Best Way to Start a Baking Business


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If you were going to start trying to make money from baking, how would you do it? Anyone out there actually doing this now? What's the best way to keep cost down and how do you set a price point?
 
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I have been struggling with this idea for sometime after discovering a place in my city where practically all the ingredients needed for a baking business or a food preparation business can be ought in retail but a wholesalers price.

No, this place has nothing to do with club stores like Sam's, which claim to offer low prices, but at this place, next to city's food distribution central, prices are the really cheap and guaranteed that you can profit from a food-related business.

So that, finding the place where ingredients are cheap is in the list of top of the hints list when it comes to start a baking business and keep costs down.

As per a chef's advice, he says that one needs to earn 300% upon the production cost. Hence if you bake cup cakes, need to determine what the individual average cost of each cup cake is and then triplicate it when sell to cover expenses such as electricity/gas and your working hours.
 
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Sounds good MyDigitalpoint! But 300% could be low in some areas. For instance, if you're talking about one jumbo cupcake with tons of icing and all the bells and whistles, you could get material costs down to maybe 30 cents each! I think a mistake mom and pop stores make is that they under-price their food. The bulk of the expense is in equipment and electricity costs. Not to mention rent or mortgage on a building.
 
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Start working from home first and if business is good then think about a move to premises.
 
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Anyone have any ideas for packaging? I really don't want to just do the ziplock bag thing for mixes, etc.
 
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Sounds good MyDigitalpoint! But 300% could be low in some areas. For instance, if you're talking about one jumbo cupcake with tons of icing and all the bells and whistles, you could get material costs down to maybe 30 cents each! I think a mistake mom and pop stores make is that they under-price their food. The bulk of the expense is in equipment and electricity costs. Not to mention rent or mortgage on a building.
Yes, you are right! Many times we underestimate equipment and electricity costs even when we devote time to an online business, like in my case, but still impossible to carry out without having to pay these costs, which vary from region to region.

As for packaging, in this city food and beverage packaging supplies are sold nearby the wholesale food markets, but I have seen many others online. It would be matter to get some quotes from them to find the right solution.
 
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Do you think word of mouth is the best advertising for a business like this or is it worth spending some money on advertising? Seems like when it comes to baked good, word of mouth travels like lightning.
 
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depends on the state you live in, depends on the laws. California just passed a cottage law but the restrictions make it almost impossible to operate a business. :( Baking from home without a license is illegal however, many do it on a lower scale.... for example, charging for a birthday cake, or graduation cake, etc.
 
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I would like to set up a Cake baking and Decorating business from home but have no idea on what to charge. I live in Gloucester. Please can someone give me guidelines
 
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I used to sell the 7up cake. People would ask for them all the time. I don't remember why I stopped selling them. I didn't have a commercial mixer back then, now I do!!
 
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I'm thinking of starting a plumbing business.
Should I go to home depot and buy lots of pipe, or get a job and learn how its done. ?
 
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A small fortune if you start out with a big fortune.
I've seen several of them come and go, minus their money.
It usually starts when they listen to some fool who tells them "you should open your own bakery".
Home cakery's can do very well, but commercial bakery is a fools game.
Most of them are surviving by selling coffee , light lunch and sandwiches.

I know from direct experience of many who look like they're very busy but aren't making profit.
Spoke to one owner who was doing $20K just on sat and sunday but still not making any profit, he was injecting $50K every 3 months.
He sold out after dropping $2M into the place.

A woman who bought one of my locations now has 15 cafes, she was a movie producer in Israel, she isn't making money but keeps expanding, I've seen that play out before, they believe if they can just get to a critical mass they will begin to make a profit, it doesn't work.

A guy I met told me he had a sourdough bakery in western MA, made nice bread and kept expanding but in the end couldn't make his loan payments, the bank called the loan in and that was that, he was an experienced baker. What he failed to see was the bigger volume of accounts meant he needed more vans, delivery drivers etc etc. But then he needed more volume to pay for the vans and drivers, in the end the balloon popped.

My brother worked for a woman who made great bread from home, everyone told her she should open a bakery, her husband is a doctor so they had cash, 4 years and $250K later she offered to sell it to my brother for $40K , he declined. It wasn't making money and never would, its gone now.

After that he worked for 5 lawyers who thought it would be a great idea to open a big gourmet food mkt and bakery.
They're going broke, hope they sell it.

My last job before I retired was a chinese woman who came to America on the chinese olympic gymnast team, she didn't go back.
I told her to de-emphasize the bakery side and push hard into the cafe business, it worked out good, I was working 4 hrs a day .
I taught her to make croissants and we sourced suppliers for wholesale brownies etc.

5 yrs ago I was pastry chef for a place that was opened by a rwandan who imported fair trade coffee beans from Rwanda, his lease was $25K a month rent. My formula for rent is it should be 10% of gross sales, there was no way he could do $250K a month selling cups of coffee and muffins. I left to work at the Hilton ( just to get health Ins) , he ended up shutting down. Nice man but he really had no business signing a lease like that, it was doomed. It was in Union square NYC and a typical NYC rent.

These are some typical examples, I know lots of them, they all end up the same.
But if you sell cakes from home, thats another kettle of fish, theres a lot of money in doing that.
 

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