By Moses Leos III.
When the Wild Flour Cakery opened along Buda’s Main Street in April 2012, co-owner Amanda Rickman, like most first-time small business owners, was ready to jump into her new enterprise.
She was living the “American Dream.”
Less than two years later, her shop became one of a burgeoning statistic of failed small business ventures. The cakery closed Dec. 31.
According to research compiled by statisticbrain.com, the startup business failure rate within the first two years is 36 percent. Only 47 percent of retail businesses were still operating within four years.
At top: Upon opening the Wild Flour Cakery in April 2012, co-owner Amanda Rickman dreamed of growing her start up business along Main Street in Buda. But high costs, along with understaffing, undermined the once popular shop. Now, Rickman hopes her story helps those who may be thinking of opening their own small business. (Photo by David White) |
Having fallen into the same trap as many businesses, Rickman now shares her experience, hoping it will help others succeed.
She said success was plentiful in the beginning. Located across from Buda’s greenbelt, the shop thrived within the first few months.
So much so that the Cakery won the Hays Free Press “Top Sweets” Facebook poll in August 2012. It beat out established pastry shops such as the Texas Pie Company in Kyle.
Rickman attributed that initial success to new business curiosity.
“Maybe we were doing so well, because people wanted to try us out,” she said.
Shortly thereafter, the cakery ran into several hurdles.
Two of the biggest were product cost and lack of manpower.
Rickman and co-owners, sister Lindsay Findlay and mother-in-law Lee Rickman, produced custom cakes, along with cupcakes and sweets.
They invested a lot in overhead. Rickman spent roughly $1,800 alone on supplies, plus the cost of rent. That put the store’s financial health in a bind, forcing the trio to sell at high prices to cover it all.
“We were trying to do custom cakes,” she said. “But people were not wanting to pay a lot [for it]. These are things that take time and cost money.”
With only three workers, two constructing cakes, Rickman said they couldn’t keep up with demand.
She said the business was in a “catch-22” – they couldn’t take in more orders without hiring more people, but they couldn’t hire because they didn’t have the budget.
Several other factors also contributed to their struggles. Lacking an advertising budget, they instead used social media.
Rickman also felt the location harbored some disadvantages. Specifically, the lack of open shops on the weekend, which she felt drove customers away.
“A lot of businesses don’t have consistent hours,” she said. “When people did come, then they would go down the street, but [there was] nothing open.”
Whichever the reason – slow sales, unsteady traffic – the shop began to falter in its last few months. Rickman said the business never profited. Statistics say it takes about three years to turn a profit for a new business.
By the end, Rickman said the shop halted day-to-day production, which included cupcakes and sweets.
While focusing only on custom cakes had some positive effect, it couldn’t save the shop from closing.
What can new business owners do to avoid the same fate?
Buda Area Chamber of Commerce Managing Director JR Gonzales says it comes down to three points – research, leadership and capitalization.
Gonzales said business owners must research a business plan, ensuring their product or service is sustainable.
Proper leadership is pivotal for big and small businesses.
“Without proper leadership, it makes it difficult for a company to be successful,” Gonzales said. “You have to give direction, but also get involved. [Owners] should also manage resources.”
The biggest step is ensuring enough capital to function – what some argue is the top reason for business failure.
Saving up money is the best way to build capital, according to Gonzales. Several other options are present.
Using credit cards is one option. However, Gonzales warns that it is “not advantageous.”
Applying for Small Business Administration (SBA) and bank loans are also an option. However, the economy has made it difficult to get them.
“When applying for SBA loans,” Gonzales said. “[Business owners] have to have a plan that shows leadership and that you can do it.”
Taking a harder stance on business sense is imperitive.
“Starting a business is tough; to be an entrepreneur takes multiple skill sets,” Gonzales said. “Providing a good product or service does not mean you’re going to be successful in business.”
Rickman admitted she and her partners did not research before starting their business.
Looking back, she said getting help from Small Business Administration, or through Texas State, could have proved beneficial.
Rickman said she and her sister will still create custom cakes, just not from the shop.
While they expressed gratitude to the community, they now realize how overwhelming it can be to own a business.
“We don’t regret trying and we had fun,” she said. “[But] it was a learning experience.”
