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should i close my bakery shop and reopen as a home business????

post #1 of 31
Thread Starter 

hey ladies,

 

im on here a lot but im usually just a reader, anyways, heres my dilemma... i own a very small, adorable, bakery specializing in pastries, sweet rolls, cookies and cakes, in my small town in Nebraska.  ive been open exactly one year now and as expected, money is tight, but its a bit tighter than i thought... all my customers seem to love my products and i'm nearly sold out every day, but as one baker i can only handle so much work and can't afford to hire another baker to help out.  basically, my husband and i went over all my expenses and it just doesn't seem to be getting better. the money i bring in is just enough to pay bills and to pay myself a miniscule amount, which i really shouldnt even be paying myself right now bc i'm so broke! anyways, im going to a bridal fair this january and hopefuly that will increase my wedding cake business, but i'm concerned that if i do get more cake business, then i'll be stretched so thin that i'll be beyond stressed and exhausted all the time.

 

basically rh last year, although i love my bakery, other people love my bakery, and i'm sure i could increase business over time, im so stressed all the time, exhausted, and i feel like my overall quality of life is not so great because of the amount of work, for such little money. 

 

my husband and i own a few acres of land that we will be moving onto this year and he suggested that we could build a small little shop (like big garden shed almost) and we can insulate it and drywall and turn it into a little bakery kitchen. i already have all the equipment i could move from my current bakery. i could close my store front, and become a special orders only bakery out of my home (even though it wouldnt actually be in home, just on property) this way i won't have all the costs of building rent and the high utilities, and i'll ahve much more free time inbetween orders. if i can even manage a couple wedding cakes a month then i'd get to keep nearly all the profit since my bills will be gone (well nearly gone).   

 

i know i have devoted customers and as a tight knit community, i'm sure everyne would understand and still order from me...  i like the idea of having my own little kitchen on our property near our house, that i can work in as i get orders instead of the daily grind of waking at 430am and working like a dog all day, i still feel sad, like i've failed or like i'm giving up to easy.. i don't know what to do !!!

 

anyone ever been in a similar situation?

 

thanks :)

ashley

post #2 of 31

After reading your post, 2 thoughts come to mind:

1. Have you thought about increasing your prices?  You wrote that you sell out every day, which means you make a product people are will to buy.  A minimal price increase is not likely to scare away any customers, but will bring in more money for the same amount of work.

 

2. Have you thought about specializing in 1 thing: either a walk in bakery that sells  pastries, sweet rolls and cookies  OR  a custom cake bakery.  You may not feel stretched quite so thin then.

 

 

 

Building on a lot is not a bad idea, but you can forget any foot traffic and probably very little walk ins.

"who says you can't have your cake and eat it too?"
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"who says you can't have your cake and eat it too?"
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post #3 of 31
Thread Starter 

yeah, ive already raised my prices since opening twice and i truly feel that they are on point... only slightly less expensive than the bigger cities on either side of my small town.

 

i know with a home bakery i'll eliminate walkins, but i wouldnt have to purchase so much ingredients if i didn't worry about walk ins anymore.  i have a lot of special orders now, so i would just focus on those and alos more wedding cakes like i had mentioned... with no rent, high utitlies, employee pay (i have one cashier who is only about $320 a month ouit of my pocket but still)...

 

anyways, i'm torn,  love my little shop, its just so expensive to run it! i feel like i do so good but then all my income goes to bills! 

post #4 of 31
How much will it cost you to build a commercial kitchen on your property that can pass inspection?

Does your state have a cottage food law, and if not is it close to passing one?
post #5 of 31

employ an apprentice

john cresswell  ( www.crezart.com )

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john cresswell  ( www.crezart.com )

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post #6 of 31

Is there a market in your area for commercial kitchen space? Could you find someone who might want to rent your kitchen when you are not using it? It would have to be someone you could trust, of course since your supplies would all be there. Just a thought to raise some extra money.

post #7 of 31

Yes, close your business and re-open as a home based business.  I did that after 10 years of having my own cake shop and now I am finally making money.

You'll have more time for yourself and less stress.  It's a win-win situation.

 

Good Luck!

post #8 of 31
I have a licensed inspected kitchen, where a two car garage used to be. We spent $17,000 buying most everything used. While I do good business with cakes, more and more people are wanting cupcakes. Even just one or two, quite often. Right now I am not set up for that, and it is a major hassle to try to explain that is not how my business works. People just don't get it! And they expect you to just have their order sitting there, anytime, and come at all hours. The concept of an appointment for a bakery product is lost on them. Just today I had 3 people come early, and one an hour and a half late. People expect you to be there, chillin, because its your home.
Each time, I sent them away, and told them their product would be done at the appointed time. But this was very different, as I usually have people come anywhere from 5 minutes to 30 minutes late. A couple years ago, I had a customer come 4 hours late, but she orders every couple months, has fun orders and refers friends, so I forgive her, lol. She is on time or lets me know now.
And one of my regulars was an hour late, so I gave her a call, and could tell she'd been drinking... She got the cakes, $400 worth of graduation cakes for twins, the next morning...
I remember from working at grocery stores that people would just no show, and we'd scrape the name off and put it on the shelf, and no one got their feelings hurt. but when you work only when you have cakes, you're not just putting in time, and you wouldn't have to be there anyway, it hurts more to think you wasted your time! Especially when your family is playing Legos and watching tv, while you're alone in the bakery working.
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post #9 of 31
Quote:
Originally Posted by Annabakescakes View Post

I remember from working at grocery stores that people would just no show, and we'd scrape the name off and put it on the shelf, and no one got their feelings hurt. but when you work only when you have cakes, you're not just putting in time, and you wouldn't have to be there anyway, it hurts more to think you wasted your time! Especially when your family is playing Legos and watching tv, while you're alone in the bakery working.

 

If you require payment prior to pick up, then this won't be an issue.  If they are late and you are unavailable when they finally show, they have already paid so you are not out the money.  They need to reschedule pickup at a mutually convenient time.  I used to have 50% deposit, then balance at pickup for smaller cakes, never had a no-show, but a few late pickups stressed me enough to change my policy to payment in full 3 weeks prior.  No one has ever not ordered because of this requirement.

post #10 of 31
Quote:
Originally Posted by FullHouse View Post

If you require payment prior to pick up, then this won't be an issue.  If they are late and you are unavailable when they finally show, they have already paid so you are not out the money.  They need to reschedule pickup at a mutually convenient time.  I used to have 50% deposit, then balance at pickup for smaller cakes, never had a no-show, but a few late pickups stressed me enough to change my policy to payment in full 3 weeks prior.  No one has ever not ordered because of this requirement.
We rarely had this issue, even with smaller cakes which do not require advance payment. We would give customers a one hour pickup window and let them know that they will not get their cake if they do not show up during the window. We had exactly one no-show out of 700+ orders in 4 years, and there were only a few late pickups here and there.

This works best if you have a significant competitive advantage over the competition and offer something (exclusive products, flavors, skills) that customers can't find elsewhere, otherwise you'll probably want to require prepayment for all orders.
post #11 of 31

This is going to be a bit convoluted response to your question. The farmer who rents my fields one time was explaining the break points in his dairy operations. If he had 90 cows, he would make money; however- if he had 97, he would lose money. But if he had 120, he would make money again – and so on. It was how much he was spending to care for his cows and the cost of the equipment he needed as opposed to the money the milk brought in.

That's what is happening to you- your expenses are too high for your gross income so you have very little profit. The solution is either expand the business ( which might not be possible if you confine your business to just your small town) or cut back on the expenses.

post #12 of 31
Quote:
Originally Posted by FullHouse View Post

If you require payment prior to pick up, then this won't be an issue.  If they are late and you are unavailable when they finally show, they have already paid so you are not out the money.  They need to reschedule pickup at a mutually convenient time.  I used to have 50% deposit, then balance at pickup for smaller cakes, never had a no-show, but a few late pickups stressed me enough to change my policy to payment in full 3 weeks prior.  No one has ever not ordered because of this requirement.

I do have 90% of cakes paid for before pickup, I just send an invoice. That's not the problem, it's the 15+ orders per week, about a third of them are late. The cakes are paid for, and I have NEVER had a no show. Paid for or not, people are just late. Generally no more than 20-30 minutes. The few I mentioned that were super late were the only ones.
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post #13 of 31
Quote:
Originally Posted by jason_kraft View Post

We rarely had this issue, even with smaller cakes which do not require advance payment. We would give customers a one hour pickup window and let them know that they will not get their cake if they do not show up during the window. We had exactly one no-show out of 700+ orders in 4 years, and there were only a few late pickups here and there.
This works best if you have a significant competitive advantage over the competition and offer something (exclusive products, flavors, skills) that customers can't find elsewhere, otherwise you'll probably want to require prepayment for all orders.

Since I have about 700 orders in one year, and I've never had a no show, I guess it could be much worse, thanks for the example. I don't give a window, but they take one, basically. And I have many competitive advantages: gluten free, vegan, homemade fondant, over 25 cake flavors, and 25 fillings, and I make sure they are all decorated to the best of my ability, and my ability is quite extensive. I'd put some recent pictures up, but I'm lazy... Where are your cakes you've done, Jason?
Edited by Annabakescakes - 12/9/12 at 11:15am
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post #14 of 31

The lateness is incredibly frustrating.  I do have a standard paragraph on every invoice that lets them know they need to be on time for their appointment or their cake may not be available to them and they risk needing to come back another time.  Usually works, but there are still some late, it's frustrating, but other than requiring everything be delivery only I don't see a way around it.  One of the downfalls of having a home business.  If it were a storefront, you have certain hours and that is that.  If they come early, cake may not be ready, but if they come late and it is still during business hours, it is not such a big deal.  One of the benefits of a storefront over home based is that your hours are cut and dry so a customer can't intrude on your home/family time.  

 

There are definitely pros and cons to each.  The nice thing about a home bakery for me is that if I want to take a week off, other than my insurance, I am not paying overhead while I am closed.  My hours can be flexible, if I need to be at my kids school for a few hours during the day, I can just work later that night (not fun, but beats missing out on events with my kids).  There is a space i was eyeing for a storefront, but the reality is, I want to be available for my kids and enjoy their childhood, they grow so quickly and I don't want to miss it.  I'm lucky to have the option to work from home.  The biggest challenges are that there is no clear divide between home and work and that the amount of cakes I can do in a week in my home kitchen is much less than what could be done in a commercial kitchen.  But to me, I still prefer the freedom of keeping a home bakery.

post #15 of 31
I completely agree, Fullhouse. We have 4 kids, and I know I could make more money if I sold my cupcakes individually, but I wouldn't trade my time with my kids for all the money in the world. We do plan to have a store front, but we will hire help to run it, while we still do the baking and decorating at home. But we are going to wait until the youngest is in school.
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