So you are making cakes, loving life, running your own cake business and think it's time you opened a cake shop. I get it, your house is filled to the brim with cake pans, ingredients and mixers. You feel you just need a space to call you own. I opened a cake shop, there were many good times, and many hard times. Here is my honest view on opening a cake shop, what I would do differently now, what I miss now it's gone and if I would ever do it again.
Opening a cake shop business, or taking on premises is a big decision - massive! And one that should never be taken lightly. It'll cost you time, money, stress and heartache. But it will also provide motivation, pride, community and respect. If you are willing to take on the costs, the benefits will be huge, but please I implore you, make sure you learn how to run the business and not just know how to be a great baker.
Why read this post?
This is not a business post that will talk about making a bakery business plan, or the startup costs. I'm not even going to talk about profit margins or give you any legal advice. This post is the cold hard facts of what I experienced when I opened a shop. As cake business owners we sometimes assume that making cakes is all we need to know to run a successful business.
Before opening my shop I'd had a successful bakery business that I ran from my home kitchen. I always dreamed of having a commercial space but I'm going to be honest I didn't do all the market research and homework. And that's exactly what I'm urging you to do now.
When is it time to Open a Cake Shop?
Shops and premises cost money, and my number one rule, I would say, is make sure you are going to get the sales/turnover/profit to cover those costs.
When you are at a point in your business where you are making a good profit and can cover the basic costs, then don't be scared. Sadly, I didn't do this. I moved to a completely new area, with no customer base and set up a shop.
Don't get me wrong I soon had clients coming through the doors, but believe me, the first few weeks were terrifying and expensive! No-one knew me, and I mean no-one! I seemed to have dropped out of the sky in a whole new town to tell the world I was there and I was going to be selling cakes. They must have wondered who the hell I was.
Before we moved I had a good home business. My business name was well known and I gained many returning customers and had a good profit margin. People in the area knew who I was and I got many referrals. In hindsight, I should have moved, rebuilt the business from home and then looked at opening the shop. But I was way too eager, and that was ultimately stressful.
But that was my biggest problem - in my eagerness I hadn't learnt the business skills I needed. I knew I could make pretty custom cakes, and I had worked in bigger businesses so I thought I was well equipped. I was naive and I was wrong.
Only consider opening a cake shop when you know you business skills are as good as you cake making skills. Make sure you are equipped with knowing how to run the business as well as being able to make the cakes. Learning on the job, like I did, makes it harder than it need be.
What do you gain from having premises for your cake business?
- Firstly, and one of the nicest things is getting all your cake stuff out of your house. Most home bakers have pans, ingredients, boxes, boards, cutters and other stuff strewn around their homes. Maybe a whole room, in addition to your kitchen, has been taken up with your cake business stuff. You just want that space back - I totally get it!
Having a commercial kitchen space means you have a place to call your own to do all your baking and decorating is a luxury, and one that I will never underestimate.
- You can set boundaries between work life and home life. You can leave your work behind, close the door and head home.
This may have to be learnt, because when you own your own business it's still very easy to take things home in your head. But, just the act of not physically being in amongst a kitchen full of cake layers is a great way to have a better work/life balance.
- You gain recognition and respect within the local community. The simple act of having premises gives you authority. Sadly, some people feel 'home bakers' aren't proper businesses (which of course is totally wrong). Having a shop gives you that something extra in some peoples minds.
Within a couple of months of opening my shop (in a town where no-one knew me) I was asked to judge local baking competitions, teach at the local Brownies group, demonstrate at local WI's and attend local wedding business meetings. None of which would ever have happened had I not had a shop.
- Promotional Opportunities come in thick and fast because you are visible. As I mention in the point above I suddenly received invitations to attend local events, as an authority on cake in the community. Because of this I was standing face to face with many of my local, potential clients, in networking situations.
In addition to that I was able to ask the town's Mayor to cut the ribbon at our grand opening. A story which was then published in the local press adding to my marketing efforts.
We also won local Food and Drink Awards - more promotional opportunities.
With a shop you don't have to go hunting for the promotional opportunities as many just come to you.
What opening a cake shop costs
- Money in Overheads - rent, rates, utility bills, premises, employer or public liability insurance, waste disposal, broadband and phone. Anything you already pay at home, you will pay again when you have a mortar bakery. This will in turn affect your profit margin.
I would recommend you do you homework, and do it thoroughly. For example, in the UK some premises are below the Business Rates threshold, some are not and will cost you.
In today's climate some businesses are assisted with their utility bills, again some are not. Business utility bills are not the same as home. They are not protected in the same way and they often cost more per unit.
You should already know how much it makes you to make a cake. Having premises means you should also know exactly what all your overheads are, and what you need to put in place to have a good cash flow through the business.
- Time - having the benefit of a work/life balance also means you are out of your home for longer periods. This is definitely something to consider. For example, will you be able to pop home to bath the kids or walk the dogs?
If you have a cake to finish you will have to stay and finish it. There is no sitting down for half an hour in front of the TV with a cuppa before continuing.
This isn't always a bad thing as it makes you more efficient with your time. I became much better at time management during my period with a shop, because I knew I didn't want to be there until 2am finishing what I could have got done earlier.
- Being open to the public is also a cost. I know this may sound weird, but when you are open to the public, the public think they own a little bit of you.
Let me give you an example. I never used to open on Monday mornings. It was my time to catch up with things at home, and maybe go and get some supplies etc. I would however, open at 12 midday but rarely see any customers until gone 1pm. One day, I got stuck at the wholesaler and wasn't there to open at midday. On this particular day, as luck would have it, there was that one customer that wanted to order a cake, and they were there spot on 12 noon.
When I arrived I got a moaned at because I wasn't where I 'should' have been. There was no thought that I might have been having a bad day, that I had problems of my own or I couldn't help being late. The customers only concern was, I wasn't where I should have been.
- The EHO from your local health department can rock up at any moment - unannounced! Being open to the public means that your local Environmental Health officer (and Trading Standards Officer for that matter) can walk through the door during opening hours. They do not have to make an appointment.
To be honest, if you are on top of your cleaning and record keeping this should never be a problem, but just bear it in mind.
Some other Practicalities to think about
- Is the rent/lease length appropriate? Is it a long term or short term lease? Some landlords will ask you to sign a 5 year lease, some will ask for less. If you are tied into a lease, and you decide having premises is not for you, is there a penalty to be released.
I actually left my lease a few months before the end of term. However, my landlord was very accommodating. I found a new tenant, who the landlord allowed to take over the lease. In hindsight I probably wouldn't have signed such a long lease if I was doing it again. But I was fortunate that our landlord was a good guy.
- Are there any restrictions? For example are you even allowed to baked/cook under your lease terms? Not all premises allow for cooking. Or are there any restrictions on opening times? Check this before you make an offer on a premises.
- What will be your startup costs? Do you need to refit a shop? Fit out a kitchen? Have new signs painted? Buy new equipment? Buy display cases? What is the initial investment and how are you going to fund that?
Check out your local council to see if they are offering any grants? Quite often councils prefer their high streets to be filled, and will help small businesses.
Are you going to get a business loan, and how much is that going to cost on top of all your other overheads? If you are going for a loan banks will need a good business plan with financial projections. Preparing one will really bring into focus your financial outgoings.
- You will probably need staff. Staff were both the best and worst thing about having my shop. My staff were an amazing team!
However, after the rent the staff were my biggest cost. They also do things like go on holiday, in the summer, when you're busiest and have the most wedding bookings. But as I said - they were an amazing team and they are still all good friends. Sammie, my Headbaker is even now my Podcast Co-host.
Owning a Cake shop was the dream
Opening a cake shop was my dream. My shop was a cute tea-room as well as a cake shop. I also managed another, much larger Tea House in a local stately home, as well as catering for many events and parties. There were many wonderful years in the shop and I learnt so much about baking, production, hospitality, customer experience, and staff management. I delivered hundreds of wedding cakes and designed even more birthday and celebration cakes. I baked thousands of scones. And I had many wonderful repeat customers.
I'm not going to say I loved every second, because when I sold the shop I was tired, burnt out and quite frankly a bit of a mess. But the problems were my own doing, and I recognise that and have learnt from them.
I learnt that I should have had a better understanding of business before opening a cake shop. I should have educated myself better. In all the things I learnt, the biggest thing was I should never have naively opened a shop without properly knowing how to run a small baking business.
I know how to run a business now. I learnt the hard way. So in the end it taught me well!
Did I love having a shop? Yes, Yes, Yes
Would I do it again? Absolutely NOT. But then I am 10 years older now and definitely don't have the same stamina that I once had.