When you're still in debt from your last business venture, all of the motivational quotes about the necessity of failure on the road to success won't alleviate your fears about trying again.
“It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.” ― J.K. Rowling
Friends and acquaintances of mine know this isn't my first food business. The product wasn't really the issue - once people got past their initial reactions ("Is this soap?" "What do I do with it?") and tasted a marshmallow, they were sold. But a quality product isn't enough. And at the risk of oversharing, I think it's time to document the extensive list of the issues I encountered over the course of Fred's Marshmallows in the summer of 2013. These are the experiences I learned from. In many cases, these are the complications I will encounter again and the scenarios I am doomed to repeat.
Actually making the goods: There are no cottage food laws in New York, so using a personal kitchen is out of the question. The commercial kitchen space I rented out was an empty room with 2 sinks that you weren't allowed to use for dishwashing; heat sources were portable induction stoves, and if you tried to plug in more than two at the same time, the electricity shorted out. The mixers (30QT, a blessing compared to my 4.5QT home KitchenAid) were communal, and often when the marshmallow base got to its target temperature of 240-250°, I'd run out of my kitchen cubby with a heavy pot full of boiling sugar only to find that the mixer was being used to mix brownie batter for the company renting the room across the way. In this commercial kitchen I consistently saw a company full of the most bro of all bros with shaggy hair and t-shirts bagging protein chips bare-handed in 90° heat at 10pm - and this just starts the list of the food safety horror stories I could recount for you. Commercial kitchen space is rented by shift and is on contract, meaning that I was paying $150/week for an 8 hour shift from 4pm-midnight every Wednesday night to make as many marshmallows as I could, whether I needed to or not (and very often I didn't need to, as I had no venues to actually sell my wares, and marshmallows began to stack up in my home - more later). Those 32 hours a month cost the equivalent of 1/2 of the rent of my one bedroom apartment in Brooklyn.
Cost: It cost $300 or so to get the business set up through LegalZoom. When you're just starting a food production business on the level I was, you're unable to purchase the quantities of product that would allow you to significantly save money on getting ingredients wholesale - and even if I was, it would mean an extra $50/month in storage space at the kitchen. I bought a $55 Costco membership and loaded up a granny cart with $40 (100lbs) of sugar biweekly, and rolled it painstakingly over 4 cobbled blocks to the kitchen. There's no money for a car, so that granny cart was loaded up with marshmallows and rolled another 4 blocks to wait by a gentlemen's club for the B36 bus at midnight in the industrial district of Brooklyn. The kitchen required the business to have insurance - $500/year. The kitchen didn't have the pans I needed so to Amazon I went, and I had to provide all utensils, plus hairnets and gloves - easily another $300. 1000 units of packaging was $250, with 500 labels costing another $250. Renting a table at a weekly market was $80 per day - if you're wondering how I got the goods there, the answer was lugging that same granny cart down the stairs at my subway stop, through the transfer at Atlantic/Barclays, and up the stairs at Fulton. Sometimes a kind stranger would help, and I'd hand them a box of marshmallows. After a few months desperate to find a platform to reach customers, I spent $650 for a booth at Brooklyn Eats, which in the end seemed to be designed more for people to market their business services to me than for me to market my goods to them. $150 in other marketing materials. A million other tiny expenses. And lets not forget that $600/month for the kitchen. The other expenses are one-time; that one is ongoing. All of this means my marshmallows are expensive, though not nearly as expensive as all of this should have made them in order to run a viable business, because I know they won't sell at that price. I'm also working full time during this period at my day job. The rent for the commercial kitchen and for my actual apartment eats up 2/3rd of my monthly pay.
Lack of personal business acumen: On top of the above listed costs, I paid $150 in taxes over the life of my business. How is this possible, since I never turned a profit? $50 in late fees for each quarterly filing period. You may notice from the other bullet points here that I never put together a business plan. If I had needed that as a pre-requisite for starting my business, there wouldn't have been a business. Even now as I apply for my seller's permit in CA, questions are asked: "What are your estimated monthly sales figures?" What am I, a wizard? If I'd known back then my monthly sales would be half of the cost of the kitchen alone, I wouldn't have proceeded. But that's not information I could have had.
Marketing and product packaging: The cost of actually making the marshmallows and getting them to market meant that expenses that fell out of the realm of "absolutely necessary" were not expenses I could justify. This in turn meant that all of the product photos on Etsy and my site were taken with yours truly's iPhone. Do you know how hard it is to photograph marshmallows? They're just pale squares! The label and consequent marketing was hand drawn, then scanned, and traced and colored via computer. And be honest: you can tell.
I thought it was "fun." It was absolutely the wrong image to put out there for $7 hand made marshmallows. Not to mention the name - I thought it would be cute to name my company after my adorable dog Fred. And then... not feature Fred at all in any marketing. No one told me to check myself. On top of this, I ran into a problem I didn't expect: people had to be convinced you could eat marshmallows. The customers I talked to over the few months thought of marshmallows as ingredients, not candy. They were to put in hot chocolate, rocky road brownies, ambrosia, rice krispie treats, on top of sweet potatoes at Thanksiving. And could I blame them? Of course not. I don't want to eat a package of plain vanilla marshmallows either. I didn't consult anyone. And I didn't ask anyone for help.
"Asking is, at its core, a collaboration. Those who can ask without shame are viewing themselves in collaboration with - rather than in competition with - the world." -Amanda Palmer
Not being able to find the customer: A direct result of the above image issues. Many markets - believe it or not - already had a marshmallow stand (you would never know if you weren't trying to sell your own artisan marshmallows that there were no less than 5 established marshmallow companies in the city). Those that didn't already host the competition were often too expensive. You know those holiday fairs at Union Square and Bryant Park and Columbus Circle? A space there for the 5 week season runs about $15,000. I took a half day from work and got on three different trains to east Queens to interview for a booth at the LIC Flea, only to hear nothing and see in their launch materials the logo for a competing company. The one market I was able to get a booth at, the Fulton Stall Market, ran 9am - 5pm on Sundays in an area of New York traversed almost exclusively by tourists. Tourists were not the target demographic for this product. Tourists that were walking by the pier on a hot day weren't interested in worrying whether the marshmallows they'd just bought that day would melt in the summer heat. They just wanted a sandwich from the Pan Latin Grill at the table next to me. And they were right. That sandwich was killer. One week the famed New Amsterdam Market re-opened for a pop-up special event down the road. All of the New York foodies came down to lower Manhattan, and everyone at Fulton Stall did great that day. But spending all of my Sundays personally selling every box of marshmallows was exhausting, and I was struggling to recover the $80 I spent on the booth each week (forget about the cost of the product or paying myself for my labor). I wrote to and visited many stores with sample goods, none of whom even responded- except my beloved Murray's Cheese, who informed me that my packaging didn't fit in with their vibe. And they were also right. (I hold no hard feelings towards Murray's. The same cannot be said of the slightly more established candy company that shared my kitchen space, who completely ignored the gift basket of marshmallows and heartfelt note of admiration I left there one night.) Lack of wholesale interest meant that I was selling every pack of marshmallows, seeing personally every single passerby that walked past with disinterest. I burnt out, and I ran out of money. I filed my final tax return with the state and informed them Fred's was over. I then got emails and Facebook messages asking me to donate my marshmallows to various charity events in exchange for "exposure" for the next 6 months.
Many people supported me that summer, and to those people I am grateful. One friend used her company credit card to make a massive order for the soulless tech firm she worked at. My boyfriend at the time sat with me at the market on Sundays. My former improv teacher came down to the Super Duper Market on break from his day job and bought some goods. My boss allowed me to change my 9-6 schedule to 8-6 every day but Wednesday so that I could leave at 2 once a week to cook. The reviews I got on Etsy kept me going. It was not all doom and gloom. But it was a lot of doom and gloom.
Some of those issues follow me to this new venture, and some I leave behind. There is still no money for a graphic designer or a business analyst, but I now carry with me the weight of my previous failures in those fields and the knowledge that comes with that. Cooking out of my kitchen eliminates the biggest cost, but brings with it a whole new set of challenges - my inspection won't happen for another week. If the inspection goes poorly, Mallow & Hop is dead in the water. But. I am confident in my potential. And if I fail again, no harm - I'll be slightly farther in debt, and my ego more bruised, and I'll have a new blog post to write in a years' time.
And if I don't fail in a few years I can quit my day job and open that dessert bar specializing in craft beer, absinthe cocktails, exotic pies, inventive ice creams and, of course, marshmallows.