so high we probably could have continued expanding (we did hire one additional employee). We would have needed a dedicated space though, and with my full-time job, MBA classes at night, and a baby on the way we decided to keep it small.

you know, I was chewing on this some more today and had a few more lessons learned.
It took me a few years (because I'm VERY type A) to not get so stressed about each cake.
I used to have to start everything on Monday and the process would go on all week. Mainly, my goal was to have the wedding done by Thurs or Friday so that if anything happened I still had time to rip the whole thing apart and re-do.
There has been a transition time where while I waited to work on the cakes until later in the week, I still stressed about them all week until i could get them going. I would think about everything I had to do, and the thinking was WAY harder than the doing!
Now this summer busy season, I am teaching myself that things WILL get done, that I DO know how to fix issues, that I need to enjoy the pre-planning and anticipation as well as the down time. I used to feel guilty when I didn't work on a bride's cake all week, like I was letting her down!
Another thought is to find where your passion actually lays. I am a hardcore wedding cake gal. Nothing thrills me more. I do NOT like putting in as much time if not more time on little Johnny's first bday cake. It's just not my passion. This week I only have 2 weddings and no celebration cakes (although one wedding has 11 cakes in it!), and I couldn't be less stressed. I've gone shopping, out to dinner, taken a nap (gasp!) And that is because I'm calm and inside my passion and confidence.
YOu mentioned another post where the OP was having a hard time with ping-pong emails and the lessons she was learning. She is one of the most amazing decorators I know, and a good business woman too. But she chose to do everything custom and not have standard prices. Because of this, she also chose ping-pong emails. I have learned that if I am simple with my pricing I don't have a lot of ping pongers. So you need to decide what works for you in your pricing structure too.
Ok, another novel out to bed

Thank you LoveMeSomeCake615, Jason_kraft, and jenmat.

I made a profit my first year out, but I also knew what my customer base was going to be and how to run a business. if you know that then you pretty much know that it's going to work from the beginning, because SCP is right about taking the emotion out of it and keeping it a business.

I'm in the unique position that it doesn't even matter if I make it or not, but I think I will anyway. We converted our garage, and paid for everything with cash. It took us about 5 years, because we are low income, but my husband makes enough to pay the bills, and make any extras. I actually didn't have a single cake to do last week, and I just enjoyed the time off without having to stress out about creditors or bills or loan payments. I recommend that anyone who is serious about starting any business do so without debt.

There's nothing inherently wrong with debt as long as it is taken on responsibly, for an investment with a reasonable risk profile corresponding to what you are borrowing against. Remember that using your own savings incurs an opportunity cost as well (not to mention the risk to your personal financial assets), depending on your situation this opportunity cost may or may not be greater than the cost of carrying debt.