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advice - starting a baking business

LibbyBoo's picture

Needing advice from people who've been there...


A friend and I have been talking abou starting a small business. Small being the key word...we would work from our homes and have no employees.  We want to bake wedding/special event cakes and also offer cheesecakes, truffles and a few other select goodies for parties/events.


Problem is, neither of us has ever been to school for any kind of baking, culinary arts, food prep. etc.


We  both are self-taught, and if that disqualifies us from this board or from starting a business, it would be a shame...  still, I know it quite possibly could.


We both have FULLY stocked libraries (and increasing by the week) with books and magazines and articles on cooking, baking, decorating desserts, food science, etc. and we both have gotten several requests for not only our recipes but also for our services - right now, our small community knows they can call on us to provide them with any dessert or meal if they only provide the ingredients.


I say all this not to "strut my stuff" or to try and prove myself...I say all this because I honestly want to know - are we even close to being able to start our own business at this point? 


I mean...is a combination of experience + willingness to learn + limited literary resources enough?


Please understand I don't mean to ask for help with the "business side" of things.  My husband runs a business out of our home, and her husband went to school for business, and manages a restaurant right now, so we have that covered. (The accounting and books and such.) 


I just mean...are we going to 'flop' because we don't have degrees?  Are people going to ask this when they consider hiring us?  Are we going to have to keep our prices lower than most since we're self-taught? And do you honestly think we can gain enough knowledge from books to make desserts in a way that people are willing to pay big bucks for?  Would it be worth it to hold off on the business and to enroll in school? 


Also, keep in mind, we don't plan on offering a full menu...we are going to select 5 desserts and stick with that.  Does that benefit us or will that limit us?  Will people be turned off? Also, will our ovens work or would we have to invest in commercial ovens?


Also...please recommend any and all books you can that you think would help.


I really do appreciate the time you've taken to read this post and I appreciate any TRUE advice you can give me.


Please don't beat around the bush or sugar coat anything.  If starting this business is way out of my league, I'd like to save my time, money, and heart before I get into something that's going to claim them all.


Thank you in advance.


Edited 2/16/2006 10:32 am ET by LibbyBoo

soccermom's picture

(post #63862, reply #1 of 70)

I catered briefly long ago and I found that it was very difficult to make money at it. If you base your food costs at 30%, overhead at 30% and labour at 30%, you'd make 10% profit, which isn't much on a $50 cake, for example. I don't know where you live (fill in your profile before Glenys finds out!!) but you have to consider how much your clients/community will bear in costs. Unfortunately, many people are just as happy with a $20 Costco cake, so you may not be able to overcome that.


I don't think your background has much relevance; if you can provide products that people like and for which they'll pay a price that gives you a decent profit, it's nobody's business what your qualifications are. However, if it's a small community and they are used to getting your food at a very low price, it will be difficult to increase those prices.


I'd be careful not to underestimate the time and cost of purchasing ingredients, waste, your own labour, gas, utilities etc. Doing it for a hobby is one thing, but as a business you'll want to make money.


Also consider how this will affect  your home life. I have a home-based business and if DH was doing one too, we'd be on each other's nerves pretty quickly. If you have to work nights, will that be practical for you, your DH and kids (if you have any)? What are the licensing requirements in your community? I wouldn't start a food business without meeting all of them--and they may be enough to prevent you from working from a home kitchen. You'll need insurance, which you won't get unless you're licensed.


There are bound to be "start a food business" books on Amazon or at your library. I'd go through those to determine if it's feasible for you.


I'll be interested to read all the other advice you'll get.


 


 


 


 

 

 

Glenys's picture

(post #63862, reply #9 of 70)

I'm here, and yes, please fill in some of your profile so we can get to know your market.

Everyone has made the pertinent points but most of all, health department restrictions are huge. If you're planning to sell to restaurants, remember you're culpable for the same food safety issues as the restaurant that sells them. If you're contracted to do a cake by an individual, that's completely different.
There's a simple way to do the math on a product for the industry and your location. Take the price muffin or cake that's similar to your product, sold in your are and divide by four or better yet five. That's going to be the cost of your ingredients. Four or five times the cost of ingredients gives you a margin that you have to pay yourself from, pay your overhead and glean a profit margin from.
You could also begin by figuring the food costs but for most, the simple formula worked backwards is a better reality check.

MadMom's picture

(post #63862, reply #2 of 70)

Be sure and check with your local Health Department to see if there are regulations on using your home kitchen to cook, etc.  I know that when CookiMonster had her candy business, she had to set up a separate kitchen just for that. 


In Killeen, where my younger DD used to live, there was a woman who did baking out of her home.  She made beautiful cakes, and people were willing to pay what she asked, and I don't think anyone looked at whether she had been to culinary school or had a degree or anything like that. 




Not One More Day!
Not One More Dime! Not One More Life! Not One More Lie!

End the Occupation of Iraq -- Bring the Troops Home Now!

And Take Care of Them When They Get Here!
elizaram's picture

(post #63862, reply #3 of 70)

Definitely do the numbers. Decide how much volume you expect or want to do; figure out if you need any extra equipment beyond what you already own to meet this volume (more cake pans? a bigger quantity mixer? pastry bags and tips?) Determine the unit cost of your ingredients, then multiply that by the amounts in your recipes to figure the cost to you per item (don't forget things like butter to grease the pan, parchment paper, cake boxes). Knowing your community, how much over this amount can you get away with charging? (Canuck is right - it's silly, but people who will gladly pay $5 for a slice of cheesecake in a restaurant may balk at paying $10 for the whole cake). And given that profit margin, and the volume you expect to do, how long will it take you to recover your initial investment in equipment, and how much will you be making per hour of effort after that? (Don't forget that your time involves not only baking, but planning, acquiring ingredients, interacting with customers, and delivering your goods.)

I did this myself recently - I had a wild idea of baking bread and pastries this summer and selling them once a week at a farmer's market. Did all the math, and, well - it was a good reality check. When all was said and done, it would take me half the season to break even, and after that I'd be earning more per hour as a greeter at WalMart. Now I know why "artisan bread" is so expensive. There's just no way to compete with the economy of scale of the mass-produced stuff.

I'm not saying the numbers won't work out for you, but it's a good first step in figuring out whether or not this is a viable business idea. Questions like "will people buy my cakes?" are hard to answer without actually doing it; but ingredient costs and effort are known quantities.




Never be afraid to try something new. Remember that a lone amateur built the Ark. A large group of professionals built the Titanic. --Dave Barry



When I was young, all my friends were imaginary. Now that I'm older, all my friends are virtual.

LibbyBoo's picture

(post #63862, reply #4 of 70)

Wow.  Good advice so far.  Thank you a ton!  You're giving me lots of homework, but that's what I wanted.


I'm copying and pasting all this and bringing it to my friend.


I did think of one question after reading your input...


Is there a market out there for people (me) who only provide the desserts for local restaurants?  Could that possibly cut down on my costs?


Just rollin things around in my head...


Thanks again!

RuthWells's picture

(post #63862, reply #5 of 70)

I'm excited for you in your new venture and am looking forward to hearing how it goes!  Please keep us posted.


As for your question about supplying desserts to restaurants, my instinct is that you'll make even less profit margin there, as the restaurants are going to protect their own profit margin by paying you less.  That being said, it may be cheaper for a restaurant to sub out to you rather than bringing staff in-house, so if you found the right fit, it could work out for you.  Good luck!


 


Ruth Wells


"Gardening is the only unquestionably useful job."
 - G.B. Shaw

Ruth Wells

"Gardening is the only unquestionably useful job."
 - G.B. Shaw

www.lemonade-and-kidneys.blogspot.com

www.ruthssweetpleasures.com

http://www.pkdcure.org/Default.aspx?TabI...

CookiM0nster's picture

(post #63862, reply #8 of 70)

As someone who did more or less just what you're talking about (though I only did chocolates, no baking), I'd worry most about the numbers. Sit down and calculate your costs on eash item - how many cakes etc do you need to make and at what price do you need to sell them in order to actually make any money? One reason I went with chocolates instead of cakes is that it's nearly impossible to actually earn any money making specialty cakes as a home business. Chocolates are better, but not by much.

Selling to restaurants and cafes will get you more volume, but considerably less profit - they buy at wholesale, not retail, prices. Wolverine used to sell desserts to restaurants. Hopefully she'll weigh in with more on that.

Don't forget to check out your local health regulations. I'd be very surprised if you're allowed to make things in your own kitchen.

Whether you've got "proper" culinary training or not is irrelevant. As long as you're good at what you do that's all that really matters.

I'm sorry to sound so negative. Perhaps what you want to do can be done in your area. I'd just caution you to check through things very carefully first. The best way to make sure you've got a solid business idea is to write up a formal business plan.

Wolvie's picture

(post #63862, reply #30 of 70)

I had a pretty decent experience doing desserts for restaurants when I live in Ma. It's all about location on that gig. I could do it here in WV with no problem, and I have from time to time provided desserts to the 'best' local establishment, but - the kinds of things that the clientele here want makes it boring for me, so I don't do it on a continuous basis.  


Excellent advice from all parties to you so far - definitely research and calc your costs, and don't sell your talents short. See what sells in your area, don't be afraid to talk to the chef's and owners to get there take on it, and You'll probably have to provide a sample to get started.


Good luck!


 


 No mans error becomes his own Law; nor obliges him to persist in it


THOMAS HOBBES, Leviathan, part 2, p. 237 (1950).

 

shaloop's picture

(post #63862, reply #42 of 70)

Did you have to have a commercial kitchen or did you do it from home? (Wolverine, or any others.)


I provided cheesecakes and layer cakes to a couple of cafe's in my area last year.  My intention was to take samples around and find out if there was interest and I intended to rent from a commercial kitchen if there was enough interest.  The deal with the commercial kitchen fell through, but the cafe's wanted my desserts anyway.  I did it for several months before Hurricane Katrina wiped out the businesses I sold to.  I haven't searched for anymore business since I would find it hard to approach a business with no commercial kitchen and no license.  I do believe now that a small business catering desserts and providing them to restaurants would do very well here, but I have no funds to put a commercial kitchen in my home and don't know of any to rent.  It's so disheartening to just put the idea on the shelf and I would love to be still busy baking (and making a little money) but I"m scared to do it from home.


Shaloop


 

CookiM0nster's picture

(post #63862, reply #43 of 70)

I built a small kitchen in my basement and got it licensed. It was surprisingly easy and affordable here, but the cost of these things varies a lot from place to place, depending on the local regulations.

Gretchen's picture

(post #63862, reply #44 of 70)

You are right about "where" you are. In the US, it can be dauning.

Gretchen

Gretchen
CookiM0nster's picture

(post #63862, reply #45 of 70)

Yes, it can, but even then how daunting does depend on the local regulations.

Gretchen's picture

(post #63862, reply #46 of 70)

I guess I thought that was what I said.
I guess this person is in Canada and you certainly have a great deal more experience with what it will take. 

Gretchen

Gretchen
madnoodle's picture

(post #63862, reply #47 of 70)

Why would you guess s/he is in Canada when there's a reference to jobs being wiped out by Katrina?


Saskatchewan:  our mountain-removal project is nearly complete.

What if there were no hypothetical questions?

 

Gretchen's picture

(post #63862, reply #49 of 70)

I don't believe I saw that. And I seemed to be having a lot of conversation with Canadians.  Forgive the mistaken inference. I'll just leave it.


Gretchen



Edited 3/23/2006 7:10 am ET by Gretchen

Gretchen
Wolvie's picture

(post #63862, reply #48 of 70)

I did it from home, but had to get my home kitchen certified for it - which, as others have said, can be difficult, depending on where you are. I did have to make a few changes, and the easiest course would have been to do what CM did - build a separate kitchen, but I didn't want to do that.


I take it you are in the NOLA /Miss area - maybe some other businesses would rent you space in their "off" time - I know I had a couple of caterers and such offer to do that for me. There is the possibility that one of the restaurants you would serve could also provide kitchen time. It could be that some funds are available to help you - you could call your local chamber of commerce to find out, and they might have some other ideas.


I hope it goes well for you. :-)


 No mans error becomes his own Law; nor obliges him to persist in it


THOMAS HOBBES, Leviathan, part 2, p. 237 (1950).

 

Ricks503's picture

(post #63862, reply #50 of 70)

with disaster relief funds from federal, state and local areas, and them wanting to get businesses up and going again, you might be able to get a loan or grant to put in the kitchen, or find a few others who want a small scale kitchen and go in with them on one in a rented space near or equidistant to each other.

1 - measure the board twice, 2 - cut it once, 3 - measure the space where it is supposed to go        4 - get a new board and go back to step 1

 

 

" There'll be no living with her now" - Captain Jack Sparrow

MadMom's picture

(post #63862, reply #51 of 70)

I don't know exactly which area shaloop is in, but from my DD's experience in Mandeville, trying to get construction personnel is like pulling hen's teeth.  There is so much clean up and rebuilding which needs to be done.  Of course, the government is being its usual incompetent self, which slows things down even more.



Not One More Day!
Not One More Dime! Not One More Life! Not One More Lie!

End the Occupation of Iraq -- Bring the Troops Home Now!

And Take Care of Them When They Get Here!

Gretchen's picture

(post #63862, reply #52 of 70)

And Chiqui's experience (unfortunately) at the moment sort of speaks against it too.

Gretchen

Gretchen
shaloop's picture

(post #63862, reply #53 of 70)

I had actually already formed a LLC and gotten a tax id number last year.  But because I wasn't already operating in a licensed kitchen (and don't have a business license) the only help out there is a small business loan which follows the same guidelines as it did before the storm.  I've gone to Small Business Deveopment centers, FEMA and the Small Business Administration.  As far as I can tell, the only help in starting businesses are for very large corporations that will be bringing in thousands of jobs (like casinos).  As I've been a stay-at-home mom for most of the last 6 years, my income and credit situation will not get me a loan.  My DH will not take out the loan as he doesn't want to take any risk.  My next step, I think, will be to approach caterers.  I don't really know anyone in the business, though.  And the businesses I used to sell to were literally wiped out!!  Don't know if or when they'll reopen.  I didn't expect such a response, but thanks for brainstorming with me!!


Shaloop


 

CHandGreeson's picture

(post #63862, reply #55 of 70)

I hate to be super-nosy, but where are you on the Gulf Coast?

shaloop's picture

(post #63862, reply #56 of 70)

Biloxi, MS


 

MadMom's picture

(post #63862, reply #57 of 70)

My sympathies go out to you.  We had family members in Gulfport, Long Beach, and in Mandeville, LA.  We used to live in Slidell (home completely gone now) and in Bay St. Louis (also gone.)  It's so sad to see the devastation, and it seems most of the focus is on New Orleans, which had such horrendous flooding, but areas to the east were harder hit by the storm. 



Not One More Day!
Not One More Dime! Not One More Life! Not One More Lie!

End the Occupation of Iraq -- Bring the Troops Home Now!

And Take Care of Them When They Get Here!

CHandGreeson's picture

(post #63862, reply #58 of 70)

Okay, my advice is to not give up! There used to be some very cute coffee shops, but I fear they were all below the high-water mark: the French one near the courthouse in Gulfport, The Tea Garden on TeaGarden, and Bankhouse in Long Beach. le sigh!
I would search out the viable restaurants still around, I know that Long Beach Lookout moved up N on 49 and start conversations with them - let them know you are there and what you do and be friendly. It's going to take time for everyone, so just talking can't hurt!
~Charlotte

shaloop's picture

(post #63862, reply #59 of 70)

The TeaGarden was my first customer.  He loved my cheesecakes.   Some of his customers even ordered from me.  I've lost contact with the owner, but his place was completely destroyed.   I know I could get more business, but I"m afraid to approach owners knowing I don't (and won't soon) have a commercial kitchen.  But, being friendly (and talkative) was what got me business the first time.  Who knows what doors may open.  I need to start small and move slowly I guess, and save my pennies!

CookiM0nster's picture

(post #63862, reply #60 of 70)

Have you thought about offering to make the desserts in the restaurant's kitchen during off hours?

shaloop's picture

(post #63862, reply #61 of 70)

Actually, I did think of that, but figuring that I'd possibly need an oven different than what was there, and a certain amount of storage space (dry goods, pans, boxes, etc as well as cooler space), I dismissed the idea and never actually approached anyone about it.  But, I think I should consider it as a possibility and figure out how I could make it work.  Maybe bringing all my supplies and doing it all in one day (like Sunday).  I guess I just need to brainstorm and think of several possibilities and plan it all out as to how it could work, then go from there. 

Ballottine's picture

(post #63862, reply #62 of 70)

a certain amount of storage space (dry goods, pans, boxes, etc


I cook for large gatherings  (100 -200) at my church and at first I was lagging my stuff back and forth.  It was extremely time consuming, and more often than not  I managed to forget something.  I managed to get one metal cabinet with a lock, the kind they used to use for office supplies in which I keep everything I need with the exception of perishables, of course.  I keep inventory on a piece of paper on the inside door.  This way I know what I need to buy or bring.  It is very efficient, and the cabinet does not take much space.  Bal


 


So much to cook; so little time.

 

So much to cook; so little time.

DeannaS's picture

(post #63862, reply #63 of 70)

I'm coming into this really late, and haven't read all the messages. But, have you asekd at your local firehouse? Often they have commercial kitchens and sometimes they'll let people rent them.

"As for butter versus margarine, I trust cows more than chemists." - Joan Dye Gussow

hillcountrycook's picture

(post #63862, reply #64 of 70)

I sometimes work out of a local bakery/restaurant in the evenings during the week.  They are open for dinner only on the weekends, so the kitchen is empty at night during the week.  For instance, I have a pie booth at a festival the end of the month and I am using this kitchen for 2 nights prior to the beginning of the show.  They have a walk-in oven in which I can bake about 90 pies at a time, so in 2 evenings I figure I can bake about 400-600 pies.  Transporting is another matter!!!


Anyway, some restaurants would be willing to rent out kitchen space in off times.  Also, try a school (charter schools seem more open to this) or even different organizations...I once baked for about 6 months in the kitchen of our local Girl Scout building for a donation of $20 a month!


There is always some place where a kitchen is being under utilized and they could use a few extra bucks and who knows?  It may lead to some extra baking jobs when they see what you are turning out!