This year, John Sweet and his wife Angela are celebrating an anniversary many small businesses never reach. For 10 years they’ve been baking bread at Neidlov’s Breadworks, a bakery in Chattanooga, TN.
The Sweet’s launched their bakery 9 months before they were married and worked side-by-side for 18 months until their son was born.
“I started hiring people, we bought a building in which to permanently relocate, and the bakery grew a lot,” said Sweet. “Two years later we almost went out of business. But then we recovered, became profitable again, and continued growing.”
The bakery now sells a million dollars worth of bread annually, employs a small team of about 25 people. Neidlov’s Breadworks has also become an anchor in the urban revitalization of Chattanooga’s Southside.
After looking back at all the trials, tribulations and successes he and his wife pulled in their first few years, here are ten lessons that John Sweet has learned in his 10 years running Neidlove’s Breakworks, in his own words:
1. Be cautious about investors
Finance your business with savings. If you need more money, borrow it. Your growing business is always worth more to you than it is to anyone else. We borrowed cash from a good friend, father in law, aunt and uncle, a business associate, three banks and a local alternative financing institution. But we never sold shares of the business.
2. Don’t buy stuff until you need it
I mean until you really need it. It is often said that most businesses don’t make it because they’re “undercapitalized” or they “can’t finance their own growth.” I think if they bought less, they wouldn’t need so much capital. I mixed the dough by hand until it was so much that I physically couldn’t do it any more. Then we bought a mixer.
3. 120 hour weeks are good for you
Once or twice. There is great value in looking back at how rough things used to be. It keeps your perspective positive.
“At least we got one day off this week.” “At least everyone else can cash their paychecks.” “At least we have air conditioning now.”
4. You need an advocate
Someone besides yourself who will talk the talk, has some answers, loans you money, finds you clients, sells your stuff, knows bankers, and won’t stop telling people that they’ve got to meet you or try your thing. Two or three of these is better than one.
5. Spouse as a business partner is not always a bad idea.
It works for us and it might be right for you. It can be dramatic though and a high capacity for conflict is certainly required. For us, the inherent risks are outweighed by the many practical and intangible benefits.
6. You need friends who are not part of the business
These people are not in the trenches. They have enough distance from your chaos to see and evaluate your life objectively. They’ll talk straight whether you’ll like it or not: “Your wife needs you to work less.” “You’re killing yourself.” “Hire a sales guy.” “Don’t buy that building.” “You’ve got too much debt.” Good friends are invaluable.
7. Be your own landlord
If you’re a normal business there’s likely to be greater long-term value in real estate than in your business. As soon as your business is viable, consider buying your own property. If you’re a destination business, move to a crappy part of town and make it better. We bought a dilapidated building on a rundown street as near downtown as we could. More people and businesses have come to our area, values are going up, and we’re on our way to owning a significant asset.
8. Have long term goals
Write down long-term goals, then tape them up somewhere you’ll see them every day, or at least several times per week. When they change, change them on paper, and repost them. We just took down our “Debt Free By 10 Year Anniversary” signs.
9. Grow Better
Once you reach a certain size, consider growing better instead of bigger. For us that was one million dollars in sales. At that level we turned our attention to getting more efficient in production and distribution, replacing worn out equipment, and giving better service to existing customers.
10. Always Be Investing
In your staff. In your community. In your family. In your health. In your physical space. In good conversations. In brainstorming and envisioning. In the future. It’ll take a few years, but the returns on these investments will make your professional and personal life much more fulfilling.