Tuesday, August 26, 2014

Guest Contributor: The Business of Baking!

Once again please welcome our guest contributor:
Michelle Green from The Business of Baking!
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Taking Deposits
by Michelle Green

The simple answer to this question is, “Yes! Of course you should!” I know that for beginning cake decorators, asking for money is really hard – let alone asking for money up front when the cake is weeks or even months away.

The reasons for taking a deposit are many, but as I see it there are two main purposes. The first is, it protects you as the cake maker.  Once the deposit has changed hands, it's effectively a contract. You know you've got that order to get done so you can plan for it. Clear your calendar, buy ingredients, start to work on that figurine or whatever it is you need to do. It also helps you to afford most if not all of whatever you might need to purchase in order to get the job done. If something goes awry and the customer cancels their order, at least you are not now left with a bunch of things which you had to pay for. Taking a deposit and securing a date it also really important if you limit the number of orders you take, because then you know what other work you can agree to or if you need to turn work away.

The second purpose to taking a deposit is to protect the consumer. Once they've paid the deposit, they know that you are contractually obligated to provide them with the agreed product. They can then move onto the next part of their event planning, knowing that the cake or cupcakes (or whatever it is you make) is secured.

Basically having a deposit paid is a guarantee to both parties – but I've heard of deposit situations going very, very wrong on both sides. Firstly, I've heard of clients cancelling orders and demanding their deposits back. In this case I usually say you should just be reasonable. If they've cancelled months and months before their event and you haven't done or spent anything on their order, and you are likely to fill their spot, I'd be inclined to refund it.  Your terms and conditions may have a time-based clause about this – so any cancellations 30 days or more before the event were refundable, 30 days or less before they event,  they were not. Again, the time you choose should be enough to give you the chance to re-book that spot with an order from someone else. You may choose to have a blanket “non refundable deposit” clause and plenty of people do, to avoid people shopping around.

I have unfortunately also heard of cake makers taking 'non refundable' deposits and then pulling out of making the order for any number of reasons (and some of them are truly bonkers reasons.) In my opinion, returning a deposit to a client is really unprofessional unless you are really and truly unable to complete the order or something catastrophic happens.  By taking the deposit you basically agreed to a contract to provide a product, and that client is relying on you to do so. Not only is pulling out effectively breaking the contract, but word is going to get around very quickly that you are unreliable. Unfortunately I had this exact experience when my Dad passed away suddenly. I was able to ask a friend to take over the orders for me, and she kindly also helped explain to my customers why she was taking over those orders for a few weeks because I simply was not able to do so.  I had an obligation to my clients and I met that obligation – I could not imagine simply walking away from those orders and leaving clients in the lurch (especially bridal clients, for whom finding a cake maker at short notice is not easy.)

To review, taking a deposit is an essential part of the business process, as it helps both the business owner and the consumer. All it takes is that one client who leaves you with a 3 tier cake and then magically decides they either didn't need it or don't remember they ordered it for you to learn that lesson the hard way.

Copyright 2014 Michelle Green The Business of Baking All rights reserved.
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Michelle is a food writer, trained chef and pastry chef with a huge amount of knowledge and helpful insight into running a cake business. She is also the sole author of the blog, "The Business of Baking" -www.thebizofbaking.com.  "The Business of Baking" is specific to the baking and decorating industry and teaches you how to make a real living doing what you love. Michelle started cake decorating at sixteen years old and eventually turned her hobby into a business by becoming a pastry chef, then opening a custom cake business and owning it for ten years. These days, Michelle is an educator, consultant and author who mentors other decorators in business, proving that it's possible to run a business and maintain your sanity at the same time. In 2014 and 2015 Michelle will be teaching live classes all about running a sustainable business. More information on her courses can be found at  www.bizbakeontour.com.

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