Saturday, October 15, 2016

Cake Business License, Bank Account, & Insurance!



Ok, so as of now we have talked about cake pricing and cake tastings (see past few posts!).  Now, let's chat about some business legalities:

Licenses

 I know it is VERY common for cakers to run their businesses without a business license.  However, if you are serious about running a professional business this piece is very important.

In the past, California (this is where I live!) didn't even allow you to obtain a license for a home-based cake business.  But things have change and now they do!!  It seems more and more states are embracing the home-based food concept in our new digital (and less brick-and-mortar) age.  

But yes, I recommend obtaining your Cottage Foods License if you want to enjoy the benefits of being a real business.  Hiding under the radar and stressing about crossing the line between legitimate and illegitimate business making isn't much fun.  And not to mention your much deserved tax write offs at the end of the year!

So here are my tips for obtaining your Cottage Foods License:

* If you or your business partner were/are part of the military check if it your fee can be waived for you!  It is in California at least:).

* DO NOT stress out about feeling watching or just not being "good enough".  The truth is the department wants you to succeed because your success is their success (at least from my experience!).  Just do what you are required and make sure you follow the regulations to the best of your ability.

* DO NOT worry that it is difficult.  Registration requires forms, an online safety class, fees, and an initial inspection.  Just make sure to obtain all the information you need and fill out the paper with the items they require.

After you obtain your Cottage Foods License you are ready to get your actual business license!!

Your local at-home business license is really not expensive AT ALL especially since you might be just starting out.

Bank Account

I absolutely recommend that you keep your business finances separate from your personal finances.  This makes it super easy to keep track of your income and expenses.  Try adding your business account along with your personal checking in order to try to get a deal and make transfers a cinch.  And, like with the Cottage Foods License, look into military discounts to try to lower fees if you can!

ALSO look into your business bank options for payment options for your customers.  For instance, I bank with Chase and they have what they call Chase QuickPay.  Their QuickPay let's your customers make you quick, easy, and free online payments/deposits by just using your email!  This works seamlessly if they are Chase customers.  It also works if they are not, however, I believe there are some additional account verification steps for them.  WellsFargo has a similar service called SurePay so check it out if your bank has any similar type of feature!

And since we are on the subject of customer payments check out Venmo, a PayPal meets Facebook if you will, for quick and easy payments!  Just make sure your customer has your email or user name right when they submit their payments!

Insurance

Then there's insurance...so I didn't have insurance when I first started.  However, I quickly learned that as I was going to more established and reputable venues, that some locations required insurance.  So that's what got me there at least, but really it is a good way to protect yourself. 

Being a sole proprietorship can really expose you to crazy law suits so it is good to play it safe!:)

For my business, and likely for other similar businesses, you might pay in the $300-$500 range.  HOWEVER, check out this link first!!  This is where I SHOULD have gone first instead of going through a specialty insurance broker.  They seem to give the best rates for just this sort of work!:)

Check these guys out for your insurance first!

Thanks for reading and that's the legality bit for now!!
Have a cakey weekend!

Christie

Monday, September 26, 2016

Steps to Perfect Cake Tastings


Early in my cake making career I really struggled to secure clients.  There are a number of factors involved, however, the MOST important factors include a great tasting cake and a promising portfolio.  This blog post attempts to address these and other important areas.  Please use this input to help you in your quests!

1. The Cake

Make sure to perfect your cake flavor and texture.  You might be ok here however, for myself (since I don't like to bake! It sure was a challenge LOL).  Also, using your home as a 'test kitchen' make sure you know just how to prepare your cake samples ahead of time and preserve them for when it is tasting time.  Here is exactly what I did and the cake samples were ALWAYS perfect!!:)

I prepared a batch of cupcakes in the most popular flavors that I offered (if the couple wanted a specific flavor they would request it but mostly I prepared these most popular flavors).  For me this was Chocolate, Vanilla, Red Velvet, and Lemon.  Then I stored them in a VERY airtight sealed container in my cake-only freezer.  I would do this for maybe up to two weeks but much more than that I would worry about dryness (always test it when you are worried).  Then I would take out two cupcakes of each flavor and let them come to room temperature in (a different) dry, and clean airtight sealed container.  The thawing incorporates amazing moisture!!
Take out the cupcakes a few minutes before the couple arrives along with a plate of the fillings you are offering (I liked preparing the fillings plate with little tasting spoons).
With the cupcakes and fillings given separately, mixing and matching flavors was very easy for the couple!
NOTE: Each tasting lasted mostly about one hour.  And whenever possible I tried scheduling them somewhat close to each other in time/day so that I wouldn't have to duplicate as many preparation steps.

2. To Charge or Not to Charge

When I first started my cake business I did not charge for cake tastings.  If you are just starting out and have yet to build tasting experience and your portfolio this might be a good option:).  However, soon after I started booking tastings and cakes much more routinely and I found just how much time tastings involved I began to charge.  This is also a way to see if you client is really serious about booking with you.

By the third year of running my business my cake tastings were $40 and if a multi-tiered cake order was placed this fee would apply to their order.  If the client wanted a cake tasting, however, a lower cost cake option (this is where I would utilize the 'Just the Cake' rate) then the tasting fee did not apply to the order.

3. Show Off Your Work

My favorite ways of showing off my work included display cakes and digital images.  The display cakes that I would take to wedding shows were always around in the room where I held cake tastings.  As for digitally I would maintain all of my cake images on my Facebook and Pinterest accounts.  During cake tastings I would use a laptop (or my cell phone if I had any technical difficulties) to show clients samples of my cakes as well as research what they were looking for.  This saved me a ton of time and money printing images (which is what I originally had done!)

4. The Contract

Simple or more complex, regardless, you should put something in writing.  Personally I preferred a very simple contract.  With a pre-designed printed template, I drew a very rough image of the cake the couple wanted.  In this same document many other details are included such as wedding date and time, delivery time, flavors, fillings, colors, topper(s), stand(s), contact information, etc.  Some people put many other clauses but I liked it nice and simple:).

5. Asking For A Deposit & Payment Terms

It is important to ask for a deposit prior to committing to a large cake order (actually this is true whether you do a cake tasting or not!).  However, I also found that this way I had so many more details and paperwork to manage!  So I also started telling couples that their cake tasting fee acted as a deposit:).  If they did not do a cake tasting then I would definitely ask for a deposit.  Typically my cake order deposit was a simple $50.  I really preferred to keep it simple since it really helped me with the cash flow management:).  However, some do half of the cake order or maybe a percentage.

As for payment terms, for large delivered wedding cake orders, I required payment one week prior to their wedding day.  Cakes that were picked up were paid for at pick up with balance being the quoted amount minus their deposit.  For most bakers that is much too last minute, but for management reasons it was my preference:).  

Just do whatever you feel more comfortable with, however, when it comes to payment terms, always remember that you are in this to make money so ensuring you will be compensated for your work is important!  I made two cakes that I did not receive any money for and collectively spent money and DAYS preparing (time and effort away from my family for literally NOTHING).  The first was someone whom I didn't ask a deposit for (this is when I finally starting asking for a deposit) and the second one was a repeat customer whom always gave me a deposit.  Assuming no issues, and before receiving their deposit, and AFTER confirming their order, they never picked up their cake.  It really does happen!


And that's a wrap for Cake Tastings!!
Hope these steps help you with executing your next great cake tasting!!
Happy Caking!
Christie

Sunday, September 18, 2016

5 Considerations for the Per Serving Cake Rate


In the past two blogs we have gone over overall pricing when starting your cake business and in the last blog we went over the 'Just the Cake Rate'.  In today's blog we are going to go over the 'Per Serving Rate' which is a rating system that I used specifically for multi-tiered wedding cake orders.  Here are 5 main areas of consideration:


1. Your Base Rate

Decide on what is your base rate.  If you are new to cake making and still developing your client base try setting your rate slightly less than the market.  For instance, if the going per serving rate at a bakery in your area is $5 per serving try setting yours to $3 or $4 depending on how much experience you have with such orders.   







2. Tastings 

There are various ways you can treat tastings.  At my established cake rate ($5 per serving) tasting rates were included.  When I first started out my cake tastings were free, however I quickly realized how much time cake tastings took and their rates went from $20-$40 as I progressed.  I treated cake tastings as built-into the per
serving rate.  However, there were occasions when folks ordered with 'Just the Cake Rate' and also wanted a cake tasting (which is when I gave them a set rate just for the tasting itself).



3. Flavor Options

When it came to flavor options I quickly noticed that the most common cake flavors always ordered were Chocolate, Vanilla, and Red Velvet.  Because of this I decided to focus specifically on these flavors plus Lemon (to keep it a little more interesting:)).  This is not to say that I didn't at times provide other flavors (for instance occasionally I made carrot cake and had a fair share of funfetti requests).  However, this was the best way to provide my customers with what they wanted and helped keep production costs down and efficiency up.

With the most popular cake flavors AND the most popular filling flavors as part of my standard rates.  Any other exotic flavors were quoted separately and I usually added the difference in time and materials (for instance $10 extra for a special flavor).  

My base rate for the per serving cake rate included one cake flavor AND one filling flavor.  If the cake was super simple I sometimes allowed flavor changes for the same base rate.  However, if the cake decor was quoted accordingly with one cake flavor, additional flavors raised the per serving cost by $1.  

Also, at times I found myself quoted just flavor changes for smaller cakes and each flavor change would be an additional $10.  Also, with wedding orders brides liked adding sheet cakes.  To allow brides to get the different flavors they wanted, preserve productivity, while keeping rates lower, I provided retail sheet cakes in other flavors.  For instance, the tiered cake might be vanilla, and a sheet cake of chocolate and red velvet for no 'additional' flavor-change cost.





4. Delivery Terms

With the per-serving rate I built-in delivery costs for up to 30 miles from my location.  Any additional mileage was an extra $2.  For instance a 40 mile delivery feel would be an extra $20 with the first 30 miles already covered in the quoted fee.


5. Cake Stand Terms

For my 'Per Serving Cake Rate' I liked including the cake stand rental.  There was no extra fee to borrow cake stands.  The terms were to return the stand by the following weekend.  However, with the 'Just the Cake Rate' stand rental did come with a fee.  

And that's it!!  Hope that helps when setting up your wedding cake rates!!:-D

Tuesday, September 13, 2016

What Should I Charge for a Cake??....Cake Rates Continued

So lets get more into cake rates!:)  Just a note that I recommend you use my rate input more or less as a guideline to create your own rates.  The reality is that all of us have unique interests, talents, and abilities and our prices will reflect that.

For instance, I always loved working with fondant so while other bakeries charged a premium for fondant (probably because they preferred to work with buttercream!) my rate was always the same between fondant or buttercream.

Also....ok, I will admit it to you...I don't like to bake.  There I said it!! No really, I don't, I really REALLY don't!  What I love to do is decorate NOT bake.  And my prices reflected just that...cake flavor changes cost extra.

So with this in mind I want to share with you about two very different cake rate structures that I recommend.  The first is 'Just the cake rate' and the second is the 'Per Serving Rate'.  In my business I used BOTH of these.  Here I will go into 'Just the cake rate' and chat about the other in the next post:

Just The Cake Rate

Just the cake rate is the rate you decide to charge for the finished cake without delivery, tastings, cake
stands, or any other charges.  I used this mostly on highly customized cakes.  The reason is because I would get a lot of 6", 8", or 10" cakes that were so highly customized yet were pretty small.  Even if I were to charge $10 per serving, if the cake was only 6 servings, $60 might not even cover half of my time and materials spent on the cake!   These cakes were typically birthday party or other celebration cakes (typically not weddings).  Again, these were highly customized cakes.

To give you an idea, if I had a request for a fondant covered cake with hand cut fondant details on top and maybe some details on the front my cake rate (eventually became) about $125-$150.  This of course was not the rate I started at.  Actually for something like this I started at $75 and I quickly learned that I had paid myself less than minimum wage to produce such a cake!  But it was that $75 cake that helped boost my cake portfolio and showed my potential clients what I could do:).  I could see my client was very happy with her cake so I was able to feel confident and comfortable charging more.

When I used the 'Just the cake rate' I would factor in the number of colors (which I am sure you have figured out takes quite a while to do or costs a lot in material), the number of details and how much time each detail would take, the work-ability of the design, the cake size, and the flavor request.  

ALSO I took into account the typical willingness to pay for custom cake clients in my area.  I live in Davis, California and from my experience the average party cake budget in this area is in the $150 range.  Of course there are heavier and less willing spenders but the average was about $150.  

HOW did I figure that out?...A number of times I was given pictures of detailed cakes and uncertain on the clients budget I would ask them if there was a cake budget that they wanted to stick to.  More often than not the target budget was $150 (and that's pretty much how I figured that out:)).  

But the problem a lot of times was that even at $150 the budget wasn't always enough for some heavily detailed cakes.  In those occasions I would tell the client what they could get for their budget.  I never liked saying 'no' to a client but rather give them options that were attainable to them in their spending range.

Although typically these cakes were mostly small cakes that wasn't always the case.  It wasn't common but occasionally I would get a tiered party cake.  These are little trickier because since they are for parties (and not weddings) again there is a lower willingness to pay by the client.  These clients might be heavier spenders, willing to spend more than $150 on a party cake, however, if you take a large cake and even put them on the low-end cost of a wedding cake a multi-tiered cake can quickly reach into the $300-$500 range.  Since I would quote such large non-wedding cakes again I would ask for desired budget and see how I could meet their needs and budget (for instance maybe there are some styro tiers?).  Also, these clients might want delivery but I would price that separately.  For instance one particular cake was a 3 tier cake.  If it was a wedding cake I would have charged at least $6 per serving which would have included delivery and a cake tasting.  This cake as a wedding cake would have cost about $400, however, because I did not provide delivery ($60 value I had determined) or a cake tasting ($40 value I had determined) the cake rate was $300 (or about $4 per serving).  

And speaking of per serving rates that's what we will discuss next!!:)


Happy Cake Making!

Christie

Thursday, September 8, 2016

How Much Should I Charge for a Cake?!

I must share with you...something has changed.  Very drastically.  I no longer make cakes.  This Lego cake on the left was the absolute most popular cake I ever made.  It was so popular I even shipped one across the states!!  I will miss cake making, and I will always cherish the experiences I had making so many special cakes.
The reality is that as much as I love design and business my business became too much and overwhelming for just myself to handle.

Yes I did consider growing much further.  Raise capital, hire employees, maybe open a store here and maybe another store there.  But I quickly faced the reality of how much launching a full-fledged venture/start-up would significantly affect my family.  Yes I love venturous things but I decided family stability was more important for my young family than the intensity of a start-up status.

But how do I fill such a void that has all of the sudden 'Closed'?

So I came up with an idea...I will share it.  With you:).  I have decided to share what I have learned during my experience of running my cake business in order to help you with yours!  In this blog moving forward I will go over strategies, operations, sales, among many other areas that will help your cake business.

The how-to cake making blogs that I posted (including the popular How to Make a Lego Cake!) while I ran my business will remain and will not be deleted.  Going forward I will share what worked well, not so well, and even ways for you to save money:)! So let's go...

Let's jump right in to the ever popular question:
How much should I charge for a cake?


There are many answers to this LOL!  The most popular one is that you have to calculate your ingredients, your time and then you come up with the 'correct' number.  Another popular answer is to assume that since the price of someone else's cake is X then yours should also be X.  So the real answer is actually a little less clear (but I will break it down no worries:)):


The TRUE price (of anything) is the price that someone is WILLING to pay.  


I learned that in business school and applied it for real and I can't tell you how accurate that really is!!  It is a reality!  So let's dive deeper into this and what this means for your cake rates...

Given this reality how do we calculate the amount someone is willing to pay?
From my experience there are two components that contribute to a customer's willingness to pay you: 1. Your cake making ability and 2. The current market price.

If you are new to cake making and you have limited cake making ability you will likely have to accept a lower price initially.  I certainly did!  However, do not take this as you are working for less than you deserve (at least initially!).  The reality is every business has a period of investment and the truth is you are investing in your cake portfolio and progressing cake making ability!

Market price also comes into play somewhat...for instance if someone can buy a basic sheet cake for and average price of $40 don't expect to sell a similar cake for $80 (again at least not initially but more than likely it won't be that similar if it is really worth $80!).

As time goes on your cake making ability will improve and therefore you will be able to charge more.  But that does take some time to develop.  You can also think of it this way...how much are you willing to make this cake for?  If it is above what someone is willing to pay you it can be tough to secure consistent orders.

A good way to 'benchmark' your rates would be to visit or call your local retail and custom cake shops and get quotes yourself!  This will give you an idea of what established businesses are able to sell similar cakes for.

How exactly I created my initial prices:
Getting current market quotes is exactly what I did...after getting an idea of what customers were already paying in the market I then charged less (to match my inexperience ability).  And the amount that I charged was the amount that I was willing to make the cake for.


Good luck out there and Happy Cake Making!!