The fun of funding
We’re working on an aggressive plan to open our own space this year, as we’ve outgrown the incubator kitchen in Poughkeepsie and need to move to keep up with demand.
This process is a murky one. We have a direction, but wow is it not a linear path to get there.
I can only really equate this time to a paint by numbers, but without any clear black lines to fill in. We have a fuzzy picture in our mind’s eye of the shape, the feel, and the energy of our new space. And now we’re adding layers of color to form the picture—all the browns, all the pinks, all the greens, all the silvers. All the millwork, all the decor, all the machinery.
Here’s where we’re at, and all the things we’re thinking about:
We just submitted for a Capital Grant through Empire State Development. This would cover up to 20% of the capital costs of our project, which is a significant amount. That said, we cannot move forward on actual construction or even sign the lease until we hear back about a decision on the grant…then it’s go time!
To submit the grant, we had to put together a business plan with 5 years of projections, key assumptions, org structure, market analysis (location, pastries, veganism), competitor analysis, and SWOT analysis. This will come in handy as we approach a lender, as well.
Speaking of lender, we have a few banks in mind, but we are first applying to Pursuit, a non-profit that supports promising small businesses with 7a SBA loans. We’re promising because, against all odds, we grew from $110K in revenue in our first year to $330K in our second. I say “against all odds” because we are in an incubator kitchen with limited space and capacity located in a deserted part of Main Street, Poughkeepsie, which hasn’t seen the revitalization other Hudson River towns have experienced. The space had also been closed to the public during the pandemic, so there was no current customer base.
We have to have a clear estimate from contractors on the space in order to apply for the loan, which requires architectural drawings. We also need a list of prices for all of our equipment, which we are submitting at full price, but that we hope to acquire used or auction.
While this is all happening, we are working with our potential landlord, her architects, and our architects, on drawings for the new space. Colleen is also talking to her mentor who owns bakeries in the Bay Area about machinery placement. This allows her to make adjustments to her build out including floor finishes, egresses, and walls (many are coming down), and submit that to the city for approvals.
We are also approaching potential investors who can supply a small personal business loan, as we don’t want to give away equity in our business yet. This would help us avoid the burden of an 11% interest rate for at least some of our funding.
So, next steps are: get contractor quote, submit loan application, wait for grant approval, sign lease, begin construction in earnest.
