AK8memphos is exactly right. I know it's hard. There is a huge leap from friends & family to a business. It's hard to raise the capital.
Just remember that each & every time you do something illegal, you run the risk of the consequences.
Thankfully, cottage food laws have narrowed the leap. There is no way I would be able to afford a full brick & mortar bakery in my town without first being able to operate under the cottage food law. In ever so grateful.
A
Original message sent by klhoward42
So my options are starting a business, which I am not able to do, or stop selling my cakes?
Why are you not able to start a business?
Your professional definition works "on paper" but not in real life! Thanks for the help and understanding you have been truly professional , you actually sound insecure and worried about a little SAHM decorator in the middle of nowhere Georgia!!!
Whoa there...Nobody's afraid of little SAHMs, I'm a little SAHM who runs a legal business out of her home. You can be a SAHM and follow the laws, the two aren't mutually exclusive. It sounds like there's a cottage food law in Georgia now, so you should look into that and get legal. I got a business license before I sold any cakes, so it isn't something that you have to do illegally at all.
Whoa there...Nobody's afraid of little SAHMs, I'm a little SAHM who runs a legal business out of her home. You can be a SAHM and follow the laws, the two aren't mutually exclusive. It sounds like there's a cottage food law in Georgia now, so you should look into that and get legal. I got a business license before I sold any cakes, so it isn't something that you have to do illegally at all.
Kara or Jason:
If your state has a cottage food law, do you still need a business license? Or does it depend on the state? I am under Texas CFL but in what I have read I haven't seen a requirement for a business license but maybe I'm just not looking in the right place. I am not selling right now.
AIn most areas the city or county govt will require a business license if you are selling anything. This is completely separate from the health dept inspection or cottage food laws. Luckily getting a business license is probably the easiest part of the process, it usually costs in the $50-100 range per year.
Contact your city licensing dept (or county if you are on unincorporated land) to find out the requirements in your area.
I am a homeschooling mother of 2, who also helps run my husband's body shop business! I only make 2-3 cakes a month, mostly to family and friends. I know how much time and work it takes to run a small business and I dont have time. I use my cakes to make a little money and to give me a creative outlet! I don't have time to do anymore than what I am doing and the logistics behind a "business" isn't worth it for the little bit I do!
AIf you want to keep things low volume there really isn't that much in the way of additional logistics, especially with a cottage food law. If you spend a few hours doing some market research and get a business license and GA cottage food license ($100/year) then use that information to set realistic prices, you will not only be legal but you will also make more money for the same amount of work. Plus you won't be harming the rest of the businesses in the market.
Situations like yours are one of the main reasons so many people have worked (and continue to work) to get cottage food laws passed: to make it easier for people to legally run food businesses from home.
Kara or Jason:
If your state has a cottage food law, do you still need a business license? Or does it depend on the state? I am under Texas CFL but in what I have read I haven't seen a requirement for a business license but maybe I'm just not looking in the right place. I am not selling right now.
In Virginia they didn't have the cottage food law until a couple of years ago, but before that you could operate from a home kitchen as long as you were only doing cakes and no catering. If you were doing any kind of catering you had to have a separate commercial kitchen. I got licensed and inspected under the old laws, so when they added the option of the cottage food law I didn't want to give that up. They still give you the option of having a health inspection every year, so the inspector comes to my house and pokes around.
Personally, I think it's valuable to have an inspection for a few reasons. When the inspector comes out I spend a good amount of time talking to him about any changes in the laws since I last talked to him, and you can learn a lot about what's up from them. It's also a good selling point for your clients, because having an inspection certificate is a good thing in most people's eyes. If you have the option to do either cottage food or have an inspection I'd do the inspection route any time. I was lucky that Virginia gave me the option to begin with.
A lot of people seem to confuse the definition of a business as selling something to others and the notion of a business being a full blown operation with a shop and employees etc. If you're selling cakes to make a little extra cash, you're operating a business whether its legal or not. The GA cottage food law thankfully makes it very easy for you to continue doing what you are doing and do it legally. If you're only doing 2-3 cakes a month the paperwork would certainly be minimal.
Jason,
I was not aware of needing a business license but I will look into this especially since I am developing a business plan and would like to factor a cost like a business license fee into my overhead.
Kara,
I don't think Texas gives the option to do inspection instead of CFL. I do see the benefit of having inspection because it can give some peace of mind and make the business seem more legit. I don't want to be under the CFL to be honest. Texas has come a long way, but there are some changes that we are hoping for. If those changes go through CFL would be more optimal for me.
AYou always have the option of getting a health inspection by using a separate commercial kitchen that's either built on your property or rented at a different site, even if there is a CFL.
AI don't understand the confusion about not needing a business license. Is it really not required in some cities? Nevermind what's being sold or what cottage law you're operating under, if you're collecting money in exchange for goods, the city will want their cut of it.
You always have the option of getting a health inspection by using a separate commercial kitchen that's either built on your property or rented at a different site, even if there is a CFL.
I haven't been able to find a commercial kitchen in my area that I could.rent. I do have space for one to be built in front of my home, and I do live in an area that has been zoned for commercial use.
A
Original message sent by AZCouture
I don't understand the confusion about not needing a business license. Is it really not required in some cities? Nevermind what's being sold or what cottage law you're operating under, if you're collecting money in exchange for goods, the city will want their cut of it.
I'm not confused anymore thanks to Kara and Jason's information. With some pointing in the right direction I did look up my city's requirements on needing a business license.
I've heard of some cities that require a business license only for certain types of businesses, and some cities waive license fees below specific income thresholds. So usually you will need a license, but in some areas you may not.
I've heard from some people in Virginia that it depends on your county. Some don't require a license, some do. What I DON'T understand is why you wouldn't get one anyway if you have the option. The license fee is based on income in this state, so unless you're making a lot more than most of us make you don't end up paying anything. I don't remember what the threshold is, but I've never paid for a license fee, I just fill out the form and they send me my license every year. That lets me get the benefit of wholesale prices from people who ask for your license, and you can also tell clients that you're licensed, which matters to most people. I tend to get everything I can in terms of credentials, though, so I can safely say that I'm licensed, inspected and insured. If you live in a state the went to a cottage law directly from not allowing any home kitchens you probably aren't going to get a licensing option. The health department here has a love/hate relationship with cottage bakers. They love that they don't have to inspect them, but they hate that they have to respond to complaints even if someone isn't licensed.
I am a new, legal, hobby baker with a full time job. Pricing was a challenge for me. Expenses including overhead are not the problem. It's my time that I had difficulty calculating. It takes much more time for me to complete all tasks involved in delivering a cake. It takes me much longer to complete a cake than a seasoned professional. Even shopping requires me to spend more time researching/calculating the amount of product needed. I spend hours and hours learning new techniques for each cake request.
I baked for a while for just friends and family without charging. I talked to several people in the business before I decided to start baking for $. While no one would tell me what they made personally, they all told me not to undercharge. It was easy to research the going price for custom cakes in my area. I try to base my pricing at the low end of the prices for those bakeries.
If I bake a cake that I don't feel is worthy of that price (and this has happened), I discount the cake or don't charge for it at all.
So far my system seems to be working. I have steadily increased my speed and my profit margins have improved. I am still on the low end of the pricing scale in my area, but not so low that I hurt the more established and more talented bakers either.
AIn florida I read that you do not need a license. Here in los angeles you do. I am legal and I am a SAHM with another full time at home job. I have waited so long for california to have a CFL, and now that i am legal, i am in competition with bakers who are wonderful at there skills and charge LESS than $1.00 per serving, fondant cakes, and all.
If a cake cost them $25 from cake to cake board, they only charge $35. When i saw that, i was amazed!
And this is los angeles, where they have famous custom cake shops that cater to movie stars!
I could not believe they sold a 3-D cake that size for that price. Even I thought about buying a cake from them at that price.
I am not looking to charge alot since I am just begining, but to charge less than $1.00 per serving is just not worth my time. Here in L.A. It is truly a race to catch the customer. It is much better to be in a smaller town/city.
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Original message sent by bnbmom
I am not looking to charge alot since I am just begining, but to charge less than $1.00 per serving is just not worth my time. Here in L.A. It is truly a race to catch the customer. It is much better to be in a smaller town/city.
I believe if you were to do this then have a section for hobby decorators who don't feel that their cakes are worth the same as a more experienced decorator. I don't feel right charging some one $100 for a cake because I am not worth that much. I am an amateur and not afraid to admit it. I am not trying to take business from someone else. I am a SAHM who likes to decorate and I feel as long as I make enough money for my supplies then I am doing great. Not everyone is in it to make money and what's wrong with enjoying a hobby and making some money. Do you really think us hobby SAHM decorators are taking away from local bakeries. If anything we are taking away from the supermarkets. Most people I am doing cakes for want something nice but can't afford to pay $3 a slice for a cake but they can pay $1 to $2. I just am not sure where that should factor in for pricing and comparison. People think I am trying to do better than our local bakery but I am not I am just having a great time being creative!!!
Does that mean you're running a subsidy program for people who can't afford the cake they want?
Wow that was super rude!! The definition of an amateur doesn't speak of money at all, so hmmmm. I guess if someone wants to be a professional they just start out being that way never having to work their way up or start as a hobby!!
Also if someone is going to a supermarket to buy a cake and they decide to go to me instead then I am not hurting a local bakery only a Kroger or Publix.
I guess the whole world is full of greed and nobody can do something for a friend without charging an arm and a leg!!!
No, it wasn't rude at all. If anything it was an impressive display of restraint. People like me whose sole source of income is cakes constantly see the effects of undercharging in their business and it's infuriating to hear anyone blithely going along thinking he or she has no effect on the cake market when of course he/she really does.
I can't make a living if I undercharge. So if you're undercharging, you're helping to put professionals out of business. If you don't think so, I'm sorry, but you're wrong. Consider listening to people who know this business and this subject instead of assuming you understand something that you dabble at. Or try making a living at this and your tune will change pretty quickly. Maybe this will help you see it: Do you vote? If you undercharge, you're voting to put people out of business.
Yes, it sure was.
Here we go with personal attacks. Where is a real defense of your position? There isn't one, so there's nowhere else to go but personal attacks if you won't admit that professionals know what they're talking about.
Whoa there...Nobody's afraid of little SAHMs, I'm a little SAHM who runs a legal business out of her home. You can be a SAHM and follow the laws, the two aren't mutually exclusive. It sounds like there's a cottage food law in Georgia now, so you should look into that and get legal. I got a business license before I sold any cakes, so it isn't something that you have to do illegally at all.
Exactly.
I am a homeschooling mother of 2, who also helps run my husband's body shop business! I only make 2-3 cakes a month, mostly to family and friends. I know how much time and work it takes to run a small business and I dont have time. I use my cakes to make a little money and to give me a creative outlet! I don't have time to do anymore than what I am doing and the logistics behind a "business" isn't worth it for the little bit I do!
Is that some kind of smoke screen? It really doesn't take much time to find out the market value of your cakes is and charge that.
Ai am sorry we are going to have to agree to disagree. Every business market in the world has low end pricing and highend pricing. If you didn't "pick and choose" my quotes you would have read, I don't feel like my cakes are worth what other sell theirs for. Everyone has a right to choose how much they spend on a cake as well as how much to charge. I in nooooo way charge what I do to steal business and put you out of business. I can't spend the time you do on cakes so I don't believe my time is as valuable. Everyone that buys a cake from me knows I am not a bakery and knows this is fun for me and an outlet. I enjoy it and won't stop doing it because maybe one day I will be able to have the skills to charge what a pro does. Like I posted before, my husband and I own and run a successful body shop. We don't have time to worry about other shops down the road and if they under charge or over charge, because everyone chooses different. Neither can I worry about this anymore. I am sorry bakeries feel we smalltown decorators are stealing business with lower prices. That was never my intention nor my reasoning for charging what I do. I simply charge what I do because none of my family and friends can afford to spend $100 on a birthday cake, so they should go to walmart instead??? No, and if indeed I give my cakes away, wouldn't that hurt the market more because I am giving away a cake for free instead of 1/2 off?? I just do not believe that this is a black and white topic and to say that no one on this site should undercharge(from local standards) and everyone should have a business and to not take business from someone else is unrealisitic. I believe the phrase "putting you out of business" is taking it to far, I have never had the thought of hurting someone elses business intentionally. Last but not least I mean this with no malice or hurt, but, if my "undercharging" is going to put you out of business then there are other things wrong with your business not just pricing. I would love to see how many professionals on this site started out exactly where I am and have worked their way up. Whether its right or wrong everyone has to start with something little. Not everyone starts at the sameplace, and to single me out and say I am the problem, " you are making professionals go out of business" is first off rude, but also just down right mean and hateful. I know I was rude with a couple of comments, which I felt like I was being attacked, but I am sorry for the attacks. But I don't believe we all fit into the professional mold and I don't believe I should be "stomped on" which I do feel the last posts were. Anyway once again agree to disagree but just remember not everyone is out to destroy your business, most people like me it never even crossed their minds, for me not until I wrote my original post.
If you own a successful body shop then you have to be aware that people who do repairs for super low prices on the weekends drain business from licensed shops. One thing that just irritates me to no end is the people who say that what they're doing as far as underpricing has no effect on other businesses. Of course it does, it drags pricing down and drains business away from others. It makes life more difficult for legitimate businesses who have to deal with a market that suddenly becomes saturated with lower priced suppliers, and it drives some people out of business.
There's an article in my local paper today about an art supply shop that's been here for 32 years that's now closing. When the reporter asked them why they said "amazon sells art supplies now." People who shopped there for years are willing to go somewhere else if they can save a few dollars, even if the service isn't the same. I'm not saying that it's good or bad ( it's obviously bad for the art shop) but to pretend like a lowballer price doesn't affect the market is just wrong.
I wrote a blog article about this last year after talking to a wedding planner who was saying that all of the people who were pretending to be planners were fine because "there's enough business for everyone." No, there isn't. If anyone thinks this is mean and cruel to say then too bad, it's just reality.
Generally what I see happening is the people who blithely say that they're just selling cakes for the cost of ingredients and so what, suddenly have a change of heart when they go through the process of getting legal. As soon as they have to actually run a business they realize that the undercutters (which they used to be) really do hurt the market. You see people on here posting about it relatively frequently and saying things like " I never knew what a pain it is to deal with this."
http://acaketorememberva.blogspot.com/2012/04/no-theres-not-enough-work-for-everyone.html?m=1
So what is a person, who likes to bake, suppose to do to start out, give away free cakes and then one day start charging the going rate in the area, never sell them to anyone before they make it where they feel they can charge the full price. Not all of us are as confident!! So back to my question how many people started out exactly where I am?? Nobody wants to admit for one moment that the majority of people who make it started out exactly where I am , so what is someone suppose to do?? All of you professionals did you start out selling your cakes for free and then one day charge full local area pricing???
Practice was practice and I didn't charge anyone to eat my sample cakes. As a professional, I still constantly give away things I'm working on, that aren't ready for retail. I don't want to sell something that isn't up to a professional standard.
I think it's about taking your work seriously.
Your either striving to be a professional or not. If your not, then you need to take responsibility that your stuff does hurt the market! As a business owner for a different market (cars) it seems your being stubborn not understanding this issue.
You don't want to be responsible, because it takes effort. As long as it does't hurt you, you don't want to care about others.
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