When I was complying materials for the Baking Business School. I observed some common mistakes made by new cake business owners. It’s one thing to be a skilled cake decorator, but it’s something quite different to be the owner of a successful cake business.
Making mistakes is part of life and it’s only by learning from those mistakes that we become better business owners. Having a cake business is about figuring things out as you go along, but knowing the common mistakes new baking business owners make is a good way to avoid them entirely.
‘Remember you’re A Cake Business Owner, not a Cake Decorator’
To thrive in the cake business world, you have to be a good marketer and be business-minded.
Here are a few of the most common mistakes in staring a cake business that you should try to avoid.
Most of us started like this- you make a cake for a friend and suddenly everyone is telling you to go into business because your cakes are great. Then a friend asks you to make a cake for her child, gives you money and suddenly you’re in business. You have just conducted your first business transaction. Yay!
The thing you have to realize is that the moment you charge for a cake, you’ve moved from amateur to professional. This shift requires a change in thinking, especially when it comes to how you view the value of your time.
In most cases, selling your cakes means you’ve already made an investment in becoming a legally registered business. All that is needed is a simple change in perspective: from amateur to serious business. The rules are entirely different, and you need to think about things in a different way – even if your cakes are not perfect and you only charged a few Naira for the cake.
If you are serious about your cake business and it’s not just “a side hustle”, you must think seriously about the cost of keeping your business open. With this change in perspective and a realistic valuation of your time, you can calculate accurate prices that reflect your work, effort and skills.
#2: Working For Free
Even if you are new in the cake business, my advice is to always know what your cakes are worth, and refuse to negotiate below a certain price.
Making a cake for free in the hope of future orders means you won’t be in business for very long. If someone asks you to bake a cake for a very low price saying that your sacrifice will lead to more highly-paid opportunities in the future. Don’t do it! This is an insult to any baker and does a lot of damage to your business and the cake industry at large. You risk being known as a cheap cake maker who will negotiate at any price.
#3: Waiting for cake customers to just appear
You’ve got the business cards, the cake equipment, the website and the logo, but no cake orders are coming in. New cake business owners forget that it’s not enough just to be a great baker; you’ve got to go out there and get customers. You need to market and get on social media to advertise your cake business. Word of mouth is good and helps bring in customers, but you can’t always rely on that.
#4: Not keeping track of your expenses
While you were still an amateur baker you never thought that such things as your cake equipment and ingredients were ‘expenses’. When you start selling your cakes as soon as you start, you should start keeping track of what you’re spending.
So keep track of the items you’re buying and note your expenses even if it’s just in a notebook and also keep your receipts. This exercise helps to keep a business mindset.
Running a professional cake business, is not so easy. Most cake business owners feel u will become a millionaire overnight just by baking cakes.
The reality is that the cake baking and decorating is only a small part of your business efforts. The rest is selling, accounting, marketing, social media, customer service, ordering supplies, negotiating with customers and so on. Those business-related tasks are required in running your business so don’t ignore them. However, the good news is that now when you’re doing those tasks, you’re and investing in your future cake business long-term success.
Other Business Mistakes worth noting include:
Worrying about the competition
As a new cake business owner, you need to know your competition, like what they charge and what products they sell. Knowing this is information is vital because it helps you make decisions.
However, if you’re spending the time comparing yourself to the competition online, complaining about other bakers doing better than you is a complete waste of your time. Spend that time marketing your business, developing new products, and surveying new and existing customers. Remember this is a business and you are doing this to make money doing what you love.
Setting Prices Without Knowing your total Cost of Goods Sold
Pricing is not discretionary. It is a calculated process. Costs includes all the direct costs necessary for making a sale such as ingredients, but not fixed costs such as internet, telephone, rent etc.
Take note that you should also include your time in calculating your costs. Your time is your most valuable asset and you need to charge for it.
Having determined the cost for any cake you sell, its good practice to mark that up at least 3 times or 50% to give a final retail price. Try and resist the temptation to reduce your prices for fear of not being able to make a sale.
To know more about pricing with pricing guides. Register for the Start Your Cake Business in 7 days free Mini Course..
I know! I know! this can be a hassle, but it is worth doing. When you’ve started your new cake business try to take a break and write a business plan. Know this can be quite boring especially when you not only have to bake, but market, sell and so on. However, without a plan, you are unlikely to achieve long-term success. A business plan helps you plan your goals and tracks your progress.
It provides a continuous frame of reference for your cake business, defining your goals, and making you accountable.
In conclusion, in the cake business, the easy part is the baking and decorating but the tricky part comes once you are actually in the business. Staying in business, and being successful at it, is most challenging thing you may have to face.
If you remember one thing, is that, this is your cake business and is not just about the baking, it’s about the business side of it too.
Talk to you next week.