“10 Things I Wish I Knew Before Opening a Bakery”
BY GUEST CONTRIBUTOR
Michelle Honeman was the owner/founder of Oregon’s own “Sugar Mommas’ Bake Shop & Cafe”. Sugar Mommas’ Bake Shop is a custom cake and bread bakery, selling premium cupcakes, desserts, cakes and savory baked goods. Michelle had long had the dream of owning her own bakery. She dove right into ownership when she got fed up working for others and wanted her fate to be in her own hands! Michelle is ambitious, talented, kind and boat loads of fun. Her bakery has just celebrated it’s 1 year anniversary and as Michelle reflects, she has some words of wisdom to share!
Michelle had the honor of making “Grimm’s” 100th Episode Celebration Cake!
Without further adu, some “need-to-knows” and some “keep-in-minds” for all you future store-front owners. We wanted to give you some real-talk tips, none of that over our head intimidating mumbo jumbo that often scares us away…
Opening a bakery … what I wish I knew going in…
So, it’s always been your dream to open up a bakery? Or maybe you have been caking from your home and think that opening a bakery is your next logical step. But where do you start? After having my bakery open for little over a year, I would like to share with you what I wish I knew about owning a bakery and what I would do differently if I had to start from scratch again…
1. Business Plan
Writing a thorough Business Plan is so important! I cannot stress that enough. At first, I thought I could get by; surely I don’t NEED one. I know how I want my business, no need to write it down.
Especially in your first year, you will seek guidance in your plan more than you could ever imagine. Your customers, friends and even family will spout countless ideas and suggestions your way. Some may be worth considering, some may even be sound ideas! However, don’t let everyone else’s ideas cloud your vision. I made the mistake by branching out on so many different ideas that I lost track of my own plan. Not only that, but I also lost money trying out these new ideas. Don’t get me wrong – a business plan can change and new ideas can flourish into great additions, but it is essential to have a guideline to reference.
A business plan is also essential if you need a business loan. Investors want to know how you plan on making this a successful business before they INVEST in your business. They need to be convinced that you will pay them back that loaned money, and one way to convince them is to show them you know what you are doing.
Need help writing a business plan? Does it sound a bit overwhelming? I hear ya. Check your local city hall, or local small business association (go here for local links). I was given a grant and free classes to help me develop my business plan with expert help. So much helpful information was given to me to help refine my plan.
Great articles related to business plans:
Man, oh man how I wish I had worked in other bakeries before opening up my own! I graduated culinary school, interned with a custom cake studio, and then, with a steady shove from my mother, I opened up “Sugar Momma’s Bake Shop” Just. Like. That.
I know, crazy right? I counted on my mother for her experience in the restaurant field, but a bakery can have very different challenges. We deal with not only custom cakes, but making sure our cake display case is full, while maintaining freshness. And we have to keep up with the shrink logs! Not everything is made to order like most restaurants. Creating schedules, par lists, shrink lists, vendor lists, rotation and inventory are just some of the essential systems you will learn best from “DOING”. I learned NONE of this from my school, or working as an intern, I thankfully had some amazing employees that taught me. Working in a Bakery, Before Opening A Bakery will also help you familiarize yourself with service reps and higher quality products on the market. Who knew you could get discounts by simply knowing vendor competitor prices? They want your business! But don’t just give it to them. Know your stuff and prove to them they can’t pull the wool over your eyes. Make them earn their paycheck. It will save you so much in the end.
Also you can learn so much from other people and their skills. If I could do it again, I would work in a production / specialty bakery for a while to get my feet wet. You can learn so much from both worlds (because they are two totally different worlds!) and then create what works for you. In the end that is what matters the most. How does it work for you? This is your business – make it work your way.
3. To Have a Business Partner or To Not Have a Business Partner
That is the question. This is a hard one for me and a sensitive subject. I started out with a business partner, changed business partners and now I am 100% owner. You have to really be truthful and honest with yourself and ask yourself if you really can share your dream. You also have to be willing to allow the other partner to be a partner and make decisions.
I was finally honest with myself and realized that I could not share my business with a partner. I had business partners for all the wrong reasons. Know the difference between an investor and a business partner.
If you still decide on a partnership this is my advice: Put everything in writing. I mean everything. From what you expect your business partner to handle; their responsibilities; what they are authorized to do; and in the event of a fallout, a detailed contract on what happens. I started with a 70/30 split with my partner responsible for all the paperwork and Human Resources. Well, you need to put into detail what all that includes. Details, details, details. If it includes payroll, paying taxes, employee files and write-ups, procedures and paying the bills, have that in writing. No confusion later with a “he said, she said” situation. If the time comes when it just doesn’t work out, having a detailed exit plan will save you both a huge headache. When it comes to that, usually there are hurt feelings on both sides and it can get ugly. Family included!
4. Get the HELP You NEED
Oh my gosh, I wish I had one from day one! Before you open your doors, get yourself a Bookkeeper (or a skilled administrative assistant) and Accountant. I was lucky enough to find someone who was both a Bookkeeper and an Accountant, you can call me a lucky duck. When you open a business everyone tells you that you will wear many hats and do all the work. There is truth to this, but in the end it is not useful. As for me, I opened my bakeshop because I LOVE to create cakes and I love my community. I, however, DO NOT LOVE all the book work nor am I good at it. You will get burnt out really fast if you are trying to do it all, and not enjoying your dream. I soon found myself being just a manager and no longer a cake artist. I found myself in my office figuring out payroll taxes, QuickBooks and dealing with 100 emails and employee complaints, and it adds up! It is such a relief having a good bookkeeper come in once a week and take care of all of that. That way, once a week for about an hour, I sit down with my bookkeeper and go over bills, new tax laws, payroll, budgeting and whatever else I get hit with that week. I still have 100% control over my books, I have to sign any check going out and I know my business inside and out, I just hire someone else to do all the footwork and there is huge peace in this. My bookkeeper is amazing and a blessing, she not only helps me and my business, but she teaches me to never be afraid to ask questions and learn. She has helped me see where we need to be tighter in our funds and helps when making big business decisions. My first year in business in my small town I did $270,000 in sales. My COGS (cost of goods) was $74,000 and my payroll expenses was $122,000. So what does that tell me? Too much labor, that’s what. And I was able to see everything broken down because my bookkeeper took the time to teach me. Save yourself and get a bookkeeper/accountant!
Knowing your strengths is best and delegating your weaknesses to others is often a necessary step we have to take as business owners. Sometimes what we need most is someone who has done this before or even just someone to help be your “checks and balances”. Someone to help fill the spaces, because let’s be honest, it’s a stressful job and we overlook A LOT.
5. Costing Your Products
This is so important to get a hold on before you open a retail bakery! First, it is vital knowing the costs of making your finished products and then how to appropriately price them. It can be easier than you think to under price and lose yourself a constant stream of money. You do not want to go down that path starting fresh out of the gates, you will end up confusing your customers and ultimately lose customers. Also, you will find confidence in knowing that your product is reasonably priced and if it doesn’t sell at asking price then pull it from your shelf. You are not in the business to give away product. We only have a very few items that are at 25% markup and that is because we have other items that are at 50% and even 200% markup, which makes up the difference for the few that are 25%. Also, I believe it will set you apart from your competition. I recently had a bakery open up less than 1/4 mile from me, on the same street and with lower prices! Unfortunately, I can’t just go lowering my prices now because of the new competition. My pastries NEED to be sold at this price in order to make a profit. Going in and undercutting your competition, in the end, will only hurt you.
So how do you get prices for flour, butter, sugar, etc., before opening?
Call local vendors! Tell them that you are opening a bakery and you are costing goods, they will gladly send you information. They want to snatch you up! You can also go to your local bulk supply shop, like Cash n Carry, Costco and Restaurant Depot. Price their product first, then compare with other reps before you decide to go with them. In my first few months, I went to Cash ‘n’ Carry every Monday, spending about $700.00 a week. Now I order through Bake Mark, Provatos, and FSA, spending about $1200 every two weeks, which saves me time and money. And it is delivered to the door!
Pricing products will help you tremendously in the beginning! And if you don’t know how to do it, learn or hire someone to do it. I learned in school, but with all of my other responsibilities I can’t seem to find the time to do it. So I gave my baker a raise, made her my assistant manager and she costs every new item we try out within minutes! And she has set up an excel program for us to use for varying butter costs, in which we can recalculate our cost to stay within profit.
6. Copy All of Your Recipes and Save Them
This will come in handy for any secret family recipes or just recipes in general. It will protect you in the rare case of hiring a rogue employee who decides to take your recipe and some other bakery items with them when they leave. I now have a bakery recipe book that contains all of my recipes that we use per season, including weights, costs and make up procedure. All of this is inside a 3 ring binder with plastic pages for protection. I also have digital copies on my computer and hard copies in a safe at my house. Which brings me to…
7. Background Checks
I never thought I would need this, being a small town little bitty bakery and all. But, after hiring a retired cop as a bakery manager, I quickly found out the benefits of taking this important step. Always go with your gut feeling, and then use a background check to back you up. And always check references! I wouldn’t be 18 employees deep if I had done that in the beginning. Instead, I found out the hard way.
8. Be the Boss
This was and still is hard for me.
I am the kind of person that just wants everyone to like me and for everyone to have fun and get along. Well, it is a hard lesson, but being the boss sometimes you are the B***H and guess what? It sucks! But it forms a level of respect that is vital in running a multi-employee business. In the beginning, I found myself being pushed over by my employees and in the end, I would get frustrated because my business wasn’t going the way I wanted it, it was going the way my employees wanted it.
There is a fine balance of being a boss first and a friend second. Now I have an amazing team that respects what I say and does it, we also know how to have fun when we work. It is important to set this up in the beginning.
I have a very rare situation where my best friend runs the front p.m. shift and my other friend runs the a.m. shift. I was hesitant with this in the beginning, but it has been great. Rachel knows me better than I know myself and we are mature enough to keep what happens at work, at work! I only see Kiely when I go to roller derby practice, but deep down I know these girls have my back and that is huge in small business. They also know when my boss hat is on, and respect it.
9. Work Harder
Expect many sacrifices. Be prepared to work harder than you ever thought you could work. I pulled many 18 hour working shifts, I sacrificed relationships and lost many hours raising my son.
This is not a fast track to fame.
This is hard.
This is losing out on a lot in the beginning.
But, how great is it to know that you are developing and are responsible for
YOUR OWN FUTURE? There is peace in that – in between the swollen ankles
and dark circles that no matter how much concealer you put on, you just can’t
hide the lack of sleep. You learn to role with it and call it the business eye blues.
Your business is its own being and you need to nurture it, teach it and grow with it.
Daily, you will fine tune her, make her beautiful and make her yours. Some days she will disappoint you, other days she will bring you so much joy that it will bring you to tears. You will take so much pride in knowing that you created her. There is so much joy in this. No college class can ever teach you this! Some days I ask myself why I started, then I remember those special days and it makes me never want to quit. You are building and creating a future, a living for other people. You are building a spot in your community and are making a difference! This takes time, trial, and many errors. Be patient, be forgiving, be thoughtful and full of gratitude. It really does go a long way. And at the end of every night give yourself a pat on the back, because you did it, for at least another day and that is a lot more than what other people can say. I started my business on $15,000 dollars, bought everything used and looked to my friends and family to help with the construction. Reach out to them; you will be surprised at how many people actually want you to be successful. Everyone wants to be part of a story, let them be a part of yours.