USING INCUBATORS SUCCESSFULLY
(Part 4 of a 6 part series)
By Kathrine Gregory
Becoming the Next Famous Amos: In past articles we have discussed the basics. Now you are an experienced entrepreneur, your efforts in marketing have paid off and you are contemplating exhibiting at trade shows and fulfilling big orders. Congratulations! But how do you achieve your goal of becoming the next Famous Amos?
Staffing and Equiping: You need to hire staff and investigate equipment that will speed your production without losing product quality. Many times entrepreneurs in my kitchens think that they have to rent an additional shift in order to produce more product per week or to fill that big order. I recommend that they hire someone on a part-time basis before they rent more time in the kitchen.
Do the math:
Kitchen cost at $200 per 8-hour shift = $200.00
Part-time worker at $10 per hour for 8 hours = -$ 80.00
Savings: = $120.00
Production Can Increase Three-Fold: You will find that your production increases three-fold with the addition of just one staff person. This person might be a student at a local culinary institute or someone graduating from a culinary job training program. Think ahead. Hiring someone to help you fill a big order without first teaching them about your production needs is a recipe for chaos. Learning how to delegate the production process is also essential.
Know the Labor Laws: In hiring, please remember to stay legal. That means you must hire someone with legal ability to work in the U.S. Keep a photocopy of their Social Security card and a picture ID (be it green card or driver’s license). Remember to comply with Privacy Act requirements. Get worker’s compensation insurance for your employee from your insurance broker. If your broker can’t get it for you, you might be able to go directly to the State Insurance Fund. Worker’s comp insurance is not expensive and is required by law.
Keep the Books: You must pay all your employees “on the books.” If you are using infrequent labor you may pay them as consultants. Have them fill out an IRS W-9 and issuing a Form 1099 to them at the end of the year. Your employees will be required to pay their own taxes. You may pay them by check or cash, but you will still record the payment... which by the way is a deduction on your taxes. Test to see if your employees fit the IRS description of an independent consultant by visiting: http://www.mdc.edu/hr/Operations/AFS/IRSFactorTest.pdf
Use the Right Equipment: Investigate equipment…are you rolling out your pie crust by hand? Check out tabletop sheeters that can do the job for you in half the time. What about filling a jar with sauce? There are fill machines that might help maintain consistent size, or you might have to build your own. This can mean something as simple as getting the right-size scoop for your cookies so that the cookies will be the same size. Biscotti makers may want to investigate a table-top model bread slicer. Think of the time savings when you can cut a loaf of biscotti all at once.
Where to research equipment? Search the Internet, read trade/baking magazines, contact trade associations and look for sources at the local hardware store. Sometimes what will work for you might come from another industry. (Investigate the cosmetics industry for some interesting fill equipment possibilities). Equipment cost can be amortized over several years on your tax return, and the savings in labor costs can be substantial. Sometimes what you want can be leased with an option to buy.
Your object is to manufacture your product quickly, efficiently WITHOUT sacrificing quality.
Sharing Your Kitchen: In incubators, where you share a kitchen, you need to ask what equipment can be brought in and stored? You will be required to pay for any special electrical connections. Can you store the equipment safely where no one else will use it? Is it something so durable that you can buy it and – in return for not being charged for storage – you allow your fellow tenants to use it? That is something you have to discuss with the incubator operator.
Meeting Demand for Your Product: As you grow your business, you need to have equipment sufficient to meet growing demand. Don’t be caught promising more that you can produce.
Kathrine Gregory, Founder of Mi Kitchen Es Su Kitchen®, a nationally known consulting firm creating incubators, including three kitchen incubators in the New York City area.
