Wednesday, September 22, 2004
Or it is 99?
Things change rapidly when starting a new business, what with barriers and opposition and all. Like a river, we've had to be constantly thinking far ahead, and plotting and planning alternatives in case we hit a sandbar or a fallen tree or a beaver dam.
Flexibility has been our only name so far.
Yes, yes, I know we incorporated under the name Cracked Cauldron, and boy, are we cracked! But we're not broken, and that's the whole point.
The bank rejected the loan application because Manager has no fungible assets, not enough years' experience, and this is a start-up.
However, the loan officer wished us good luck, because she was looking forward to patronizing the bakery - we had a good marketable product.
I think the sticking point is Manager's age. She is young. You can't get 15 years' experience as a baker when you're 22.
And while she appears to have a net worth of zero (or maybe a negative worth, what with her small outstanding college loan), she owns the recipes for the Cracked Cauldron, valuable in themselves. She owns the Cracked Cauldron, all but the few shares sold. She owns the logo, another asset that has some value. While she doesn't own my house, I have given her access to all of its equity.
She's not exactly without tangible value.
So, even though we've applied through a different bank, we have a back-up plan in reserve. We have several in reserve, actually.
But the most attractive one is to get a second mortgage, open up in the desired property as a coffeehouse by Halloween, and work our way up from there.
We will be able to immediately offer the consignment art and performance space to draw in customers in addition to the outstanding coffees. Our pastry, cookies, and cake selection will be smaller than we'd like, but much more varied than other coffee houses offer. We can still have our Menu Decision Night. Marketing will have to be more aggressively guerilla style than paid for.
After we're open, we can arrange to lease/purchase or finance out the larger equipment we'll need for the expansion into the handpies and breads: the ovens, the storage containers, the mixers, the walk-in refrigerator and freezer.
I figure we'll have the customer base to seek a consolidation loan within 2-3 months, and we should be back on our preferred expansion plan track by February.
It'll be tight, it'll be harder work, longer hours, and no financial cushion, so we can't screw anything up.
But we can do it.
Know anyone who wants to buy stock in a really good bakery?