Thursday, 16 May 2013

Home-baked business: Can you have your cake and eat it too?

The first time Sue Lane, 47, made a cake was for her daughter’s second birthday. It was a clown cake, and although the cakes Sue produces now are of a much higher standard, Chris loved it. Chris is now 22 and a graduate, and her sister Sophie is at university. Their independence has given Sue the time and financial freedom to make her cake decorating a business, but she is still having doubts.

“When the kids were younger I had to work to be able to provide for them. Now they are big enough and ugly enough to look after themselves. Now, financially, it’s a case of ‘can I actually afford to work part time and do this?’”

The cost of setting up her own business is a major hurdle. Currently, Sue makes cakes for friends and family but only charges for ingredients. This is something she started doing recently, as her hobby was costing her a small fortune.

“The biggest factor that has deterred me up til now is probably the cost of setting it all up. I probably still lack the capital to set up a business. I don’t want to borrow money so I will probably wait til I can afford to do it myself. I mostly advertise through word of mouth at the moment, so at least I can still do that.”

The complexity of setting up a small cake business from home is also a drawback: “I’ve got my hygiene certificate, but then you have to get insurance, you need to have environmental health inspect the kitchen and I would probably have to get business insurance on the car. I think you might have to get business insurance on the house as well.”

Yet interest in starting cake businesses has boomed since the advent of shows like the Great British Bake Off revived interest in baking. Simply Business, the UK’s largest insurance broker, received quote requests from 2,139 new cake-making businesses in 2011, up by 54 per cent on the previous year and 325 per cent on 2009. 91 per cent of those contacting Simply Business about starting a cake-making business were women. For many, it seems that turning a baking hobby into a job represents the perfect solution to balancing childcare and work, and the word ‘mumpreneur’ is being bandied around the internet forums and chatrooms. There is even now a support network for mums in business in the form of

Type ‘set up cake business from home’ into Google and you’re bombarded with pages from the likes of eHow and wikiHow, and threads on forums such as Netmums. But read carefully and a trend emerges: many prospective cakepreneurs abandon their plans when they realise how much work is involved in setting up a business, obtaining the necessary hygiene certificates and business licenses and insuring your home.

For many, the issue is finding the capital to start up a business from home. Robin Campbell, 32, was made redundant from her job in the city in 2008, and immediately set up Cakes by Robin. She was able to use her redundancy package to buy a mixer and about £1000 worth of ingredients, but admits that she may have struggled without that capital:

“Having worked in a bank I was perfectly aware that if I asked for a loan a bank would turn me down. Without my redundancy package I would have had much more of an issue with paying my mortgage because when I started up I didn’t have any customers.”

A 2012 report by the Open University confirmed that financial support is still a problem for small-to-medium enterprises across the board. One respondent said: “the main requirement is access to funds and no amount of advice will open that door if the economic climate is not ripe.” Another said: “banks will not lend even when there is ample equity in assets to borrow against”.

Competition is also a worry for many bakers and cake decorators. It’s hard to walk down a busy high street in the south of England without seeing a shop that sells cupcakes and makes designer cakes to order, indicating that as far as custom made cakes go, the market may be reaching saturation point. Chris Cooper, 38, of the National Business Register agrees that competition is fierce:

“Those kind of businesses seem to be very popular at the moment. I think it’s certainly becoming more competitive, because it’s getting more and more difficult for people who are setting up cake businesses to submit a name that is completely unique. Many of the good names are gone.”

Sue is relying on the individuality of her cakes being a key selling point: “There are so many people doing it at the moment, but I tend to concentrate on carving cake, and a lot of people don’t do that – they use cake cutters. I tend to think that each of my cakes is totally individual, so that no one else would make them. A bit like edible art.”

Sue also worries that turning her hobby into a job may take the enjoyment out of it, and Robin admits that she no longer bakes for pleasure: “I have got a team of people in the shop and I don’t do much decorating myself, I run the business side instead. So in some way it did take away the enjoyment, because there’s a big difference between when you make a batch of cupcakes for fun and when you do it as a job. I definitely never bake at home now.”

Despite her misgivings, Sue is still keen to pursue her dream of owning her own cake business. She says: “I have spent so much of my life not doing stuff that I don’t want to miss out on doing this.”

I would like to thank Sue Lane, @cobhamcakes and Robin Campbell, for their help with this feature.

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