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Ignorant
Ignorant SuperDork
2/6/11 9:22 p.m.
patgizz wrote: 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.

I agree with you to a point. In the beginning, if you need capital, hit up your family or something.

I think the whole debt adverse culture that folks like Ramsey is building is foolish.

SVreX
SVreX SuperDork
2/6/11 9:50 p.m.

There is no problem with debt.

The problem is putting yourself in the position to have to learn to manage the debt before you learn to manage the business.

I would be extremely cautious about borrowing money from family on an unestablished food service business. Unless you are trying to clear out a few unwanted relatives. That's a risk I wouldn't take.

I have a friend with a wonderful little fair trade coffee importing business which has grown into a roastery and coffee shop. He has done a tremendous job financing the growth by offering ownership to investor friends. Basically, he offered ten investors limited shares in offerings of $10K. He pays them 6%, which is better than they could do in a safe investment, and after a few years the stocks convert to preferred shares, and the company has right of first refusal if they sell. Worked great.

However, he DID NOT do this for start up money. He did it for growth money for something he had established over 10 years.

Start up capital for a business of this type is almost unheard of.

Ranger50
Ranger50 HalfDork
2/7/11 9:06 a.m.
patgizz wrote:
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.

I agree and disagree. Borrowing money is a necessary evil, whether it is family or the local bank. Now what amount you are borrowing is what gets people in trouble starting out. As the OP said while the product he is making is a good product, the hurdles in making it is a problem. It maybe beneficial to take someone else's money for a bit to upgrade to some used equipment to make the process easier and therefore throughput would increase. But then again this is where people fall into the gotta have new stuff and spend themselves into liquidation. They are already looking past the point of their business taking off time range, 6-12 months, by getting the new stuff.

If you are looking at 100k plus to get going, you need a nearly dead sugar daddy IMO, unless you are buying someone else's business, which then can hit 500k plus.

As much as I would love to work for myself by having a transmission repair business, I just can't find a workable building for under 3k/mo rent/lease and the 50k to outfit it with just enough speciality tools and parts/cores to start out. So, I just stay right where I am, unemployed.

Conquest351
Conquest351 New Reader
2/7/11 10:07 a.m.

I love hearing everyone's input. This is actually great advice for him. He can learn and hear from past experiences and gain insight on what to do and most importantly what NOT to do.

I'm kind of taking this all in myself as I'm on the verge of opening a side business myself. The prototype is done and undergoing testing and once that's complete, we're rockin' & rollin'! I'm not risking my day job as it's a somewhat stable income (commission only service advisor for a Ford dealership), but working weekends is best for the business I'm looking into.

I want to be one of the ones to thank everyone for their input on this subject and I wish the OP all the luck and good fortune in the world as he embarks on this journey of being a self-made man.

Laters,

Brian

petegossett
petegossett GRM+ Memberand SuperDork
2/7/11 10:31 a.m.

I started a business late in '09, in our tiny/declining town with virtually no market for much of anything.

My story is backwards from most, however. While I'd been interested in starting a business for several years, I was never really sure what to do, or what our market could sustain. We ended up buying an 8800sq-ft building that our village had come to own through a tax lien(for not much more than Challenge money). One main reason for the purchase was the 1/2-finished 3500sq-ft apartment(that we're slowly completing in order to get out from under our house & live debt-free), but there was a caveat in the contract that we opened a business within 12-months.

So I put an open sign in the window, and set evening & weekend hours(so I can keep my day job). I started with eBay consignments, but I learned quickly that I really need to be selective in order to turn a profit, so I started focusing more on computer repair, and this has worked well for me. Fortunately there aren't many tech-savvy people in town, and also a high number of senior-citizens, so even a hack like me can keep pretty busy. I also found a tenant when our town barber needed a new place for his shop.

I'm still just doing it part-time, but I think it's very possible for me to be full-time in a year or so, especially as I find other things I can augment my income with.

Oh, and hiring an accountant has been a God-send. Our tax return last year was 5x our usual amount, and his fees were about the same as I'd paid with Turbo Tax in previous years.

pinchvalve
pinchvalve SuperDork
2/7/11 10:50 a.m.

Don't forget, it's all for nothing if you don't get paid. Collections can be the biggest PITA, but they are the most important aspect of any business in the end.

As a marketing guy, I would say that you are ideal for SOCIAL MEDIA. You have a small, localized customer base, and you want to give them timely information and incentivize them to make purchases now. Building a following on Twitter/Facebook plus an e-mail database (Constant Contact is probably good investment) can really pay dividends. It will keep you in close contact with your customer base and allow you to give them reasons to buy. "Red Guitar just received some amazing stone-ground virgin wheat from the Heartland and will be baking a limited run of dinner rolls that your customers will rave about! Get your orders in early, supplies will be very limited!"

You could also get local citizens on board, supporting a local business and all that organic goodness, by updating them on where Red Guitar products are available. "RG Fans, be sure to hit Rosco's Bistro Downtown for Valentines Day Dinner Specials that include our Honey Wheat Baguettes!"

And yes, I eat a certain restaurants based on their bread bowl alone.

pinchvalve
pinchvalve SuperDork
2/7/11 10:51 a.m.

And I will work for baked goods.

aircooled
aircooled SuperDork
2/7/11 11:10 a.m.

Fresh bread hot out of the oven is one of the best things ever. I almost doesn't matter what type, it's just good. Crispy Creme made a pretty big splash selling (what some would consider marginal) doughnuts that could be bought fresh and still warm....

....just food (literally) for thought...

...I would go to a fresh bread store, probably be a big hit in a mall like setting (a long as there are not too many of those low carb people around).

Yes, I am a bit of a carb fiend, but it works for me.

Oh! (based on the above post), Fresh Hot Bread Truck! (fancy food trucks are a big trend these days) Advertise your location on the Twit feed.

speedblind
speedblind Reader
2/7/11 11:45 a.m.

First - congrats on your business! It's a scary but very cool thing. I can't offer much advice, as I've been doing this for...3 months now? But it definitely feels different (both good and bad) waking up each day knowing you work for yourself.

Very interested and thankful for the advice on this thread so far - keep it coming! And put me down as interested when you start shipping.

4cylndrfury
4cylndrfury SuperDork
2/7/11 12:15 p.m.

I worked for a mom and pop bike shop for 5 years. They taught me a lot about being self employed.

  • The LLC bit must be first priority. Cover your butt...
  • You need to have 3-5 years worth of operating capital in your pocket, not loans, but cash...if you can make it past the 5 years mark, economists say you will be certain to experience growth. It takes that long to really build a customer base, establish yourself in the market, learn the aspects of the market that you can profit from, and establish good terms with suppliers.
  • Repeatability = sustainability. if your pumpernickel is doughy one time and more crispy and slightly sweeter the next, your customers may not be certain about your ability to deliver. A restaurant is only as good as their customers reviews of the food. People want to know their Reuben will taste the same this time as the last time, dont let your bread be the part that makes someone say "I liked this better last week...". If youre constantly having to work past issues with your equipment, and those variables may have an effect on your product's consistency, I would work on making sure your equipment needs are met before other issues are tackled.
  • Where I worked, service made more PROFIT than product. Needing stuff brought people in the doors, but where we made the most cash and where we made the best relationships was in the services we performed. If you can leverage more profit from your actions than the physical stuff you sell, that could be a big winner - not sure what that could be in bread, but still...
  • Definitely make sure that your logo, in no uncertain terms, instantly lets people know what you do, and that it is simple, and recognizable. The guitar is cool, but as others said, it may have people thinking youre tuning stratocasters versus leavening dough. I like the name a lot, but maybe work on the packaging.

If you end up on facebook, let us know, I will add you for sure.

ultraclyde
ultraclyde GRM+ Memberand Reader
2/7/11 12:33 p.m.

I have worked for a small business for the last decade and now I'm part owner. I've tried the corporate grind but I'm not sure I could go back. Good luck. There's a lot of good info posted above, and a lot more experience than I have, so let me offer some thoughts on the logo since I started out designing signs and logos many years ago.

I'm guessing that the trace of color inside the lettering is intended to make it look like a stamp or wood cut. Lose it. The text needs to be legible at a glance, plus it doesn't fit well with what is otherwise a very crisp logo. I understand the desire for the logo to represent some of the handmade aspects of the product, but don't risk cluttering up to get there. the mismatched typeset conveys it well enough.

I agree with making the word bread a little larger.

Consider pulling the first two words up into the negative space around the guitar neck, then filling the body with the word bread. I like the logo as it is but remember that this will see many applications where it will need to be reproduced small. Having the text as a larger percentage of the total area of the logo will mean you can get better readability from a small logo, like on a bread tag or something.

Do what feels right to you for the logo (and other stuff too.) No opinion matters if you can't put your heart behind it. It's YOUR business.

Letsee if I can post a quick-and-dirty idea of what I mean. I didn't try to find the exact font, you get the idea...

Chebbie_SB
Chebbie_SB HalfDork
2/7/11 5:33 p.m.

Can't add much to what has already been stated other than get a mentor if possible to steer you clear of lessons already learned in your business / local area, or as some would say "Know the room that you are playing ! "

MitchellC
MitchellC Dork
2/7/11 7:38 p.m.

Will you be operating a storefront? If so, will you offer any options to offset the possible shrink percentages of selling only bread? We have a bakery in town, which I understand is quite successful. Here is their website. Their backbone is some of the best bread I have ever had. They are the only ones who seem to get baguettes just right. However, they also have a variety of other offerings--cereal bread, loaded with grains and seeds, which is great, and chocolate bread, which I haven't had anywhere else. They have excellent pastries as well. However, they also have a great assortment of items to compliment their baked offerings--coffee, wine, cheese, olive oils, vinegars, etc. I imagine that a lot of these items help bring in more revenue and make it possible to support a bakery in a relatively small town such as ours..

Chebbie_SB
Chebbie_SB HalfDork
2/7/11 7:57 p.m.
MitchellC wrote: Will you be operating a storefront? If so, will you offer any options to offset the possible shrink percentages of selling only bread? We have a bakery in town, which I understand is quite successful. Here is their website. Their backbone is some of the best bread I have ever had. They are the only ones who seem to get baguettes just right. However, they also have a variety of other offerings--cereal bread, loaded with grains and seeds, which is great, and chocolate bread, which I haven't had anywhere else. They have excellent pastries as well. However, they also have a great assortment of items to compliment their baked offerings--coffee, wine, cheese, olive oils, vinegars, etc. I imagine that a lot of these items help bring in more revenue and make it possible to support a bakery in a relatively small town such as ours..

That was another point to address -

Can you partner / barter with an appropriate pairing to expand your product exposure ?

And most of all, have you realistically thought about whether you can support yourself as an artisan baker, or will you be happy as a businessman that runs a bakery (but may not be the one who is in the trenches doing the actual baking?)

Wishing you the best as you go forward !

BoxheadTim
BoxheadTim GRM+ Memberand SuperDork
2/7/11 7:57 p.m.

As everybody else said already, get a good accountant. Check with other small business owners who they use and how happy they are with their accountant - word of mouth works very well for that.

Oh, and another vote for incorporating ASAP.

I'm firmly on the no debt side these days, but then again I only finished paying off the business that taught me the lesson a few years ago. Only took about 8-10 years...

Seriously, no debt that's secured on you personally - yes, I ran my last company with a business credit card for a little credit, but I made sure that I kept the card limit below the limit at which the bank required me to personally guarantee the debt.

I've personally known a few too many small business owners who lost their business, most of their tools and in at least one case their house because the debt associated with the business created a millstone around their neck when the economy tanked. All of them were well established and had been profitable for a fair number of years beforehand.

Keven
Keven New Reader
2/7/11 9:45 p.m.

+1 for getting a good CPA, setting up an LLC, logo changes and its what the customer wants. Keep us updated I would love to become a customer somehow!

BoxheadTim
BoxheadTim GRM+ Memberand SuperDork
2/7/11 10:43 p.m.

That's a good point - one thing I really miss since I left Germany is decent fresh bread. We get OK bread out here but I wouldn't mind supporting a fellow GRMer's business .

digdug18
digdug18 HalfDork
2/8/11 7:31 p.m.

If it were me, I'd start with bread but also sell products that go with bread, so bread slicers,bread boxes, homemade butter both cow butter and apple butter.

Have you bought your website address yet? I'd get yours, but also hyphenated versions of it as well, linked to your page. Just so people typing in your website address still find your page when they mistype the name of it.

Karl La Follette
Karl La Follette Dork
2/9/11 7:58 a.m.

Check school or restaurant auctions for pennies on the dollars auctions .There is allways an auction of a restaurant in the paper . But I must say the borrow a kitchen for bread sounds great . Logo Maybe put an amp off to the side " And More" on the front .

http://www.theperfectcupcake.com/

http://www.thegreatcookie.com/categories/Cookies/?gclid=CNXeuMCd-6YCFYnt7Qod2mLjtw

alex
alex SuperDork
2/9/11 12:54 p.m.

Hey everybody, thanks again for all the input.

My focus has been thrown for a loop lately: my house was robbed on Sunday night while I was a away at a super bowl party (and I don't even like football!). So, my personal life is kind of up in the air, but it's nice to have something that forces me to concentrate on something either than theft recovery for a few hours a day. I'll have a separate thread on that soon.

Anyway, to answer some quick questions:
- No storefront yet, in fact, probably no direct retail sales for a while, strictly wholesale to other restaurants
- Agree on the no-debt scenario; right now my overhead is super low, so that's not an issue yet
- I have an LLC organized and a good CPA already lined up
- Near term goal is to expand in my current arrangement until my production needs outgrow the facility, as that will have me making enough money to make a standalone operation financially viable. I'll likely transition into some retail sales at that point. Ultimately, I'd like to own my own shop, and keep the scale small so that quality can be the focus. I don't intend to get rich doing this; I love the work, and if my projections are accurate, I should be able to live comfortably off the income eventually.

More to come after a while, but I'm burning daylight today on the theft. Thanks again for the input, it's much appreciated.

Ranger50
Ranger50 HalfDork
2/9/11 1:41 p.m.

You know you don't personally have to sell retail. If you have a customer that handles a retail operation, kinda like how Shoney's, Perkins, etc.., sell the stuff they make OTC, great way to have some retail exposure without anything different on your end. Much easier way to sell more without the headaches of adding "another business". Or if you have a good enough relationship with your customers, do something like a co-op store with each customers signature items. Just a thought or two.

Karl La Follette
Karl La Follette Dork
2/9/11 3:42 p.m.

one word Pretzels http://www.youtube.com/watch?v=Pw4ARIKQkdo

jamscal
jamscal Dork
2/9/11 6:56 p.m.

I know you're not wanting to retail, but one possibility for you is www.etsy.com , a place to sell your handmade wares.

I'm on there with the 'artsy' side of my business, and notice that there are at least several people selling baked goods, some of whom have a bunch of feedback.

It might be a way to keep/get your name out there for .40 cents a listing, and they have various ways to search and find local artisans.

Good luck with your business!

-James

digdug18
digdug18 HalfDork
2/9/11 8:34 p.m.
jamscal wrote: I know you're not wanting to retail, but one possibility for you is www.etsy.com , a place to sell your handmade wares. I'm on there with the 'artsy' side of my business, and notice that there are at least several people selling baked goods, some of whom have a bunch of feedback. It might be a way to keep/get your name out there for .40 cents a listing, and they have various ways to search and find local artisans. Good luck with your business! -James

Ahh, your the one selling these necklaces.....

jamscal
jamscal Dork
2/10/11 5:57 a.m.

That necklace does look familiar but it's not one of the things I'm selling.

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