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  1. If you want to make a success of your business there’s a few easy things you can do to ensure you will still have a business which is turning a profit in 2 years’ time.Whether you are a new business or someone who is finding it hard there are things here which you can all try.

    Costings – Get it right the first time. Make sure you calculate everything which you will use right down to the washing up liquid you will need to wash your cake pans and mixer. It all adds up and it is the only way to really see how much the cakes cost you to make before you add on your mark up.

     Look at ways to lower your out goings, could you buy in bulk and save? Remember to be cautious though. It is only a good deal if you will use it all and in the right time frame if it is perishable. Otherwise you could be increasing your costs and that won’t help.

    Market research and general bakers etiquette – It is always a good idea to introduce yourself to other bakers in your area. They’re not the enemy far from it; if you build a good rapport with them you may well get extra orders when they are too busy to take them on. I myself have several local cake companies who I work closely with and we all refer our customers to each other if we are busy. The end result is we are all now busy thanks to each other.

    Other bakers may be able to offer you advice on suppliers and pitfalls they have found which will in time save you making the same costly mistakes.

    There is no point in pitching your prices against each other let the customer decide and instead focus your efforts towards being the best not the cheapest. You will find if you undercut others you will become known for it and you will find that hard to shake off. Your peers will not respect you and customers will wonder about the quality of your cake in comparison to others if it is too cheap. Instead look at other's pricing to see what the local catchment area is willing to pay and then work out your costings and find the price level to suit you.

    Family discounts – This is something which can often cause issues for bakers. Families watch you grow from someone who bakes for fun and they regularly forget you have progressed to a business. Whilst you were practicing your skills offering a giant cupcake to your nephew for £10 helped you cover your costs and they benefitted, but quite often they expect the same treatment when you have started your business and it just isn’t feasible when you have paying customers looking to book the same date.

    Get registered – So many times I see bakers popping up on Facebook offering cakes and cupcakes at rock bottom prices and they often say “I do this as my hobby, not my job” Let’s just clear one thing up. If you accept money or advertise your services in any way you are operating a business. There are no grey areas there are no get out of jail free cards either. If you are caught doing this you will feel the force of the Inland Revenue, the environmental health and possibly other government agencies if you are claiming anything like tax credits or other benefits.

    Start as you mean to go on. Get registered with both the Inland Revenue and environmental health. They are there to protect you as well as your customers. If you ever have any questions they are there to help you and if you were to ever receive a complaint over one of your cakes they will fight your corner too. It’s not as scary as you would think, registering takes moments.

    Telling tax credits could help you; you will be working more and may be entitled to more help not less. It’s better to tell them straight away than owe them money if they find out later down the line. If this is your first step back into work you may also be entitled to business start-up grants. This is something you won’t be able to claim if you do not do this officially.

    Get insured - If you add silver dragees to a cupcake and Aunt Bessie’s dog chokes on it and you aren’t insured your home, savings etc. could be at risk if they sued. Get insured and you will have plenty of protection. It’s not expensive and many companies will offer a monthly instalment option. Mine works out at just over £5 per month!

    These are my top tips for starting out in business. Most of it is common sense, but it seems the cake world in some parts has lost its way. I hope it helps you and you will have a thriving business which is here for many years to come. If you are ever unsure of something just ask a fellow baker, were not as scary as you think and you may even make a friend for life!

    I would be interested in your thoughts on this please do feel free to make a comment below. If you liked this blog please subscribe and share. I will be sharing lots more business advice and cake based topics soon.

    Shelly

  2. Starting out in the cake world is hard. There's no guidebook to how much you should charge for cakes. No steadfast rules on how you should operate your business or what etiquette is practiced by other bakers who have progressed well in the cake world.

     If you started a business selling shoes you would have some idea of where to start when you are given the RRP. With cakes a lot of people think its guess work, well they would be wrong.

    When you first start out you will almost always doubt your worth, want to compete with your local competitors and make sure you get the sale. Some make the mistake of thinking they should run their company like a supermarket in some price war with the other local bakers. This is really a mistake which will hinder you.

    Some doubt their skills are good enough to command a higher price and so go in at silly prices like £30 for a 10" sponge fully decorated. Doing this when working from home can give you a false sense that you are doing well. Of course you will make lots of sales as everyone loves a bargain and if your cakes are good they will come back for more. However your bank balance won't thank you for it.

    The average cost of materials for a 10” cake with modelling and detailing is £28 this includes things like boards, boxes, the use of your oven etc. This doesn’t however include the cost of your time. If you are running a business you will triple the cost of this on average to arrive at a price you should charge. This cake could take anything from 6-12 hours depending on the design you may even find you have work to do the day before for figures and other modelling work. You will have spent time on the design idea and this too can be time consuming.

    Why then would you charge £30 for this 10” cake? You may be the lowest priced baker in your area and yes as I said before you will make that sale. However the only profit you will make is around £2. If you attach a business card or ribbon to the box you will earn even less.

    This costing also doesn’t take into account any advertising costs you may have, lighting for your kitchen whilst you work. The equipment you buy to make the cakes and the wear and tear on these over time. If you offer to deliver you will have fuel and wear and tear on your car to account for too. There are so many more costing’s I could mention here, but you get my point.

    If this is how you run your business you will not last long. You will make a name for yourself and you will get the sales, however you are in fact paying to bake someone a cake if the money they pay you doesn’t cover your costs and more. You may as well hand over £5 to every person you see in the street and save yourself the hassle of all that work. You will find yourself ostracised by other bakers too as it is not good practice to try and outdo each other to get a sale. The decision should be down to the customers taste and how good you are as a designer.

    If you would like your passion for cake to be a profitable business check out our next blog where I will share with you some great ideas which will really help you stand out from hobby bakers.

    Shelly