Hey Colin,

I’ve been working on a little side-project for a few years now, and I think I finally have a product (vegan cupcakes!) that people like and would actually pay for. My friends all really like them and I’ve figured out how to produce them daily, if I need to.

I’m stuck on what to do next though. How do I take this kind of thing and turn it into a small business? What should I do next, and what should I think about for the future?

Sweetly,

Steph

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Hey Steph-

First off, it’s wonderful that you’ve already put in time and effort to refine your offering: it’s a solid niche, and from what I’ve seen firsthand, one that seems to do pretty well—if you can get word to your intended audience and figure out the proper framing and price-point.

There are a couple of things I would do next, if I were you, but before I get into that, let’s establish that one of the main differences between a business and a passion project is that a business is meant to be economically sustainable, and should ideally make a profit.

In practice, that means the precise cost of every single thing will be important, from the bags of flour to the gas in the vehicle used to make deliveries or otherwise distribute the cupcakes.

Optimally, you’ll spend less than you bring in. This is a super-simple concept that is nonetheless often ignored by smart people because the project is just so much fun and so fulfilling. But if you’re not careful, and you don’t keep this reality in mind, you can find yourself with a costly hobby rather than a business.

Which, by the way, is not the end of the world: some things should be hobbies or enjoyable side-projects rather than businesses. It’s okay to do things because we love doing them and for no other reason.

Likewise, in some cases, things that start out as hobbies eventually become businesses, because you iterate as you go: eventually the dollars and cents line up just right, and you’re incidentally making a profit, rather than going in with that intention.

It sounds like you’re keen to make this into a legit business, though, and that means keeping this fundamental premise in mind: spend less than you bring in.

Also important: profit may not happen right away, but as you scale, as you sell more cupcakes, you should make more money rather than less.

If you lose money on every cupcake sold, you don’t benefit as you grow.

This approach can work (sometimes) in some industries, where you’ve got a big investment fund to draw on and can make your entire service a loss-leader while you drive your competitors out of business (think ride-sharing and food delivery services), but it’s not something small cupcake businesses can afford to do, typically, so it’s best to aim for the proper numbers out of the gate, so that you can focus on scaling and know that as you grow, your numbers will become more favorable, not less.

That said, it’s probably a good idea, early on, to do a lot of taste-tests, and to possibly combine those research and development efforts with your early marketing efforts.

This will allow you to get feedback from people who aren’t friends and family—who may not always tell the full truth when giving feedback on things made by people they love—but it will also give you the excuse to get your cupcakes in the mouths of folks who may then become early customers and supporters.

To find that initial group of taste-testers and potential future customers, think about who your intended audience is and go where they spend their time. This might mean the right online forums or Facebook groups, the right coffee shop or board game night; go where they are and ask if you can bring in some samples for everyone to try.

Expect to give out a lot of freebies early on, and work that into your marketing budget.

Take the feedback you receive seriously, but don’t let it get you down if it’s not all positive: such feedback generally isn’t, and it’s okay if your cupcakes aren’t for everyone. Improve whatever you can, but most good products are amazing to some people, and kind of a turn-off for others—that’s ideal. Nothing is universally appealing unless it’s so bland and unmemorable that everyone finds it kind of sort of okay, and that’s probably not what you’re aiming for.

As you’re going through that process, refining your product and delighting an initial group of people, also be thinking about your “unique value proposition,” which in non-business-speak means “what you offer that no one else can offer.”

Your UVP might be certain cupcake flavors, a particular price point, or you may decide to be a completely sustainable company, using carbon offsets for all the energy you use and biodegradable cupcake packaging.

Whatever the specifics, be thinking about this and figure out ways to make it economically sustainable (so you’re still able to make more than you spend), and don’t be afraid to experiment and tweak along the way—with your recipes, but also your prices, unique offerings, marketing tactics, and the like.

Do a lot of learning and iterating because at this stage, you’re still mostly below the radar. Utilize your lack of notoriety to make gobs of valuable mistakes while you’re able to do so with few consequences.

Think about relationships you might build at this point, as well.

This includes asking your local coffee shop if they’d be interested in stocking your cupcakes alongside their other baked goods, and figuring out the pricing on that sort of distribution relationship.

It also means sorting out suppliers for your ingredients and packaging and business cards and the like, negotiating bulk deals (if possible) and making sure you’re working with people you like, and who themselves do good work that you’re proud to be associated with (and can afford to be associated with).

Be thinking about marketing, but again, give yourself time to lurk below the public’s radar before you aim for widespread exposure.

It would not be ideal to get a big push on the local news while you’re still figuring out who you are and what you do, and whether or not the way you’re doing it will be affordable. It would be great to get that push when you’ve got all your ducks in a row and you’re ready to scale, but getting that same exposure before you’re ready can be a costly missed opportunity.

In the meantime, get your online infrastructure in place, and get some nice photos of your products to use on your website and social media profiles.

There’s no need to invest too much time or resources on social media until you know what your actual strategy will be in these spaces. You’ll likely be best served by simple profiles with a few photos and links back to your main website, at first, rather than any larger strategy requiring posting schedules and regular streams of new content.

That may be worth investing in someday, but it can steal your attention and resources when you should be focusing on other things, if you’re not careful. Start simple, focus on making the information people need available and accessible, and get a basic landing page up so folks know who you are, where to get your cupcakes, and what you stand for.

That’s a very succinct outline of early days considerations for a small business, and optimally it’s paired with other small business activities like registering your business with your local government and figuring out how you’ll manage your accounting (both of which can be automated, hired out, or done in-house).

Ideally, too, this remains something that you enjoy doing, and it’s important to keep checking in with yourself along the way to ensure that your business is sustainable economically, but also physically and psychologically.

Keep in mind that there’s no single, correct way to start and run a business, and no single, perfect outcome. It’s okay not to scale as far as you’re able, and to keep things small and delightful. It’s okay to want to scale up to become the Google of vegan cupcakes, too.

Just make sure, whatever you do, that you do it purposefully, intentionally, and as well as you’re capable of doing it. That, ultimately, is what brings more wonderful stuff into the world, without sacrificing the happiness of the people making that wonderful stuff in the tradeoff.