Adjusting Her Ingredients
Jackie Ravel Knezevich started a wholesale bakery five years ago with two employees, an oven that didn’t work and a $15,000 loan from her father.
This year her company, BakeAway Inc., was selling $65,000 a month in desserts and wedding cakes to restaurants, cafes, caterers and movie studios throughout West Los Angeles and the South Bay.
Knezevich was in a good position when she started out in business: She had already established herself as a wholesale supplier of baked goods while she worked as executive pastry chef at the DC-3 restaurant at the Santa Monica Airport. She made money her first year in operation, starting out with sales of $10,000 a month.
But the rapid growth of BakeAway has not come without pain, Knezevich said, and last year she began losing some business. She realized she needed to hone her skills and streamline her operation, so she incorporated her company and computerized her accounts receivable and payable, concentrated on improving her marketing. She recovered all of the lost business and even gained some.
But the experience made Knezevich realize she needed expert help to take her company to the next level. Aside from suggestions from her husband and father, both entrepreneurs, she had not had the business evaluated by a professional.
“This is very much a transition period for my company, and I thought it would be nice to have somebody come in, look at the way things are going and tell me what I should do,” Knezevich said.
Entrepreneurial consultant Peter Cowen, founder and president of StratePlan, a business consulting firm in Santa Monica, provided that objectivity for Knezevich.
“She is an entrepreneur who has done a lot of things right that have brought her company up to this level,” he said. “Now she has a chance to really accelerate, but the very things that have brought her to where she is are many of the things she’ll have to alter to go to the next level.”
In that respect, Cowen said, Knezevich is no different from many small-business owners.
“If she didn’t have the tenacity and the attention to detail that she does, she wouldn’t have gotten where she is,” he said. “But now, if she’s going to grow, she has to let go a little, because she’ll never manage to keep absolute control over a company that gets any larger.”
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BakeAway is growing a commendable 30% or so a year, Cowen said. But he believes it could grow 50% to 100% a year and, with a better focus, still not be overwhelmed.
“We talked about that kind of growth, and Jackie was clear on what she did not want to become: a company so large that it capitalizes on its name but does not follow through with integrity, quality and good customer relationships,” Cowen said.
He took a tour of Knezevich’s bakery and sampled her desserts, which he said convinced him she is selling a high-end product. “Her pies are amazing, her bar cookies are really delicious and her bundt cakes are wonderful,” he said.
Putting out a premium product is important for a small business, which must be able to charge enough to maintain a healthy profit margin, Cowen said.
It also became clear to Cowen, as he talked with Knezevich, that she has been so involved in every aspect of her business and so dedicated to making every customer happy that much of her time is spent embroiled in details she would need to delegate if she is to help the company grow.
“She has the products, clients, reputation and referral base to be able to increase the profitability and the value of the business. She just has to channel the energy to make that happen,” he said.
While they were meeting, for instance, Cowen noticed that Knezevich was interrupted repeatedly by phone calls from clients. She complained that many of her long-term clients take up a lot of her time with late orders and demands for special treatment.
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In fact, Cowen found that 20 or 30 of BakeAway’s regular clients account for the lion’s share of her business, but that Knezevich often ends up spending an inordinate amount of time on smaller, more difficult clients instead of concentrating on her most prestigious accounts--entertainment studios such as Paramount, Sony, DreamWorks SKG, Disney, the Hollywood Park racetrack and some of the top caterers and coffeehouses in the city.
“She should be growing the company by focusing on the dozen or several dozen perfect clients who are out there,” he said. “She needs to woo them, and she may have to do it by cutting loose some of the smaller clients.”
Knezevich said she realizes she has an abnormal amount of loyalty, especially to those customers who have been with her since the early days of BakeAway.
“I cut people a lot of slack, and it is hurting us. For instance, our deadline for accepting orders is 11 a.m. But some of them call me at 2 p.m. or even 4 p.m. and expect me to take their orders. If I tell them no, I hear comments like, ‘Oh, she’s getting too big!’ I can’t afford to accommodate everyone anymore,” she said.
Freeing Knezevich from the daily hassles of taking orders and dealing with every customer personally would allow her to capitalize on her people skills, which are considerable, Cowen said.
“Jackie should get out of the kitchen more and do some selling,” he said. “She’s the key person in this company, and she has charisma and enthusiasm for her products that comes across immediately.”
Cowen recommended that Knezevich also think about expanding her business through a couple of avenues. Although she has always run a strictly wholesale operation, he said she should aim to establish a retail side.
One way to prepare for retail sales is to begin promoting the BakeAway brand name, something Knezevich has never done, and for good reason.
“My customers are very protective of my stuff,” she said. “Most of them want people to come to their locations and think they made the desserts in-house themselves. That has always been totally fine with me,” Knezevich said.
There is nothing wrong with continuing to supply some product wholesale and anonymously for good customers who want to keep it that way, Cowen said. But recently, Knezevich has had some requests from customers that she put the BakeAway label on her desserts.
“I think it’s time for her to get some name recognition,” Cowen said. “People will find out who she is and start to look for her label. BakeAway will start to promote itself, bringing in more clients.”
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In the last year, Knezevich has gotten into the wedding cake business, a venture Cowen applauded and recommended she use to further spread the BakeAway name.
“Wedding cakes produce a lot of emotional meaning for people, and they tend to have a high referral rate. This should be done as ‘Wedding Cakes by BakeAway’ in order to promote the name more and set you up for some retail business down the line,” he said.
Cowen also recommended that Knezevich take some time away from the business on a regular basis to clear her head, preserve her health and get some time to evaluate her company objectively. Over the years, Knezevich has put tremendous energy, vision and work into BakeAway. She routinely works six days a week, putting in 15- to 18-hour days, and she can’t remember taking a vacation.
That kind of grueling schedule is common for an entrepreneur in the first few years of a start-up, Cowen said. But now that Knezevich has built up the business, she probably can’t sustain that level of involvement. “You can’t put in 80- or 90-hour weeks without having some lulls,” he said.
“I do need to take time off,” Knezevich agreed. “Not only for my own health, but because that is when the good ideas come, when I can think things through calmly with no interruptions. Normally I don’t have time to do that.”
Knezevich hasn’t reaped much of the financial benefits of a healthy company, either. Cowen noted that her salary is $1,600 a month.
“She can afford to take some of the fruits of her labor out and go relax a little,” Cowen said. “So far she hasn’t really enjoyed the financial profits she’s reaping, and she deserves to do that after all the hard work she’s put in.”
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This Week’s Company Make-Over
* Name: BakeAway Inc.
* Type of business: Wholesale bakery specializing in wedding cakes and desserts
* Owner: Jackie Ravel Knezevich
* Annual revenue: $900,000
* Headquarters: 3380 S. Robertson Blvd., Los Angeles
* Founded:1992
* Employees: 16
* Financing: Savings, family loans
* Status: Private
* Clients: Customer list of 175 includes cafes, restaurants, coffeehouses, caterers, hotels and movie studios.
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Main Business Problem
Dealing with demands of expansion, reorganizing production and becoming more efficient
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Goal
Becoming the premier dessert factory and wedding cake provider in Southern California
Recommendations
* Owner should improve client focus by deciding who her top customers are and putting her energy into keeping them happy and wooing them into doing more business with her.
* Owner should not spend time accommodating small clients who demand an inordinate amount of personal attention and special treatment.
* Develop company logo and label and begin putting them on products to increase name recognition.
* Expand wedding cake line under the name “Wedding Cakes by BakeAway.”
* Explore possibility of retail sales.
* Owner should step out of the kitchen more to make personal contact with her largest clients and use her people skills to sell her products.
* Delegate some of the detail work to trusted employees who are ready to take on management duties.
* Owner should take regular time away from the business for personal and professional health.
* Begin reaping more of the financial proceeds of the company.
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Meet the Consultant
Peter Cowen is the president of StratePlan, a consulting and investment banking firm in Westwood that works closely with select emerging-growth companies. Cowen has worked with more than 200 firms worldwide and is an equity partner in more than a dozen companies. He was a principal in a start-up computer network company that was sold to a public company and has worked in marketing for Hewlett-Packard Co. and Unilever. He teaches strategic planning for entrepreneurs through the UCLA extension program.
