Want to move your business outside of your home? In this post we discuss when to move from a home based business to a store front business, and provide questions to consider when making this important decision. Find out if the time is right for you to invest in a store front and all the benefits that come with it.
Growing a business can be exhilarating, rewarding and stressful all at the same time. However, once you get past the stress of growing a loyal customer base, you’ll find yourself in the land of stressing over turning away business.
If you’ve been running a baking business out of your home for a while and this sounds like your current situation, you might be wondering if it's time to move out of your home into a retail space. In fact, this is a question that I help walk many home based bakers navigate on a regular basis. So, in this post, I’m going to share a few questions to consider when making this important decision in your business.
What do the numbers say?
If there’s one thing I know as a financial analyst it’s that numbers don’t lie. If you have a solid accounting system and a numerical way of tracking the data in your business, you’re going to want to review the numbers before making the decision to move into a retail space. Too often I consult with bakers who “feel like” certain things are happening in their business when in reality the numbers tell a different story. When making decisions that impact the financial success of your business, you should always start with the numbers.
How many orders are you taking weekly/monthly? How many orders are you turning away because you’re “at capacity”? How much more money could you make if you would have taken those orders? These are all questions that can be answered if you’re keeping track of the data.
Why can’t you take on more orders in your current work space?
Once you’ve reviewed the numbers, review your business and figure out the main drivers behind your capacity limitations. Do you lack prep space? Do you need more oven space? Could you use another/larger mixer? Not enough freezer space? Does your house look more like a bakery than a living space? Do you need an extra set of hands?
Take some time to analyze why you’re not able to take on more orders and think of solutions (other than moving out) that might address the problems. The solution might end up being that you need to move out. However, before you go signing a 3 - 5 year lease, I want you to consider all of your options. Could you hire someone to do dishes? Could you buy an additional fridge or freezer and keep it in your garage? Could you buy another mixer or a larger mixer to help increase your production? If you physically have the space in your home and everyone who lives there is on board, these all could be less expensive and viable options that will help you stay in your home.
Do you have other options when it comes to space?
If traditional kitchen space is the main reason that you can’t take on more orders, I ask you to consider your other resources. Do you have other rooms in your home that that could be used for storage or prep?Do you have a garage or basement that could be converted into a commercial kitchen? I know all parts of the U.S. are not the same, but in the South basements and large backyards are not uncommon. I definitely know a baker or two who have made improvements to their homes to make more room for their baking businesses. While you’re saving money to open a retail space, I recommend you research how much it would cost to make tweaks to your existing space so that you can keep your business at home.
I know that making these kinds of adjustments to your home can feel a bit risky especially if you plan to sell your home at some point. I also know folks who tend to be averse to any drastic renovations for fear that they may have an issue when it comes to selling. However, my thought is that if you know you will be in your house for 10 or 15 more years you should make it as livable for you as possible...and that includes upgrading your basement, garage or backyard into a workable commercial kitchen space. Entrepreneurship is not a rare thing any more, and I can assure you that there will be some aspiring caterer, chef or baker who would love to buy your house when you’re ready to sell. It will be their dream space and those changes would have added a ton of value to your property. Let’s be real, if you were in the market for a house and the basement was converted into a commercial kitchen wouldn’t you snatch it up, and don’t you know a handful of other baker friends who would too?!? I know I would be on the buyers list!
Can you afford it?
The luxury of running a business from your home is that most of your bills are consolidated with your household bills and they will only run so high. However, as soon as you’ve taken on the responsibility of a retail space, you will find yourself basically running two households. You’ll have your mortgage/rent and your retail rent. You’ll also have double utilities, water, etc. The addition of those costs means that you’ll have to make more money. Then, you’ll probably need to take on staff to support the front of house or to help you with baking and that means more cost as well.
Yes, you may be turning away orders now. However, if you open a retail space will those orders make up for the added expense that will come with running a retail space? Moving into a retail space may sound good in theory, but it is more than a notion.
As I mentioned earlier, consider the numbers. Consider how much money you’re already bringing in. Consider the additional costs that will come with opening a retail space and then evaluate how much more business you will need to generate in order to cover that added cost. If the numbers look good, and you have the finances to go for it, by all means do it! However, I highly recommend that you review all of your options before taking that leap.
Conclusion
It might be a great move for you, but I’ve seen way too many bakers take that step because they were impatient or because they “always dreamed of having a bakery.” There’s nothing wrong with having goals and aspirations, but make sure that your move into a retail space is backed up by the data and not based on emotions or ego.
Cyd N. Mitchell
Business Blogger, Retail Bakers of America
Cydni N. Mitchell (aka Cyd) is a Bakery Consultant and the Sweet Business Coach behind Sweet Fest®. Based in Atlanta, GA, Sweet Fest® is an online company that supports the business needs of the Sweet Community in the areas of professional development, marketing, branding and web design.
By trade, Cyd is an accountant & financial analyst with a Masters from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. She is the Founder of the Sugar Coin Academy, an online business academy for business owners in the baking and sweets industry, and she is also the organizer of The Ultimate Sugar Show, Georgia’s Largest Annual Baking and Sweets Expo in Atlanta. She is also the Business Blogger for the Retail Bakers of America.
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