Investor:Barbara CorcoranShark Aquarium Appearance:April 22, 2011 Bid:$50,000 for 25% stake Results:Sales went from $27,000 to $5 million
One Saturday afternoon, about five years after Kim Nelson appeared on Shark Aquarium , she stands in the Pauline, SC commercial kitchen of her company, Daisy Cakes, sifting the powdered sugar "so it's perfectly smooth and there won't be a single bump or bubble in the frosting . As she sifts, Nelson reflects on the time since she handed slices of carrots, red velvet and lemon cake to the Sharks and landed Barbara Corcoran as an investor and mentor.>Just because Nelson became what Corcoran called one of the best deals it has landed in the eight seasons of ABC's commercial reality show doesn't mean you can stop sifting sugar, even on weekends. “The lengths we go to are ridiculous,” says Nelson, “but we want our customers to love every thing about our cakes – from the taste to the packaging – and to have a throwback experience when they take that first bite. . ”
Yet Nelson discovered that while you can smooth out every ripple in cake batter and frosting, you can't avoid a few bumps on the road to success.
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Nelson went from selling 2,000 cakes in two yearsAquarium to sharks to the same number of orders within the first 48 hours after the episode aired. Corcoran has found a high-production bakery in Savannah, Georgia to meet the increased demand. “I loved our new baker,” Nelson says, “and they loved us. Everything seemed wonderful. ”
Until Daisy Cakes landed a spot on QVC. That's when the production bakery that Nelson used to create his products fired them as a customer because the bakery was selling its own cakes on QVC. “Now we were competing,” Nelson explains. With the help of Corcoran, Nelson located another production bakery, this one in the Bronx, New York. They worked with a distribution house close to QVC on Long Island. “It seemed like the ideal setup,” says Nelson. "I was certain that this time everything would be fine. When Nelson appeared on QVC on Nov. 30, 2011, Daisy Cakes inventory of 5,000 cakes sold out in eight minutes, and the home shopping network asked Nelson to return in a few weeks. Bingo, right?
Not so fast. “We ran out of money,” says Nelson. "We were flat broke. Indeed, although Nelson poured money into baked goods to create this inventory for QVC, it would take 60 days before the network paid for them. To make matters worse, the busy holiday season was falling right in the middle of this cash gap. “We had gotten too big too fast,” says Nelson, a trap many start-ups find themselves in.
A cash-strapped Nelson had to borrow $50,000 from a friend and family member. family just to buy ingredients to fulfill Christmas orders. "In all my life this is the most desperate I have ever been and all I could think about was doing anything to keep the business running for at least a few months until I can find something else,” Nelson said. "And it was one of the absolute worst decisions I've ever made in my entire life. ”
Nelson managed to overcome this crisis only to be hit by another. The quality of the cakes the Bronx bakery produced was dismal, both in appearance and flavor. When customers complained, Nelson would send them a replacement cake and, as an apology, a second free cake, but sales had dropped 50%.
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In the summer of 2012, Nelson turned to another great baker, this one in Nashville, Tennessee, and two distribution centers, one in Maryland for cakes shipping east of the Mississippi and one in Kansas City, Missouri for cakes going to the Midwest and West. Then, in early 2013, a huge order for 6,500 cakes was marred by sugar bloom – unsightly crystalline stains. Nelson says the hit was catastrophic, resulting in a loss of $150,000 in inventory and $310,000 in sales.
Corcoran was clear on what needed to happen next:bringing production back to Pauline and the bakery that Nelson's father had built for her years before. "Bigger isn't always better," says Nelson. "We're a small company, and every cake is handmade and hand-wrapped. It's a labor of love, and the volume doesn't diminish the cost of making each cake. »
“We want our customers to love everything about our cakes – from the taste to the packaging – and to have an eye-rolling experience when they take that first bite.”
Today, Daisy Cakes produces around 20,000 cakes a year, which is ideal for their seven ovens and six full-time employees, in addition to Nelson and his 83-year-old mum, who has been with the business since start. They recently introduced minikins, 8oz cakes sold in jars, which have been well received. Nelson has a new cookbook coming out in early 2018, and she's starting to think the Daisy Cake bakery franchise could be a solid path to growth. “Cakes should be baked exactly the way we bake them here at Pauline,” she says, “and that takes love, passion, and following a very, very strict set of rules.”
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This article originally appeared in the August 2017 issue of SUCCESS magazine.
