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Sift: a Cupcakery, LLC, Cotati

Andrea and her husband moved from Las Vegas to Sonoma County in early 2008. The first order of business was opening a flagship cupcake shop.  Andrea had her sights sets on a chain of shops and in less than a year she opened store number two. Store number three is in negotiation as we speak.

Andrea, her husband, and her mother provided the capital to open their first shop. They took over a vacated coffee café in Cotati. It is on the frontage road of the main freeway that travels through Sonoma County. At first glance, I wouldn’t have chosen this location but Andrea’s insight proved to be spot on. It is right off the freeway and has adequate parking and extended hours. People travel from near and far to purchase her cupcakes, which are the best tasting and as good looking as any you’ll find. The Cotati store financed the opening of the Napa store and will finance the third store as well.
Andrea found the SBDC services through the Cotati Chamber.  She knew she needed help because as much as she had passion for cupcakes and knew cupcakes were the happening thing, she knew little to nothing about running a business. Her expertise was marketing and she was confident she had that piece under control (in fact she got GREAT press which supported her opening and continues to this day). On the other hand, she had no idea what it cost to run her business, no budget, no knowledge about costing or pricing her products.  She was unfamiliar with COGS and break even.

My job was to support Andrea in getting financials, reviewing them monthly, assisting her with employee and HR issues, getting systems and protocol in place: insurance, merchant services, theft prevention, and maintaining profitability to support opening another store. I turned to Betsy Fischer, our food service specialist, to work with Andrea on how to cost her products, determine her pricing, and once we began getting P&Ls Betsy gave her guidelines for managing her payroll land her COGS. Between the two of us, Andrea has garnered essential information that supports her as she builds a successful, compliant, and well run business.
Andrea was hot on the path to wanting a second store moments after store number one was up and running. She has had the good fortune to capitalize on the right opportunity at the right time and the Cotati store has been profitable right out the gate. Low overhead, excellent margins and the right timing propelled Sift into immediate prosperity, a rare thing, especially in an economy like we have today.

She opened a store in downtown Napa in February 2009. She is sharing space with a high end clothing store called the “Cake Plate” (another interesting concept that seems to be paying off). The revenue in Napa is not what Andrea had hoped for, but it is a 6 month old business that is already showing profitability. I have explained to Andrea that Cotati is an anomaly and Napa is the best of what happens in the “real” world.

She is currently in negotiation on a location in Walnut Creek that she plans to open mid-September. This location is big enough to have decorating classes and birthday parties as well as enough office space for Andrea and her soon to be born child. The overhead is going to be significantly more than in her other 2 locations but she has dreamed of Walnut Creek since the beginning and believes it is the best opportunity for expansion. She has enough money to open this store if all the ducks line up. Because she has only been in business a year and four months, lenders aren’t willing to work with her until she hits the two year mark. Her personal credit has been impacted by a short sale of their house in Las Vegas so her options are self financing and friends and family money. They are counting on family money in the event they need additional resources to get the Walnut Creek store opened.

Since working with the SBDC, Andrea has opened a 2nd store and is in the process of opening her 3rd location. She has maintained staffing in Cotati and hired one full time and four part time employees at the Napa store. Her sales at the Cotati location have increased 122% the first 4 months of 2008 compared to the first 5 months of 2009 and profits increased 263% for the same time period. The Napa store has reached sales of high 5 figures in the first 6 months and profits (excluding start up costs) of low 5 figures.
"The SBDC connected me with Cynthia Riggs to help grow our business and gain understanding of our financials.  Since our very first meeting, I have been constantly learning and growing as a small business owner.  Without her support, I might have gotten to where I am today but not without some major mistakes and learning curves.  Not to mention time and money!  The expertise and knowledge acquired from both Cynthia and Betsy have been the backbone that keeps pushing Sift to new heights."

Sift: a Cupcakery, LLC
Business Owner(s): Andrea and Jeff Ballus
(707) 347-6478