Business advice is crucial, but be careful. I would be the last person to tell you to just go it on you own. You definitely want to learn as much as you can from the experts. That said, understand that sometimes the experts have an agenda that is different from yours. This sounds jaded, but believe me, sadly it is the voice of experience.
I took all the classes, educated myself as much as possible. Unfortunately, I was so eager to get started, that I neglected to pay attention to what the advisers had to gain. Of course you should expect that you need to pay people for consulting with you, but you should make sure that once you have paid their fee, they have no other motivation to steer you down a certain path.
In my case, I was in a program with other women in the start-up phase of business. After you completed the classwork, you were assigned mentors to help you continue down the road of business start-up. One of my mentors was a bank employee (are you seeing the bright red flag) and the other was an accountant. I just saw them as nice people who were kind enough to help me. The truth of the matter was they were looking for new customers, and the advice they gave was much more concerned with what they had to gain then what I had to loose.
Starting a Small Business is Risky
One of the things you need to understand is that when you sign a lease or take out a business loan, you are personally guaranteeing that the loan will be repaid. It may seem that that is an insult to your intelligence, but lots of people think that the business stands on it’s own to win or loose. That is not usually the case, if your name is on the contract, you and your assets are on the line. Yep, that could mean that you are using your home as collateral. Do you see what I mean about risk?
I am not trying to scare you out of starting your dream business, instead, I want you to possibly re-evaluate how you might get started. Start small, don’t quit your day job until you are already replacing your income, or you can at least cover all your bills with the income you are generating with your business. I know that is not what you want to hear, I didn’t either. I paid dearly for that mistake.
Because I have been in business, people wanting to start a baking business frequently ask me questions. I don’t mind that at all, but I have to admit that sometimes it makes me sad. It is like giving your kid advice that you know they will ignore. I have been where many of you sit, and I don’t even pretend to know all the answers. However, I do see red flags when I hear certain answers to questions.
Who is Your Target Market?
If your answer to that question is “everyone”, you don’t get to advance to “go” and collect $200. I was talking to someone over the weekend who honestly believes that is the correct answer. I don’t want to burst anyone’s bubble, but that is” la la land “thinking, and it simply is not true. I am not picking on that person, believe me I have heard that answer many times. I would have to admit that in the beginning I was a little guilty of that answer too!
Look at it this way, people who love your product may tell you that, but if someone does not particularly love what you make, it would be rude to say so. That allows us to easily conclude that everyone loves the bread, cinnamon rolls, cakes etc. that we produce. In addition to that, many people may like our baked products, but the next question is realistically, will they pay for them?
If you want to start a small business – start small
I know that sounds repetitive, that is because sometimes we have to hear things many times before we listen to that advice. In business, location location location is great advice for a retail business. The problem with that is that in most places, that requires a lot of cash on the line. If you don’t have the cash on hand, then you are looking at going into debt, and if you have been reading much of what I write about, you already know I caution people about going into debt. It just adds stress to your life, and in my opinion, it just is not worth it.
If you build it, will they come?
It was a great plot for a movie, but the reality of it is, maybe, maybe not. Every grocery store and many restaurants have baked goods for sale. Even worse, the customers are already there, and it is so easy for them to just purchase their baked goods in one stop shopping.. People are short time, and often convenience wins out over the quality of the products purchased. Another factor that you have to consider if you open a retail location, you have to remember that any product left at the end of the day is a loss. There is very little market for day old baked goods. The food kitchens are grateful for your donations, but that does not help your bottom line.
I know I may sound like a Debbie Downer but the point I want to make is take a realistic look at the risk you are taking when you decided to open a retail baking business. Do you really need to expose yourself to the risk? In the beginning, many people can benefit from the recent cottage laws that are now in place in many states. You can start small and build a loyal following that really is clamoring for continuous access to your baked goods. Once you have absolute proof of that, hopefully you have been able to generate enough money from the sales of your product to cover your expense, you can either add a licensed commercial kitchen to your home like I did, or make the leap for a retail business.
If you have been dreaming about whether or not you can bake money baking, I wanted to let you know that I offer coaching that takes you beyond what I can offer here. We can brainstorm ways for you to get started, and hopefully avoid some of the pitfalls that are hazards many bakers meet along the way. Please feel free to ask questions in the comment section.