Businesswise | Success tips for new cupcake business
QUESTION: I have been interested in starting a business for a long time, but I am quite uncertain how to make the leap. I did a degree in hospitality and tourism management, initially to work in hospitality but became very comfortable in my present job of over 10 years. My best friend works with a government agency and has a business administration degree and we want to create a second income by starting a business. She suggested a partnership doing cupcakes and pastry.
We have recipes and started writing a business plan, but we need input from a professional. We don't have a commercial business location, so we'll work from home. We've researched how to start a business, but we have concerns and would love your advice on product shelf life, batch production, and prepayment for orders. How do we work out the dynamics with location when we are in two separate places with families and children, balancing our day jobs with limited equipment? Can we start without registering the business until we are able to?
We plan to start a business page, make a sample batch and advertise on Facebook. Does this make sense?
- L, Kingston
BUSINESSWISE: It's impossible to address all the questions you've posed in a single column, but I'll try my best to answer the most important ones.
I must first caution you that while the desire to earn additional income is the primary motivation for many people who start business, it won't drive success.
One of the most critical success factors for any business is that it's driven by specific and viable opportunities. Based on what you've outlined, I don't see the clear opportunity you are pursuing and am very concerned that you both are embarking on this business because you want to make money, the business is easy to start, and requires minimal skills and start-up capital.
If my assessment is correct, you should both go back to the drawing board and come up with other business ideas that are opportunistic - filling a clear need or solving a problem.
If I'm wrong and there's a lucrative opportunity that you omitted to mention, maybe for strategic reasons, then you can proceed to read my answers to your questions below.
Product shelf life: Extending the shelf-life using artificial preservatives is not a simple decision. This should be based on your strategy, products, target market, distribution, pricing, to name a few. Customers who crave fresh baked goods will likely differ dramatically in their needs and tastes from those who prefer pre-packaged.
Whatever you decide, you should get expert help from those who specialise in food science and chemistry, such as the Scientific Research Council (SRC). It's important for you to be proactive and aggressive and keep calling and knocking on doors until you get it done.
Billing and payments: At the very least part, payment should be received when taking orders, otherwise, you run the risk of cancellation losses. There are many thriving pastry businesses being operated out of people's homes for years, including some of Jamaica's leading wedding cake designers.
Managing distance, work and family: The only practical solution is keeping the equipment in one place. The other partner will have to commit to considerable travel. Check with the Bureau of Standards regarding food safety regulations and standards. I know, for example, that preparing food from home for commercial sale home is acceptable only under certain conditions. In fact, the facilities you use for your family purposes must be separate from the sterile space you maintain for the business. Balancing family and work life will be a Herculean feat. You will need family support, and you must be prepared to make sacrifices, work long hours, get little sleep, have many stressors - especially financial stress until you've proven the concept and have a steady, worthwhile customer base.
Business registration: You can start the business without registering, however, I have a bias toward formality, especially once you are past proof of concept and are in the early-growth phase. For example, without registration, how will you protect the business name you choose to operate under? Also, it is unlawful to advertise a business name that's not registered at the Companies Office of Jamaica, which will seriously hinder your ability to promote the business without looking over your shoulder for the authorities coming after you.
Facebook promotion: You will need far more than social media promotion to kick-start this business! However, a Facebook business page is a great idea. I would also recommend Instagram. You can use them to promote your business, get orders, and engage with existing and potential customers. it's, however, very important that you invest in quality food styling and food photography. If not, don't start on social media.
Yaneek Page is an entrepreneur and trainer, and creator/executive producer of The Innovators TV series.