My home bakery is busy but I am not making money. What am I doing wrong?

Home Bakery Business ProfitCostingBurnoutBusiness model

Second year of custom orders. I am working most days, turning down some work, and my bank balance has barely moved. On paper this is a successful small business and in practice I am exhausted and broke.

I do not think this is a pricing problem alone because I did raise prices last year. Something structural is off and I cannot see it from inside. What should I be looking at?

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4 replies

Check your product mix before your prices. I found that about 70% of my orders were the most labour-intensive, lowest-margin thing I made, purely because it was what I had become known for. I was busiest on my worst product.

Also check customisation. Every bespoke request adds time that does not appear anywhere in your price. I moved to a fixed set of designs with a clearly priced customisation charge and my hours dropped meaningfully with almost no drop in orders.

Meera, the two replies above cover the most common causes, and in our experience they usually appear together.

A diagnostic worth doing this week. Take your last thirty orders, and for each one write the price, your true cost including wastage, and the honest number of hours from enquiry to handover. Then calculate profit per hour, not profit per order. Almost everyone who does this for the first time discovers that their most popular product is their worst one, and that a small number of high-touch customers are consuming a disproportionate share of their week.

The fixes usually follow directly: retire or reprice the loss-making line, standardise designs with priced customisation as Vikram describes, and put a minimum order value on the things that only make sense at volume.

One more thing worth naming, because it is doing real damage: you said you are turning down work while being broke. That is a strong signal your capacity is being spent on the wrong orders rather than that you need more of them. More volume will not fix this — it will accelerate the burnout.

This is squarely what the business strategy portion of our programme exists for, but you do not need a course to run the thirty-order analysis. Do that first.

Profit per hour rather than per order. I have never once looked at it that way and I already know what it is going to show me. Thank you, all three of you.

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