Sunday, September 9, 2012

eBay Is An Option

eBay Is An Option

Interview with Thierry Aujard
Sweet Prosperity Bakery
Valley Forge, Pennsylvania

By Jeff Yoskowitz, Jessie Riley and Kathryn Gordon

Kathryn:  Hi Thierry!  Jessie and I have known you for years through the World Pastry Forum and Championships.  It’s great to visit you here in Pennsylvania, and see this amazing space you’re constructing.  How big is it?

Thierry:  We have 7,000 square feet.  It was formerly a chocolate production facility so there was already flooring and some useable walls.  We just got the space 2 weeks ago and we are in the middle of everything;  electric, sheet rock, adding washable wall surfaces, washable ceiling tiles, building a storage facility with a giant fork-lift and also adding a large walk-in freezer on the loading dock.

Digging under the concrete for the freezer walk-in insulation at the loading dock 

Jessie:  I thought that you had wanted to open a retail “corner” bakery? How did this project evolve instead?

Thierry:  I was working at another wholesale bakery in the area, and had taken over as pastry chef.   I worked with the recipes and procedures to make the process more efficient, and the clients liked my work.

Three clients from that bakery approached me to produce their product for them.   They came with me to the bank and supported me through the SBA loan process, verifying they would transfer their business to me when I am open in production.  They gave me a letter of intent to do business with them, and their past year’s sales data and projected 3 years.  The production levels are quite high, one of the clients already has an operational contract with Costco.

Jeff:  How are you financing building your own manufacturing facility?

Thierry:  We have taken an SBA loan and put our home up as collateral, and I had to put in some of my own savings (per SBA rules).   The bank gave us a loan and a line of credit for one-third of the total loan value.

Kathryn:  The whole process is amazing.  It’s like it all fell into place.  When did you start the process, and when are you hoping to open?

Thierry:  We just took possession of the space a few weeks ago, but I started working on the business plan for the loan application in May.  I’m hoping to open for production mid August.   We are in the construction phase now and equipment is coming in.
One of 3 depositors (never used) purchased through eBay 

Since I started to write the business plan, 4 additional companies and QVC (which is in the region) contacted me to ask if I would manufacture products for other businesses.  I said yes, because it is difficult for companies to find a co-producer with small production runs. I also now have my own contract with QVC for 3 of my own products to be launched at the end of the year.

Kathryn:  You wrote the business plan and you got your funding very quickly! 

Thierry:  It took a month and a half to put the business plan together, which is kind of stressful with everyone rushing you.  The SBA pressures you for the business plan, and the clients wanted to leave their existing manufacturing facility.

The SBA money came thru via our bank. The lender was organized by SCORE, who were awesome and helped identify 4-5 potential lenders.  My wife Cherie went to meet them with a few of our contracted clients, and that make a huge difference; the numbers were not coming from the sky, but were based on reality.

In 2-3 weeks, the lender came back with their underwriting.  So it was very fast and I finalized the paperwork last week.

A dishwasher that will accommodate washing a full speedrack!!! 
Jessie:  It’s amazing that you already have a strong relationship with your clients.

Thierry:  One even helped me find the production space, and a builder to do the construction.  I got this space the very first morning it was put on the market at 25 cents per square foot.

Kathryn:  How about your staff ? Are you ready to go with production in a month from a staff perspective?

Thierry:  I have my managers in place.  They are coming with me from the prior production facility.  Therefore they are already trained on producing these formulas.  We just have to get used to new equipment.

Jeff:  There was no equipment here, right?  You are bringing in everything?  How are you making the decisions regarding purchasing “new” versus “refurbished” equipment?

One of new the double rack rotating ovens 
Thierry:  I have a mix of new and used equipment.  If the equipment is essential to the “life of the bakery,” I am buying it new.  In other words, I cannot lose someone’s product while it is stored on our palets in the freezer.  I cannot risk that it is not baked correctly,  so the freezers/compressors/condensors and ovens are all new.  

Thierry:  We are fortunate to be located in the area near the largest equipment refurbisher in the United States, in case I need help.  I have gotten a lot of my equipment on eBay, and from as far away as Florida.  Through eBay, you pay for shipping but you can get some very good deals (like on the mixers and depositors).  

Jeff:  You know what equipment you need, and you are already experienced with manufacturing this product for these clients. Has anything been a surprise to you? 

Thierry:  Yes, the range of price quotes for the installation of the walk-in refrigerators and freezers with compressors and condensors.  The high end quote varied by as much as 5X more than we are currently paying for our installation.  Shop around!   
Two 120-quart refurbished mixers 
Calm before the storm?  Production facility in construction phase 

Kathryn:  Thank you Thierry, we look forward to visiting you again once you’re up and running!

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