How I Got My Capital:
How a muffin maker created a business
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.
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
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
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-- Posted: July 14, 2000