Part 4 – Make a Realistic Financial PlanPosted 06/05/2014 by Rebecca Cannon
Make a Realistic Financial Plan
There can be lots of start-up costs when you are starting a cake business from home. From training for yourself to purchasing equipment, these should be worked out in advance to save you from unexpected financial problems.
You will probably need some equipment straight away: stand mixers, a range of good quality baking tins, tools such as a lazy Susan are invaluable and of course a large heavy duty non stick rolling pin… these can soon all add up!
For everything else, including a massive range of bake ware and good quality, long lasting cake tins, we are huge fans of The Cake Decorating Company.
Remember that up to £25,000 can be deducted from your first year’s taxable income (but you’ll still have to find the cash upfront). It is important to keep your receipts as proof of purchase.
If you’re working from home, don’t forget to include overheads like electricity bill (estimate this using a percentage for business/ family use), broadband, insurance, and telephone.
You will need funds for market research, business cards, leaflets, and a website (unless you can create one yourself). Think about what promotional activities you could use to spread the word about your cakes.
Then there are ingredients, labelling, and packaging. Buying in bulk will save money it the long term but remember to consider sell by dates!!
It is important to work out how much each product will cost to make and package safely – no point in all the hard work of making a cake for it to fall apart on delivery or collection!
We recommend The Craft Company for all your packaging needs.
Our very own app CakeUlator is a must for anyone who has a cake making business or who simply want cake costing help. If you don’t include cooking time, preparation time, decorating time and even shopping time in your costs then you will probably not be selling your cakes at the right price and making a profit.
“The hardest part about setting up is being ‘realistic’ and staying focused; it’s so easy to get carried away and want to be a success overnight but, as boring as it sounds, it takes hard graft, long unsociable hours, and commitment.
“My best advice is to remember… just because it looks easy, doesn’t mean it is… Make sure you KNOW how much a cake is going to cost and DON’T guesstimate!!”
Work out your initial outlay as well as your annual costs. You will need to estimate a sales target so that you can be sure your business will be profitable.
If you need investment, there are grants and loans available to start-up businesses, which can be identified through your local Jobcentre or online.
See what you’re eligible for! The Business Finance Support Finder is a simple government tool. Type in your area, number of employees, and industry (Hospitality and Catering) to see what you could get. Government initiative Startup Loans is helping to launch 40 businesses a day! It’s not a grant – it’s a loan, and you’ll repay it over 1-5 years at an annual rate of 6%. When you get the money, you’re also assigned to an expert mentor, and you’ll get access to special training programmes too. New Enterprise Allowance is available to people who are on benefits (JSA, ESA or Income Support). You’ll get a weekly allowance worth up to £1,274. Find your local jobcentre to talk to an advisor. The taxman has a scheme to make investing more attractive.
Read on… Part 5 ‘Starting your accounts and keeping them in order‘