Being Pressured Into Starting a Business

[DanM]

Hello everyone.

In early 2007 I knew that I had to make a career change after marrying the love of my life and the related move to Milwaukee. Wifey convinced me that I was happiest when I was baking in the kitchen and should look into culinary school after we settled down and maybe one day we would open a bakery of our own.

Nearly 2 years have come and gone. We have moved to Connecticut and I have completed the baking and pastry program at a mediocre culinary school. Residents of the local Jewish community that we live in have heard about me as a baker and are very excited about the potential for a kosher bakery in the community. Last week was an unofficial start to this potential project when I was asked to make desserts for several small events. My desserts were very well received and now my arm is being twisted in many directions, some not intended by nature to start the business NOW.

Members of the shul's board are offering me the synagogue's kitchen to run the business out of as it is not used during the week. I also have people offering to assist me with writing a business plan, working out kosher certification, and obtaining financing or grants from the rich and retired in the community. While I am extremely flattered and rather tempted to make the dive into this, I do have several reservations on actually making this happen.

1. I have no experience in an actual bakery outside of my internship. Not that there are many quality bakeries to learn from or bakery jobs to find...

2. I have no formulas of my own and lack the experience and knowledge to develop my own. I currently bake from what I find in cookbooks.

3. My wife is in law school and shows no desire to give up her career. In fact, she plans on us to move in 2+ years after she graduates. The potential for a bakery will be taken into consideration when choosing a place to move to.

4. I don't know if the synagogue's kitchen has enough equipment capacity to make this work. They currently have a Vulcan double convection oven, two 48" ranges and a 4 door True fridge.

5. My wife and I want to start a family. I do not know what the impact of the business will have on our family life. Once we have kids, they will come before any possible business.

6.With the economy as it is and our investments greatly depreciated, I just don't know if it is worth the financial risk.

I have expressed these concerns to LOML and am leaning towards not pursuing the business for a year or two and get more experience in a bakery for a year or two while I work out these issues. But my arm is being twisted more that I may be passing up on a good opportunity and not to chicken out.

What are your thoughts?

Dan

[johnlrc]

Hi Dan

I think that your right, you shouldn't open a bakery of your own yet. You said your self that you don't have much experience. That being said, making desserts and breads for parties is a great way to make so extra cash if you have the time. I also think that you have to do it for yourself and what is best for yourself.

[jackal10]

Baking for fun and baking for a living are very different.

If you are running a business, then its the business part that is most important.

Lets say you are making challah. They are good challah, and you can sell a 2lb loaf for $7.50. I use challah as an example, obviously you would bake lots of different things.

That loaf has about 1 1/4 lbs of flour in it, some oil and some poppy seed, say $2 worth of ingredients. You pay $3 to the shul for rent, fuel, phone, insurance and all the rest, leaving $2.50 profit.

Minimum wage in Connecticut is $8/hour, and you work a 40 hour week, so $320/week. That is 128 challahs, or 4 an hour, every hour, not allowing for cleanup, delivery, sales, chatting to customers etc. How fast can you plait?

Can you sell 128 challahs, or 25 a day, everyday?

Can you bake 25/day in the ovens?

Its at best marginal. Don't do it.

If your arm hurts now, think how it will feel after plaiting 128 challahs...

If you must do it please do a cashflow and budget first.

Edited February 24, 2009 by jackal10 (log)

[Edward J]

1. I have no experience in an actual bakery outside of my internship. Not that there are many quality bakeries to learn from or bakery jobs to find...

2. I have no formulas of my own and lack the experience and knowledge to develop my own. I currently bake from what I find in cookbooks.

3. My wife is in law school and shows no desire to give up her career. In fact, she plans on us to move in 2+ years after she graduates. The potential for a bakery will be taken into consideration when choosing a place to move to.

4. I don't know if the synagogue's kitchen has enough equipment capacity to make this work. They currently have a Vulcan double convection oven, two 48" ranges and a 4 door True fridge.

5. My wife and I want to start a family. I do not know what the impact of the business will have on our family life. Once we have kids, they will come before any possible business.

6.With the economy as it is and our investments greatly depreciated, I just don't know if it is worth the financial risk.

I have expressed these concerns to LOML and am leaning towards not pursuing the business for a year or two and get more experience in a bakery for a year or two while I work out these issues. But my arm is being twisted more that I may be passing up on a good opportunity and not to chicken out.

What are your thoughts?

Dan

←

In regards to (1) Yes, you are right. You should be working in another bakery, F/T to get lots of on-hands expereience, as well as learning how to deal and interact with customers

(2) Don't worry about formulas. Most are based on volume, equipment, labour available, and avialable ingredients. What works in one place won't neccesarily work in another.

(3) It will be at least 18 mths from the time you open the doors of any bakery to the time where you actually feel comfortable taking a week off. If you plan to move in 2 years, I personaly wouldn't put alot of effort into a business I couldn't move with me.

(4) Equipment sounds O.K., but the mixer is missing......

(5) Children usually come when they want to, not when you plan on them. If you have financial reserves and one spouse can afford to take a year or two off, or have parents who are willing to look after kids, then you can probably swing it. We had neither, and it was very difficult to do, but we did.

(6) If you don't feel comfortable, then don't. By the time you have a few year's experience uder your belt, you'll feel a lot different.

I urge you to take a good look at a used restaurant eqpt. store. Not to ogle the equipment, but to see what happens when people jump to quickly into a business. It is very sobering....

[rickster]

Per the point about how many challahs can you sell, it's unclear to me how this business works if you are operating out of the synagogue's kitchen. How would you market your product without a storefront? Would it just be word of mouth to the local community associated with the synagogue and are their enough of them to for you to earn a decent wage?

Seems to me that using the facilities for a catering business makes more sense.

[DanM]

Baking for fun and baking for a living are very different.

If you are running a business, then its the business part that is most important.

Lets say you are making challah. They are good challah, and you can sell a 2lb loaf for $7.50. I use challah as an example, obviously you would bake lots of different things.

That loaf has about 1 1/4 lbs of flour in it, some oil and some poppy seed, say $2 worth of ingredients. You pay $3 to the shul for rent, fuel, phone, insurance and all the rest, leaving $2.50 profit.

Minimum wage in Connecticut is $8/hour, and you work a 40 hour week, so $320/week. That is 128 challahs, or 4 an hour, every hour, not allowing for cleanup, delivery, sales, chatting to customers etc. How fast can you plait?

Can you sell 128 challahs, or 25 a day, everyday?

Can you bake 25/day in the ovens?

Its at best marginal. Don't do it.

If your arm hurts now, think how it will feel after plaiting 128 challahs...

If you must do it please do a cashflow and budget first.

←

I was figuring I would be making Challah all day Thurs and Friday. I can probably fit 4 challahs per oven every 40 minutes. If I do a best case scenario of baking ONLY challahs Thurs day Fri with 14 hours of oven time, that is maybe 150 loaves if I am really efficient and have nothing else to bake or do.

Per your estimates... my ingredient costs came out to approx $70 per 1 lbs loaf with 2 or 3 loaves per customer. The local supermarket charges $3.95 per loaf and everyone thinks it is crap. So lets say $3.50 per loaf = $7-10 per customer.

I can always "hire" slave labor interns from local culinary schools, but I despise the practice of free labor.

Any way you slice it, it does not add up to much money.

Per the point about how many challahs can you sell, it's unclear to me how this business works if you are operating out of the synagogue's kitchen. How would you market your product without a storefront? Would it just be word of mouth to the local community associated with the synagogue and are their enough of them to for you to earn a decent wage?

Seems to me that using the facilities for a catering business makes more sense.

←

The model that makes the most sense is that this will be a preorder/catering business. A menu of available items would be sent out to members of the local synagogues 2 weeks in advance and then given 1 week to respond for their orders for the upcoming Shabbat. That will give me time to order ingredients and do any prefab.

Dan

[Kayakado]

I don't know this as a fact but thought it was something you should consider and perhaps look into.... by running a for-profit business out of a non-profit kitchen could jeopardize the non-profit status of the kitchen's owners/synagogue

[scottie]

I don't know this as a fact but thought it was something you should consider and perhaps look into.... by running a for-profit business out of a non-profit kitchen could jeopardize the non-profit status of the kitchen's owners/synagogue

←

As long as the for-profit business is set up separately, and pays even a nominal rental fee to the synagogue, it should be fine. Personal chefs and caterers do it all the time. Churches, synagogues et al. are required to maintain certified kitchens that they might only use for a few hours weekly. These kitchens are comparably inexpensive to rent, the rental generates a bit of income for those institutions which are often strapped for cash, and legality is maintained all around.

[baroness]

Per your estimates... my ingredient costs came out to approx $70 per 1 lbs loaf with 2 or 3 loaves per customer. The local supermarket charges $3.95 per loaf and everyone thinks it is crap. So lets say $3.50 per loaf = $7-10 per customer.

←

Why would you charge LESS for your (superior) product?

[prasantrin]

Per your estimates... my ingredient costs came out to approx $70 per 1 lbs loaf with 2 or 3 loaves per customer. The local supermarket charges $3.95 per loaf and everyone thinks it is crap. So lets say $3.50 per loaf = $7-10 per customer.

←

Why would you charge LESS for your (superior) product?

←

He's not. That $3.50 is his cost, at he's charging the customer $7-10.

I vote for the catering option, too. They have to pre-order and pre-pay. That way you never make more than you need, and it will be easier for you to plan. It's a good way for you to get your feet wet.

Edited February 24, 2009 by prasantrin (log)

[Pam R]

Would you do things other than challah? Hamantashen next week, chiffon cakes for Pesach, cakes for bat mitzvahs, etc.? Or are you just talking about bread?

Has the synagogue expressed any interest in hiring you vs. running it as your own business? Would you be interested in an arrangement where they cover your 'salary' and you get a share in any profits?

[rickster]

Per your estimates... my ingredient costs came out to approx $70 per 1 lbs loaf with 2 or 3 loaves per customer. The local supermarket charges $3.95 per loaf and everyone thinks it is crap. So lets say $3.50 per loaf = $7-10 per customer.

←

Why would you charge LESS for your (superior) product?

←

He's not. That $3.50 is his cost, at he's charging the customer $7-10.

I vote for the catering option, too. They have to pre-order and pre-pay. That way you never make more than you need, and it will be easier for you to plan. It a good way for you to get your feet wet.

←

I'm confused. I don't understand the ingredient costing, but I intrepreted this the same as baroness. he's charging the customer $3.50 per challah for 2-3 challahs which is $7-10 per customer per order. I agree he should be charging more than supermarket prices.

[prasantrin]

I'm confused. I don't understand the ingredient costing, but I intrepreted this the same as baroness. he's charging the customer $3.50 per challah for 2-3 challahs which is $7-10 per customer per order. I agree he should be charging more than supermarket prices.

←

I just reread. I think it's unclear, but I interpreted it a different way, and after re-reading I think you're right.

And you're also right that it doesn't make sense to charge less than supermarket prices, especially if, in fact, the product is superior.

[Reignking]

I also have people offering to assist me with writing a business plan, working out kosher certification, and obtaining financing or grants from the rich and retired in the community. While I am extremely flattered and rather tempted to make the dive into this, I do have several reservations on actually making this happen.

Dan

←

Keep working on that business plan. You'll be able to vet the idea and see if it is worthwhile.

Edited February 24, 2009 by Reignking (log)

[Dignan]

I don't know this as a fact but thought it was something you should consider and perhaps look into.... by running a for-profit business out of a non-profit kitchen could jeopardize the non-profit status of the kitchen's owners/synagogue

←

As long as the for-profit business is set up separately, and pays even a nominal rental fee to the synagogue, it should be fine. Personal chefs and caterers do it all the time. Churches, synagogues et al. are required to maintain certified kitchens that they might only use for a few hours weekly. These kitchens are comparably inexpensive to rent, the rental generates a bit of income for those institutions which are often strapped for cash, and legality is maintained all around.

←

This is not entirely true in its simplicity. Yes, non-profits often hire out the use of their space to unrelated for-profit businesses without an issue. The question, however, is one of degree. For example, a very important question might be how much of their total income do they derive from activities that are unrelated to their non-profit purpose? And how regular and extensive are those activities? We're talking about regular and extensive weekly use of their kitchen space, not a couple of times a month thing. If a Burger King opened up in a church kitchen, I suspect they'd have an issue they might want to discuss with a professional advisor. At a minimum they could owe Unrelated Business Income Tax even if their non-profit status is not threatened.

Would you do things other than challah?  Hamantashen next week, chiffon cakes for Pesach, cakes for bat mitzvahs, etc.?  Or are you just talking about bread?

Has the synagogue expressed any interest in hiring you vs. running it as your own business? Would you be interested in an arrangement where they cover your 'salary' and you get a share in any profits?

←

I think this scheme would not address his main concerns, which were being responsible for starting a new business with modest baking experience while starting a family.

I also have people offering to assist me with writing a business plan, working out kosher certification, and obtaining financing or grants from the rich and retired in the community. While I am extremely flattered and rather tempted to make the dive into this, I do have several reservations on actually making this happen.

Dan

←

Keep working on that business plan. You'll be able to vet the idea and see if it is worthwhile.

←

I agree with this idea, provided you don't let it make you feel obligated to go through with it in the end because folks have put an effort into it. It would be a good learning experience for sure, but perhaps if you have no intention of going through with it whatever the outcome of the plan you might feel better about it to say no from the start.

[K8memphis]

What risk?

If you are walking into a facility that is up and running.

You have a willling captive audience awaiting your every move.

I mean if you are worrying about the children you have yet to conceive, probably not a good plan for you.

?

Determine your break even point and go start some relationships with vendors. I mean you could do this part time. What?

[DanM]

My computer crashed yesterday and was unable to follow up on your thoughts and questions.

Per your estimates... my ingredient costs came out to approx $70 per 1 lbs loaf with 2 or 3 loaves per customer. The local supermarket charges $3.95 per loaf and everyone thinks it is crap. So lets say $3.50 per loaf = $7-10 per customer.

←

Why would you charge LESS for your (superior) product?

←

I'm sorry for not being 100% clear on this. The local supermarket sells 24oz challahs for $3.95. The challahs I will be making will be 1lbs each at 3.50. Thats 16 cents per oz from them or 21 cents per oz from me. 1 lbs loaves make more sense to me given the quantity purchased by the average family.

Would you do things other than challah?  Hamantashen next week, chiffon cakes for Pesach, cakes for bat mitzvahs, etc.?  Or are you just talking about bread?

Has the synagogue expressed any interest in hiring you vs. running it as your own business? Would you be interested in an arrangement where they cover your 'salary' and you get a share in any profits?

←

Yes! I plan on making 2-4 desserts available for preorder with the challahs. I will vary the offerings by season and per holiday. Birthday cakes and special even orders will be possible given the amount of time I might have that given week. Pesach is a whole other beast given that I would need a whole new set of equipment.

Working for the synagogue has not been explored. I would prefer to be a separate entity to protect myself and the business from the board's influence.

What risk?

If you are walking into a facility that is up and running.

You have a willling captive audience awaiting your every move.

I mean if you are worrying about the children you have yet to conceive, probably not a good plan for you.

?

Determine your break even point and go start some relationships with vendors. I mean you could do this part time. What?

←

The facility is there, but I am also facing a $7-10k in start up capital to purchase a 20-30 qt mixer, racks, pans, pots, and other equipment.

Thanks again everyone!

Dan

[docsconz]

If people are twisting your arm, you can see how far they are willing to go to help you make this happen. Be up front and don't make any commitments that you can't keep. It sounds to me like there is little real risk here with a pretty good upside, especially in experience.

[Pam R]

Pesach is a whole other beast given that I would need a whole new set of equipment.

Check with the Rabbi or Vaad. There's a lot that can be kashered with a blow torch and a pot of boiling water (and a stone). Especially if you're talking about mostly stainless equipment. If you are going to make a large investment on equipment, you can charge well for Passover items and help pay for the items you need. Seriously, people will pay for Passover baking and many kosher businesses make a good chunk of their yearly sales on the one holiday alone. Certainly more can be made from one chiffon cake than 10 challah.

[K8memphis]

The facility is there, but I am also facing a $7-10k in start up capital to purchase a 20-30 qt mixer, racks, pans, pots, and other equipment.

Thanks again everyone!

Dan

←

You can get started much cheaper than that but you have to want to.

I don't think you want to do this.

I gave $600 for a used heavy duty Berkel 20 qt. I replaced all my cake pans for $800 (after a house fire) My speed rack was a hundred bucks. Sure, you could do it for half your estimate & have a cadillac set up.

Still yet there's no risk.

There's no risk buying equipment because you can sell it.

You have no overhead and no improvement cost--gedotta here!

I mean you could start by jacking up one credit card if you didn't want to go for any other financing. Not plan A but so doable.

Your overhead to start is so low it's almost too good to be true.

You need to decide what you want.

Because a plan like this is many people's dream come true.

[Edward J]

Hold it for a sec.

If you want to make bread in quantity, do NOT, repeat, NOT buy a 20 qt, and I don't care if it's a brand new Hobart.

All new mixers, including Hobart, come with a caveat in their warranty: Making pizza dough will void the warranty. Think I'm kidding? Check with a kitchen eqpt supplier.

You can't make enough bread in a 20 qt to warrant the amount of time in scaling and mixing. A 30 qt is just squeaking by and a 40 qt is a lot better.

Very rarely do you sell your equipment for what you paid for it, or even with a 10% amoritiziation per year of use.

Now here's a secret. If you're really crafty--think James Garnder in "The Great Escape", you use your fingers to walk through the yellow pages to find "Baker's equipment-reglazing". Most large cities have a small plant where they re-glaze all kinds of sheetpans, bread pans, cake pans, etc. Most large commercial and in-store supermarket bakeries have two sets of bakeware, one is in use and one is either waiteing to be re-glazed or getting re-glazed. Depending on the use and the sugar content of the doughs, the glaze lasts 3-4 mths. During this time no greasing of the pans in needed and good release from the pan is expected. Most of these re-glazing plants have used-albeit re-glazed pans for sale. Check them out.

[K8memphis]

Very rarely do you sell your equipment for what you paid for it, or even with a 10% amoritiziation per year of use.

←

For sure. My point is that by comparison to improving land and building, installing lights, putting in ceiling tiles, hand sinks, flooring, cleanable walls, stoves, gas lines, hood, fire system, bathrooms, parking lot, mop sink, plumbing out the whazoo, yada yada yada, there is no 'risk' in purchasing equipment especially if you buy it used.

Turning enough profit on bread is unlikely anyhow.

Sill yet the most valuable commodity here is wanting it.

Here's a new one for $3200. I mean dig a bit and you can do much better than that.

[jackal10]

For that much bread you don't need a mixer.

Using stretch and fold you can do it by hand until you establish the business

[K8memphis]

For that much bread you don't need a mixer.

Using stretch and fold you can do it by hand until you establish the business

←

Dude, Dude, take the $3100 Jackal just saved yah, go hog wild buying ingredients and go mix it up!!!

[DanM]

For that much bread you don't need a mixer.

Using stretch and fold you can do it by hand until you establish the business

←

Umm thanks dude, but I am neither a masochist, nor desire the forearms of popeye. I think a mixer will be used if I ever have to make this much bread.

I greatly appreciate everyone's advice. I have been thinking about it greatly and have decided to resist the pressure and temptation to open a small operation for at least one year. I will instead try to find a job in a local establishment. I need to work on my skills, see how working 40+ hours a week will effect home life, and work on the numbers more.

Now the hard part... Finding a local bakery that knows what they are doing. Sadly, there are not very many around here.

Dan