Having set up my baking business around 9 years ago, and subsequently set up a training business to support other home bakers, it’s a question I’m asked a lot.
The short answer is… they can be profitable, yes.
Obviously this answer comes with a lot of provisos, I shall attempt to walk you through them.
First of all you need to think about Planning and strategy.
It’s no good just to decide to bash out a few cupcakes for a market and roll up expecting to make enough to retire on. The key to making a successful business is planning. Without strategies for sales, marketing, visibility, pricing etc you will just be winging it, and the chances of making a good profit will be less. And as part of that strategy you need to know what you are aiming for…
Goals and targets.
What do you want to achieve? Why are you setting up a business?
Is it as a second income to pay for a holiday for your family?
Is it to create a full time living income for you and your family?
Is it to create a brand, and be known nationally for what you do, with chain of premises?
Or is it somewhere in amongst all those things…?
Without knowing where you want to end up, it is difficult to really get to grips with making a profit. Goals and targets help you to focus. They indicate how many products you need to sell, and at what price. They will help you to work out how many customers you actually need.
Start with your goal… be it a 1, 5 or 10 year one, and work backwards. What do you need to achieve each year… then break that down for each month… then each week.
Pricing.
I’m a bit passionate about this one…
Too many times I’ve seen bakers price products based on what their competitors charge, or what they think people will pay in their area.
I cannot stress enough that it is vital that you know EXACTLY the cost of what you are selling, including ingredients, materials, packaging, overheads, labour… and profit.
Profit is not the same as your labour cost. A successful business has all its outgoings it pays its employees, then works out what is left… which is the profit. It’s what can be put back into the business to pay the tax bill, pays for equipment, training etc…
CLICK HERE and I’ll email you my pricing guide.
Ideal Client.
If you can really focus on who you are aiming your products at, then you are much more likely to sell, and therefore make a profit. All successful businesses have a customer profile, which they use to guide product development, marketing etc.
One of my favourite stories about ideal client was when Lamborghini were asked why they don’t advertise on TV. Their answer…? ‘Our customers don’t watch TV.’
If you want to know more about this subject, which was a real game changer for me with my business… CLICK HERE for my blog all about it.
Be a business owner who bakes, not a baker who sells.
If you want to make a good profit, you need to have a good business mindset. That doesn’t mean being all kick ass and ruthless… it just means that whatever you do in your business, making a profit always features. A new product, a new market stall, an offer of a paid advert… will these things make your business a profit, rather than just be something nice to have or do?
That’s not to say you can’t support charities. Far from it. But this needs to be worked into your long term strategy. No knee jerk reactions with local events pleading for a cake to raffle, no offers of free exposure in exchange for a cake. Because at the end of the day, the more profit you make, the more you’ll be able to put aside to help your community.
Always be aware of the money you are making, and what you do with it.
Ignore the competition.
This can be tricky, but you need to stand firm. Never reduce your prices so that you undercut Mandy down the road who has just started up.
Concentrate on building your own reputation for producing quality goods, so that you build a loyal following who will not only stick with you, but will recommend you to others. I would much rather pay more to someone I know and trust, than risk paying less to a brand new business that I don’t know.
Be a leader, not a follower, know and engage with your audience, and you will make sales despite the competition.
And just to make my point… In the town where I live there is a short ish high street. Along that high street there are 4 hairdressers and 3 Indian restaurants. And everytime I go along my high street, they all appear to be busy. Proof, if it is needed, that there is room for everyone.
Be determined.
I’m always banging on about this… my favourite three words:
Determination, perseverance and resilience.
If you have those, you cannot fail.
If you are determined to make that profit, you will find ways to do it.
If things go wrong, but you persevere, you will find ways to do it right.
If you resiliently look failure straight in the eye and take all the learning you can, and apply that learning to improve your business, then there’s no reason why you shouldn’t make that profit.
Annie ran her baking business, Leading Lady Cakes, for over 10 years, following a career in primary teaching. She is now combining her teaching experience and her passion for baking to teach and support others who wish to set up for themselves.
Find out more about The Home Baking Business Academy here:
