I don’t know who first said that life is a roller coaster, but it must have been a small-business owner. Who knows more about life's ups, downs and unknowns, than an entrepreneur?
Just ask Molly Fuller, the founder and CEO of Hands On Gourmet, a San Francisco company that offers private cooking classes for corporate team-building and celebrations.
Fuller (pictured with the writer) and her business partner, chef Stephen Gibbs, came up with the idea for the company seven years ago. Right from the start it was pretty clear they had a hit on their hands. In 2006, she received an M3 award, and within a year she was at the million-dollar mark.
When 2008 hit, business “literally ground to halt,” says Fuller, now 35. “It was like someone slammed on the brakes. I don’t think the phone ever rang. It was spooky.”
The spookiness lasted from the fourth quarter of 2008 through 2009, when business slowly began to pick up. In 2009, the company was at $650,000 in annual revenues, and up to $850,000 by 2010. “This year is our best since 2007,” she says, expecting to hit $1.2 million.
How did Fuller go from the brink of disaster to success? And what are some of the things you can do if you’ve lost ground in the economic recession and are trying to grow again? Here are some of her tips.
1. Cut unnecessary spending
“For a while it felt like we had a lot of cash, and looking back I would have managed that surplus so much differently,” she says. For example, during her flush period, Fuller hired someone to do sales at $2,500 a month and someone else to do marketing at $1,500 to $2,500 per month.
“That’s all stuff we can do in house. We saved a lot of money by cutting them.”
She and her business partners also slashed their salaries in half, which, though scary, also helped.
2. Know your financials
You need to know where every dollar goes, right down to the last decimal point.
“Had we not been really familiar where every dollar was going, it would have been more difficult to make cuts,” says Fuller. Today, her profit margin is better than ever, which she attributes to thoroughly understanding how she was spending her money.
3. Continue to innovate
Look for ways to expand on what you can offer clients without decreasing the value of your product. In the beginning, Fuller held her events at a separate location from where her business operated.
“When corporate budgets dried up, we were trying to accommodate smaller parties that didn’t necessarily have the budget to pay for our services and a party space, so we converted our warehouse into a party space,” she says. This allowed her to host parties at her kitchen that could serve up to 20 people.
“This is obvious now, but what we discovered is that it cost us so much less to produce parties in-house than off-site, and we were charging the same amount of money,” she says. “That’s where the profit margin increased.”
Since then, she has moved her company into a larger space that can hold up to 60 people. About half of her events are in-house and half off-site. “Having the event space has been a really positive thing,” she says. “Before we did it, I was tentative about it—I thought it would become difficult to manage but it’s not at all. It’s a turnkey. The events we do in-house are so easy. And they take barely any time to put together.”
4. Don’t underestimate your resilience
When business tanked, Fuller’s first response was “paralysis.” And then she met an older businessman who said, “Is this your first recession?” Fuller nodded. He said, “It gets much easier after the first one.”
“It gave me peace of mind to hear that,” she recalls. “I knew I would survive.” She also learned a lesson about peace of mind.
“After we cut our salaries in half I couldn’t imagine that I could make ends meet,” she says. “But I could. I did. And I was just as happy as I was before.”
5. Develop a good relationship with your bank
This is critical, says Fuller. Without it, “we would never have gotten a loan to build that bigger space, or get a line of credit when we were short on cash.”