Now that cakes aren’t just my hobby, every free one takes time from paying customers

QUESTION

After several years in an office job, I’m happy to say I now own my own boutique cake bakery and am able to work there full time! Making themed, special occasion cakes started as my hobby. I was always the go-to baker for family holidays and friends’ get togethers, and I enjoyed making elaborate, personalized cakes for each event. They were a hit, and several people told me I should make cakes professionally. I finally worked up the courage to do it, and I’m so glad I did!

But, now that fancy cakes are my business, I find I have less time and energy to make them for fun – for all the occasions I used to bring them to. I’ve felt awkward more than a few times when people who knew me before I started the business asked if I could ‘do the cake’ for some event they’re having. (READ: Do it for free.)

I know I never would have started my business without support and encouragement, and I don’t want people to think I’m ungrateful or that I value money more than relationships. But I also know that every free cake I do takes time away from paying customers, and my young business has me watching time and revenue very closely.

I’d love to know how other business owners draw the line for free or discounted ‘friends and family’ work – and how they communicate it to people who don’t think there is a line!

Thanks for Your Advice,

CAKE MIXED UP

ANSWER

Hi Cake Mixed Up,

First of all, congratulations of the success of your small business! And furthermore, kudos to you for recognizing the value of your time and product that you make, and seeing the potential impact of personal favors on your business. A lot of people don’t always make that association and either end up burning themselves out, or burning their bridges. Either way, we would like to observe the same rules for ourselves as you do in the kitchen — keep things from burning.

Friend/family discounts are always a tricky one, because as you stated, these people may have been your first supporters and your first clients. But remember that ultimately, they pushed you to pursue your passion so that you would find success. And now, ironically, they are requesting favors that could detract from your success. So here are a few things to think about and consider how best to navigate this social situation:

YOUR COMMUNITY PRESENCE MATTERS
One of our biggest advantages as small business owners is our own perception in the community. (As we’ve written about before, public opinion polls show people trust small businesses more than almost any other American institution.) It’s part of the reason we can afford to charge more than giant impersonal factories turning out the similar products we do for less.  So it is important that we find way to give back to our community of clients and let them know how much we appreciate them. That being said, it doesn’t always have to be free products. There are lots of non-monetary ways to thank customers ranging from social media shout-outs to hand-written thank-you notes. So challenge yourself to find ways to give back that aren’t always free goods.

CONSIDER A DISCOUNTED — NOT FREE — RATE
One way some business owners have chosen to get around this all together is offering a slightly discounted rate for friends/family/charity/etc. Nothing too elaborate – 10 percent off or something that is more of a symbolic discount than anything. Recipients may feel like they got somewhat special treatment, and you can avoid the conversation of free altogether by holding firm on your discount rate.

SET A DONATION QUOTA
Consider having a donation policy of either a monthly dollar amount or number of cakes that you can afford to donate. And that donation may be to a local nonprofit or it may be to a family member’s birthday party. But once you’ve hit it, you can simply respond, “I am so honored that you would consider my cakes for your party! Unfortunately I have already hit my monthly donation limit so I am unable to do the donation this time.”

Ultimately, remember that your business is a business; ignoring the bottom line won’t help anyone. The more successful and profitable you are as a small business, the more potential you have to help people. But you have to observe the rules of the bottom line. If you run out of money, there are no more cakes for anyone. Period. So, the more you are able to (gently) remind others that you have to run this business in a way that makes financial sense, the more they may be reminded your once hobby is now a business.

Someone asking you for a free cake is almost like straight up asking a friend who has a traditional job to just give a part of her paycheck to pay for a birthday party. And societal norms would say that is rude. At the end of the day, bottom line, community perception and your own burnout are all factors that need to be taken into account in order to ensure a successful business.

SMALL BUSINESS OWNERS — What are some of your tried-and-true tips for working with the (often well-meaning) folks who ask you to donate your products or services? OR — on the flip side — what have you tried that didn’t work? Tell us about it in the comments section.

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