Sells like hot cakes

[Bakeit]

Hi Everyone
I'm new so bare with me.
I need a some advice.
I work full time, and different shift patterns.
The food at work, was not really nice at night, and everyone was complaining.
So I decided to make some savoury products, I won't say what they are yet, but you might guess.
I made 24 mini one's, as samples, with the best quality ingredients, that money can buy, and fresh herbs. I gave them all out, 2 days later I went around, and started taking orders.
To my amazement, I was getting orders of people, who I hadn't even sampled, but they told
me someone else had recommended them.
In the end, I had a very big order, I told my friend, and he said make sure you can fill it, at the time, I hadn't even thought about that, so I stopped any orders after that. '
I can only sell these products, 2 days a week, as it's very time consuming, as I make everything from scratch. But people are now asking for boxes, of the product, I've had to tell them no, and friends keep recommending more people, so some people I avoid, as I know there going to tell me, they have yet another friend.
I only sell as cost price, at the moment, my friend tells me I'm mad, but I don't want to get in trouble, I have registered a domain name, and I have a Facebook page, that I don't have time to visit.
Everyone wants me to open a shop, but I've been reading the site, well, and it looks like commercial property doesn't seem to be doing to well.
I want to brand my product, what I was thinking is, should I rent a unit and get it kitted out, and supply to shops and cafes, do up a website for my brand, show the shops and cafes, that I'm going to be advertising there shop, on my site as an outlet, so I'll also be bringing them customers.
Or open up a shop, and supply customers first, then build up to supplying other establishments.
I have been on a hygiene course, and I'm now certified, I've put a few figures down, and it looks promising, what else should I do?

 

[Twoscoops]

I would say keep your costs as low as possible. Can you make the product in your home kitchen and do farmers markets? It is a good way to meet consumers and it generates cash. Markets are very hard work but they are often the best way to start retailing, as you are only paying for your pitch on days when there will be customers buying. If you open a shop you will be paying rent 365 days per year.

 

[Lentinus]

Or go mobile and supply night time shift workers - talk about niche! All those lucky day workers have shops and vans to get hot food from - what about the night people?

 

[Bakeit]

Hi Twoscoopes

I use my kitchen at the moment, but it's very small, and the amounts I need to make, my oven just can't handle it, and it's not big enough.
I need to rent a kitchen, I have looked but the rents are pretty high.
I will Google farmers market's, and research that area, thanks for the advice.

 

[Bakeit]

Or go mobile and supply night time shift workers - talk about niche! All those lucky day workers have shops and vans to get hot food from - what about the night people?

Hi Lentinus
I do supply night shift workers, that work with me, but the problem is, that they want this product, day and night, and at the moment I'm the only one, who makes it. I've worked out that, I would need 4 people, and we could make approximately 1000, in 5 hrs with the right equipment, but i need a kitchen, to make them in.
I don't have no problems, getting customers, I have problems keeping up with orders. So I need to turn it into, a proper business.
Thanks for your advice.

 

[patientlady]

Hi Bakeit
I think you need to walk before you run. Are you still selling these at cost ? If so then your sales and recommendations are based on cost price. Double the price at least, or work out a sensible margin and see if the response is the same !

 

[cjd]

At the moment you're selling a good product at the cost of the ingredients. That's obviously not a real situation. In a real business you have to pay for your own time, the equipment you use, the power it takes and the building you're in. Not to mention all the other overheads like packaging, insurance premiums, web design, broadband, accountants and on and on.

Get a spread sheet out and work out what the price needs to be to cover those costs and therefore how many you'd need to sell to achieve it. If that still makes sense, put your prices at that level and give it a go.

I really hope this isn't a seasonal product - like a mince pie...........

 

[Bakeit]

Hi Patientlady
I understand what your saying, and I have told the customers, that the price will go up, and most of them, had already offered me more for the product, as they said it was top quality, and I should charge more.
So when I work out my figures, I base it on the price, I will eventually sell at, to start the business.
But I'll also factor in a wholesale price.
And yes I did put it up, for a little while to check response, and nothing had changed, the demand was and still is there.
Thanks for your advice.

 

[Bakeit]

At the moment you're selling a good product at the cost of the ingredients. That's obviously not a real situation. In a real business you have to pay for your own time, the equipment you use, the power it takes and the building you're in. Not to mention all the other overheads like packaging, insurance premiums, web design, broadband, accountants and on and on.

Get a spread sheet out and work out what the price needs to be to cover those costs and therefore how many you'd need to sell to achieve it. If that still makes sense, put your prices at that level and give it a go.

I really hope this isn't a seasonal product - like a mince pie...........

Hi

No it is not a seasonal product, it is an every day product.
And I've put a few figures together, but i need to do a few more.
As I do need packaging, for transportation etc etc...
I will put this together, thanks for the advice.

 

[Bakeit]

At the moment you're selling a good product at the cost of the ingredients. That's obviously not a real situation. In a real business you have to pay for your own time, the equipment you use, the power it takes and the building you're in. Not to mention all the other overheads like packaging, insurance premiums, web design, broadband, accountants and on and on.

Get a spread sheet out and work out what the price needs to be to cover those costs and therefore how many you'd need to sell to achieve it. If that still makes sense, put your prices at that level and give it a go.

I really hope this isn't a seasonal product - like a mince pie...........

Hi

No it is not a seasonal product, it is an every day product.
And I've put a few figures together, but i need to do a few more.
As I do need packaging, for transportation etc etc...
I will put this together, thanks for the advice.

 

[promdressers]

With respect, Bakeit, you really do need to get real with the pricing. A "normal" selling price would be several times your current "cost". You need to work out this properly, as if you were paying staff and associated costs, - it is not just "wages", plus rent, packaging, insurance, etc.

If you still maintain a good level of sales, then you will build some equity which you will need when going for it properly.

Most folk will be scared of charging more in case sales stop - but it could be an economical life saver. If sales stop, then you will know to either not move forward, or to scale down your plans.

Do you have sufficient funds for starting up properly?

Incidentally, you are selling home bake food at cost. What if someone claimed your food made them ill? Have you any form of insurance?.In the eyes of a lawyer, you are providing a commercial service, whether you think that way or not.

Good luck.

 

[Bakeit]

Hi Promdressers

No disrespect, but if I price my products, at several times my costs, I'm sure I won't make no sales.
My product is a savoury snack, eg like a pie.
And I should have said before, I buy my ingredients at retail prices.
I cannot buy at wholesale price, at the moment, as I have no where to store the ingredients.
I'm in the process of doing a business plan, which I've just found on the site, I know I have lots's of costs involved, I've done 3 months worth of research, and if I get a shop, I basing my costs on 12 staff minmum, with tax and pensions, insurance etc etc.
I was scared of putting up the price, it was my friend, who kept going on at me, saying you can't get a product like mine, at the price I'm charging any where, put it up and see what the customers say, so I did, and most of them said, it's about time, as they wanted to pay me more, as they said it's the best thing out there, as a take away snack goes.
I have quite a bit saved, to invest my self, and I have plenty of people, who keep on telling me, when I'm ready, they would like to invest in the business as well.
I know I need insurance, and I want to be a legitimate business, that's why I'm here.
Can I get insurance, with out being registered?

 

[Chris Ashdown]

Your town hall should be able to guide you to a enterprise agency who will help you put together a full business plan and a mentor to advise you

Talking of 12 staff before you can walk is silly, staff cost vast sums, commercial catering equipment isvery expensive, so is third party insurance for food products

Last dont forget people soon get bored with simular things and want something else

 

[Bakeit]

Thank you for the advice Chris.
But I had to start the plan, somewhere.
I will take your advice, and check my town hall.
I have already checked, the price of equipment, and you are right, it's alot, so i'm going to rent.
But thanks.

 

[MOIC]

Employing 12 staff from the start seems reckless without bona fide contracts or guaranteed sales.

What sells at £1 will not sell in the same quantity and enthusiasm as £3 (as an example)

I think the OP needs to share his business plan with an accountant to ensure they all add up and has the finances in place to keep the overheads in check.

The market has a knack of attracting copycats, if indeed the product is uniques, which in turn will bring the selling price down to competitive levels.

My advice is to start selling the products at the "correct retail prices" for 6 months to ensure the business has longevity as well as profit, before embarking on leases, rentals . . . . .and 12 staff!

I wish the OP good luck.

 

[Lentinus]

Ok first off as everyone else has said, make them and sell them at a proper price for 6 months - then you will know a lot more than you do now about the potential.

What you need to figure out is a way to make them in a reasonable volume without committing yourself to a lot of fixed costs and investment.

One suggestion would be to find someone doing something similar in an industrial unit, or a pub or any other commercial kitchen and rent their down time. So if their kitchen is in use half the day you use it for the other half.

Alternatively you may find a local pub/hotel in a seasonal area whose kitchens are going to be closed for the next few months, so you could work alongside their existing staff to create the product.

There is quite a bit of regulation surrounding food production esp if it is a high risk product, your local EHO will advise on that.

Run the pilot then what you put in your plan will have more chance of being accurate.

To give you an idea of numbers a friend of mine makes very high quality pies, after 3.5 years he employs 3-4 people and makes 3000 pies/week.

 

[promdressers]

Hi Promdressers

No disrespect, but if I price my products, at several times my costs, I'm sure I won't make no sales.
My product is a savoury snack, eg like a pie.
And I should have said before, I buy my ingredients at retail prices.
I cannot buy at wholesale price, at the moment, as I have no where to store the ingredients.
I'm in the process of doing a business plan, which I've just found on the site, I know I have lots's of costs involved, I've done 3 months worth of research, and if I get a shop, I basing my costs on 12 staff minmum, with tax and pensions, insurance etc etc.
I was scared of putting up the price, it was my friend, who kept going on at me, saying you can't get a product like mine, at the price I'm charging any where, put it up and see what the customers say, so I did, and most of them said, it's about time, as they wanted to pay me more, as they said it's the best thing out there, as a take away snack goes.
I have quite a bit saved, to invest my self, and I have plenty of people, who keep on telling me, when I'm ready, they would like to invest in the business as well.
I know I need insurance, and I want to be a legitimate business, that's why I'm here.
Can I get insurance, with out being registered?

I am always afraid of sounding negative, and appearing to wish to burst a budding entrepreneurs bubble. So please do not take me as a nayser. BUT... your opening comment above is precisely what I was driving at. If you are afrais of raisnig the price for fear of lost sales, then you really cannot invest the massive sum required. Your friend gave you sound advice - test the market BEFORE committing your life savings etc.

Can I ask you if you have any idea of the "real" retail cost at this stage? I fear it may be more than you presume. To get massive trade discounts on food entails massive purchasing. Your estimate of 12 staff suggest you are thinking big. so maybe you will get a good price on product. (It is, however, a sad fact that retailers " cash and carry" stores are sometimes as expensive as large supermarkets - so you need proper sources). Even of you buy the materials at very food prices, this will be massively outweighed by other costs.
Have you considered your "route to market"?. To keep 12 staff running, you will need to sell a LOT! You appear to be thinking of selling to Cafes etc. THEY will be looking at significant mark ups, (others may have some ideas on this) so your product HAS, (ultimately) to sell at several times cost. Will your product be subject to VAT - or example, cake is VATable, biscuits are not - this has serious implications, although from your brief explanation, you may not pay VAT - in fact you could be in the enviable position of claiming back VAT while not charging it!

Your friend gave you sound advice - test the market BEFORE committing your life savings etc.

Another point to consider: If your product is truly unique and you produce (and sell successfully) in large numbers, the likes of Greggs or a major manufacturer may be inclined to copy your idea ad will be in a position to do so less expensively. (We sold Chimineas BEFORE B&Q etc, buying from an importer. It lasted barely 2 seasons before we were knocked out of the market on price)

As I write this, I am thinking of more an more problems: Your apparent lack of experience and the fact your business seems to be a single product, Buying in large quantities is not just about "storage room", it needs to be a controlled environment, in regard to humidity, sterility, access, and stock control. You also probably need to be buying consistently.

Please do not be disheartened. Talk to the right people, and be prepared to listen and adjust your ideas accordingly. Above all, think about developing the business organically, rather than diving in on such a large scale.

 

[e-vulture]

People will always say they'd be willing to pay more for a good product (especially so when being asked face-to-face by the person who makes them!). But when it comes to actually handing over more cash for that product? No way! Very few will actually pay extra.

Much the same as when you ask people will they pay more for a UK made product ? Yes, of course they will, right up to the point where they have to actually pay more! Then it's the Chinese import every time...

 

[Pish_Pash]

as an aside, you say you are selling at cost price so as not to get in trouble...I don't think HMRC will differentiate whether you are making no profit (selling at cost price) or not...you're essentially selling stuff, which makes you a business.

 

[neils3]

First off, congrats. You've just created a product people seem to love, I actually think you're doing the right thing by brainstorming different ideas and seeking advice.

I would suggest increasing your price as recommended by your friend and selling it, and seeing the response. You will answer a lot of the comments on here and potentially your own self doubts.

Good luck with it, and please do share the business once it's ready.

 

[Bakeit]

Promdresser, E-vulture,Pish_pash, Lentinus, My office in China, CJD, Patientlady, Chris and Neils3, thank you all for your advice.
If I learnt one thing in life, that would be, to listen to other people's advice, as the saying goes, life to short to make your own.
So I hear you guys, loud and clear, and after new years, I'll put up the price, and see how things go.
And I be honest, I was never going to start, with 12 people, I was just looking at the big picture, like promdressers said.
I know I have to start small, but I like to think big, as it gives me the enthusiasm, to keep going.
CJD, your right about kitchen sharing, the only problem is, I need mostly ovens, and most kitchens are not kitted out like that, and when I do find one, it's too far from me. But I will find one, eventually.
And as for copy cats, I'll be honest, this product is already on the market, but it is being made in specialized bakery's, and there are not a lot of them. And I find that these shops, do not reach out to enough people, and I want to change that.

 

[MOIC]

Make sure you have good management in each department.

Purchasing

Baking

Distribution

Accounts

Trial the different packaging available and choose what enhances your product the most. Appearance is vital when introducing a new food product.

Don't undersell your product, make sure it's competitively priced.

A healthy profit is key if you are looking to expand.

Best of luck yo you!

 

[promdressers]

Make sure you have good management in each department.

Purchasing

Baking

Distribution

Accounts

Trial the different packaging available and choose what enhances your product the most. Appearance is vital when introducing a new food product.

Don't undersell your product, make sure it's competitively priced.

A healthy profit is key if you are looking to expand.

Best of luck yo you!

+1

And let us know how things progress.
Remember that even if you have a worry or query, an no one here knows the answer, you will probably get a heads up as to who else to ask.
Again, good luck.

 

[Bakeit]

Thank you Office in China, I'm going to take Chris's advice, and check out my town hall, for business enterprises, in fact I've already done it.
I'll contact them just after the new year.
I know already, packaging is going to be a problem, for me.
At the moment, I'm only using high quality, grease proof paper bags, and my customer's say, when they put it in a frezzer bag, it frezzes so well, that when they reheat it, by oven or microwave, the quality isn't impaired at all, and that's my USP.
So I have to find the packaging, that's going to keep this standard, for my product, I'll get there in the end.
Thanks again

 

[Bakeit]

+1

And let us know how things progress.
Remember that even if you have a worry or query, an no one here knows the answer, you will probably get a heads up as to who else to ask.
Again, good luck.

Thanks Promdressers
I will let every one know what happens.