MINI CASE STUDY
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KLARA’S GOURMET COOKIES, LLC
Klara Sotonova emigrated from the Czech Republic to the United States on her own at the age of 19. She came with a desire to make her dream of owning her own business a reality. Her dream came true in 2006 when she founded Klara’s Gourmet Cookies.
Klara hails from Chrast, a village of approximately 5,000 residents, located two hours south east of the historic Czech capital city, Prague. Under the former Czechoslovak communist regime, Klara and her family did not have easy access to mass produced baked goods, unlike in the United States. Klara’s rich Czech baking traditions were passed down from her grandmother, as it had been done in her family for generations. It is that tradition she now brings to you.
1. In what year did your company begin operation?
We began as a sole proprietorship in 2006 and incorporated as an LLC in 2009.
2. How do you define success? Are you “there” yet?
Success is a process. We are growing and are profitable and are now in the process of redefining our business. It is taking on a life of its own!
My husband Jefferson and I are the business (along with our dedicated staff and the independent reps we work with). We are working on establishing systems, tools and policies to grow our business through managing a management team. Our definition of success is being able to take a much deserved vacation and to spend more time with our daughter instead of worrying about our business functioning correctly and smoothly. We do not feel we are “there” yet, but we are getting closer.
3. How long did it take to be successful? What challenges did your face in establishing your company?
It has taken us 7 years to get to where we are at now.
We started as an apartment based business with one Kenmore electric oven and a Kitchen Aid Mixer. Jefferson would leave the house at 7 am to go to work as a chef for a local specialty food store. I would bake until 3pm, when I would go off to my evening waitress job. Jefferson would come home after work at 3pm, clean the kitchen and fulfill the production list I had left for him. We rapidly out grew this “space” and our dining area became dry storage and a spare room became the office and prepared product storage area. We had only our bedroom and bathroom not occupied by our business!
In March of 2009, we purchased our current location, a general business zoned former 2-family home. We converted the downstairs apartment to our 1400 sq ft commercial space and we lived on the second floor.
During the summer of 2010 we contracted with our first broker. This was our first major mistake and it almost cost us our business! On advice, we changed our packaging from a window bakery bag to a foil coffee pouch with a full color photo of the product in an effort to gain longer shelf life. The backlash from our current customers was the challenge. We definitely made the mistake of thinking that we could force something to work.
We spent a great deal of time sampling and conducting in-store demos to get customers familiar to the new packaging. In late 2011, we added a clear hard bottom bag. This made the product visible and our sales improved.
The thing that really pushed us forward happened in the fall of 2011. We started receiving Package Design magazine in the office. We were confused as to why since neither Jefferson nor I are “designers” of packaging. Jefferson started to read it and noticed an ad for their Package Design Makeover competition. He went to the magazine website and learned that companies could submit their brand for a complete Package Design Makeover. He entered us. However, when he tried to upload photos of our current packaging (the foil coffee bag) the link did nothing. He hit submit without the photos just for the heck of it.
Two weeks later we received a call from the editor of Package Design, Linda Casey, asking why we did not upload our product photos? We were in the running with 5 other companies for the makeover and they would make their decision upon receipt of our photos. We sent them and 2 days later Linda Casey called us to tell us we had been selected out of a total of 150 brands submitted in the competition.
We worked with 4 major branding companies during this process and we now have our new carton packaging as well as hang tags for our clear bags. The entire process did not cost us a dime.
We rolled out our current packaging at the 2013 Fancy Food Show in New York where we gained several new, large accounts from exhibiting at the Show. Klara’s Gourmet Cookies were sofi Finalists at this 2014 Show.
In addition to our 1400 sq. ft. bakery, we leased a 750 sq. ft. cage in a local commercial building. It allows us to ship and receive LTL and store packaging supplies and ingredients in larger quantities. Up until then we would assemble palletized shipments on the sidewalk in front of our bakery while waiting for the truck to arrive. With the warehouse life is much, much easier.
4. How long did your initial roll-out for the above product line take (months or years?) and how much did it cost? ($5,000? $20,000?) What kind of funding was available to you?
It has taken us 7 years to roll out and establish the product line we have now. It used to be much broader. When someone asked if we made a certain product, we would experiment to see if it worked. Now we produce 9 varieties in 3 different styles of packaging. We started out with $1500 in cash for basic supplies and an American Express credit card. From 2007 to 2012 we ran a “bootstrap” funded business. In 2013 we started a line of credit against our building to increase our working capital and this month we are getting our first business loan for a cookie depositor to streamline production.
5. Please share your insights and advice for new to industry companies.
If you wish to own and operate your own business, you must be willing to sacrifice something, whether that is time, money or both. If you work hard enough, smart enough and have a little bit of luck, success will come. Success doesn’t happen over night!
6. How would you define your “vision”? Where do you want to be in 5 or 10 years?
Our “vision” is to be a multi-faceted biscuit and cracker company, producing high quality, all natural products. Many companies of our type manufacture their products using a co-packer and concentrate on marketing their products. We like to produce our product ourselves.
We wish to continue to bake, pack, sell, ship and support our products on our own. As we grow we want to diversify our product line, add co-packing services and private label services.
We are in what we refer as “stage 2” of our business. Stage 1 was the apartment. Stage 3 will be the build out of our next facility. We are planning on 5000 to 7500 sq. ft. of production, office, warehouse and cold storage space. With our corporate headquarters in place, our systems and tools and a little luck we will continue to grow and ultimately succeed.
Klara’s Gourmet Cookies, LLC
18 Railroad Street
Lee, Massachusetts 01238