Baking in the Profit

Lauren Carmody  Follow

CupcakeRecently, a colleague and I met with the owner of a vegan bakery. We happen to both love her products, but we also noticed that she could increase her "social factor" (translation: appearance on social networks to help build her business).

But we got around to discussing a position that I am sure many entrepreneurs are familiar with -- business purgatory. No pun intended, but this woman has the right ingredients - a delicious product, clean branding, an attractive and timely niche (gluten, nut, dairy free products), but is currently feeling stuck with her business. She has a healthy business flow (plenty of regular customers) but baking, as some might know, takes a ton of time. So, there are production and distribution issues.

Ultimately, she will need to find a distributor, but in order to increase her profitability, she must first get her volume levels up. However, the company is a small one and there are only so many hours in a day.

Here within lies the dilemma. Does she keep her business small, which is simpler because the owner does not have to deal with production or distribution complications, but is less profitable? Or should she grow her business, which would require her streamlining production, finding a distributor, risking the loss of her IP (her recipes), but ultimately can bring in more profit?

If her goal is to grow, how does she leave business purgatory? She took the first leap: the one to start her business. Does she leap again?  CJP

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