Happy National Women’s Small Business Month! Throughout October, Nav recognizes both women-owned businesses and women who are just now taking the plunge into business ownership.

Michelle Spell is a pastry chef and owner of Ava’s Cupcakes, a boutique bakery in Rockaway, N.J., specializing in cupcakes, hand pies, cheesecakes, and cookies that are handmade from scratch and baked in small batches. Additionally, Spell operates a Bake a Wish center at Ava’s where kids can get hands-on and learn how to bake at birthday parties, classes, and camps.

“We’re in year five,” she says. “We’ve had to go back to the drawing board to make some new plans, because we surpassed all of our goals in year three!”

She owes the company’s success to making budget-minded investments and unwillingness to take on debt.

Starting Out

Why did you start your business?

When I was 15, I had my first job at a bakery. My second job was at a pizzeria. Back then, in high school, I knew that in food was where I wanted to be. I worked through national chain restaurants all along the East Coast. I was always in the culinary field, from catering to personal chefing, even waiting tables. I never went to culinary school. Everything I learned from my family’s long line of Italian cooks and chefs or from being out in the field working.

In 2009, after being a stay-at-home mom for 10 years with four children, I decided I wanted to get back into the workforce. I knew food would be the obvious industry to go into. I started with cupcakes because they were trendy, everyone loves them, and I didn’t have to educate the public about what I was making. It started as just an idea for a small business I could run and bring in some extra cash. Within six months, the business was twice as big as I was, so we decided to go retail and open up our storefront. From there, it’s been very successful.

How did you get the funds to get going?

We really didn’t take out any financing in the beginning. We had a little bit of savings when we started. My initial idea for the cupcake business was to start a truck, a mobile unit. We purchased a food truck super-cheap at an auction. We put a little bit of money into it. We went to have it inspected, and the town ended up having a hard time having a food truck in town. In the end, they denied our food truck. We were devastated.

For a day and a half, I didn’t know what to do, but I decided to re-sell the food truck. I made three times what I put out for it, so we had money to put down on a retail storefront. Still, that wasn’t a lot of money, so we bootstrapped it from there. For six months, I traveled around and showed up wherever a bakery was going under. With discretion, I offered pennies on the dollar for the equipment they were liquidating. It took some time, but that was time vs. money. If we had taken out a loan or taken equity out of our home, we could have opened much sooner, but in my opinion that wasn’t the best thing to do because of the rocky economics and because we didn’t know how well this business was going to work.

Have you heard of business credit?

Yes. We don’t use any of our personal credit for the business. The business has always provided for itself. We were fortunate enough that the first few months of being open were phenomenal, because we were a novelty. We lived on a shoestring budget at home and put all that money back into the business. We’ve never needed to get a line of credit or credit cards for the business. The business is now five years old, and it’s never had any debt.

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Managing the Business

What’s most challenging about running your business?

Work and life balance. I’m a mom with a husband and four kids. I love being in the business, so it’s easy for me to spend 65 hours there a week and miss a soccer game or a high school dance. I have to keep that in check because my husband and family come first.

How do you finance your business to manage cash flow or growth?

We work two weeks out. I’d love to project a month out, but this is how it’s worked itself out. Every bill is taken care of two weeks in advance. It may not be paid two weeks in advance, but the money has been made to take care of that bill two weeks ahead of time, including our payroll.

Do you use trade credit from your vendors or suppliers?

Everything that we buy is upfront. We have a few suppliers that bill us net 30, but everything else is cash and carry or C.O.D.

What’s the biggest mistake you made in your first years?

When we first opened, we were not as tidy with our bookkeeping as we should have been. The business was making so much money, and we didn’t really anticipate that. We just knew exactly what we needed to break even, but in the first six months, we were making triple that. We didn’t have QuickBooks. We were just keeping a paper trail. Looking back now, we can’t even count those first months into our total sales, because we don’t even know how much we made. Getting a computer and getting a P.O.S. system to track everything—I should have done that from the beginning. When you have half a year of data missing from all of your books, it hurts.

What’s the smartest thing you did in your first years?

Being budget-savvy was the smartest thing we did. When you’re opening a business, there are tons of vendors coming to you offering a shiny red apple that’s going to make life wonderful for you. I was very skeptical through all of those decisions, because I didn’t want to start out behind the 8-ball. When we opened our business in 2011, there were three other similar bakeries in the area. They’ve all since gone under, and they all had top-of-the-line marble cases and state-of-the-art equipment. We bootstrapped through that, and that was the smartest thing we did, because we were never buried under debt from opening costs.

What’s the most rewarding thing about owning a business?

It’s having my family be a part of it. They are there often. It’s named after my youngest daughter. My husband is my business partner. It’s rewarding to see how the business is part of their lives. They are so proud of what we do as a family, it’s not just like “My mom works there, it’s her shop.” It’s really a family business.

Future Plans

What does the future look like for your business?

For year six, we’re going into high gear. We want to open another location. We want to expand our Bake a Wish centers so that we can license that to other bakeries that want to have a baking center with their flair and their logo and what they do best. We have some fun and exciting things on the horizon that are services we can provide for other businesses and other towns. That’s all on the agenda for years six to 10.

What advice do you have for someone starting a business?

Regarding finances, the best advice I could give is to triple every idea you have. If you think it’s going to cost you $5, it’s more than likely going to cost you $15. Do your homework and get a second and third opinion on any major purchase, whether for equipment or a lease or whatever. Your due diligence is the best thing you can bring to your company. Lose sleep over it in the beginning. You want to make the best decisions right then and there to build a strong foundation. A house built on the sand will get washed away when it gets stormy, but a house built on a strong foundation is going to stand through those storms. The decisions you’re making at the beginning are going to be your foundation.

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