A Buyer's Market Will Crush Your Fabulous Ad Campaign

Let's say that you're thinking of opening a home-based custom cake business. Keep this in mind:

-There are too many home-based custom cake businesses right now, the market is at full capacity.
-New (and some old)  businesses are finding it difficult to get customers who will pay enough to make selling a custom cake profitable.
-Many decorators who are underpricing make cakewrecks, but many do not. Decent cakes are out there for low prices.
-The general advice is to just improve your marketing and the customers will come.
-This is total crap.

Some areas just can't support yet another cake business, let alone the ones that are there currently. 

If there's too much supply for the demand, you're going to have a buyer's market. That means that buyers will be able to choose from similar items that are priced lower than they would be if there weren't as many choice.Which means that there are a lot of "cheap customers" because they CAN be cheap and still get a decent cake. The person who made it might not be earning more than $2 an hour, but that doesn't mean that the cake is terrible, it just means that the person who made it doesn't know how to price things to make a living wage.

There are also places that can't support a custom cake business because the economy is so depressed and there's genuinely no way that people can afford to spend the money for something that isn't a necessity. And no, a custom cake is not a necessity.

So my point is that if you want to have a PROFITABLE cake business these days, you need to look long and hard at whether your area can actually support another cake business. Marketing isn't going to make people want to pay more for a cake if  1. they don't have to, or 2. they genuinely can't afford it. 

If you have a gorgeous website with lots of awesome photos, but the only thing people do with them is cut and paste them on facebook with the question "who can do this for a reasonable price", that isn't very effective. And it might be impossible to get better results regardless of your marketing efforts if there's just too much competition or not enough $$$ in town.

So the next time someone tells you to improve your marketing and the profits will just start rolling in, ignore them and take a realistic look at your area. You do need to have a good marketing plan, but what that is will vary by location. And even the best marketing might not be able to break through the buyer's market/small-town mentality barrier enough to make it possible for you to make a real profit. Be realistic.

Kara Buntin owns A Cake To Remember LLC,  online cake supplies at  www.acaketoremember.com and www.acaketoremember.etsy.com

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