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How I Got My Capital:
How a muffin maker created a business from scratch


How I got my capitalSome people go into business because they love the work. Tami Webb started a gourmet muffin business for the dough -- the money, that is.

"I've never been interested in cooking -- never. I don't even eat my product," says Webb.

Here are some of the lessons Webb learned as she grew her money-maker, Vintage Bake Shoppe Inc. in Laurel Springs, N.J., from nothing to a business that grosses more than $500,000 a year.

Lesson 1: Keep your day job and, if possible, make moonlighting a plus for your employer.
Five years ago, with her husband's auto repair business going badly and Christmas only a few months away, Webb, a bookkeeper for a restaurant supply company, couldn't see how she could afford to buy gifts for her two daughters.

One of the products her employer sold was pre-made muffin mix. Webb took some home and baked it in her own kitchen. The result was tasty. With her employer's encouragement, she began selling muffins to other businesses in the office complex -- primarily as refreshments for meetings. Business was immediately brisk.

"The phone started ringing. 'We want your muffins. We want your muffins,' " Webb recalls.

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She negotiated a deal with her employer to give her time to make morning deliveries before she went to work. Webb made money and her employer got free product advertising -- a good deal all around.

Lesson 2: If you don't have cash, barter can work just as well.
When Webb started the business, she was baking muffins in her small kitchen oven at home. Because she didn't have enough refrigeration space and the weather was cold, she was storing dough in the junked cars her husband was restoring in the back yard -- cranberry in the Chevy, chocolate chip in the Ford.

After Webb baked her first ton of dough, it was clear that she had to have a commercial oven and a large refrigerator. She didn't have enough money to buy them or any place to put them, so she cut a deal with the owner of a small grocery in her town. He needed someone to work nights when he didn't want to. In exchange for minding the store, Webb got to use his refrigerator and she scraped together $1,000 to buy her own used commercial oven, which the store owner allowed her to install there.

The commercial location also gave Webb the opportunity to expand her customer base. Not only could people buy the muffins there, but also she reached business customers that were more geographically diverse than just the initial office complex where she had begun.

Lesson 3: Just because you haven't done something before doesn't mean you can't.
Webb got into the muffin business because her boss sold the pre-made mix and it worked well for her in the beginning. But as the business grew, it was clear to Webb that the pre-made ingredients cost too much. As she contemplated quitting her day job and going full-time into the muffin business, Webb knew that she had to come up with a less-expensive alternative.

She'd never taken a chemistry course, didn't know anything about food science and wasn't a particularly experienced cook. Moreover, the new recipe had to taste the same as the old, very popular pre-made product. By reading and with help that she found through the Small Business Administration, Webb developed a scratch muffin recipe. "I made up the formula, replicating what I had, made it better and was able to make muffins from it at a savings."

Lesson 4: Sweat equity counts.
Sixteen months into it, Webb was making about $15,000 a year from her business and felt she was ready to go full time. To pay for a bigger location and better equipment, she applied for an SBA-backed bank loan, but was turned down. Webb wasn't discouraged. She found a dilapidated building in the center of town that had once been a post office. With about $7,000 in savings, she rented the place and bought used equipment. She and her husband installed ovens, a walk-in refrigerator, vents, sinks and large mixers themselves. They also fixed the roof and did the painting, making Vintage Bake Shoppe Inc. an attractive addition to the neighborhood.

"I got to know every piece of equipment from top to bottom, and now I can fix it myself most of the time. When the repair guys do come, they're always amazed. They expect a dumb blonde," Webb says.

Lesson 5: Take the business and run.
When Webb started, most of her customers were located in a small geographic area -- nearby office parks. But as word of her tasty muffins at reasonable prices spread, she began to get calls from as far away as Trenton, N.J., and Philadelphia, each 50 miles away in opposite directions. Because for the most part the muffins had to be delivered early in the morning, selling more at greater distances made the business a lot more difficult.

Webb contemplated turning these new customers away, but thought better of it. "I decided I couldn't afford to say no. If somebody called me for product, I got it there one way or the other."

The new customers meant Webb was getting up at midnight and baking throughout the night, then getting in her van and making deliveries starting at 5 a.m. It was a physical grind, but the effort tripled revenues in a few months and justified Webb's decision to leave her full-time job.

Lesson 6: Keep your eye on the goal.
Last year, Webb had a potential investor who was interested in helping her purchase her own bakery and grow the business dramatically. Webb was about to take the offer until one sleepless night, when she had a revelation. She realized that she had gotten into the business so she could buy what she wanted for her daughters and eventually send them to college. She had mostly achieved that goal through investing the profits, was comfortable and didn't really want to grow any more. She didn't want the headaches, and she didn't want the financial responsibility.

So Webb turned down the offer and business continues as usual. "I've never borrowed a penny, and I hope I don't have to. The plan is five more years. When that day comes, I want to be able to turn the key and walk away. I don't want to owe anybody, and I don't want to worry about owing anybody. I just want to be able to walk away.

"This may not be a good business decision, but it's the right personal decision for me."

Jennie L. Phipps is a contributing editor based in Michigan
To comment on this story, please e-mail the
Bankrate.com editors

-- Posted: July 14, 2000

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