How I Bought An Ailing Baking Business And Grew It To $20K/Month
Hello! Who are you and what business did you start?
Hi! I’m Linda Gonzalez, and I own and operate a third-generation family-owned business - Gloria’s Cake & Candy Supplies. We are NOT a bakery, we sell everything you need to make-bake-decorate-transport your cakes-cupcakes-cookies-candies and chocolates.
I was 10 yrs old when my Aunt Gloria started teaching me cake decorating. I was 12 yrs old when she opened Gloria’s Cake & Candy Supplies in 1972. I worked with her through high school, then went off into the corporate world. We were very close and lived near each other, and over the years I advised her on marketing, social media, and such.
She passed in 2012, and the shop was passed down to my cousins & other family members that had been running the shop with her for 30+ years. My career over that time had me working with very high profile CEOs/million-billionaires and world events, always continuing to make cakes & baked goods for friends & family. February 2016 I went in to get some items and immediately my cousins started telling me how they were going to shut down and go out-of-business. I couldn’t believe it, after 40+ years, I couldn’t let it happen. My aunt worked so hard to open and run her business.
I quit my then investment banking job, bought the shop from them, and set about rejuvenating the business. I moved it to a new location, redesigned the logo & website, changed the color scheme to brighten things up, and most importantly focused on customer service and social media exposure.
Within 6 months we went from 1-2 star reviews on Google & Yelp to 4-5 star reviews. Since buying the shop I’ve increased revenues by about 60% and am looking at the possibility of franchising. My stress level going from the corporate world to meeting-greeting-helping real people every day is so different. Someone thanks me every day for keeping the shop going and being here! You don’t always get that in the corporate world.
What's your backstory and how did you come up with the idea?
As I mentioned before, I worked at the highest levels of the corporate world, as well as on major world sporting events. My journey in the corporate world included working for many million-billionaires, some very high profile, some very discreet. In the capacity of personal/executive assistant, I coordinated and hosted several events, fundraising dinners, art exhibits, press conferences, political issues, etc. for very high profile guests, i.e. mayors, governors, senate & congress members, president, vice president, and celebrities.
I was also exposed to how to create entities and operate businesses successfully, i.e. restaurants, service industry, retail, property mgmt & development. I also worked the 1984 Olympics directly with Peter Ueberroth and the 1994 World Cup in Protocol seeing to participating country VIPs’ needs.
After 30+ years of running/managing other people’s businesses and companies, I was talking to my husband about retiring (haha) and just operating our own business. Then I went to Gloria’s to get some items to make Valentine chocolates and found out of their plans to close down. I was so distraught at the thought of it, and my husband said, “you were talking about running your own business. Gloria had talked to you about taking over someday...why don’t you buy it?!” And that’s how the decision was made.
I searched online and found that the Google & Yelp reviews were pretty bad at 1-2 stars, someone even said if they could they would give zero stars. The financials they provided me weren’t that great either. So although a little apprehensive, I figured - can’t get any worse, and with my knowledge of managing & marketing & organization. Let’s Do It! The challenge was just too much to resist.
I paid a bargain price for the business, using personal monies we had. Went from a just under 6 figure income to “how am I going to pay the rent, much less myself” for the first few months. Finally, the changes I made and implemented started taking hold, word of mouth on social media took off...new owners, new experience!
Take us through the process of designing, prototyping, and manufacturing your first product.
We don’t really have any of our own products that we design and/or manufacture. We simply are a retailer for all the cake decorating supplies that are out on the market. We stock and sell the following:
- Regular and specialized bakeware
- Silicone molds for baking and candy/chocolate making
- Plastic chocolate molds & high-temperature candy molds...many unique shapes/themes/bars
- Character pans (i.e. Mickey mouse, dinosaur, cross, race car, Princess, Darth Vader, etc.
- A huge selection of cupcake liners/baking cups
- Novelty decorations for cakes & cupcakes
- Chocolate couverture melts - dark & milk chocolate, white and many colors
- Packaging/wraps - cello bags of all sizes, foils, cello wraps, wax wraps, bakery boxes, cupcake carriers & other containers
- A full selection of fondant & gum paste, along with the necessary tools, cutters, impression mats, molds & more
- A complete aisle of decorative sugars, sugars, nonpareils, shaped quins, chocolate & candy rocks, chocolate coins, and other assorted goodies
- A large selection of bakery emulsions & flavor oils
- Large selection of spatulas and other kitchen tools unique to baking and decorating cakes and pastries
- We offer edible luster dust and glitter in a variety of colors
- A huge selection of Americolor gel paste colors, as well as oil candy colors, powder colors, edible markers, ColorMist sprays, and airbrush colors
- We carry specialty/hard to find ingredients, i.e. Tragacanth Gum, Gum Arabic, Ascorbic Acid, Tartaric Acid, CMC/Tylose Powder, Citric Acid, Glucose, Glycerine, Cream of Tartar, Meringue powder, No-Melt Powdered Sugar, Xantham Gum, Ammonium Carbonate, Tart & Sour, FloCoat, Isomalt Crystals and much much more
- We have an entire wall of cookie cutters, all shapes, sizes & themes
- We have two cases full of ready-made, ready to put on your baked goods edibles
- We print edible images to go on your baked goods
- We offer a variety of classes
You cannot make everyone happy, but you know you’ve succeeded when that one bad review gets attacked and rebutted by your regular happy customers.
The challenge for me is to stay on top of the latest fad, gadget, product, and try to find it at a price that makes sense for me to offer it. I’m also committed to doing my best to buy American...that’s very important to me. It’s getting harder and harder for brick & mortar stores to compete with Amazon and the internet as a whole. Thankfully, there is still a public that wants to see and hold the products before they buy it.
Describe the process of launching the business.
Once the decision was made to purchase the business, I set about creating a timeline and planning for moving location, revamping the logo and website, notifying people of the ownership, and location change to minimize customer loss. Although the shop was already not doing well, I wanted to at least keep the loyal customers we had.
I was able to get a good price for the business, we used savings for the purchase & new lease monies. We used credit cards for all the items needed to prepare the new space, moving, printing new business cards, and others, to document all the expenses and keep track for tax purposes.
The lease was up on the existing location at the end of May, which was too big to begin with (2,000 sq ft) and overpriced. The landlord was not very helpful or interested in re-negotiating the lease. Consideration was also given to cost savings if we downsized and reorganized.
I started searching online for new space, as well as driving around the neighborhood to see what was available. I found a nice location, only 1 mile away from the existing location, near a freeway exit, in a nice little corner neighborhood strip mall. Although almost half the size (1200 sq ft), I was confident I could make it work.
We signed the lease, I negotiated 2 months of free rent (April & May 2016) as we prepared the space for the new shop. It was a family affair with my husband, sons, and grandkids helping to paint, strip floor tiles, put up slat walls, and assemble display racks. I tasked one of my younger cousins that was studying graphic arts to come up with a new logo.
My nephew worked at a print shop and I tasked him with creating some eye-catching banners for the store interior and the front street window. I created a simple to read, eye-catching flyer explaining the move and new management, which was handed out to every customer at the old store before they closed, and it was posted on all their windows.
I also took the old large industrial Gloria’s sign and put it in the new storefront windows for all to see what was coming. I worked with graph paper and layout how I would downsize from 2000 to 1200 sq ft, marked out rack locations on the floor, allowing at least 3 ft in aisles for wheelchairs. When the time came, the old shop closed its doors Friday, of Memorial Weekend 2016 and the new shop had its Grand Opening on Saturday, June 4, 2016….it was only closed for one week.
We had a great opening day, however, it took approximately 4-6 months before we started seeing an increase in business, customers, and income. The focus on customer service was the key to our growth. Great customer service translates into good reviews, good social media chatter, and good word of mouth exposure.
We went from 1-2 stars on Google & Yelp, to 3-5 stars. I had to constantly monitor all the search engines to make sure they didn’t have us as “Out of Business”. This continued for the first entire year. I spend very little on traditional advertising. I pay for an ad in the Venice High School football schedule and sponsor local fundraising community events. All other exposure/advertising is the internet and social media.
Since launch, what has worked to attract and retain customers?
Again, to retain and get more customers, you have to make the current customers happy so they post and share their experience on social media. CUSTOMER SERVICE!!! I cannot stress this enough. You cannot make everyone happy, but you know you’ve succeeded when that one bad review gets attacked and rebutted by your regular happy customers. Yes!
I regularly post on our Facebook page, I aim to post something at least every other day - a new item for sale, a new holiday-related display, information about the store, I thank our customers for their business & loyalty, anything to keep them engaged.
Unfortunately, I don’t think traditional print advertising works for me...for the clientele that I am looking for. I find the sponsoring of local, community events and groups works well for my daily foot traffic, and social media exposure is what brings in my customers from all over the world.
Yes, I said, “From all over the world!” We are just north of Los Angeles International Airport (LAX) and we get many, many travelers from all over the world that come in to buy supplies to take home with them...home being Netherlands, England, India, Spain, Argentina, Brazil, Romania, Kuwait, Tonga….you name it. We also get many, many customers from neighboring cities and states.
Last, I can’t say it enough...CUSTOMER SERVICE is what keeps my customers coming back and, in our industry, spreads by word-of-mouth like wildfire. We greet EVERY single customer that comes through the door; we offer our assistance, but let them browse on their own; if they ask for ideas and/or advice we give it and if we don’t know or aren’t sure, we look it up for them; if we don’t have what they’re looking for, I suggest where they might find it, even if it is a competitor.
I want my customers to leave my store feeling noticed, important, informed, and happy. They will come back excited to show us pictures of what they made and sometimes don’t even wait to come back, they email us or post their pictures to our FaceBook and Instagram accounts. THAT exposure is gold!
How are you doing today and what does the future look like?
When I first purchased the shop I didn’t pay myself and I struggled to pay bills on time to maintain good credit with the vendors so we could transition to net 30 days terms. I worked long hours as I couldn’t afford to hire more help until business picked up, it was just myself and my cousin. I also extended the hours of operation from the prior owners, as I remember myself struggling to get to the shop after work and before they closed. Customers were very happy with the extended hours, for that very reason.
It took about 6 months before we saw a substantial increase in customers, and thus business. However, it took a couple of years to really become profitable, by focusing on customer service, overcoming the poor ratings & reviews on social media, and improving & managing cash flow. Understanding too that I spent a good chunk of money that first year on new signage, business cards, banners, website, computer equipment, security cameras & monitoring system, POS system, and an expanded merchandise selection than previously offered.
The bulk of our sales is from in-store shopping. Only about 10% at most is from online shopping. Thus I never saw the need for a distribution partner, as you would need to stock a huge inventory to work with a distribution partner, I just didn’t have the capital. We are more a brick & mortar business, relying on our personal, one-on-one customer contact. It seems to be working.
I guess success can be measured in many different ways, a lot depends on what your aspirations are, your expectations, your desires. For me, I was at a point of wanting to work for myself in a business that I knew, that made me happy, that made me financially comfortable, and made me content. I’m a people person… I LOVE helping my customers with ideas, solutions, substitutions if they can’t find what they’re looking for, etc.
I LOVE when they come back with pictures or post to our social media and give us a shout out on their social media. My favorite is when my regulars come in, let out a big sigh and say, “Awe….my happy place!” and when new customers come in and look around and say “Wow! You have everything in one place...I LOVE it!!”
At this point, I’m trying to finesse the POS and inventory system and processes. My time constraints at home have slowed this down a bit (for the last 2 years my husband and I have been caring for our parents. His parents live with us, they are 91 and 84; and, my mother lives with us too, she is 89). And with this year’s COVID-19 pandemic, we took a huge hit, but we’re still here. When the home situation changes, I plan to look into expanding and opening 1 or 2 more stores and/or the possibility of franchising. I’ve had many, many requests to open in different areas, as well as requests to the franchise, that’s a whole other scenario.
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the most important things to learn and manage is your cash flow. Especially when you don’t have much! I needed to keep the store stocked, but found it hard to do with erratic cash flow. Because I was a new owner and had never really owned my own business before, almost all the vendors put me on C.O.D. terms, which can be a real killer.
I was able to talk up my experience & great personal credit and get a couple of them to put me on 30-day payment terms, which gave me a little wiggle room. I also had to learn how to space out my ordering. In other words, do regular/monthly orders which tend to be smaller, less costly, rather than wait until you’re completely out and need to order a lot to replenish, costing a bigger chunk. To maintain my great credit, I really focused on paying my bills on time and eventually was able to convince about 60% of my vendors to put me on 30-day payment terms.
Another important decision for me as a small, family-owned business, was how to handle paying employees. My organizational entity is an LLC, so I can take a partner draws for myself. In the beginning, I only had one other employee, and she wanted to remain an independent contractor as opposed to being an employee, so that’s what we did...I paid her as an independent contractor, no taxes withheld, and at the end of the year gave her 1099 she used to file her own taxes.
As we hired more employees, most were retired and only working part-time and they also wanted to remain independent contractors, so I did the same with them. In late 2019, California passed AB5, a law that cost many people their Independent contractor status. So, in January 2020 I had to start a payroll with additional costs of workers comp insurance, payroll taxes, and payroll processing fees. I wasn’t too worried about it because we have been doing well and 2020 seemed to be headed to be our best year yet….then COVID 19 hit.
Another piece of advice...make sure you have all the licenses and permits needed for your business. You don’t want to be caught out of compliance and then fined with penalties and interest. Thankfully, because of my years in corporate, one of the first lessons I learned was CYA (Cover Your A__), so I’m anal about record-keeping and documenting everything, including telephone conversations.
When I applied for my health department permit, I was initially told I didn’t need one. I explained that the store had one before me, but they said that was because they had a kitchen...I don’t have a kitchen and we don’t make anything here. So I noted everything in a file with my attempt at applying and the business card from the inspector that told me I didn’t need one.
Two years later, a new inspector is assigned in my area and he’s appalled that I don’t have a health permit and wants to fine me and shut me down! I explained to him the situation, he tells me it’s “impossible” that I was told I didn’t need one. I pulled my file, went to the health department office, and walked away with a designation as a Mini Market/Convenience Store because we fell into a “gray area”, and I only had to pay beginning with that year, with no penalties or interest because I had my documentation.
Apparently, the inspector that told me I didn’t need a health permit was no longer with them. In the end, this “gray area” designation allowed me to remain open during the COVID pandemic. Although we closed our doors to in-store shopping from March-June, only doing phone/email/online orders with curbside pick-up, we started letting limited in-store shopping around mid-June, and business has really picked up since.
What platform/tools do you use for your business?
There are really only two systems I use in my business - eHopper POS system, in conjunction with the POYNT handheld device.
In the beginning, we went with the conventional bank merchant services route through AmeriBank, then North American Bancard, and ended up paying up to $1,200 a month in processing fees for credit card transactions!! It was ridiculous. I switched to eHopper, which leases you the equipment at a fixed rate of approx $250-$350 a month (depending on the equipment you want/need) and the processing fee is basically passed on to the consumer.
You clearly display the processing fee cost and let the consumer decide to pay with a credit/debit card or pay cash….that simple. It increased our cash sales and has worked out just great. Since we’re a small shop, we only have one register, however, we use the POYNT handheld device that works in conjunction with the eHopper system to check out a couple of customers at the same time. Works out great. I save about $800 per month.
The eHopper system also handles inventory control, but I have not yet set-up to use it. On my to-do list and very important.
Our online sales are only about 5% of sales. The majority of our customers want to come in and look around, see, and hold items before buying, and ask for advice and ideas. So we really don’t have a fulfillment or shipping system. I use USPS when we ship out. We do a lot of curbside pick-ups, as well. Our website is powered by Squarespace.
For social media, we rely heavily on Facebook and Instagram, as well as our ratings on Google and Yelp. I’m always asking our very satisfied customers to please take a moment to give us a good shout out on social media...and they do! We appreciate it!
What have been the most influential books, podcasts, or other resources?
I’ve always been a reader of non-fiction, always trying to find answers and better myself. The four books that turned out to be big influencers in who I am, giving me confidence and building my reputation as a “get it done” “go-to” person (which led to some amazing positions & experiences) are -
The 7 Spiritual Laws of Success by Deepak Chopra and The Four Agreements by Don Miguel Ruiz- these books helped me to reinforce that being truthful and living your life from the truth and a desire to make a difference, is possible and makes you strong in heart & soul. Good karma is everything.
The Tipping Point by Malcolm Gladwell - this book is truly insightful at helping you understand the powers of balance and how to identify that “tipping point” where your decisions, your direction you choose, will make or break your project.
The Art of Being Unreasonable: Lessons in Unconventional Thinking by Eli Broad. I had the great fortune of working by and for Eli Broad when he was CEO of SunAmerica back in the 90s. He was an extraordinary leader, a self-made billionaire, always one step ahead of everybody else, great philanthropist. Loved this book which gives insight on how he created two Fortune 500 companies (Kaufman & Broad, then SunAmerica) with his “unconventional thinking”.
Advice for other entrepreneurs who want to get started or are just starting?
Pre-thought and pre-planning are an absolute necessity. Once you’re somewhat confident with your plan...EXECUTE IT!! You can only put your toe in the water so many times before you just have to jump or dive in!! The best advice I can give you.
The other more technical, thoughtful advice is in my previous responses.
Are you looking to hire for certain positions right now?
Not hiring at the moment. We have a crew of 6 that works well together. When we get to the point of franchising….that’ll be another story.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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