So you’ve finally got your home-bakery business going. Congratulations! And even better, your best friend wants to commission a cake for her daughter’s party. But when you show her the bill, she’s suddenly upset. A common problem faced by small business owners is charging family and friends for service. So how can you balance doing nice things for your friends and keeping your business up and running?
When you own a business, your goal is to make a profit, which means you charge for your work. Don’t ever be ashamed to set a fair price. As the owner, you may choose to offer a discount for the people closest to you. If that is the case, establish a “Friends and Family” plan for your home bakery to manage expectations.
Here’s all you need to know about dealing with friends and family who want discounts for your cakes and cookies:
Have a Solid “Friends and Family” Plan
A “Friends and Family” policy is a pre-established system of discounts or reduced rates. Having a reliable, definitive plan in place prevents the awkwardness and confusion of having to work out pricing with your friend or family member every time.
First, you need to define who falls under this plan. You can have it only apply to close family members and particular friends, or you could allow your friends to offer the discount to their close friends, which would allow you to expand your client base and reach.
No matter what discounts you choose to give, it’s essential that you are consistent. The discount should be the same for everyone every time. Having a plan in place will make it a lot easier to cut negotiating and guilt-tripping arguments down.
A policy is a policy, and it needs to be respected. If your friend or family member is wheedling their way out of paying you, you do not want their business.
Don’t advertise your policy to the public. You know who it is for but what you don’t want is every person you have gone to high school asking for a friend discount. As the business owner, you can make any exception you feel comfortable with, but having that policy in your back pocket is a powerful feeling.
Treat Your Business Like a Business
Your time and talent have value, regardless of who they benefit. You worked hard to get where you are now, putting in a considerable investment of your time, talent, and money. This investment is intended to be paid back by the sales that will make your business a success. Your work is not worthless because it is done for a friend. You deserve to have your work respected, and you are more than allowed to say as much to people who ask you to work for free.
Unfortunately, this kind of investment might not be as apparent to people who are not directly involved. They might not understand that making baked goods as a business is entirely different from doing it as a hobby. They are used to you baking for special occasions; it may be difficult for them to make the mental switch to considering what you do as your job.
To cross this particular hurdle, you can try explaining the time and effort that goes into each cake or cookie you produce. Be upfront about the cost of ingredients and labor that goes into each batch, breaking down the expenses and time. From there, you can explain that while you are happy to help them, you cannot afford it.
You can explain that you don’t want to bake in your off time because it is working overtime for you. Your friends wouldn’t ask an accountant they know to file their taxes for them for free or ask a doctor to treat them for free. Your work deserves just as much respect.
Be Clear You Expect Payment
It would help if you also made it clear that you expect payment from your family and friends. Marie Forleo, the author of Everything is Figureoutable, suggests using this language to head off any awkwardness: “I’m surprised and honored that you would hire me.” The word “hire” makes clear that this is a business transaction.
Find Other Ways to Give Back
Sometimes it’s not just friends and family that will ask for free work. Once you gain traction in your community, people may reach out with requests to donate goods to events. This sort of claim does not fall under the “Friends and Family” plan idea, and so can be a little more challenging to address.
Community donation requests can be difficult to navigate. Read my blog post, The Top Do’s and Don’ts of Home Bakery Donations, for tips on how to handle them.
Giving back to your friends and family doesn’t have to come only in discounts and free work. Personalization, extras, and trades can be excellent ways to make the work beneficial for both of you in the long run.
Be Proud of Your Accomplishments
We all want to do nice things for our friends, of course. It may even feel wrong to charge them money for something you’ve been doing for free before becoming your business.
But just because you have a history with someone doesn’t mean they should take advantage of you. You’ve worked too hard to let awkward conversations about money drag you down. In the beginning, where drumming up a paying client base is incredibly important, you might not be able to afford not to charge.
Your friends and family want to see you succeed, and will probably be more willing to support you than you think. Have confidence in yourself and your business.
Not everyone has the guts to go after their dreams and build a business from the ground up. You deserve to have some pride for having the grit to chase after the career you want. Remember, it’s your business, and you decide what the rules are.
Have you gotten my Essential 5 P’s for Perfect Product Pricing pdf yet? I created this freebie to take the guesswork out of determining how much to charge for baked goods. Sign up for my email list and your very first email has the pdf.