We’ve all had it, a new local baker posts on Facebook. They’re selling a 7 tier, all singing, all dancing wedding cake for £30. How can you compete? Well, you can’t and here’s why you shouldn’t AND why you shouldn’t let it bother you. In this post I’m going to tell you why you should ignore the competition when cake making!
You’ve been in business a little while. You’ve just started getting some steady business, some returning customers and then you see it…..the Facebook post from a new baker on the block. There they are selling everything and more for knock down prices that you can’t possibly compete with. It knocks you for six.
But here are some stone cold facts to face up too.
- They’re new, they’re trying to drum up business – we’ve all been there
- You have built a reputation. You have your returning customers
- You don’t want to ever make cakes for such a low price because…..
- They’re not making any money
- They’ll soon learn that they’re working for nothing, or maybe even a loss and you’ll either not see them again OR they’ll be putting their prices up pretty soon
So, why are you worrying?
You’re worrying because you feel threatened. You’re worrying because they may be busier than you. You’re worried because your customers may defect to the other side. You’re worrying because you saw the post!! I get all of that. Believe me, I've been there.
Every day there are hundreds of new bakers coming onto the market, and every day I see other cake makers in Facebook groups worrying about the post they’ve just seen in their own area. I have several bits of advice for you about this, advice that I’ve taken myself, and now never worry and can ignore the competition when cake making.
The competition are not selling to your ideal client
Do you know who your ideal client is? I’m sure you do, but maybe you’ve just never actually thought too deeply about it. I recommend you get this number 1 business tactic sorted, before you worry anymore about the local competition.
Once you know your Ideal Client, you’ll know that the competition isn’t really competition at all, they’re just other cake makers.
The competition are not selling in your niche market
Sure they may be selling geographically local to you, but are they reaching out to the same market as you? I would guess not.
This is a direct follow on from knowing your Ideal Client. What is your niche market? What are you good at? What attracts clients to you rather than other people? I’m guessing it isn’t just a rock bottom price.
Make sure your market knows what is different about you, whether it’s your style, ingredients, flavours, customer service, etc etc. Making yourself stand out because of your differences is as important as knowing who you are talking to.
Be confident in your pricing
Do you know your costs? Do you know how much you are paying yourself? Do you know how much profit you are making?
I know it’s THE most boring thing in the world for a creative person like yourself, but if you’re going to succeed in business then sometimes you have to do the dull stuff and sadly that means looking at your accounts.
Knowing exactly how much your cakes cost, and how much you want to pay yourself will give you confidence to price your cakes correctly. This means you will be less likely to under price, which in turns means you will always earn from your business. Read my blog post about pricing here.
Now this person down the road, selling for flumpance. They are NOT making any kind of profit. They are probably not paying themselves even close to the minimum wage. Actually, chances are they aren’t even considering all their costs and when you add their utility bills, petrol to get to the shops and time spent doing admin into the mix they may well be paying their customers to buy their cakes. I promise you, they won’t do it for long before they get bored!
We did a whole episode about pricing on the Podcast. You can check it out here.
Essential Business Techniques
Now, these 3 bits of advice are basic and essential in business. However, sadly, when we see a bit of scary competition all reasonable thought can go out of the window and we get worried. Next time this happens to you, step back and remember what makes you a good business person, and why your cakes are so amazing and why you can ignore the competition when cake making
Then let that Facebook ad worry you no more!
For more information about running a cake business read an Essential Guide to starting a Cake Business.