My Donut Business.com

Archive for the ‘Starting a Donut Business’ Category

Happy belated donut day everyone....  here is a video update of what we have been up to and where we are headed with us....

Be sure to check out MyConcessionBusiness.com

Do you want to have a small business or do you want to go big? There is basically two things you can do when starting a donut business, you can start small or start big. When you start small, you buy a basic donut making machine from someone, set up at a church or local event, perhaps even a fair or festival. You could travel around to different places close to your area and probably do very well. It would not take very long for people to fall in love with your doughnuts. People fall in love with your doughnuts if you have a good recipe and they follow you, and perhaps tell their friends all about you. You could even set up little doughnut boxes in local businesses.

If you do not want to start small and you have the capital and resources to do so, you may want to go big and buy into a donut franchise. There is an enormous amount of capital required in order to start a donut franchise as you can imagine. The rewards can be great plus you have the backing of someone who is experienced in the industry. This experience can be very valuable as you work your way through the business. You do not have to worry about trial and error, making mistakes as they have your back. I personally was always leery about franchises in other industries. I had once thought about opening up a cleaning business using a franchise system. But luckily I was talked out of it. If I was not talked out of it could be several thousand dollars in debt to this day. Thank goodness I never went through with it that started it on my own. We have a blog about that as well you may want to look into it.

Look up donut franchise on the Internet and you will see several resources regarding this industry. Be sure that you have your financial house in order though, because it will be required in order for you to sign on the dotted line. This is pretty much the case with all franchises, you need to have your financial house in order. You can most definitely make it without a franchise, sometimes it may be even better.

We have talked before in previous posts about trying different things in your donut business. Questions come up like should I sell coffee? Should I sell milk? Should I sell coffee? Should I sell orange juice? Each one of these has its disadvantages and advantages, just like selling anything else. You need to consider the overhead that each one will give you and the profit that each one could give you as well. You may, depending on the location, be better off just sticking to selling your doughnuts alone without anything else accompanying them. But there are situations where selling drinks could be beneficial.

I think we mentioned this before, we were in San Francisco on Pier 59 I believe (I'm not sure of the exact number) And there was a small doughnut shop on the Pier. It had been there a few years before and I assume that it is still there now. They seem to do very well, even though it was a slow time of year and the traffic was down. There were not a lot of people on that here, buying anything. But the little doughnuts shop had a steady flow of traffic buying their doughnuts. I thought it was very interesting, and that we had seen the doughnut shop before it was not until a year later that we had the idea to have one of our own. But one thing that we noticed is they did not sell any beverages except coffee. They sold a mini bag of doughnuts with about Half a dozen in each bag for three dollars. My partner and I absolutely loved them. Wow, it makes me want to go back to San Francisco, the two of us. We had such a good time, it really brings back good memories.

Anyway, back to trying different things in your donut business. If you have a stand-alone store and offer multiple varieties Of doughnuts, like the big chains, then of course it will be necessary for you to have drinks. He not only will have to have coffee, but you will probably have to have orange juice sodas and other drinks people enjoy in your area. By the same token if you have a large store then you probably won't need multiple varities of donuts. This is just not our business model, we are selling small doughnuts without drinks. Perhaps in the future we can offer a bigger menu. But for us this works out very well. Try different things in your donut business will be depend on your resources, venue and your audience, it is pretty much that simple.

There are advantages and disadvantages to having business partners in the doughnut business. In this post I will discuss the advantages of having business partners. As you know there are four people involved in our doughnut business and thus far it has not been a problem. The four of us are partners and other ventures, beside the doughnut venture, and we have been successful. I am not saying that we do not disagree on things, actually we disagree on a lot of things, but we end up agreeing to disagree. We are lucky that we all give and just enough and realize the role each one of us plays in the business. Respect is an important part of having a business partner and we all respect each other for what and who we are.

Having a business partner is not always a good idea. You really need to know the person and what they are about. How long have you known your potential business partner? Do they have good credit? Do they have money? What do they bring to the table that you do not have? Can you trust this person? Do they have other interests besides what you are trying to do? All these questions need to be answered before you even consider a person to be your business partner. There are many a horror story of partnerships gone bad. One of my business partners Brothers lost over $100,000 in a motorcycle shop business that did not turn out well, basically went out of business. He mortgaged his home for the money and lost every cent of it. There was no recourse against his business partner because he went bankrupt. It is a sad situation but one that he has recovered from nicely. There is no education like experience, though it can be costly.

So you think you have a potential business partner for your fledgling doughnut business? The question is, do you really need him? What are they bringing to the table that you do not have? Maybe it is money that they have and you do not have. If so, you need to spell out exactly what they want in return. Maybe it would be better if they were a silent investor instead of a partner. I have found a lot of times it works better for both parties if one has money and the other doesn't, that's a person who has the money simply invest the money and gets a set rate of return on their cash. Set up a venture capital deal with someone where they get a guaranteed rate of return. You can afford to pay a higher rate of return, make it attractive to a potential investor, especially considering that you could give up 50% of the business if you became partners. Plus the business partner would have control over your business and you would have less of a say than if they were just a venture capital investor.

Having a business partner can Be a good thing or a can be a living nightmare. Do your research on the person and find out how they will fit in to what you are planning on doing with your donut business. A lot of times not making them a business partner but giving them a guaranteed rate of return on their money Is the best thing to do for both parties.

As we talked about In the previous post finding a good location for your donut business is a top priority. We personally are staying away from pricey malls that charge a lot for rent and where the overhead is a lot and the traffic may not be what we expect. I have paid a lot of attention to food places in the mall, people selling fudge, candied popcorn and every kind of sweet you can imagine, and it seems that many do not stay very long. I would love to know the reasoning behind this. One cookie store, actually opened up another small stand in the center aisle of one of the mall coridoors. I assumed that they must be doing quite well to open up another store. But regardless, we do not plan on opening a doughnut shop in the mall.

As we mentioned last week, we are trying to get in a flea market where we can sell doughnuts. I think we might have mentioned before, that we are also interested in selling doughnuts at fairs and festivals. People at fairs and festivals are pretty much a captive audience. Eating tasty foods is almost a tradition at these places. Instead of leaving when they get hungry, they find places to eat there. When you are selling small doughnuts at fairs and festivals, you are also selling convenience.

When you are selling doughnuts at a fair or festival the rent is usually a lot less than if you had a storefront establishment. In addition you are only paying when people, a lot of people are there. When you rent a spot at the mall, you are paying when there might not be very many people at the mall. If you make your business portable, you can travel to a lot of the fairs and festivals all over the country. If you feel financially secure to do so and are not tied to your job this may be an an excellent opportunity for you. Traveling from Festival to Festival is not for everyone, But can be very rewarding monetarily.

It can be very difficult to get your foot in the door at fairs and festivals. There is often times a waiting list just to set up shop. Many times if you have something different such as a doughnut, you may have a better chance of getting your foot in the door. I always thought it would be a neat idea if they had some sort of bidding process for the food vendors, it would be interesting to see how it went. It may price some people out of the market.

Knowing your startup costs for any business venture is always a good idea. As we have previously discussed the capital needed to start a doughnut business can be very low or very high depending on where you are headed in the business. For example, if you want to start a franchise donut business, of course your start up cost will be much higher than if you start a simple one man operation small doughnut business, with one product to sell. You need to be aware of all the costs associated with starting your business, it just makes sense.

Do you know of anyone else in your network of friends or family who have started a business in the past? They are usually an excellent resource and can answer many of your questions for no charge at all. There are many similarities in businesses, so they do not necessarily have to have a donut business in order to give you good advice. There are many things that can suck money out of you, and you want to be aware of each one of them. There are so many unexpected cost in running and starting a business, you want to plan for the unexpected. It is never fun to realize you have unexpected expenses that you must attend to. Pay attention to the people that offer you advice, especially ones that have had their own business. They are an invaluable resource in your future endeavors. Also make sure you are comparing apples to apples, prices in some cities are different, so you need to be sure about licensing and taxes for different areas.

Remember there is no education like experience, you may find out after starting your donut business, that you have found out more by making mistakes on your own. Sometimes education is experience that is what you do with it that matters. Be sure you are aware of everything that goes on in your business, and the less surprises you have, the better off you are.

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.