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alex
alex SuperDork
2/6/11 9:38 a.m.

As of February 2*, I'm an independent businessman. I'm the owner and sole operator of Red Guitar Bread; I make a small number of handcrafted breads that I sell wholesale to independent restaurants around town.

The idea of this thread is to give me a sounding board of trusted people with a wide variety of experience, both in life and in business. And someplace to put my thoughts down and vent, without whistling into the wind like I'd be doing on a normal blog. Hopefully, you all won't mind a little navel-gazing on my part, and maybe I can be of some help/inspiration to anybody who's thinking about working for themselves. Certainly, if I can do this (which, granted, at four days in remains to be seen), anybody can.

Without getting too long winded, here's the Cliff's Notes version of my background: about 10 years ago now I was finishing one very unsuccessful first year of college and staring down the barrel of what would turn out to be another. I'm one of those people for whom college was just not right; whether it was timing or personality, I can't really say. Anyway, I somehow stumbled into culinary school and found it to be a good fit. And in the process of establishing my culinary career, I stumbled into bread baking early and never could shake it loose. Over the years it has turned out to be an ideal match for the way my mind works: it takes organization and a methodical approach, but requires a lot of critical thinking and educated creativity to carry out well. As an added bonus, my field of speciality is also looked upon as sorcery by most of my colleagues, so I occupy a lonely niche in the industry.

My first dedicated baking job was in Wisconsin, working with a wood-fired brick oven, and using a lot of wheat grown only miles from the shop, which I'd stone grind myself. All very crunchy and hippie, but it was an eye opening experience to be so closely tied to the origins of my product. I haven't been able to get that damned oven out of my mind, and I know I'll be building one for myself sometime soon.

But now I'm baking out of a regular commercial kitchen with almost no dedicated equipment. It's less than ideal from that standpoint, but it does have a couple advantages. Until this month, I was en employee of this restaurant, and I was able to use their reputation as a jumping off point to get my product out into the market. And, I'm trading bread for rent, so in terms of overhead for a startup, it's hard to complain.

The lack of dedicated equipment is a constant challenge. Bread baking is a matter of manipulating time and temperature, and I don't have the means to do much of either. (The time machine's on back order.) Improvisation is the name of the game, and every day brings a weird new set of circumstances to deal with. Most of the time I can roll with the punches, sometimes it bites me in the ass. Now that I'm working without a safety net and I rely on my product for income, I have to get to the point that I'm always on top of my game. Play time is over.

The process of officially starting up, which I'll get to in a later post (gotta go shovel the sidewalk), is a daunting one. For obvious reasons I have to do everything above-board, so I'm spending a lot of time shuffling paperwork for permits, licenses, taxes, LLCs and all that fun stuff. I can supply boring details if anyone is interested, but the stuff is a mind-numbing necessary evil to me. I've never been a paperwork guy, I've never been good at record keeping. That has to change, now, too.

I'll leave with one last item: an early version of my logo, which a very talented friend of mine is working on. One thing I'm coming to really appreciate is talented friends and family who are willing to help out. This would be so much more difficult without them.

So, if anybody's interested, I'll pick this up at a later date, with updates on how I'm starting out and what my immediate future holds.

In the mean time, check this out.

alex
alex SuperDork
2/6/11 9:40 a.m.

*: Groundhog Day seems like a fitting metaphor for the ongoing low-level existential crisis of running a business.

aussiesmg
aussiesmg SuperDork
2/6/11 10:02 a.m.

Good luck, minimize spending and take out no loans, after 9 years of being self employed with varying rates of success those are the financial gems I can offer you.

Remember recycling furniture and equipment is now seen as being green

z31maniac
z31maniac SuperDork
2/6/11 10:08 a.m.

Definitely interested in reading about your progress.

Keep us updated!

Toyman01
Toyman01 SuperDork
2/6/11 10:12 a.m.

Nice! Love the logo. Good luck to you. You CAN do it.

My only recommendation is this. If you don't like paperwork hire an accountant. I started my business a little over five years ago. I handle all the invoicing and bill collecting but I HATE dealing with record keeping and government paperwork. I pay an accountant to handle it. He does it on the side for a reasonable rate. From him I get the forms filled out with a note on how much to make the check for and where to send it. The government can be relentless. Keep your paperwork straight or they will burn your butt. We have been through two local audits and have come out of both smelling like a rose. If you won't or can't keep up with it pay someone to do it for you.

The only other think I can suggest is don't go into debit if you can avoid it. You will have months where income is virtually 0. Debit payments are due whether you make money or not.

Dr. Hess
Dr. Hess SuperDork
2/6/11 10:19 a.m.

Yeah, NO DEBT. I really like making bread myself. I make a mean whole wheat and an authentic (no lactic acid added) sourdough. I buy my whole wheat flour directly from the farmer in Colorado. I can give you his web page if you're interested. Red winter wheat. It's about a buck a pound including shipping, which is expensive, but I only put a cup in each loaf so what's an extra quarter to a loaf of bread?

cwh
cwh SuperDork
2/6/11 10:39 a.m.

We started our export business 3 years ago. I am by nature a salesman, meaning all those pesky details bore me to tears. I am extremely fortunate to be married to a detail Queen. She drive me nuts sometimes, but has probably kept me out of jail. You must keep out of debt. Avoid open accounts with suppliers. Eliminates grief when you can't make a payment, will get you better prices (usually). Stay on top of accounts receivable!! If a customer thinks they can drag out payment, they will. All of our sales are paid in advance. We have lost a few customers that demanded open account, but have not lost any money to bad pay, either. Put together a good web site. Good advertising, cheap. We use Quick Books for accounting, they will provide a free web design set up that we used. Also, www.homesteadtechnologies.com for web hosting. www.caribsecure.info (mine) will give you an idea of what you can do. Contact SCORE for free advise. There are some good people there. The baking part will not kill your business, the business part can. Good luck, you CAN do it!

Stealthtercel
Stealthtercel Reader
2/6/11 11:04 a.m.

I'm a words guy, not a graphics guy, so good graphic design always looks like magic to me. That logo is outstanding!

I definitely second the idea of getting together with a good accountant/bookkeeper/paperwork person ASAP. Pay them in bread if you have to. Maybe your current landlord/former employer knows or uses somebody? Obviously, confidentiality would be a potential issue, but a good service provider would deliver that without even being asked.

DILYSI Dave
DILYSI Dave SuperDork
2/6/11 11:17 a.m.

Great logo.

Bartering is cool - if you can find a competent accountant who appreciates premium bread, that would be a win.

Customer is usually right. I mean this to say that what ever your favorite bread is is irrelevant. For some reason a lot of premium bread is hard and nutty. I call it birdseed bread. My favorite bread is something that is roughly the consistency of cotton candy. Super soft and melt in your mouth fluffy. Incredibly hard to get it done right.

Javelin
Javelin SuperDork
2/6/11 11:23 a.m.

Excellent plan so far and by all means keep us updated. I ran a business for 3 years as my secondary, and then primary, source of income and quite enjoyed it at first before being bogged down into the paperwork and customer nightmare. That was retail though, and as you are business to business with no real "suppliers" to worry about I think you will do better. (As an aside, I still have my licenses, insurance, and company, which is now a hobby business).

I will say to make sure you at least consult with a good local CPA to look through your books and make sure you are on track. Nothing will sink you faster than being ill-handled on the paperwork end, except for debt. Do not get any loans, buy used equipment for pennies on the dollar, and always keep an eye on your bottom line.

Good luck!

oldtin
oldtin Dork
2/6/11 11:36 a.m.

Don't forget to find time to promote yourself or find a marketing or PR or film/video student to help as an intern - even with slave wages or free - make sure they are the best of class. Work on your list of prospects - expanding the list and talk to them consistently.

PHeller
PHeller Dork
2/6/11 12:15 p.m.

Jealous.

I'm not a self-employed man, but I do feel that pricing in today's economy is very important.

You're far better to sell something at a loss and get lots of customers and eventually raise your price than you are to start high and never sell anything.

Be competitive just to get your name on something. Tell your vendors that you'll give %XX discount if they list your products in their ingredients.

SVreX
SVreX SuperDork
2/6/11 12:24 p.m.
DILYSI Dave wrote: Great logo. Bartering is cool - if you can find a competent accountant who appreciates premium bread, that would be a win. Customer is usually right. I mean this to say that what ever your favorite bread is is irrelevant. For some reason a lot of premium bread is hard and nutty. I call it birdseed bread. My favorite bread is something that is roughly the consistency of cotton candy. Super soft and melt in your mouth fluffy. Incredibly hard to get it done right.

^This.

You sound a lot like me. I've been self employed for most of the last 30+ years.

There is a difficult balance between pursuing your passion and the needs of building a business. The vast majority of small businesses fail because of this.

Your ability to bake bread has absolutely nothing to do with your ability to build and run a business. Don't get confused- there is NOTHING in common.

The decisions you will have to make to make your business successful will be in direct conflict with your passion for good bread.

The earlier you can learn to ignore your personal desires and passions, the sooner you can get down to running a business.

Sometimes, this may mean delivering what you consider to be an inferior product in order to please the customer and the balance sheet.

Get that out of your head. It is NOT an inferior product to deliver to the customer exactly what they want at a price you can make a profit. That IS the product, even if there are (in your opinion) better ways to make bread. Nobody cares about your opinion.

And most people will want to see you succeed. If they like you, they will want you here next year. In order to attain that goal, you MUST make a profit, or have a sugar daddy in the form of investors, etc (but THEY will expect you to make a profit).

If what you want to be is a great baker, get out of business as fast as you can. It will only bring heartache.

If what you want is to build a great business (as the title of your thread says), then the sky is the limit.

Other tips:

  • Profit and income are not the same. Do not finance a business out of your own flesh by not paying yourself to do a task. If it is not possible to hire someone else to do what you do, you are not being profitable.

  • Your product must be standardized, repeatable, and trainable. If you can't teach the average high school dropout how to make the product (so you can run the business), it is not sustainable.

  • Food services are a tough business. (I own a coffee shop). Do not consider your local community your market. You must be able to sell and market your product out of the area, and ship it.

  • I'll second the other votes to stay out of debt, however once you are started, there are other creative methods of financing (like preferred shareholders, etc). ONLY do this to build to the next level, not to survive.

Your logo looks great- make sure it is instantly recognizable and legible from a distance.

Good luck! Keep us posted.

Lesley
Lesley SuperDork
2/6/11 12:34 p.m.

Sounds wonderful, I wish you luck. Great logo!

SVreX
SVreX SuperDork
2/6/11 1:00 p.m.

I do have one comment on the logo...

The font in the word "Bread" should be larger than the font in the word "Red".

Make sure people know you are selling bread, not red guitars.

alex
alex SuperDork
2/6/11 2:12 p.m.

Excellent thoughts, everyone. I'm looking forward to more input as the thread progresses. Thanks for the support!

TuffWork
TuffWork Reader
2/6/11 3:54 p.m.

Take some of the advice up there as your new religion. It's all more true than you know. I've been self-employed for 3 years. landscaping, tree trimming, and basic handyman work

My only thing to add is that if this takes off you need to get an LLC. It hides you so that if the business goes south and people come looking for money they can't get your house. Only your business.

SVreX
SVreX SuperDork
2/6/11 5:16 p.m.

I agree on the LLC (or S-corp). I'd go ahead and do it as soon as possible, whether or not it takes off.

They will also change your tax structure (in a manner beneficial to you), and allow you to offset losses (if there are any) against other income.

Make sure you elect to convert it to an S-corp after initially forming it as a C-corp. It doesn't happen automatically. A C-corp can't offset losses against other income.

Get some better advice on this issue than a car web forum.

gamby
gamby SuperDork
2/6/11 6:13 p.m.

Awesome logo as others have said.

Get your stuff in the hands of the food bloggers. As annoying as food bloggers are, they can really help get your name out there for no cash outlay.

I think what you're doing is great. "Baking bread" seems more marketable than "assessing risk" in this economy. At least you're actually doing something relevant.

internetautomart
internetautomart SuperDork
2/6/11 6:21 p.m.

Lots of good advice has been given by those already posted. I've been self employed for a while and have made more than the normal share of mistakes.
My biggest is that even though I love selling, I can't do cold calling and that has killed my business.
Make sure you have your weaknesses covered by someone who has them as a strength that you can trust. Anything you can do to reduce overhead is a good thing.

patgizz
patgizz SuperDork
2/6/11 6:50 p.m.
aussiesmg wrote: Good luck, minimize spending and take out no loans, after 9 years of being self employed with varying rates of success those are the financial gems I can offer you. Remember recycling furniture and equipment is now seen as being green

that's about the exact same thing i was going to say to a T. except i've been self employed for 10 years.

we cut spending by ditching a storefront that was costing $3200 a month and bringing in about $20. i never have new work vehicles. my flagship face of the company truck that gets me and my trailer full of tools to the job on a daily basis is a 21 year old chevy that i keep in good shape that cost me $4800 about 7 years ago. i keep a small fleet of astro vans, i never pay more then $800 for any of them.

remember the 80/20 rule. 80% of your business comes from 20% of your customers. take good care of the 80, but do not forget about the other 20.

your business is a cool one, i wish you all the luck in the world. i want to get rich so i can open a gourmet ramen stand.

Ignorant
Ignorant SuperDork
2/6/11 7:57 p.m.

OK..

  1. Don't listen to the folks who say.. Borrow nothing. They're idiots. No big business would be where it is today without some sort of loaned money. Not leveraging yourself in a controlled manner will limit your business. I just don't get, "No Debt" at all people. It's financially stupid.

  2. Your logo is good, but dosen't 100% convey bread upon a quick glance.

  3. You don't talk about what your goal is? What would be your dream? What do you want to do with this?

  4. Consider alternative marketing channels... Maybe a bread truck that has an oven in the back and you bake it on street corners.

  5. Use social media as much as possible to let people know about your product. Tweet and blog relentlessly.

  6. Consider a couple different types/levels of bread.. Do a local/ sustainable bread line, then maybe something more conventional. Partner with small businesses that want local products, rent a stall at a local farmers market and be there every saturday morning.

  7. Be a good data guy. Bad financial management will kill you fast. If you can't do it, hire someone part time.

John Brown
John Brown SuperDork
2/6/11 8:19 p.m.

Alex, when you have a product menu and are prepared to ship let me know. I will order some weekly and talk to a local resteraunteur about the product.

John

tuna55
tuna55 Dork
2/6/11 8:23 p.m.

I will only add that my local farmers markets and my awesome CSA are where, if at all, I will purchase artisan bread. Good outlets.

patgizz
patgizz SuperDork
2/6/11 9:13 p.m.
Ignorant wrote: 1. Don't listen to the folks who say.. Borrow nothing. They're idiots. No big business would be where it is today without some sort of loaned money. Not leveraging yourself in a controlled manner will limit your business. I just don't get, "No Debt" at all people. It's financially stupid.

there is a time and place for borrowing. IMHO the beginning is NOT the time. once you are established and looking to grow is the time. otherwise you're pulling some dumbass move like putting up your house on a whim.

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