Monday, February 2, 2009

Betting on the new local economies: I'm expanding my business

I own a small bread bakery in West Philadelphia. My business is expanding in a shrinking economy and consumer spending. Why? Keep reading and have a peek at the bright future that is ahead of us; even if it's a challenging road to get there.


A bit about my bakery. I started this bakery in my house with 15 people on an email list. I just sent out a weekly email and said "this is what I'm baking; pre-order and pickup your order on Friday on my front porch." Hand-made sourdough breads, locally grown organic whole grains, milled at the bakery, local ingredients mostly.

Grass roots expansion. The word spread quickly taking on a life of it's own, seemingly totally beyond my control; and the bakery operation slowly crept into my basement with the addition of more ovens, sinks, refrigerators, etc. Seeing the writing on my bare basement walls, I began to look for a real commercial kitchen and spent 1 1/2 years planning and renovating a small space in an existing local cafe to put my bakery; I moved the bakery, got all the required permits and certifications.

Since moving into my own commercial kitchen, I have kept the same business model that I started with: direct sales to people through internet order forms; slow growth with the goal of building lasting connection and loyalty with a strong customer base; high margins (revenues minus costs) and low volume.

Here is a nicely edited video of the bakery move from the basement. We moved the entire contents of the bakery with bicycles, no trucks.

Sustainable Business model. I have been convinced that the high volume, low margin business model is going to very problematic in the emerging economy. The key is flexibility. When low margins, small changes in supply costs (like the huge spike in food prices last year) puts the whole business model in turmoil. I was able to ride the spike in food costs without raising my prices, because I had high enough margins on my products to sustain the changes without changing my business model.

Instead, I got creative. I found new markets for my products and invested in sustainable packaging (reusable bags), used barter and bicycle transportation for delivery, and almost eliminated waste in the bakery. For example, I create only one home-sized trash bag of garbage a month; the rest of my "waste" in composted or recycled.

When the recession hit, I added an option on my order form to donate bread to hungry people. My customers can now donate $1 to $40, or more, to an account that use to give away bread to people. I have matched most of the donations, but essentially the program allows my customers to support the bakery in baking fresh quality bread for people who need bread. A comment from a hunger organization I am working with:

Thank you for your generosity with Intercultural Family Services. Myra and Kim told me how much the families loved the bread and sweets you provided. Oftentimes, people in need of food are used to getting the food that no one else wanted or expired foods. When you are hungry, you usually eat it, because that is all that you have. When you give someone good, wholesome food prepared with care, as you did, I feel that you are also nourishing them with dignity. Thank you again.

And now expansion. This week I am launching a daily fresh croissant and bagel delivery for area cafes and small sweet shops in a 2 mile radius in West Philly. This is a major expansion for my small bakery which will, if all goes well, double or triple my overall sales in just a few months. There is great support in my neighborhood for this venture, and I'm marketing it as a way to help fix the broken economy. Invest in your local economy; in businesses whose CEO's live in your community, send their kids to the same schools as yours, who really care about the employees and where the waste they create ends up. This is the way of the future; and I'm investing and betting on it.

I'm lucky I live in an supportive community for this venture. The local food economy here is strong and growing.

Our collective future. Any stimulus package needs to include motives for small businesses like mine to expand, hire people, and support the community that hosts them. It's the key to our long term future. I don't reject the "global" economy, as long as it's firmly rooted in a strong decentralized local economic engine that builds on the benefits of having access to international trade. We have gone into depending on the global engine as our food; but we are going back to building at our roots. Local, small businesses is the future. And there is great hope; even if the times are challenging. Thanks for listening.

Here is an effort to get you hungry; I'm just a small time baker after all is said and done:


*Update: Here is a link to my web page; many a commenter has been asking:


Verdant Thoughts said...


Red Ribbon Bakery said...

Well, that's great! it is a good sign for you. Anyway, I enjoyed reading this post! Keep it up!