Starting a Cookie Business
Have you been thinking about starting a cookie business? Do you have cookie creations which started as a hobby and then grew into people asking you to make them for their parties? Your love for making cookies which started as a hobby has now morphed into a cookie business. Or has it? Are you struggling to navigate past being a hobby baker to having a cookie business? Do you feel lost trying to figure out the laws? Have you even defined if you truly want to own a business? My husband and I are going to help you jump through those hurdles in our blog series: Cookie Business 101. While I graduated with a Degree in Organizational Leadership in Business, I sadly threw much of what I knew out the window when I started my cookie business. It wasn’t until my husband threatened to call the labor board for paying myself under minimum wage. He straight up said, “you have a hobby, you don’t have a business.” Businesses have to pay at least minimum wage, or they get fined by the labor board. Take your degree and your knowledge and apply it. If not, I am shutting you down. Those who know our family, know my husband was not kidding. My first response was “if I price my cookies appropriately, no one will buy them.” My husband’s response, “then you don’t have a business.”
I walked away aggravated, but I knew he was right. We live in a Pinterest world that often tells you to follow your dreams and be passionate. I quickly learned that passion and dreams are not enough to sustain a business over time. Opening a business, even if it is a home based business, is a serious venture. Are you willing to ask yourself the tough questions? Are you willing to let someone else ask them? Over the next couple of weeks you will get to know my brilliant, sarcastic, attorney husband, who happens to be one lab accident away from becoming a super villain. He is going to share his perspective on business and cookies. Two years ago, I was ready to open a store front. As my husband and I were looking for property, he asked me some probing questions. Once again, I was aggravated and he was right. This happens often. I realized while my passion and dreams of a store front were great, I was not ready to take that leap after contemplating his questions.
My husband’s name is Dann. He is going to take over now. He has successfully started, run and sold three different companies. He is now currently the Director of Legal and Compliance for a company in Phoenix. He is a wealth of knowledge. Feel free to ask questions. He loves to help.
Many times in business, one looks to the internet to see what other people in their industry are charging. This is not uncommon if one opens a local hardware store and surveys Wal-Mart, Home Depot, and other supply shops to determine if their prices are in line with their competitors. However, the small business owner is often left to bemoan that they cannot truly compete on an equal playing field with these businesses as they do not have the distribution lines to buy in the same bulk nor do they have the pull with distributors to actually negotiate their prices. However, in the field of “home bakeries” we are left to compete not only with Costco, the local supermarket, the brick and mortar bakeries, but also hobbyists.
I guess the first question you have to ask yourself is “am I a hobbyist?” Please note that I will not be addressing competing against “competitors” in this blog, but I will touch on this in the next one. This blog is devoted to “the hobbyist.” I have nothing against the “hobbyist,” but it is time to ask you to come out of the closet. The closet is not a scary place, and many of the “hobbyists” don’t even know they are in the closet. I pause a moment to laugh at this as the room is dark, the light is off, and you should be claustrophobic at this point; this is why I am snickering. For most snickering is an insult, but don’t be alarmed as my wife states that I am laugh deficient and this is the best that I can do.
A hobbyist has no business plan, they have not determined the cost of goods, they don’t know who their target customer is, and they don’t even notice the creepy music playing next to the stale cookies at the market selling 12 per box for $.99. If you have never heard the creepy music as the lights glisten off the plastic cookie casing, you are usually the first casualty in the horror movie. Don’t be alarmed over ninety percent of the teenagers in the movie are killed, and if your contract does not contain a clause for a multi-picture arc, you most likely are one of the first casualties in the horror film titled “These Cookies will Kill You due to Chemicals as well as Pricing.” Yes, I agree the name of the picture is not catchy but look how many people have fallen prey to this.
The plastic cookie casing is not your competitor. However, you are not only letting the creepy plastic shell determine your pricing, but your customer as well. You have priced yourself below market value not only in terms of the cost of goods, but you have not set a wage for your hourly work. Your clients often ask you vague questions such as “I am throwing a “insert random theme” party here and I have no idea what type of cookies I want but they have to be “amazing, move around without a visible motor and be no more than the cost of the expire cookies found on the “Day-O Bread Rack.” You are so determined to please said customer that may never use you again or recommend you, that it has not even occurred to you that you are now envying the wages of workers in third world countries. You often are tucking not only your kids in bed, but your husband as well. I would say that you would wake up from this nightmare in a cold sweat and realize it is only a dream, but alas, tomorrow starts a fresh new day losing money and working for less than what McDonalds’ cashiers were making in the 1980s. I have good news for you my friend, you have a hobby. There is good news, you have choices. 1) You can start treating this like a hobby and not let this consume your life; just think there is room next to your wooden tennis racket, your lace-up ice skates and the bowling ball in the closet as well, 2) You can focus on how to turn this hobby into a business, or 3) You can wait several years until you hit rock bottom and then join a support group. For the rest of you who are running a business, in the next post I will address who your competition is and how you can react and adapt.
Cookie Business 101 Topics to Come:
- Why Business Plans are important even if you are a small home based business
- How to define your mission
- What is a SWOT Analysis and why it matters?
- How to properly price your products?
- How to determine if a “opportunity” is one you should go after or are you better to walk away?