Archive for February 2010
Should You Start a Doughnut Business in a Slow Economy Part 2
February 27, 2010 | 
Author A lot of potential would-be business owners face the dilemma of starting out on their own on a daily basis. They know that they have a good product, doughnuts, but they are afraid that the slow economy will prohibit them from doing well in the donut business. They fear they will not be able to make it through the very difficult startup period When overhead is high and revenue is low.
The first thing you should do when starting a new business or thinking about starting a new donut business, save your money and get debt that you have currently paid off. If you are overrun with that and have no savings, when you experience bad times in your donut business, they will be amplified. If you are having difficulty making ends meet and have additional bills related to donut business venture You'll be in very bad state very quickly. If I don't give you any advice that you do not take, be advised that you need to have savings and most of your debt paid off before venturing out into having your own business. This becomes increasingly important when you have a family to support and only one income. If you do not do anything else before you start your done the business, get your debt paid and build your savings.
If you have enough money to live for two years saved, then you will have a very significant amount of money to help you when times are tough. Keep in mind you need to have enough money saved to pay your mortgage, utility bills, and any other debt that you may have. These bills have to be paid every month, you really do not have much of a choice.
The next thing you should do when contemplating starting a donut business, is setting up a timeline. You can use this timeline to set your goals of where you want to be and when. You can also use the timeline to develop a strategy for your donut business. Use the timeline to determine the amount of time you'll spend on developing and marketing the business. You will use it to plot times when you will work on the business. Do not set unrealistic goals, like working in the middle of the night if you do not have a history of doing something like that. Setting unrealistic goals when starting your donut business will only push you that much closer to failure. Be realistic and setting your goals And you will set yourself up for success in business.
Another thing you will want to do is analyze the opportunities you have in your area for setting up a donut business. Are there a lot of schools and churches that you could possibly sell your doughnuts to, maybe set up charity events to help push your doughnuts. The more people that taste your doughnuts, the better chance you have of people falling in love with them and wanting them. You want to make sure that there is a market for your business. How many people in your area are selling donuts? Have they been in business for very long? Do you have a unique donut recipe that you can share? Do you have a passion for what you are selling? All of these questions will get you closer to having a successful donut business and keeping you happy And a wave from your job.
Should You Start a Donut Business in a Slow Economy Part One
As you drive home from your current job do you ever wonder what it would be like if you would not have to do that anymore? You may think that you are lucky to even have a job when so many people do not have one. After all, these are bad times and having a job is a good thing and knowing you have a paycheck coming in is definitely a plus. You may even have the chance to move up in your company and make more money.
You may have often thought about starting your own business and all of the perks that come along with it. You could take advantage of the tax to deductions, Be your own boss, and all of the other things that you always hear about working from home or having your own business. It is true, when you work for yourself you do not give Uncle Sam an interest-free loan while you earn money, you pay the tax man after you have already earned it and take out your deductions. The doughnut business could afford you a lot of deductions and peace of mind knowing that doughnuts will always be in demand and people love them. But you question the timing of starting your own business. You have reason to be afraid, change is always a hard thing to do.
You have all of these things going through your head, But how could you live with yourself if your family lost their home and their life savings because of your business venture. That would be a very difficult pill to swallow, especially if you have a family. You feel trapped and go to work daily Thinking about the way life could be. It is much easier to be told what to do and how to do it than venture out on your own and try to make something of a business. You have probably heard all the horror stories of opening up a food related business. One of the good things about having a donut business, especially a small donut business, is you are selling one product and the overhead can be quite low. We will talk more about that in a bit. Stay tuned tomorrow and we will continue our discussion about starting a good business end is poor economy.
Posted in Starting a Donut Business | 
Tags: business opportunitiesdonut business plan, donut business, donut industry, donut shop business, donut shops, donut store, doughnut business, doughnut shop business, home based businesses, how to make extra money, how to make quick money, how to open a donut shop, how to open a doughnut shop, how to start a donut business, how to start a donut shop, how to start a doughnut shop, open a donut shop, open a doughnut shop, opening a doughnut shop, start a business, start a donut business, start a donut shop, start a doughnut business, start a doughnut shop, starting a business, Starting a Donut Business, starting a donut shop | 
No Comments »
Getting Donut Equipment
So where are you plan to get your doughnut equipment? This is a good question, you need to know what kind of equipment that you will need and of course your business model.
 |
" BELSHAW " DONUT ROBOT MARK X DONUT FRYING CONVEYOR FRYER WITH TABLE + MORE |  |
 |
US $2,999.00 | 20d 20h 43m |
 |
NEW BELSHAW TG-50 THERMOGLAZE PRE-FRIED DONUT SYSTEM | |
|
US $2,500.00 | 10d 13h 25m |
 |
Belshaw Bakery Donut ThermoGlaze TG50 with TZ-6 Proofer | |
|
US $2,245.00 | 23d 11h 41m |
 |
BELSHAW THERMOGLAZE DONUT GLAZING MACHINE ON CASTERS | |
|
US $1,950.00 | 12d 9h 34m |
 |
Belshaw Bakery Donut ThermoGlaze TG50 with TZ-6 Donut Proofer | |
|
US $1,850.00 | 6d 17h 26m |
| Powered by phpBay Pro |
Are you simply making small doughnuts and keeping it simple? We have focused our attention on this blog about making small sized doughnuts. But you may want to make other sized donuts with different flavors. You also need to be concerned about supplies along with donut equipment. You'll basically need a manual donut cutter, donut fryer, proofer and perhaps a glazing table. You can use manual cutters for manual frying doughnut machines. Always purchased mixes and doughnut droppers When you go to buy supplies.
Doughnut cutters are important because they allow you to create nicely shaped doughnuts each time you make them. You will not have to worry about creating donut holes and putting a lot of extra work into it. There are lot of sizes of donut cutters from small to large but they create nicely shaped doughnuts every time. If you have seen one of our videos you will notice how difficult it is to have a nicely shaped donut. They often turn out to look like hush puppies or other irregular shapes. They are not pretty, so it is important that you have the proper equipment to make nice, pretty doughnuts every time.
Doughnut droppers allowed just the right amount of doughnut mix to get through so you have a good shape once it gets to the fryer. They save time and energy and are well worth the price that you pay for them.
Another thing that you want to keep in mind is what kind of donut equipment you will need for your business? Donut machines come in about every size imaginable. Do you want a small tabletop doughnut maker to sell doughnuts at fairs and flea markets? Or do you need something full service, to sell doughnuts perhaps at a sporting event? Maybe a mobile donut concession stand will work for you? And just depends on your needs. If you are taking your donut business on the road, you would need something mobile.
Be aware of all the warranties on your donut equipment, especially if it is used. You will need to verify that the equipment works and get something on paper before you purchase it that it does indeed work as advertised. There is nothing worse than spending a lot of money on a commercial doughnut machine only to get a home and it does not work. Get everything in writing.
Posted in Donut Equipment | Tags: bakery equipments, bakery machines, commercial dough mixer, donut business, donut cutter, donut cutters, donut dough, Donut Equipment, donut fryers, donut machine, donut machines, donut machines for sale, donut shop equipment, donut supplies, dough mixer, doughnut equipment, doughnut fryer, doughnut fryers, doughnut machine, doughnut machines, doughnut making equipment, food processing equipment, food service equipment, mini donut machine, mini donut machines, mini doughnut machine, mini doughnut machines, used donut equipment, used donut fryers | No Comments »
Second Donut Taste Test
My business partners and I tried another experiment using liquid soybean oil from Sam's and the partially hydroginated soybean oil from Lil Orbits. It should be noted that the ingrediants for each were the same according to the nutritonal labels, but the amounts of each ingrediant were not stipulated. So, exactly how much citric acid is in there? Does it really matter? Who knows. There was one glaring difference between the oils, however. The Lil Orbits oil contained transfat while the Sam's oil did not. I guess you could say we were trying to make healthy donuts with the Sam's oil! Okay, maybe not. But, we were interested to see it there was a taste difference.
We started with the Sam's oil, and I made a small mistake in preparing the batter. Two weeks ago during our last taste test session we noted that if prepared exactly to the directions the batter set up quickly. This made it too thick to pour through the applicator. I noted the same consistency again and added a bit more water to the batter to thin it out. Apparently, I added too much as the batter became too stringy. Ugh! Frustrating! So much for finding a happy medium.
Instead of coming out in nice rings through the applicator the batter came out in clumps with strings attached. Someone commented that it looked we were deep frying tarantulas. Yum Yum! The cooking time was the same, but more bubbles were noted rising through the batter in the oil kind of like what you see when cooking pancakes. With the thinner batter more tiny pieces were left in the oil follwing the cooking process "dirtying" the oil. Note to self--easy on the water.
Surprisingly, I did notice a taste difference between the oils. We tried both sets of donuts together, some hot and some cold after sitting for an hour. Same results. The donuts made in Lil Orbits oil were slightly better with a pleasant cake-like taste. The donuts cooked in the Sam's oil were a bit heavier and greasier. Even though there was a noticable difference in was only slight, and in my opinion insignificant. When running a business it's a no-brainer that costs must be controlled. Getting oil from Sam's is less expensive than from Lil Orbits mostly because of shipping costs. The Lil Orbits does make a tastier donut, but it would also have to be a more expensive donut to turn a profit. I can say that the donuts we made last time with the pure vegetable oil were my least favorite with the ones being made with the Sam's oil being superior.
My business partners and I plan on videotaping the donut making process next week using our Lil Orbits test kit. Stay tuned!
To Sell or Not to Sell – Should You Sell Something Besides Donuts
As we have already discussed the donut business can be quite profitable. When you are selling mini cake doughnuts there is a high profit margin and low overhead. Depending on where you are selling your doughnuts, the overhead can be very low or very high. We are planning on starting small, Getting a machine that makes the doughnuts, and finding a place to sell them. We are focusing our attention on two places, a popular entertainment area that has movies, restaurants and some smaller shops. It is one of the open mall concepts where everything is outside, and people walk around the complex.
Another place we are thinking about selling our doughnuts, is the flea market in our local area. As you probably can imagine there is a lot of traffic that flows through the flea market. Anywhere there is traffic you can be assured that you will sell a lot of doughnuts. The problem is, or what we have found, is getting into these places to sell the doughnuts. Once we get into the place of our choice, we plan on purchasing the doughnut machine and setting up shop there. That is the only thing that has stopping us from continuing this project. There are other ways we can get the doughnuts out into the marketplace, but we would rather have somewhere to sell the doughnuts right from the start.
So now that that is out of the way, should we sell anything else but doughnuts? We have thought about this, and each one of us have varying opinions. We all do agree however, that the menu should be very limited. We will not sell 100 varities of doughnuts, we all agree on that. It is just not in our business model, the more choices you give the consumer, the more overhead that you have. We have studied other businesses that offer small doughnuts, and they have a very limited menus themselves. We will probably model Our donut business After what they are doing. We have noticed that the doughnut shops that are in business today have been around for quite some time now. None of them have changed much, and have not added things to their menu. They offer one or two varieties of small doughnuts, and perhaps a couple varieties of drinks to go along with the doughnuts.
We have facts about offering milk, juice or coffee to our menu but we have mixed feelings about this. We are leaning toward just producing the doughnuts and offering two different kinds of flavors. We will most likely have sugared and cinnamon flavored doughnuts. Depending on our location, we may offer milk or coffee but we are afraid of the overhead cost of adding these drinks to the menu. We may do it as a market test and see how it goes. But as mentioned the more items you have on the menu, the more overhead that you incur. If the doughnuts do not sell as well as we anticipate, we could potentially have a lot of waste as far as the drinks go. If the doughnuts sell well, then the drinks will complement the doughnuts and we can start selling drinks as well. Basically, selling drinks will depend on the net sales. Then we will go from there.
Getting Capital for your Donut Business
You have an excellent donut recipe, You have a location and an audience to sell your too... and you are certain that they will sell very well. Now you just need to get equipment licensing and other things rolling in order to get your business started. Yet found a great place to get equipment, but you have found that it can be very expensive. If you do not have any money saved but you are financially secure, i.e. you have enough money to make ends meet. Then he may want to get the capital to run your donut business from other sources.
Do you have good or decent credit? If so, then you may be able to get a small business loan from your local bank. Local banks are usually easier to deal with than big banks that just look at numbers. Credit unions are excellent places to get loans for $10,000 or less. If possible attempt to get a loan at a bank that you frequent often. You may be surprised how easy it is. They will want to know what the money is for of course and what you intend on doing with it. This will help you get the necessary capital that is required to get your business venture up and running.
If getting a loan from a bank or credit union is not an option, Have you considered borrowing the money from a family member? Maybe you can borrow the money from a close friend who could possibly be a business partner? We explained the differences between a business partner and a venture capitalist and a previous post. But to summarize, when someone invests (capital) in your company they will have little control over the day-to-day operations of the business. It is simply your responsibility to pay the loan off when you start to make money, or whatever arrangement that you may have with the venture capitalists. Having a business partner can be a sticky situation if you are not careful. The business partner in your donut business could be difficult to work with or have different ideas on how things should be handled. As previously mentioned you can pay a higher rate on the loan than giving 50% of the company to someone who will not be actively involved in it. Be very careful about taking money from people and the contracts that you sign.
The business partner model has worked for us and our situation, but it may not for you. Assess your needs and what everyone brings to the table before you make a decision. This lone decision Could mean the success or failure of your venture. Not to mention the overall happiness that you will have our not have by going into the doughnut business.
Donut Taste Test
Per Donnie
The Lil' Orbits taste test kit may have been pricey, but it was worth the opportunity to try the donuts first hand. They are really delightful. They must be hard to screw up because we didn't, he he. We did not perfect the use of the little batter dropper that was included. Our donuts looked rather odd, but they were quite tasty. We had comparison products from our local convenience store: Dolly Madison Mini Donuts (cake with powdered sugar; $0.75/six) and off-the shelf Krispy Kreme Donut holes ($1.79 for five). Our warm Lil' Orbits beat them hands down. The aroma filled our kitchen. We made some with the partially hydrogenated soybean oil provided and some others were cooked in Kroger brand Vegetable oil. There was a definite unpleasant after-taste to be had with the alternative oil, and the donuts cooked in that oil were greasy.
The experiment sold us on the Lil' Orbit batter. They were the best donuts I had ever eaten. We plan on testing partially hydrogenated soybean oil obtained locally against the Lil Orbits brand oil.
Having Partners in the Donut Business
What will each partner bring to the table? Agree on how much money each person will contribute to the venture. If outside funding is needed, like to purchase donut making equipment, who will ask for it and assume
the responsibility for payments? There are also more things to consider than just money including time and property.
Partners need to decide how decisions will be made before it is ever required. Perhaps one should give certain responsibilities to the other knowing that there may be some unpopular decisions made. There are disagreements in every type of relationship, and a business partnership is no different. Will every decision require the consent of each partner? Perhaps the various responsibilities of each partner should be spelled out in written form.
Will partners divide profits equally? The split could depend on what each one brings to the table, how much risk is taken, and how much work each puts into the success of the company. As with everything else this should be worked out ahead of time to prevent any misunderstanding once the company begins to make money. On a similar note, partners need to decide who owns any copyrights, physical property, and intellectual property that is obtained or created.
Partners should develop contingency plans ahead of time for when the relationship ends. A partner may want out or one my die. Will one partner be able to buy out the other and how will the the assets being transfered be valued? An exit strategy should also be agreed upon if the company becomes too much to handle so that partners part amicably, fairly, and legally.
Partners need to agree on what constitutes a conflict of interest. One may engage in other business activities that could compete with the company or have other ventures that take efforts away from the potential success of the company.
In summary, a partnership can be mutually beneficial by decreasing risk and start up costs for each individual making the idea of a business a reality. There are also many points that need to be considered to keep the relationship healthy and the business moving forward. To not discuss and plan for the issues mentioned could mean disaster.
Benefits of Having a Donut Business
There are many benefits to having a doughnut business. We are focusing on the small doughnut business, and not the franchise donut business model. The franchise donut business model Is not an effective way to sell small doughnuts, which typically are just one product. People who sell small doughnuts may sell milk, coffee or a different flavor donut but that is the extent of what they sell.
One good thing about the doughnut business are the low startup costs. You can typically buy the equipment anywhere from $5000-$20,000, depending on the route you want to go. If you just want a small fryer to set up shop at flea markets or even in your kitchen selling doughnuts, then you can get by with investing $5000 or less. If you want a concession type stand for your doughnut business then you will spend $20,000 or more on start up cost. Donut stands are good if you are selling your doughnuts at festivals, fairs, carnivals, sporting events or any other outdoor activity. Having a doughnut concession stand is a good way to generate a lot of revenue very quickly.
Doughnuts sell! As long as you have a crowd or an audience for your doughnuts, they will pretty much sell themselves. It is hard to avoid the smell of the doughnut, this is what gets them to your stand. Once they are there people can barely resist buying your doughnuts. The overhead is low for making doughnuts. You will have very little cost on the ingredients and equipment. The return on investment can be quite high.
If you can find a good place to sell your doughnuts, with a lot of traffic, you will make money. You will need to keep in mind the rent you are paying and how much you pay your employees for their time. As with all business endeavors, you will need to keep check of all expenses. Another thing that you will need to find, is a good donut recipe. You can try the recipes that can be found on the banner below this post, that website also will teach you how to start and operate your donut business. It is an excellent way to get the support and ideas from someone without having to purchase a franchise. It is well worth the money to invest in the system.
Getting Your Donut Business Legal
When starting your doughnut business, it is important that you comply with all state and federal regulations. There are legal issues and every business, and you want to prepare yourself for anything that arises. Anything from employee issues, problems with customers, and organizing with the state and federal governments, can pose a problem if not done correctly. Especially, when you are in the food business you need to be very careful on the laws that you may be breaking. It is a matter of public safety since you are serving food. The good thing is you will only be serving one item in your donut business. We are focusing on the small doughnuts on this blog and not the many variations and flavors of doughnuts that can be found in traditional donut shops.
Before starting any business endeavor you will want to find a competent attorney to help you along the way. Just as you do not want to put trust in any one person, you will not put all your trust in this one attorney. You will need to get a second opinion at times, it is just wise to do so.
The first thing you will need to do is organize your business with your state. Most businesses are better off being organized as either an LLC or Corporation. These structures will put a barrier between your business and your personal affairs. Never take someone's advice, whether they be professional or not, as gospel. Learn each business structure and their benefits, downfalls for each one. Depending on who you talk to, you'll get different answers as to what your business structure should be. Many accountants will tell you that a corporation is better and attorneys will lean toward a limited liability company. Find out which one is best for you and go from there.
The operating agreement for your donut business will outline how you will operate, regulate and rule the business. It is especially important to have your operating agreement if there are more than one person in your company, for example business partners. You do not want any misunderstanding about how your donu business is run. A lot of conflicts can be resolved when you have a carefully crafted operating agreement. There have been many failed businesses that were a good idea but failed because of misunderstandings with the business partners. What if your partner goes bankrupt, dies, or perhaps becomes a compulsive gambler? What will you do and how will your business handle this situation? What happens if he or she just quits? These are all legitimate questions that need to be discussed in the operating agreement. You need to pay a lot of attention to the operating agreement, it can save you a lot of trouble in the future.
Be familiar with any contracts that your company may be involved in. It is worth hiring an attorney to review and make any contracts that are necessary for you to run your business. Do not wait until your company is sued to deal with contracts, learn all about them from the get-go. Contracts can be very technical and when things go awry you can find yourself in serious trouble.
Employment law is one of the big things that gets small businesses in trouble. Employment law can be devastating to your business is not done correctly. Everything from employment taxes, terminations, recruiting and hiring employees can cause a lot of trouble if not done correctly.
This is not meant to scare you from opening your donut business, These are just facts that you need to be aware of before venturing into the world of business. Pay mind to the old cliché, don't quit your day job. Always have a backup plan, perhaps have some money saved before you start out on your own.
