Respond to the following in 250 words: Successful entrepreneurship encompasses a variety of skills. Review Case Study 13, “Amy’s Bread,” attached here. As you review Amy’s proposal, contemplate the

Amy muttered to herself, “There are already so many days when I feel stretched past the breaking point. There are so many demands.” Amy mentally ticked them off: Ensuring consistent quality, scheduling and training staff, ordering supplies, developing new recipes, contacting potential customers, collecting from slow-paying clients … the list was truly endless. Amy wondered, “If I decide to expand, can I do it successfully? Can I find another trustworthy manager, like Toy Kim Dupree, to help me manage the staff and maintain bread quality? Can I find expansion space in Manhattan? Should I close our current location and expand to a much larger space, thus eliminating the need to manage two locations? Should I look for a location for my wholesale production, or a space that would provide both retail and wholesale opportunities?” There was so much to decide. Right now though, Amy’s dough starters were waiting, as were her employees. She had to get up and face another busy day at her bakery. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 2/21 Amy’s Bread, founded in 1992, served about 50 wholesale customers, including some of the finest restaurants, hotels, and gourmet food shops in Manhattan. Amy’s Bread also had a waiting list of more than 30 wholesale customers from other quality restaurants, hotels, and shops.

Amy thought, “I really want to meet their needs and accept their business, but any further production expansion in my existing space is impossible. I know I can’t produce one more loaf without hurting bread quality, which is absolutely unthinkable! We are already working three shifts, and there is no more room for additional equipment.” Amy and her assistant manager, Toy Kim Dupree, had commiserated:

“The bakery is stretched to the limits. Dough production ranges from 1,800 to 3,000 lbs. of bread per day, well over capacity for just 1,300 square feet.” As Toy described, “We are like sardines making bread.

Surviving in these close quarters is so difficult. Not only do we produce all of the wholesale and retail bread in this one location, but we also store ingredients and have a small office.” Amy worried that some of the customers on her long waiting list were on the brink of turning away. But, Amy thought, “Am I really ready to tackle a major expansion? On the one hand, I have worked so hard to make my dreams a reality, I can’t imagine stopping now. But, can I handle an expansion and larger ongoing operations? Financially? Mentally?

Physically?” Amy remembered Toy’s recent comment: “Amy’s Bread is finally turning a profit.” The thought of an expansion and additional debt was very scary. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 3/21 Pag e 5 3 8 AM Y’S PERSON AL HIST ORY Am y wa s born and r a ised in M inneso ta , wh ere her f a th er wa s a hig h-lev el ex ecu tiv e fo r P illsb ury a nd h er m oth er wa s a go u rm et co ok wit h a f a m ily r epu ta tio n fo r b ak ing f r esh b rea ds.

A s a ch ild, A m y r em ember ed  co ming h om e fr o m sch ool t o t h e sm ell o f h er m oth er ’s hom em ad e brea ds wa ft ing f r o m t h e kit ch en. A ft er h ig h sch ool, A m y ea rned a d eg ree in eco nomics and psy cholo gy. S h e th en moved t o N ew Yo rk in 1984 t o t r y h er l u ck in th e Big A ppl e.

Am y so on fo u nd t h at a n office jo b wa s no t f o r h er , a nd t h at sh e lo ng ed t o pu rsu e a m ore cr ea tiv e ca reer . S h e ta lk ed end lessl y t o h er m ana ger s and co wo rk er s ab ou t h er d rea m o f o pening h er own bu siness. I t wa s th en th at A m y b eg an to so licit su ppo rt a nd pr om ises of f ina ncia l b ack ing if sh e wer e ev er t o s ta rt h er own bu siness. A ft er 3 yea rs , A m y l ef t h er wh ite- co lla r m ark et ing po sition to pu rsu e her d rea m. S h e decid ed t o a ttend th e N ew York R est au ra nt S ch ool f o r cu lina ry t r a ining . A ft er g ra d u ating f r o m t h eir pr ogra m , A m y l a nd ed a j o b a s a ch ef f o r one of N ew York ’s m ost h ig hly a ccl aim ed F rench r est au ra nt s.

Aft er 2 y ea rs of v er y ch alleng ing wo rk a nd l o ng er h ou rs th an h er m ark et ing j o b , A m y esc aped t o E uro pe. A m y sa id, “I t wa s th er e I d isco ver ed m y t r u e pa ssio n: brea d b ak ing .” Sh e back pa cked a ro u nd E ng la nd a nd I ta ly a nd ev ent uall y set tled in F ra nce, wh ere th er e are st ro ng t r a d it io ns of b rea d b ak ing . A m y wo rk ed a t F rench b ak er ies in th ree dif fer ent t o wns, sp end ing a m ont h a t ea ch . “W hen I r et urned t o N ew York in 1989, I wa s brim ming wit h id ea s and e x cit em ent a b ou t o pening m y o wn b ak er y,” A m y r eca lled .

Am y spent t h e nex t 2 y ea rs as a pa stry ch ef a nd b rea d b ak er f o r ano th er t o p New York ea te ry . A s Am y wo rk ed , sh e sim ult a neo usl y d ev eloped r ecipes and b u siness plans. A m y drea med t h at so med ay so on sh e wo uld b e wo rk ing f o r h er sel f. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 4/21 HIST ORY OF A MY’S B READ Am y k new th at o pening a b ak er y in New York wo uld b e ex tr em ely ch alleng ing. F ir st , it wa s a h ig hly co mpet itiv e ind ust ry wit h l o w wh olesa le pr ofit m arg ins. S eco nd, s pa ce in New York wa s alwa ys at a p rem ium , a nd r ent ing a d esir ab le lo ca tio n wa s go ing t o b e ex tr em ely ex pensiv e. T hir d, s h e disco ver ed t h at b ank s wo uld no t l o an her m oney . B ank s viewed b ak er ies as rest au ra nt s—f ar t o o r isk y a n inv estment wit hou t a pr ior pr oven tr a ck r eco rd . A m y r em ained u nd au nt ed . S h e wa s det er mined t o a ch iev e her g o al o f r u nning h er o wn bu siness, one th at so ld a m illio n doll a rs wo rth o f b ea utif ul b rea ds ea ch yea r m ad e by em ployees who t o ok pr ide in th eir wo rk a nd wer e rewa rd ed f o r t h eir ef fo rts. A m y h ad cl ea r g o als: “I wa nted t o b e fa m ou s fo r m ak ing a g rea t pr od u ct a nd f o r cr ea ting a g o od pl ace to wo rk . I d id no t ca re a l o t a b ou t b eing r ich . I j u st wa nt to sel l b ea utif ul b rea ds fr o m a cu te, co zy pl ace. ” In 19 92, a rm ed wit h so me sa ving s, a l o an fr o m h er pa rent s, private lo ans fr o m h er f o rm er co llea gu es in th e m ark et ing pr ofessio n, a g o od b u siness mind , a nd a v er y d et er min ed spir it, A m y t o ok t h e big st ep. S h e qu it h er r est au ra nt j o b a nd o pened A m y’s Brea d o n Nint h A ven ue in a t o u gh a rea o f M an hatta n k no wn as H ell’s K itch en. T he spa ce she fo u nd wa s an old st oref ro nt t h at h ad b een a f ish m ark et a nd h ad b een em pt y f o r 5 y ea rs. A lt h ou gh o nl y 6 50 sq uare feet , it wa s st ill ex pensiv e, bu t it wa s th e m ost a ffo rd ab le spa ce she co uld f ind . W ith t h e hel p of f a m ily a nd f r iend s, it st ill t o ok 6 m ont hs to r en ova te th e spa ce, incl uding pl ast er ing a nd pa int ing . A m y inst alled eq uipm ent, h ir ed a nd t r a ined st aff, d ev eloped a cu stom er l ist , and b eg an pr od u ct io n. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 5/21 CURRENT OPE RATIO NS O F AMY’S B READ Pe rs o nne l Am y’s Brea d st arted wit h a st aff o f six d ed ica ted em ployees wh o scr ubbed u p used eq uipm ent, b u il t sh elves, a nd l ent a h and a s need ed. A m y r eca lled , “I t a u gh t t h em b rea d m ak ing tech niques, a nd t h en, wit h l it tle id ea o f wh at wa s to co me, we o pened f o r b u siness. ” A m y’s Brea d so metim es used newspa per ad ver tisem ents fo r a ttr a ct ing em ployees, b u t m ost r espo nded to a “N ow Hiring ” sig n in th e bak er y’s wind ow. A ssist ant m ana ger , T oy K im D upr ee, d escr ibed r ea sons em ployees came to wo rk f o r A m y’s Brea d. “S om e wer e int erest ed in bre a d b ak ing , b u t m any ca me bec au se we offer ed a 5 -d ay wo rk week wh ile m any b ak er ies and r e st au ra nt s have a 6 -d ay wo rk week .

We also wo rk ed h ard t o cr ea te a h appy , o pen, a nd f r iend ly env ironm ent. I t’s wh at we wanted f o r o u rsel ves and wh at we h oped t o cr ea te fo r o u r em plo yees. O ur a im wa s to h ave a 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 6/21 Pag e 5 3 9 per fect pr od u ct , b u t we reco gniz ed t h at we wer e dea ling wit h hum an being s. A ny one wh o is to o int ense does not f it in wel l her e. W e don’ t h ave any r o om f o r pr im a d onna s. W e also t end t o pa y m ore th an ou r co mpet itors. ” A t y pica l em ployee wo uld b eg in in th e sh aping a rea , w ork ing t o fo rm t h e brea d l o aves. F ro m t h er e, t h ey ca n m ove to b ak ing t h e brea d a nd , f ina lly , t o t h e m ixing o f t h e dou gh . T oy d escr ibed a k ey m ana gem ent ch alleng e a s “h elping em ployees to b ea t t h e bored om o f t h eir r epet itio us wo rk .” Toy sa id, “O ur m ost su ccessf ul em ployees have a po sitive ou tlo ok, a re depend ab le a nd co nscient ious, t h ink o n th eir f eet , a nd int eract we ll wit h th eir co wo rk er s. W e have no cu bicl es her e!” E m ployees su ggest ed so lu tio ns to m ana gem ent issu es, wit h A m y h aving th e fina l sa y. A s Toy  d escr ibed , “W e all pu t o u r h ea ds to get her , b ring ing in ou r sepa ra te area s of ex per tise.

O ur g o als wer e to pr od u ce ver y h ig h-q u alit y b rea ds by h and , pay o u r em ployees a d ecen t l iv ing wa ge, a nd ensu re th at o u r cu stom er s get g o od v a lu e fo r t h eir m oney .” O ver t h e yea rs, A m y’s Brea d h ad ex per ienced v er y l o w tu rno ver . R et ail st aff st arted a t $ 8.0 0 a n hou r a nd b ak ing st aff a t $ 10 .0 0. I n fa ct , A m y’s Brea d’s lo west pa id em ployees were th e cl ea ning st aff, a nd t h ey st arted a t $ 7.5 0 a n hou r, w el l a b ove m inim um wa ge. B enef its w er e ava il ab le to em ployees who work ed m ore th an 20 h ou rs a week , a nd em ployees who wer e with t h e co mpa ny l o ng er t h an a y ea r wer e el ig ib le fo r a 4 0 1k pl an. T he m ajo rit y o f h er em ployees (8 8 per cent ) wer e mino rit ies fo r wh om E ng lish wa s a seco nd l a ng uag e. T ra ining wa s oft en done by d em onst ra tio n. P ayro ll ex penses were extr em ely h ig h, r epr esent ing o ver 5 0 per cent o f sa les. W ith a h and mad e pr od u ct , it wa s dif ficu lt t o a tta in any eco nomy o f sca le co ncer ning l a b or. N ew sales led t o a d dit io na l pa yro ll ex pense. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 7/21 Am y r em inisced, “T he fir st y ea r wa s by f a r t h e to u gh est . W e lea rned t o h and le dou gh in st ifling h ot wea th er . W e had t o k eep go ing o n onl y a f ew hou rs of sl eep a d ay a nd g et b y wit hou t m oney wh en ou r cu stom er s wer e slow to pa y. O ur spa ce wa s so na rro w and cr am ped t h at we stru ggled t o g et r a ck s of d ou gh th ro u gh it . H owev er, sa les wer e go od , a nd so metim es a ll t h e brea d wa s so ld b y no on! ” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 8/21 BR EAD PRODUCT IO N Am y su rm ised t h at “pr act ice and pa tience were th e key s to per fect b rea d, a nd a ll su ccessf ul b rea d st arted wit h q u alit y ing red ient s.” A m y ex plained , “D ou gh b atter s are ver y ch alleng ing. T hey ca n be to o d ry , t o o wet , no t r ising q u ick ly eno ugh , o r r ising t o o q u ick ly . M any ex ter na l el em ent s ca n affect t h e dou gh , incl uding t h e air t em per atu re, t h e tem per atu re of t h e wa ter , t h e tim ing o f ea ch st ep. ” O ne of t h e m ost cr itica l a spect s of t h e su ccess of A m y’s Brea d wa s her dev otio n to so urd ou gh st arter s. T he st arter s are essent ially f lo u r, y ea st, a nd wa ter . A m y q u ipped , “T he st arter s are th e m iracl e ing red ient t h at g iv es lif e to t h e brea d.” A m y m used , “A b ak er ’s wo rk is rea lly nev er d one. T he d em and s are co nst ant . T he dou gh k eeps rising a nd m ust b e ca ref ully wa tch ed t h ro u gh ou t t h e pr ocess. T he bak er y o per ates 24 h ou rs a d ay, 7 d ays a week . W holesa le cu stom er s wa nt b rea d ev ery day. O n week ends and h oli d ays, t h eir o rd er s dou ble! ” A m y’s B rea d h ad a st aff o f 32 b rea d m ixer s, sh aper s, a nd b ak er s by 19 98 .

A t a b ou t 5 :0 0  A. M . , t h e m ixing b eg an. A m y d escr ibed t h e pr ocess: “We fil l a l a rg e m ixer wit h f lo u r, wa ter , t h e all - im porta nt so urd ou gh st arter , sa lt , a nd y ea st. B ef ore lo ng , t h e m ixer ’s fo rk k nea der pu lls and st ret ch es a m ass of su ppl e dou gh . T he dou gh is pu t a sid e to r est a nd r ise slowl y a t a co ol tem per atu re and t h en div id ed int o po rtio ns to b e sh aped a nd b ak ed .” E ver y st ep was ph ysica lly d em and ing , a nd wo rk er s go t so re a rm s and sh ou ld er s and v ery , v er y t ir ed l eg s and f eet . A t no on, th e sh aping o f t h e lo aves fo r t h e nex t d ay’s ord er s beg an. R ack s of r ising d ou gh wer e cu t a nd f o rm ed . T his wa s a t o ta lly m anu al pr ocess, a s ea ch l o af m ust b e hand -sh aped . T he brea d wa s th en 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 9/21 lef t t o r ise ag ain at a co ol t em per atu re so it ca n fer ment .

Fina lly , t h e lo aves wer e bak ed in th e ea rly h ou rs of t h e m orning . A ft er t h e brea d w as bak ed , it wa s co oled a nd pa cked fo r d el iv er y b y a n Am y’s Brea d t r u ck . A m y co mment ed , “S melling t h e brea d a s it co mes ou t o f t h e oven, seeing it s go ld en colo r, f eel ing it s tex tu re, a nd enj oying it s del icio us fla vo r cer ta inl y co ntrib ute to j o b sa tisf act io n! ” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 10/21 Pag e 5 4 0 C us to me rs A m y’s orig ina l b u siness plans call ed f o r pr ovid ing b re a d s wh olesa le to r est au ra nt s an d h otel s. S h e had a l o ya l cu stom er in a f o rm er em ployer a nd a l ist o f int erest ed cu stom er s. H er lo ca tio n wa s rea lly no t t h e best f o r r et ail t r a ffic. R et ail b u siness wo uld sim ply b e a sid eline— she wo uld sel l ex cess lo aves to peo ple wh o wa ndered in to ch eck o u t t h e bak er y.

S lo wl y, b u t su rel y, A m y b eg an ea rning a cit y-wid e repu ta tio n fo r h ig h-q u alit y, inno va tiv e y et co nsist ent pr od u ct s. H er sig natu re brea d, sem olina wit h g o ld en ra isins and f ennel , bro u gh t A m y’s Brea d l o ts of a ttent ion. B y 19 96, sh e wa s prepa ring a b ou t 6 0 0 l b s. o f d ou gh a d ay j u st f o r h er se molina , go ld en ra isin, f ennel b rea d. H er pr od u ct l ine incl uded appr oxim atel y 5 0 it em s m ad e fr o m 15 d if fer ent d ou gh s. A m y’s b est -sel ling pr od u ct s incl uded h er sem olina b rea d, wa lnu t sca llio n brea d, b la ck o liv e twist s, a ppl e wa lnu t r a isin ring s, a nd o rg anic whole wh eat b rea d wit h t o ast ed seed s.

As Am y’s bu siness grew, sh e disco ver ed a g ro wing r et ail int erest . T he area a ro u nd A m y’s Brea d wa s im proving , a nd new r est au ra nt s and co ffee shops wer e opening . S h e beg an t o b ak e ro lls and sing le- ser ving l o aves specif icall y f o r r et ail cu stom er s.

Sh e ev ent ually h ir ed co unt er h el p to ser vice th e ret ail cu stom er s and b eg an sel lin g no t o nl y b rea kfa st b rea ds, l ik e m uffins and sco nes, b u t sa ndwich es to cu stom er s as wel l. S h e set u p attr a ct ive  wind ow displ ays and a d ded a f ew sm all t a b les in th e fr o nt o f h er sh op. A m y’s ret ail b u siness gra d u ally g rew un til it r epr esent ed a b ou t 2 5 per cent of sa les. B est -sel ling it em s fo r r et ail t r a ffic incl uded f o ca ccia wit h r o sem ary , b rea d t wist s, so urd ou gh b ag u et tes, a nd co unt ry so urd ou gh l o aves. A m y no ted t h at h er st aff “t ook g rea t pr ide in ser ving r et ail cu stom er s.” They t o ld A m y, “W e enj oyed h ea ring d ir ect ly f r o m t h e cu stom er s how much t h ey enj oy t h e brea d.” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 11/21 A m y co mment ed t h at “wh olesa le is my m ainst ay a nd wh ere th e grea test v o lu m e of sa les exist . H owev er, t h e pr ofit m arg in on ret ail is bet ter t h an on wh olesa le. ” A m y r em ark ed , “A cr itica l part o f m y ex pa nsio n decis ion is decid ing wh ether t h e ex pa nsio n sh ou ld b e so lel y f o r wh olesa le spa ce, a co mbina tio n of r et ail a nd wh olesa le, o r p u rel y r et ail .” A m y f el t t h is wa s a cr ucia l issu e beca use th e use of t h e spa ce rea lly d ro ve t h e lo ca tio n decisio n. A m y k ne w, “I f I wer e to ex pa nd t o m eet m y wa iting l ist o f wh olesa le cu stom er s onl y, t h en th e fa ci lit y need ed t o h ave go od a ccess to m ajo r st reet s wit h a n am ple tr u ck d ock f o r l o ad ing b ak ed l o aves and u nl oad ing su ppl ies and ing red ient s. I t a lso co uld b e lo ca ted in a l ess ‘d esir ab le’ neig hborh ood . H owev er, if r et ail wer e to b e th e em phasis, t h en I need ed t o f ind a n attr a ct iv e spa ce wit h l o ts of f o ot t r a ffic in a neig hborh ood wh ere m any peo ple liv ed a nd wo rk ed .” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 12/21 Comp etit o rs W hen Am y’s Brea d o pened , b rea d b ak ing a ppea red t o b e a gro wt h ind ust ry , b oost ed b y h ea lt h fu l ea ting t r end s. T he U .S .

D epa rtm ent o f Co mmer ce repo rted t h at per ca pit a consu mpt ion of specia lt y b rea ds incr eased 12 per cent f r o m 19 88 t o 19 93. A 19 92 a rticl e in  Bakery P rod uction a n d M ark etin g  st ated t h at k ey t r end s pr ed ict ed f o r su per mark et s in th e 19 90 s wo uld b e th e ex pansio n of in- store bak er ies as a k ey aspect o f enh ancing t h eir o u tr ea ch t o cu stom er s.

In 19 93, per ca pit a co nsu mpt ion of specia lt y b rea ds wa s 23. 28 lb s. wh ich r epr esent ed 30 per cent o f a ll b rea d co nsu mpt ion. A Ga llu p Poll in Janu ary 19 95 sh owed t h at 7 1 per cent o f a d u lt s pr efer b rea d t o a ll o th er g ra in- based f o od s. N inet y per cent indicated t h at g ra in- based f o od s wer e co nv enient , a nd 6 3 per cent t h ou gh t b rea d wa s l o w fa t. N ew brea d ch ains and fr a nch ise lo ca tio ns wer e spr inging u p ev ery d ay, incl uding Sto ne Mill B rea d Co mpa ny , P aner e, L a M ad el eine, a nd t h e orig ina l, A u B on Pain. P er haps th e big gest o f t h e fr a nc hise ch ains was th e Gr eat H arv est B rea d Co mpa ny , f o u nd ed in 19 76 . I n 19 95, Gr eat H arv est h ad 8 7 st ores wit h 15 m ore und er dev elopm ent, spo rting a 30 per cent a nnu al g ro wt h r a te.

Cl oser t o h om e, A m y’s Brea d h ad sev eral pr im ary co mpet itors fo r specia lt y b rea ds, incl uding t h e Tom Ca t B ak er y in Queens (o ne of N ew York ’s oth er b oro u gh s) , E cce Panis, a nd E li’ s B rea d. T hey wer e wel l- est ab lish ed a nd l a rg er t h an Am y’s B rea d. T hey su ppo rted a cl ient l ist t h at incl uded f a m ou s rest au ra nt s su ch a s th e U nio n Squ are Ca fé, B ald u cci’ s, a nd D ea n & Del uca . T hese bak er ies tend ed t o b e m ore m ech aniz ed th an Am y’s Brea d, u til iz ing eq uipm ent f o r d ou gh sh ap ing a nd b ak ing .

Som e of t h e la rg er co mmer cia l b ak er ies had f o ld ed d u e to co mpet itiv e pr essu res bu t, a t t h e sa me tim e, m ore and m ore 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 13/21 small b ak er ies fea tu ring sp ecia lt y v a riet ies wer e open ed in M anh atta n and t h e su rro u n ding a rea . T hese micr ob ak er ies, lik e Am y’s Brea d, ca ter ed t o u psca le rest au ra nt s and g o u rm et sh ops th at wa nted t o pa mper t h eir cu stom er s wit h t h e b est o f fr esh , cr ea tiv e brea ds. A m y f el t t h at “t he secr et t o f ina ncia l success in th e bak er y b u sin ess was to d if fer ent iate yo u r b rea ds, ra th er t h an co py ing wh at ev eryo ne else mad e. ” A m y maint ained , “T he key s to g et ting a nd m aint aining wh olesa le cu stom er s are inno va tiv e and co nsist ently h ig h-q u alit y b rea ds.

O ne of t h e wa ys I ensu re hig h q u alit y is by t h e hand -sh aping and ind ivid ual b ak ing o f t h e brea d. T he ret ail cu stom ers also wa nt co nsist ent q u alit y, b u t t h ey a re lo oking f o r co nv enient lo ca tio ns and pr om pt ser vice, t o o. I d on’ t f o cu s on wh at m y co mpet itors ch arg e. O cca siona ll y , I see th eir pr ice list s, b u t I b asica lly ch arg e wh at I f eel I m ust t o co ver m y ex penses and o ver hea d. I n fa ct , m any o f o u r pr ices have no t ch ang ed since we fir st o pened f o r b u siness. ” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 14/21 Pag e 5 4 1 F ina ncia l R esul ts S h ortly a ft er h er 19 92 o pen ing, A m y d isco ver ed wh at m any ent repr eneu rs find t o b e a m ajo r r o ad blo ck : ca sh f lo w. A s new ent repr eneu ria l b u sinesses b eg an to f lo u rish , m ore an d m ore u p- fr o nt m oney wa s need ed f o r eq uipm ent, su ppl ies, a nd st aff.

T ypica lly , t h e cu stom er b ase had no t g ro wn la rg e eno ugh t o co ver a ll t h e ex penses, no r wer e cu stom er a cco unt s as cu rrent a s desir ed, a nd so metim es prod u ct s wer e no t pr iced co rrect ly .

A m y r em ark ed , “S oon aft er o pening , I d isco ver ed t h at ev en if I so ld ev ery l o af I co uld m ak e, m y r ev enu e wo uld no t b e hig h eno ugh t o co ver m y h ig h m ont hly l ea se and eq uipm ent r ent al ex penses. ” A m y wa s ver y l u ck y t h ou gh , wh en ad jo ining spa ce opened u p in Decem ber , a nd a lt h ou gh sh e co uld no t e a sil y affo rd t o l ea se th e spa ce, sh e also k new th at sh e co uld no t continu e to ex ist wit hou t ex pa nd ing . Q uick ly ,  A m y wa s ab le to b orro w eno ugh a d d it io na l f u nd s fr o m fa m ily a nd f r iend s to l ea se th e ad jo ining o pen space. B y Ja nu ary 19 93, sh e wa s in fu ll pr od u ct io n in her newl y expa nd ed spa ce.

Thou gh t h e beg inning m ont hs pr oved t o b e qu it e a st ru ggle, A m y’s Brea d g ra d u ally g rew . T he 19 98 inco me st atem ent a nd a cco mpa ny ing sch edules fo r A m y’s Brea d h ig hlig ht h er sa les a nd pr ofit ab il it y. A m y r em ark ed , “S ince payro ll ex penses rise wit h sa les, t h e rea l pr ofit s onl y co me fr o m eco nomies of sca le r ea ch ed wit h f ix ed ex pense s lik e rent a nd u til it ies. ” A m y fu rth er no ted , “Giv en th e lo w unem ploym ent r a te, t h er e oft en is a sh orta g e of g o od st aff a va il ab le at t h e sa la ries my b u siness co uld a ffo rd t o pa y.” A m y’s co ntrib utio n m arg in on ret ail o per atio ns was 47 per cent ; it wa s onl y 35 per cent f o r wh olesa le o per atio ns. O th er b ak er ies th at wer e m ore m ech aniz ed exper ienced h ig her pr ofit m arg ins. I n ord er t o ensu re th e hig hest q u alit y o f pr od u ct , A m y’s Brea d h and -sh aped a ll t h eir brea ds; th er efore, l a b or co sts wer e m uch h ig her t h an oth er 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 15/21 bak er ies. F or ex am ple, a “m ech aniz ed” bak er y wit h sa les r ev enu e sim ilar t o A m y’s Brea d h ad o nl y f iv e em ployees; Am y’s B rea d need ed 2 0 em ployee s to pr od u ce th e sa me am ou nt o f sa les.

I n ana ly zing o th er ex penses, A m y co mment ed, “F ood co st ch ang es usu ally co me fr o m f lo u r, nu ts, d air y pr od u ct s, a nd o liv e oil . P rices fo r t h ose prod u ct s are qu it e vo la til e wh ile pr ices fo r o th er ing red ient s r em ain qu it e st ab le. ” In th e m id- 19 90 s, t h e bak ing ind ust ry ex per ienced a st eep rise in th e pr ice of f lo u r. H owev er, ind ust ry r epo rts sh owed t h at b ak er ies wer e onl y a b le to r a ise th eir pr ices 5 per cent o ver t h e sa me tim e per iod. I n ad dit io n, r est au ra nt s, o ver wh elm ed wit h so urces of b rea d pr ovid er s, wer e resist ant t o b ak er y ind ust ry pr essu res fo r pr ice hik es. F or q u alit y r ea sons, t h ou gh , A m y r ej ect ed u sing “q uick -b rea d” m ixes wh ere yo u o nl y a d d eg gs and o il , pr efer ring m ore ex pensiv e fr esh , o rg anic ingred ient s and so urd ou gh st arter s. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 16/21 Mark e ting T e chniq ues Am y sa id h er m ost su ccess fu l m ark et ing t ech nique wa s to “k eep current cu stom er s happy .” Sh e no ted , “W ord o f m ou th is v er y po wer fu l in th e N ew York r est au ra nt b u siness. ” A no th er wa y t h at A m y h ad o b ta ined new custom er s wa s by b ei ng v er y ava il ab le to t h e pr ess. A m y em phasiz ed, “W henev er so meo ne calls fo r a n int erview, I m ak e th e tim e to m eet wit h t h em a nd m ak e ev ery ef fo rt t o m ak e th em f eel wel come. I inv aria bly d iscu ss wh at is uniq ue ab ou t m y b rea ds and , o f co urse, ev eryo ne receiv es fr ee brea d sa mples. T he fa ct t h at I a m a wo man in a m ale- dom ina te d ind ust ry h el ps ensu re th at m y bu siness is an int erest ing st ory .” A m y a lso d et er mined t h at “wh enev er t h er e wa s a m ent ion of m y b u siness in a l o ca l pa per , bu siness increased a g rea t d ea l f o r t h e nex t 2 – 3 week s, a nd so me of t h e new custom er s co ntinu ed t o r et urn. A po sit iv e rev iew by a n ou tsid er is bet ter t h an any a d I co uld wr ite. ” H owev er, l im ited a d ver tisin g wa s used f o r specia l ev ent s or sea sona l pr od u ct pr om otio n.

Am y’s Brea d h as been reco gniz ed b y  T he N ew York T im es, N ew York M agazin e, M od ern B akin g, Gou rmet,  a nd  F ood & W in e,  ju st t o m ent ion a f ew. E xcer pts fr o m t h ese articl es incl ude th e fo llo wing .

“At h er t iny , ch arm ing st oref ro nt in wh at u sed t o b e kno wn as H ell’s K itch en, A m y S ch erber t u rns ou t a d ozen and a h alf su blim e va riet ies th at a re any th ing b u t co nv ent iona l wh ite brea d. A m y’s is th e ca nd y st ore of b rea d b ak er ies. ”  New York M agazin e,  Ju ne 1994. “A rm ed wit h a g ent le m anner , m od est bu siness plan and a g enu ine lo ve fo r b ak ing b rea d, A m y Sch erber , 34 , h as m ana ged , in less th an 2 y ea rs, t o po sition her bak er y in th e hig hly co mpet itiv e, so metim es cutth ro at, specia lt y wh olesa le brea d m ark et o f N ew York Cit y.”  M od ern B akin g,  N ovem ber 19 94. 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 17/21 Pag e 5 4 2 A m y h ad o th er su ccesses as wel l. T he 19 96  Z agat M ark etp la ce S u rv ey  ra nk ed A m y’s brea d t h ir d o u t o f 2 7 N ew York b rea d bak er ies. “T he best t h ing t o h appen to N int h A venu e” say ad m irer s of t h is “ch arm ing ” brea d sh op fil led wit h t h e aro m a o f “h om e bak ing ”; it o ffer s “im ag ina tiv e brea ds to b u il d m ea ls a ro u nd ” and “co nso ling st icky b u ns”; th e brea ds are also so ld in f o od specia lt y sh ops aro u n d M anh atta n; owner , A m y S ch erber (th e “S tr eisa nd o f b ak er s”) a nd h er “f riend ly ” st aff “r ev ere brea d a nd it sh ows in every l o af.”  Z agat,  19 96. O th er m ark et ing t ech niques pu rsu ed b y A m y’s Brea d incl uded deco ra ting t h e sh op wind ow s fo r ev ery h olid ay. O ne co u ld f ind la rg e deco ra ted h ea rt co okies on Va lent ine’ s D ay a nd b ig b ask ets of specia lt y b rea ds on East er . A m y r eg ula rly sent f r ee sa mples of h er b rea ds to in flu ent ial ch efs. S h e dona ted b rea d t o ch arit ies, t a u gh t b ak ing cl asses, a nd a ppea red o n tel ev isio n Food N et wo rk sh ows. I n ad dit io n, t h e Am y’s Brea d d el iv er y tr u ck h el ped spr ead t h e wo rd a s it cir cled M anh atta n del iv er ing brea d.

A m y wa s no t o ne to r est o n h er l a u rel s. W ith h er a ssist ant m ana ger , T oy K im D upr ee, A m y d ev eloped a co okb ook t h at wa s pu blish ed in 1996. T his ef fo rt co nsu med co unt less hou rs to ca ref ully m od if y r ecipes mea nt f o r h uge batch es of d ou gh d own to t h e one lo af siz e. I t a lso inv olv ed h aving t h e recipes test ed b y u nt ra ined b ak er s and ed iting a nd im proving t h e inst ru ct io ns.

Am y h ad  to ex plain her t ech niques so t h at t h e no vice b ak er co uld u nd erstand t h em . A m y no ted , “T he co okb ook pr oject t o ok wa y m ore of m y t im e th an I co uld h ave ev er a nt icipa ted .” The co okb ook wa s a h it wit h b ak er s ev erywh ere. R ev iews of t h e book, a s wel l a s glo wing cu stom er co mment s, wer e po sted a t t h e Am azo n. co m web site.

To a d d t o h er ch alleng es, A m y’s lo ng -tim e ex po sure to b rea d and y ea st h ad m ad e her a ller gic to m any b asic brea d ing red ient s. A m y sa id, “I h ave lea rned t h at if I spend t o o m uch 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 18/21 tim e aro u nd t h e m ixing o f t h e dou gh , I g et a n itch y no se, wa ter y ey es, a nd a co ugh . I a lso h ave to b e ca ref ul t o e a t b rea d in mod er atio n. ” Beca use of t h e po pu la rit y o f h er M anh atta n bak er y a n d h er co okb ook, A m y wa s co ntacted t o co nsu lt wit h b ak er ies acr oss th e co unt ry . S h e also m ad e a v id eo ta pe appea ra nce on t h e O pr ah W inf rey sh ow fea tu ring su ccessf ul y o u ng ent re pr eneu rs.

A m y wa s also in th e pr ocess of d ev eloping a n Am y’s Brea d web site desig ned pr im aril y f o r m ark et ing a nd pu blic rel atio ns pu rpo ses. A lt h ou gh t h ey w ou ld a ccept o n- line ord er s, A m y no ted t h at, “b rea d is ab ou t f r esh ness, im pulse bu ying , a nd tem ptatio n. W e do no t ex pect m uch m ail -o rd er b u siness, a nd tr u th fu lly , sh ipping ex pens es can oft en be hig her t h an th e co st of t h e brea d.” 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 19/21 Fut ur e O pportunit ie s Arm ed wit h 6 y ea rs of co ntinu ing su ccess, A m y wa s fa cing a cr itica l d ecisio n. S h ou ld sh e ex pa nd o r st and pa t? Sh e h ad a wa iting l ist o f wh olesa le cu stom er s, b u t co uld sh e st ret ch her sel f a nd h er r eso urces eno ugh t o ex pa nd su ccessf ully ?

D espit e th e po pu la rit y o f A m y’s Brea d, A m y wa s st ill wo rk ing lo ng h ou rs and ea rning o nl y a m od est inco me. A m y h ad m ana ged t o pu t a wa y a g o od -siz ed nest eg g, b u t it wa sn’ t nea rly eno ugh f o r ex pa nsio n. A rm ed wit h sa les and f ina ncia l project ions, sh e beg an by l o oking f o r a d d it io na l wh olesa le pr od u ct io n spa ce in Manh atta n. A m y wa s lo oking f o r a b ou t 3, 000– 4,0 00 sq uare feet t h at wo uld essent ially t r ipl e her cu rrent spa ce. S h e based t h is req uir em ent o n her g ro wing wa iting l ist o f po tent ial cu sto m er s, a na ly ses of o pt im al pr od u ct io n la yo u ts, a nd a sso ciated pr oject ions fo r sa les and ex penses.

Am y ev ent ually f o u nd a 6 ,0 00-sq uare- fo ot b u il ding o n 31st Str eet t h at sh e fel t sh e co uld a ff o rd . S h e also su cceed ed in g et ting a b ank t o a g ree to a $ 15 0,0 00 l o an fo r h er b u siness pl an. U nl ike her 19 92 a ppl ica tio n fo r a l o an, A m y no w had a pr oven tr a ck r eco rd a nd wa s int erest ed in borro wing f u nd s to pu rch ase a h ard a sset , a b u il ding . H owev er, h er est imated b u dget f o r pu rch asing t h e bu il ding a nd m ak ing need ed improvem ent s wa s appr oxim atel y $ 30 0,0 00. A m y’s per sona l saving s as wel l a s th e bak er y b u siness saving s wer e no t eno ugh to m ak e up th e dif fer ence. Cr eativ e fina nces would b e r eq uir ed to ex pa nd … b u t A m y d ecl ared , “I h ave m ana ged b ef ore and wil l a g ain. ” While pu rsu ing t h is plan, a d ev eloper co ntact ed A m y wit h a new opt ion. A l ea se wa s ava il ab le on a 7 ,5 0 0-sq uare- fo ot spa ce th at wa s pa rt o f a b lo ck -lo ng wa reh ou se reno va tio n on 15 th S tr eet . T he dev eloper ’s id ea wa s to f il l t h e spa ce wit h a v a riet y 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 20/21 of f o od pr od u cer s wit h sm all r et ail sh ops wh o so ld t h eir pr od u ct s at sl ig htly r ed uced pr ices dir ect ly f r o m t h e pr od u ct io n so urce. T he pr opo sed m ark et wo uld incl ude a f r esh pr od u ce sh op, f lo wer sh op, a nd pa stry sh op. T his spa ce wa s essent ially a n em pty sh ell wit h no wir ing , v ent ilatio n, pl um bing , o r int erior wa lls. A m y wo uld need t o m ak e all t h e lea seh old im provem ent s, b u t sh e co uld a lso ch oose how th ing s wer e to b e d esig ned a nd co nst ru ct ed . A m y est imated t h at it wo uld t a k e 4 m ont hs to co nst ru ct h er st ore at a co st o f a ppr oxim ate ly $ 50 0,0 00. T his rent al spa ce had r et ail po tent ial; th e 31st S tr eet b u il ding sh e co uld pu rch ase wa s essent iall y a pr od u ct io n fa cil ity o nl y a nd wa s lo ca te d in a d eso la te area . A m y wa s fa ced wit h a d ecisio n to l ea se spa ce th at wo uld ser vice both r et ail a nd wh olesa le cu stom er s, o r t o b u y a spa ce th at wo uld ser ve wh olesa le cu stom er s onl y.

A m y co mment ed, “A lt h ou gh r et ail is pr ofit ab le, y o u need m any lo ca tio ns to r ea ch m ore cu stom er s and incr ease ret ail v o lu m e.

W holesa le bu siness vo lu m e ca n be incr eased f r o m j u st o ne lo ca tio n. ” A m y’s gro ss sales wer e appr oxim atel y 7 5 pe rcent wh olesa le and 2 5 per cent r et ail . T he wh olesa le bu siness was much m ore st ab le wit h a d va nce brea d o rd er s fo r l a rg e, f ix ed am ou nt s. R et ail b u siness depend ed o n ind ivid ual co nsu mer bu ying d ecisio ns fo r m uch sm aller q u ant ities. H owev er, a n it em t h at so ld f o r $ 1. 10 wh olesa le wo uld r et ail a t $ 1. 75 . T his repr esent ed a pr ice incr ease of 5 9 per cent co ntra st ed wit h a n a d dit io na l r et ail co st o f o nl y a b ou t 14 per cent ( fo r co unt er st aff, t a b le spa ce, a nd so f o rth ) r esu lt ing in a pr oject ed per it em net r et ail g ro ss profit m arg in incr ease of 4 5 per cent . A nd , r et ail sa les wer e fo r ca sh o nl y.

A m y sa id, “I a m su re th e answer l ies in caref ul f ina ncial pr oject ions fo r sa les and a sso ciated co sts, a b it o f l u ck , a nd a l o t of pa ssio n and h ard wo rk .” I t wa s tim e to co mplete so me det ail ed f ina ncia l a na ly sis, incl uding ca sh f lo ws to h el p decid e 4/18/23, 6:48 AM Amy’s Bread https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f2a5509f41c44fb59930000cb7704fe6 21/21 Pag e 5 4 3 th e best co urse of a ct io n. A m y st ated , “D ecid ing no t t o ex pa nd wo uld b e th e onl y “su re” bet . B ut, I ’m no t su re I a m r e a d y t o sit b ack a nd b e sa tisf ied wit h w hat I h ave alr ea dy a cco mplish ed. I h ave wo rk ed so h ard t o g et t h is fa r, I a m no t su re I ca n t u rn   h ard -ea rned cu stom er s awa y. A nd , wh at if m y bu siness slum ps beca use I ca n’t m eet incr easing dem and ? Ca n I k eep interest in my b rea d h ig h if I a m t u rning a wa y po tent ial cu stom er s? Sh ou ld I r el y o n m y per sona l insig hts and a wa reness of N ew York Cit y t r end s?” What sh ou ld A m y d o? Exp and o r st and pa t? If ex pa nd , sh ou ld it b e a wh olesa le oper atio n onl y? W holesa le and r et ail ? Ret ail o nl y? Two l o ca tio ns or o ne ?

Sourc e : T his c a se s tu dy w as r e p rin te d b y p erm issio n f r o m t h e C ase R ese a rc h J o u rn al.

C op yrig ht 2 0 01 b y Pa ula S. W eb er, C ath le en S . B urn s, J am es E . W eb er, a n d t h e N orth Am eric an C ase R ese a rc h As so cia tio n. A ll r ig hts r e se rv ed .