Cake Talk

Opening a Bakery: Do your Christmas shopping early!

A belated Merry Christmas to all! My brother is visiting from California.  He has now experienced first hand how busy we are at the bakery in the weeks leading up to December 25th, and I am hoping he will explain to my other family members why I can't seem to shop for Christmas gifts before Christmas.

I should have done my holiday shopping in November, before we got busy -- or better yet, July -- but I didn't. I am not really in the mood for Christmas the first week of November, let alone summer. I don't think that makes me a bad person.

Christmas is an extremely busy time at a bakery. That's a good thing.

Unfortunately, nobody wants to buy holiday treats early. Everyone wants them fresh. That's also a good thing, but only for the customer. We baked and decorated almost non-stop and late into the night the last weeks before Christmas. Thousands of cookies were made, all mixed, cut and decorated by hand by one of our elves (oops, I mean employees).

Christmas Eve day was spent handing out orders until almost 3pm. We had planned to close by noon but waited for three customers whose cakes and cookies were not yet picked up at 12. We had to call them and one actually accused us of "knocking off early."

Then a quick trip to Best Buy (looking for a gift for my hard-working brother, which of course they were sold out of).

Then we were late for Christmas Eve mass, which I had not had time to second check the starting time. I thought it was 5:30, turns out it started at 5:00.

Then we discovered only one restaurant (besides Waffle House) was open for dinner on Christmas Eve in Tuscaloosa. Olive Tree would not have been my first choice, but we were hardly in a position to pick and choose.

So the only family members who got gifts by Christmas were my sister's family in England, and only because I had the good sense to shop on Amazon.co.uk early in December. And that is only because I DIDN'T shop early for them last year. One on-time family at a time... Maybe next year it will be my brother's family in Michigan.

The shop will be closed for 10 days later in January, so I now have the luxury of shopping the after Christmas sales for Christmas gifts.  Unlike December, January is a very slow month for bakeries. Many people go on a diet for at least a month after New Years.

So do as I say and not as I do.  If your 2010 plans include a bakery, do your Christmas shopping early.

Business 101: Before you open a Bakery...

You went to culinary school (or maybe not) and you have a passion for baking.  You are ready to pursue your dream of having your own bakery. Before you make this big investment, there are two things you should do:

Get a job as a manager at a major chain bakery or restaurant -- Panera Bread, la petite boulangerie, even McDonald's -- that hires predominantly low-skilled labor, for at least six months.

You need this experience for three main reasons.

First, you should learn how to deal with someone else's employees before you hire your own.  You need to learn first hand that your employees may not have the same passion for the bakery as you have. You will not feel so bad about firing them if you are just the manager carrying out company policy.

Second, you will get a chance to deal with complaints in an impersonal way. There will always be employees or customers with problems. You need to NOT take it personally and it's easier to disengage when it is not your business.  If you work for a large enough company, they will even teach you how to do this.

Third, as a manager in a large corporation, you will have health insurance which you can take with you when you leave. Assuming you live in the United States, your employer is required to offer you COBRA, which will allow you to continue (and pay for) your existing health insurance for 18 months.

The other work experience you need before you invest in your bakery is to work in a high volume kitchen for at least six months. Pay attention to how things are done, how the kitchen team works together, and ask lots of questions. Don't worry about the low salary because you'll appreciate any income at all during the first few years of having your own business.  High volume kitchens do things over and over, and most are extremely efficient.  During this internship you will learn that it CAN be done. Kitchen workers can multitask and work together to accomplish incredible things.  And do it again the next day...and the next...and the next...

Consider this a year of training, and use the time to take notes, fine tune your business and marketing plan, write a detailed employee guide, and assemble a set of master recipes. You will have an opportunity to learn much from these experiences.

One more thing, save your money. As much as possible. No matter how much you think you will need, something will come up and you will need more.

Marketing on a Budget

We are a small bakery.  We don't have thousands, or even hundreds of dollars to spend on advertising each month. Most small business advisors will tell you how important getting the word out is, and they are so right. That's why we have a website, and why we have a blog.

The dilemma for us, and for many small businesses, is how to make every dollar spent on PR and advertising go as far as possible. It went very far today.  The Tuscaloosa News published a photo of our rose and SEC cookies on the front page of the West Alabama section.  In color!!  If you click on the link, there are six more photos!  And it did not cost us an arm or a leg!  

We've been in the Tuscaloosa News before (and the Northport Gazette, and the Planet Weekly). When we opened the shop, when we published our cookbook, when we came up with the "Saban Hat" cookie. We've also been featured on local WVUA television. Even Fox6 in Birmingham has interviewed us three times!  For a small business in a small city, this is better than Oprah. Lots of people read the local newspaper, and even more just look at the pictures, especially the color ones on the front page.

Access to our news media is one of the advantages of doing business in a smaller city. Yes we have crime and politics, but opening a bakery, publishing a book, or celebrating football is also news here. Tuscaloosa may not be Chicago, or even Birmingham, but we have most of the same amenities -- on a smaller scale.  Unfortunately, many of the large media companies, and some of the smaller ones just don't get it.

I get calls almost every day from media sales representatives who want to sell us advertising.  They simply do not understand why I'm not willing to pay hundreds and thousands of dollars to attract someone into the shop to spend one dollar on a cookie.  Or that I don't have the time or inclination to explain my business plan to perfect strangers again and again.

The conversation often goes like this...

"You have such a nice shop here.  It has that 'wow' factor that would really 'pop' on screen (or in print, or whatever), and you have come highly recommended."

Or "This cookie so delicious, I had no idea you were back here.  I'd love to help you expand your business."

I'm busy so I cut to the chase.  "Is there money involved on my part?"

"Well...yes, you would be sponsoring the video (or the ad).  But I am sure it would pay for itself."

I think not.

But free?  Well free is good.

Food Safety and the Bakery

Three of us took the eight-hour ServSafe class and exam a couple of weeks ago (we all scored 95% or higher). It wasn't that I had a burning desire to spend $450 on training.  But beginning in January 2010, we risk a critical health code violation if the person left in charge of the bakery does not have a food safety certificate.

While a bakery serving cakes and pastries does not pose the level of food safety dangers as a regular restaurant serving hot food, we did learn a few things, including these acronyms...

1. HACCP = Hazard Analysis Critical Control Points
2. ROP = Reduced Oxygen Packaging
3. NSF = National Sanitation Foundation
4. UL = Underwriter's Laboratory
5. TCS = Temperature Controlled for Safety
6. FAT TOM = Food, Acidity, Time, Temperature, Oxygen, Moisture (the conditions that promote bacteria growth)
7. RTE = Ready To Eat
8. LPCO = Licensed Pest Control Operator
9. FDA = Food and Drug Administration
10. MSDS = Material Safety Data Sheets

Thankfully, almost none of the foods we sell at the bakery are considered potentially hazardous. But that didn't exempt us from learning all about Hepatitis A, Norovirus, Escherichia coli (E. coli), botulism and salmonella.  We also learned that cooking does not destroy Ciguatera toxins in predatory fish.  And we learned we should not use raw unpasteurized eggs for royal icing due to the risk of salmonella (no worries, we use pasteurized dry egg whites).

We learned the proper safe internal temperatures for various foods, most of which we would never cook, as well as the proper cooling and reheating methods.  Food reheated in the microwave must reach an internal temperature of 165^oF, and there are at least four different kinds of thermometers.  For utter "coolness," I liked the infrared type which you can just point at something to measure the surface temperature, but it costs $50-$60 and would break if dropped.

Hot foods should be held at 140^oF or higher, cold foods at or below 40^oF.  BTW, since our display cases are not refrigerated, this is why we do not sell cream-filled pastries and pies.

At least one of us learned that a small pile of paper and debris in the corner suggests a potential rodent problem, and not (necessarily) a poor sweeping or mopping job. And we all guessed (correctly) at the question about mechanical ware washing machine water temperatures (we can only dream about having a mechanical dish washer).

Our certificates will be displayed on the wall at the bakery as soon as we get them in the mail.  Be sure to congratulate Pat and Emily for a job well done.

Opening a Bakery: The Business Plan

A business plan outlines the essentials of your proposed venture and tells potential investors what you plan to do with their money.  We've been open three years, but still refer to it when making important business decisions.  It has seven basic sections.

1. Overview.  Explains your concept in a single, SHORT paragraph. In our case, we offer custom wedding and specialty cakes in a retail bakery environment.
2. Description. Describes your business in more detail.  What do you plan to sell, why, and how do these items support your overall concept?  Everything we do and sell supports the sale of custom wedding and specialty cakes. Even the fact that we are a retail bakery supports this concept as wedding and celebration cakes are mostly made for weekend events.  Cookies and pastries are baked at other times when the ovens are not needed for cakes.  These products also give customers a reason to come into the bakery when they do not need a cake. When done properly, they also establish and support the image of a high quality bakery.  Workshops highlight the artistic quality of products from the bakery.
3. Location. Where do you plan to locate your business?  Will you own or lease?  And how does this location support your overall concept (sensing a theme here?). Our bakery is located in an historic district among other independently owned galleries and shops selling high quality and unique products such as home furnishings, baby clothes and furniture, and antiques.
4. Competitive Environment. How large is the market for your products?  Who is your competition?  How much market share do you plan to have? How and why is this realistic?  Are there other bakeries serving your market?  What do they offer and how much do they charge?  In our case, we also researched the number of marriage licenses issued in the county every week, as well as the venue offerings and other wedding vendors.
5. Marketing Plan.  Long term, this is the most important section as you will refer to it over and over.  It explains how you plan to meet your sales goals.  Who are your customers?  How will you reach them, and how much do you plan to spend to do this?  What is the planning process for wedding related sales?  When and how do brides decide where to buy their wedding cake?  What about birthday cakes, anniversary cakes, baby shower cakes, etc.  When distributing precious marketing dollars, which channels give you the most return?  Over the years we have used the initial thought process in this section to decide NOT to buy advertising in telephone directories or billboards, but to spend money on bridal directories and wedding websites.
6. Management. Who is going to run this venture.  How are they qualified to do so?
7. Financial Plan. What are the new business' needs in terms of capital equipment, working capital (cash) and what are the sources and uses of funds for the first 3-5 years (or until the business becomes self-sustaining and the loans have been paid off).  Cash flow is just as important as the long term return on the overall investment. What contingencies do you have for cash emergencies such as uncollected invoices, power outages and equipment breakdowns.

The next post will focus on why you need to keep your business plan on your desk and not in the drawer.

Opening a bakery: Don't forget the insurance!

When we lose power, we're done.  Finished.  Closed.

It's one of those things you try not to think about.  No refrigerator.  No freezer.  No oven.  No mixer.  No gelato machine.  No hot water.  No computer or cash register.  No phone.  And no lights.

The power has only been completely off once since we opened three years ago (knock on wood).  And it was only for about an hour.

The other day however we had a brown-out -- the lights flickered and then went dim.  Not completely out.  The computers and phones still worked.  But the oven and ice machine were beeping and the freezers were eerily quiet.  The gelato machine wouldn't work.  I didn't even try to turn on the mixer or the sheeter.  Why bother since we couldn't bake anyway.

It could have been worse.  Many people in West Alabama had no power at all after a strong storm the day before.  I thought we had escaped unaffected.  I was wrong.

More than 20 hours later, when the power came back on, we started throwing out the damaged food.  Almost full cases of heavy cream and cream cheese, milk, buttermilk, ham, swiss cheese, cheddar cheese.  Mushroom soup and chili we were planning to serve for lunch.  And our gelato.  About 80 containers of beautiful hand made gelato and sorbet, all melted.  Then there were all the pastries and cookies that had been made-up, then frozen or refrigerated, waiting to be baked.  Ugly and misshapen from the lack of cold air.  For a small bakery, the loss was significant.

This is why we have insurance.

So if you plan to open a bakery, or any other food service establishment, have a contingency plan.  Many large restaurants in our area (which is prone to storms) have back-up generators.  While we cannot justify that expense, our insurance company offers coverage for losses due to a power outage.  It doesn't cover the time and expense of re-making the lost items, but it is still a no-brainer. 

Remember, it's better to have it and not need it than need it and not have it.

Opening a Bakery: The Taxman Cometh

I wish someone had told me it was an absolute certainty we would be audited for state sales tax within the first three years of being in business before it actually happened. I am not a dishonest person, just ignorant when it comes to tax codes.  If I had known about the audit, I would have made a greater effort to understand all the tax codes and requirements.  And read all the small print.  And asked more questions of my accountants. And been more firm with my customers.  And I would always carry a copy of my tax ID and resale certificate with me when I shop.

A very nice lady from the Alabama Department of Revenue has been studying our books in great detail over the last couple of weeks. Luckily I am reasonably organized and still have every bank statement, deposit slip and credit card receipt ever generated at the bakery, as well as every receipt for everything I ever purchased from day one and before.

And our point-of-sales system is capable of giving me more information about every sales transaction than I could ever hope to remember on my own.

We still owe money.

So here are seven things we learned during the audit about sales tax in Alabama:

1. You have to pay tax (Use Tax) on used equipment when purchased from a liquidator, but not when purchased directly from the prior user.  Of course you always pay tax on new equipment.
2. You have to pay Use Tax on equipment (new or used) purchased through internet auction sites (such as E-Bay) unless you can prove that the seller was actually using the equipment before they put it up for sale.  It does not matter if the seller (and the equipment) is in a different state, and it is YOUR responsibility to report and pay Use Tax on non-taxed purchases as they occur.
3. You have to pay tax on 'shipping and handling,' but not if it is just 'shipping.'
4. You do not have to pay tax on items you purchase for resale.  HOWEVER, providing lunch to your employees is not considered resale and you will be required to deduct purchases of ingredients that may end up as employee meals, no matter how small that amount may be.
5. Just because a customer tells you they are eligible for tax exempt sales, AND they provide you with a state tax ID number, does not mean every purchase they make meets the tax exempt criteria.  And it is YOUR responsibility to know when to collect tax.
6. On the other hand, should YOU pay sales tax on items you buy for resale (such as emergency purchases at the grocery store when you run out of milk or butter), too bad. The state is not responsible or liable for your omission or your inability to claim your exemption every time you purchase an item.  You should have the forethought to properly and thoroughly claim your tax exempt status every time you make an eligible purchase.
7. No infraction is too small or too old to be ignored.

Who knew?

Test Your Baking IQ -- Part One

So you think you know baking?  I picked the ten easiest questions from a bakeshop final exam.  Give 'em a whirl.  The answers can be found on our website.

True or False:

1. Sugar is a dry ingredient.
2. Water always boils at 212 degrees.
3. Frangipane is made from hazelnuts.
4. In bakers percentages, flour is always 100%.
5. A high-ratio cake refers to the high percentage of flour compared to the percentage of shortening.
6. Buttercream is used to coat classic French Petit Fours.
7. All flours produce gluten.
8. Genuine couverture chocolate contains cocoa butter and no other fat.
9. Sugar stabilizes meringues.
10. The biscuit method uses liquid fat.

If you answer these ten questions correctly, we'll have ten more next week.

Opening a bakery: This is YOUR business!

Lesson #10:  Keep your eye on the ball, it's YOUR business.

Running a small business is a labor of love.  Few people actually get rich doing it, and it consumes your life from the moment you wake up until you fall asleep (and sometimes even your dreams). Some people start a small business to become a large business (like Steve Jobs or Debbi Fields).  I am not one of those people.  I started this bakery because I love to bake, I like being in charge, and I wanted something I could control and still have a life.  I like being small and love the challenges.

There is something about a small business however, that invites perfect strangers to give you advice.  Here is some of the advice I've been offered by others (and I am NOT talking family and friends here, I am talking absolutely and perfectly random STRANGERS).

1. You should sell these cookies at Publix (or Sam's or Wal-Mart or Winn Dixie).  After all, Emeril or Wolfgang Puck or Martha Stewart does it.  The fact that neither one of these people runs a small business apparently doesn't really matter).  One of the reasons our cookies (and cakes and pastries) are so good is that we make them like you would at home, in small batches with fresh ingredients, and without compromising taste and quality for mass production.
2. You should get a billboard.  Do they have any idea how much outdoor advertising costs?  Even in Tuscaloosa, Alabama it is about $3-5K per month.  How many cookies and pastries do you think we'd have to sell to support a billboard? (And that would be AFTER paying for ingredients, labor, and and marginal electricity.)  Our big ticket item is wedding cakes, and the folks selling outdoor advertising around here have yet to convince me that brides consult billboards before buying their wedding cake.
3. You should sell on the Internet.  Which would involve packing and packaging of fragile and perishable items.  We'd have to buy reasonably small quantities of packaging and have the space to store it.  Who knows, maybe we'd find a shipping company to work with us as we grow.  And maybe even I suppose there are folks out there that would pay a huge premium for custom cookies and cakes.  Not a risk and investment I'm willing to make right now.
4. You should make cream horns (or cannolis, or bagels, or baklava, or some other perishable specialty item). We can't be everything to everybody.  While I am not looking to get rich, I would like to eke out a living.  Never mind that the person suggesting never plans to actually BUY any of these things from us on a regular basis, they only want to know that they COULD if they wanted.  That's what personal chefs are for - you pay them to make what you want when you want it.  We're a bakery, and hope to sell more than one of each item we make.
5. You should write a book.  Well, I did.  And you can buy it on the Internet.
   

Lesson for the day?  Listen to advice, but only YOU can decide what is right for your business.

Opening a bakery: Never assume

Lesson #9: Never assume.

Before opening the bakery, I taught culinary arts at our local community college.  So did one of my friends, who also helped me out in the bakery during the first year.  She taught a course called "Flavorings and Aromatics" (or something like that).  The class met once per week and included a short lecture followed by a lab.  About 20 students.

 One day they were making black bean and mango salsa (and learning about the various flavorings and spices used in salsas).  She handed out the recipe and went over it, then made team assignments.  And they got to work.  As she floated in and out among the teams prepping vegetables she watched as one of the students opened a can of black beans and was about to empty it directly into a bowl of beautifully diced onions and mango.

Chef:  "WHAT are you doing?  You need to rinse those beans."
Student (looking over the recipe sheet): I"It doesn't say to rinse the beans in the recipe."
Chef (incredulous): EVERYONE KNOWS you have to rinse beans before using them.

Well, apparently not.  That student, who always sat in the front row of the classroom, was stunned and embarrassed.  She retreated to her seat and did not participate in the lab the rest of the day.

You know what happens when you assume...

There are some things I have never assumed.  Like most people have no idea what it means to temper chocolate.  Or that you need to bake cheesecake in a water bath or it will crack across the top.  Or you can kill yeast if you're not careful. There are however, several things I USED to assume.  So here is a random list of ten things I no longer assume in the bakery:

1. Everyone knows it's wise to read the directions and make sure you have all the ingredients before starting a recipe.
2. Anyone who says they can cook knows there are 16 ounces in a pound, or 4 cups in a quart, or 3 teaspoons in a tablespoon.  And there is such a thing as a "standard measuring cup."
3. Everyone knows that a "dozen" means 12.
4. Everyone knows the "A.P." in flour stands for "all purpose" (and there is more than one type of flour).
5. Everyone knows that granulated sugar and confectioner's sugar are not the same thing.
6. Everyone knows that baking powder and baking soda are not the same thing.
7. "Cooks" know that water boils at 212^oF and freezes at 32^o, and you should preheat an oven before using it.
8. Everyone knows that if you leave the water running in the sink it will eventually overflow (and items left unattended in the oven will eventually burn).
9. Anyone who has been to culinary school knows the difference between "clean" and "sanitary."
10. And surely nobody would ever leave a sharp knife in a sink full of water.

Today's lesson? Tell your employees what's important but never assume they are listening.