Monday, September 8, 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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Should I Open A Store?
by Michelle Green


With the plethora of home businesses closing and opening a bit like popcorn – with a lot of noise and not much substance – it can seem like the only people who are surviving in the industry as those with an actual shopfront. Having a shopfront is not for everyone though, and in today's article I want to take you through some of the things to consider when deciding if you want to build your business outside of home. There are plenty of things to think about, and benefits and down sides to both business models, but here are a few things to consider when opening a store:

  •  Do you want to be tied to specific hours? Even if it's a studio that is “by appointment only,” there is still a natural expectation that a human being is actually IN the store. This means you commit yourself or someone else to being there a reasonable amount of hours per week.
  •  It's a much longer term commitment. When you work from home, it's pretty easy to shut down your operations if you choose to. With a shopfront, that would mean getting out of a lease (or not renewing it), cancelling contracts for things like phones and water and so on. It's just not as easy to get out of a shop-based business.
  • It's a bigger financial commitment, but also potentially a bigger financial gain. I know plenty of cake makers who built up really profitable businesses from home so I'm not saying you need a shop in order to be successful.  However, having a shop generally allows you to expand your offerings, so you might have a retail line of products, a place to teach larger scale classes, cake stand rental services and enough space to take on more orders. Because you'll have more space and resources, this enables you to do more than you could without that space and resources.
  • Having a shopfront often forces you to be more organised and procrastinate less because at some point, in theory anyway, you've got to go home! You can't just drag home all the tools and ingredients back home to make those 300 roses in front of the TV like you used to.
  • You will need to charge more because your costs are greater, but the advantage to this is that customers are usually more willing to pay more from a shop than a home based business. It's about their perception, not about your skill or talent.
  • Opportunities for cash flow are easier to implement – in a retail environment it's a lot easier to offer a weekly special, or try out new products or cupcake flavours. As the store is there set hours, people can pop in at specific times to get these kind of things, so it's a lot easier to manage. In a home based environment where you are making cakes, you're limited to that one product to bring in money – until such time as you can teach, or offer tutorials, or other forms of income.
For every cake maker there is a different answer to this problem. Sometimes we start off wanting one thing and then realise our business model takes us another. I've met plenty of people who say that they really want to own their dream bakery, only to open it and then crash and burn a year later. Similarly I've met lots of people who don't want to ever work out of home, but their success starts to require commercial space so they end up having to move out anyway. In all of this decision making process I actually think the debate is not about store versus home, but about what kind of business you're wanting to grow. Are you wanting the boutique, hand made, small scale and exclusive bakery? Or would you rather be making lots of different products at a higher volume? Working out what you actually want to do is almost more important than working out where you are going to do it from.


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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