5 Lessons from Trying to Start a Business

I ended my baking business before making even one sale, but it wasn’t a failure - it was a great success! Nothing is a failure if you can learn something from it, so here are five valuable lessons I learned from trying to start a business.

But, first, here is a little background and context for this story. I took a hiatus from this website while I was developing new recipes and trying to start a baking business. As for this website, I created it because I wanted to share my tried and true recipes with you!

I don’t publish any recipe until I have thoroughly tested it to ensure it will come out perfectly, and it can be repeated by anyone. When you bake with recipes that you know will work, you bake with confidence. That’s why I try my best to provide you with recipes that are guaranteed to be foolproof!

But, I also wanted to share my finished products with people, so I pursued the idea of opening a baking business, where I would sell my baked goods.

After developing and testing new recipes, baking thousands of prototypes, figuring out sales and shipment logistics, and researching business strategy and licensing, I ran into a problem. I’m never intimidated by problems because I always believe there is a solution. However, the solution to the problem that prevented me from opening my baking business was too drastic.

I had everything ready to open the business: delicious recipes, packaging, labels, purchasing and shipping logistics, an LLC, EIN from the IRS, separate banking accounts, website - everything! It took several months of hard work to get all that completed. Then, I ran into a huge roadblock, which also leads into the first lesson learned.

The city where I live does not allow or permit the producing and selling of food products from your home. Now, you’re probably thinking, “Geoff, didn’t you look that up before starting all of this?” And that would be a great question!

I did look it up, and, from what I read on official government websites, it looked like I could start this business. But, don’t believe everything you read. Once I applied for the actual license, I was told that it couldn’t be done. The solution to this problem would be moving to a new city or leasing commercial space to open the business, but those options were too drastic to work.

This leads into the first of the five valuable lessons I learned from trying to start a business:

1.Confirm Legal Stuff

Whatever business you are trying to start, do more research about it than you think you need. And then do some more! There are always more details waiting to be discovered about opening your business. Triple-check with local and state authorities about all the requirements you may have to meet, including licenses, permits, inspections, applications, fees, etc. Ask lots of questions, and get all the legal/governmental requirements clarified in writing.

2. Keep Finances Separate

Put as much separation between your personal finances/assets and your business as possible, so if anything goes wrong with your business, it will not injure you personally. This is why the first thing you should do is create an LLC (Limited Liability Company). An LLC will separate your personal finances from your business’ finances. Never mingle monies from your personal accounts with your business accounts as this is known as “piercing the veil”. Piercing the veil between your personal and business accounts could open up your personal finances to legal action if anything should go wrong with your business.

Once you have an LLC, get an EIN (Employer Identification Number) from the IRS. You will need an EIN to open bank accounts for your LLC, and you will need it for tax purposes. If you have your credit checks frozen, you will need to contact the credit bureaus to unfreeze them or else you won’t be able to open new business accounts and business credit cards.

You can also use the EIN to create business accounts with Amazon or other retailers, which could give you discounts on purchases. Finally, you should create a separate phone number (Google Voice) and email account for your business to keep things further divided, and use those for only business activities.

3. Be Honest with Yourself

It’s totally natural to feel anxious and nervous when starting a business. Anything new and unknown is always a bit scary. We tend to think of all the problems that can go wrong, especially the ultimate problem of the business failing. Yet, you should focus on all the positives and wonderful things that could happen if your business succeeds! Those positive things are what will keep you motivated and help you overcome obstacles! Yes, it can be a long road to starting your business, but every step you take (even small ones) brings you closer to accomplishing your goal.

Still, you need to be brutally honest with yourself about this endeavor. Do you have the time to do it? Are you willing to put in early mornings and late nights to work on it? Are you willing to sacrifice your free time during the week and on weekends for it? Do you want to put your hard-earned money into it, knowing you may never get that money back? Do you want to put in all the work, research, time, and effort that is absolutely necessary to even getting your business off the ground? If you don’t, then that’s perfectly fine!

Starting a business isn’t for everyone, and you don’t want to invest your time and money into something that will become a hated chore or a burden to you. Not every hobby or passion should become a business because it is quite often that people grow to dislike what they once loved because they tried to make money from it. Yet, you will never know what could happen if you never try! Just be honest and realistic with your goals.

4. Get Your Domain Name and Social Media Usernames ASAP

Our world is fully digital now, so it is a must to lock down your business’ domain name and social media usernames. First, buy the domain name for your business. Research credible domain name registrars to find a quality one. Remember, if it’s too good to be true, then it is. Registering a domain name is cheap, and it should cost $10-25 per year to keep it registered to you.

Next, grab any and all social media usernames for your business. Get it on even the lesser-used social media platforms as well since those could get huge in the future. Use different passwords for each of them, and, if these social media platforms offer 2FA or MFA for increased security, turn it on, so no hacker can take your account! The most secure method of 2FA/MFA is through an authenticator app, such as Aegis or Authy, but if the platform doesn’t support an authenticator app, you can have the code sent to the business phone number (Google Voice) that you created earlier.

5. Make Sure You Can Profit

The harsh truth is that you won’t be in business very long if you can’t make a profit. You have to know all your numbers and know them very well. No matter if you are selling goods or services, you need to know the cost of everything. And you need to find out how to procure your raw materials for the best quality and the best price. That requires copious amounts of research, but it is absolutely worth it. Here are some things to look into:

• How much do the raw materials cost that are used to make your products? Does the cost of them change when buying them at a certain scale? Is there a best time to buy them? Can you get discounts on them?

• Do you need to buy new or additional equipment? Can you buy it used/refurbished?

• How much will it cost to ship them? Packaging, labels, shipping, etc.

• How much does PayPal, Stripe (credit card processing company), or another financial institution take for transactions/sales?

• How much does the operation of your website cost?

• How much do the licenses and permits you need cost per year?

• Do you need any type of business insurance or liability insurance? How much does that cost?

• Where can you store all the stuff for your business (materials, finished products, shipping stuff, etc.)?

• Do your products need to be temperature controlled? Would you need more refrigerators or freezers?

• How much money do you want to spend on marketing and advertisement?

I conducted months of research into the numbers for my potential business and created spreadsheets with formulas to figure out the cost of each of my baked goods (cost to make and ship) as well as the cost of business operating expenses (website, marketing, licenses). Then, I worked backwards to figure out their sale price to generate a profit that could sustain the business but also compete in the marketplace against other bakeries. It was a lot of math, but the geek in me loved it! In summary, know your numbers, and know them well!

I learned many more lessons from trying to start a business, but those are the five most valuable ones. Nothing is a failure if you learn from it, and I hope you can learn from this as well. Now, my full focus is on making Geeky Bakehouse the best it can be and providing you with foolproof and delicious recipes!