From $5 to $10M/year… during the 2008 recession

Hey UpFlipers,

A recession sounds like the worst time to launch a business. 

But sometimes, your back is against the wall. You have no other choice…

Kind of like the subject of today’s newsletter — a mother of six who turned her last $5 into a multi-million-dollar cupcake empire…

With little to no debt…

During the Great Recession.

Sounds impossible — so keep reading to see how she did it.

How one woman turned her last $5 into $10 million… during the 2008 recession

Today, we’ll learn how Mignon turned a $5 bill into The Cupcake Collection, her $10 million cupcake empire.

The crazy part:

She started it during the 2008 recession — when things were so bad that she couldn’t afford electricity for several days.

Oh, and she had to buy bottled water to bathe her six children.

But now, she’s a local hero in Nashville, where The Cupcake Collection homemade cupcakes are a staple…

And she never has to worry about money again.

Let’s see how she did it.

Mignon had been listening to Dave Ramsey’s radio show for a while, leaning on his advice to try and make it through the Great Recession in her dire situation.

One day, Dave Ramsey was discussing ways to get out of debt. 

He mentioned two ideas:

A garage sale and a bake sale.

Mignon was 110% willing to work hard at either of these to get some extra cash. 

She believed it was possible, too, after hearing others call into the show, proclaiming, “We’re debt-free!”

But Mignon had a few problems:

She had recently sold all her possessions to move to Nashville. A garage sale was out of the question.

She didn’t know how to bake, either — but at least you can learn how to bake.

And Mignon’s grandmother was an excellent baker. She could teach Mignong the basics.

So a bake sale it was.

The big break… with $5 to her name

Mignon leaned on her grandmother’s baking skills, asking her questions and mixing in her own knowledge to make the cupcakes.

She’d make small batches of cupcakes (she couldn’t afford much) and bring them to the neighbors…

And they were a HIT.

One day, she got a knock on the door from her neighbor across the street. The neighbor asked not for one or two dozen cupcakes…

But 600.

Mignon couldn’t afford the ingredients needed.

Luckily, the neighbor offered to pay for each batch as she made them.

So Mignon bought as many ingredients as $5 would allow her, combined that with the ingredients she had on hand, and went to work.

By the end of the day, she had turned that $5 into $60.

And by the end of the first week… she had collected $600.

Gaining traction with free marketing

Mignon continued following Dave Ramsey’s financial tips, living on a strict budget and avoiding debt.

Her initial marketing consisted of the following process:

She’d tell passers-by she was building a bakery business and ask them to try her cupcakes.

(Little did she know, she was developing sales skills and confidence by doing this.)

Then, Mignon would urge them to tell friends and family.

(Lesson in there — ask for a referral when the customer’s thinking positively about your product.)

Word-of-mouth costs nothing, and these kinds of customers are more likely to buy.

From side hustle survival to “real business”

Mignon couldn’t afford a commercial lease, so she ran the business out of her home for two years.

But business just wouldn’t slow down.

Soon, the cupcakes and associated equipment started gobbling up space as she reinvested profits into the business.

She moved out once she could afford it…

And her former home officially became The Cupcake Collection.

Building an “A-team”

Mignon eventually needed to hire.

She listed 100 tasks she did not want to do anymore… then found people who were good at them.

Her cashiers and bakers are on the “frontlines,” so she listens to their concerns and inputs to make business decisions.

Mignon gives them profit-sharing opportunities, too. Employees are encouraged to sell more cupcakes and find ways to cut costs/improve efficiencies.

Employees also get a sense of ownership in their roles.

They have a stake in company success. Hard work pays off in terms of money and job satisfaction.

Expanding The Cupcake Collection’s operations

Mignon made some big investments as business blew up.

For one, she bought a school bus and put a sign that said “Cupcake Bus” on it. She later exchanged that for a “cupcake truck” with her branding all over it.

This truck advertises The Cupcake Collection wherever she drives…

AND she can bring cupcakes straight to people in the city.

Her biggest move, however, was opening a second location in her hometown of New Orleans.

That’s a tough market for a food business to break into.

The New Orleans location struggled along for a couple years. But Mignon had done this same thing already in a much worse personal situation.

So what might’ve crushed other entrepreneurs didn’t stop her.

One other thing the company added was regular cakes.

This helps them attract a different customer base…

But more importantly, upsell/cross-sell to existing customers to boost customer lifetime value.

Finally… Enough money for paid marketing methods

The Cupcake Collection continues to lean on word of mouth while listening to and building relationships with customers. 

However, the business has money for paid marketing methods like:

• Billboards

• Digital marketing

• Email marketing

• SMS marketing

That last one’s especially helpful. SMS marketing has some of the highest response and conversation rates, and it solidifies customer loyalty.

For example, The Cupcake Collection texts its SMS list when it releases a new flavor.

Loyal customers visit (or order delivery) to try the new flavor. Lots of money and happy customers for a simple text message.

How easy is that?

The Cupcake Collection, 16 years later

The Cupcake Collection had sold over 5 million cupcakes and was clearing $10 million/year when we interviewed Mignon.

At the time of writing, the company was also working on launching a monthly subscription service.

(Genius: Offer customers convenient monthly delivery and lock in recurring revenue.)

Mignon did it all with as little debt as possible…

Merely turning the dollars she earned into more dollars via reinvestment.

Mignon can now step away from the day-to-day and focus on the big picture.

She now spends a lot of time at Nashville’s Entrepreneur Center, using her experience and “battle scars” to teach and inspire the next generation of local entrepreneurs.

The most exciting news, though…

Is that The Cupcake Collection just opened another location in Hendersonville, TN (just northeast of Nashville proper) a few days ago.

Looks like The Cupcake Collection has a bright future.

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5 tips for bootstrapping a business debt-free

Loans aren’t always an option. A lot of new businesses struggle to get them.

But starting a business without debt or a ton of cash is tough. 

Fortunately, tough doesn’t mean impossible. You can start with nothing but a skill, a few bucks, and some hard work.

(And hey, no debt means wider margins, better cash flows, and less stress when things get going.)

So let’s look at a few ways to build a business debt-free like Mignon.

1. Run it part-time until the business outweighs the job

Run the business part-time while you work a job. You’ll have less time to work on it…

But you’ll be more financially stable.

Patience is key. A few hours a week for your business is better than nothing. Kickstart the business with a bit of your job’s income, if viable.

Only once your business earns more than your job (to account for extra taxes/expenses) might it make sense to quit.

2. Ditch anything but revenue-generating activities

Do NOT get tempted by “shiny objects” like a picture-perfect website or the latest hot product idea. This wastes time and money that can go toward making money.

Find customers that need something, and sell them that something. Ditch anything that is not at least indirectly contributing to making money.

3. Customer relationships > marketing

Free marketing gets you those few customers on a shoestring budget. But pure acquisition marketing will be slow when you’re bootstrapping.

Building bulletproof customer relationships is all the more important.

Customers who love your business and product are much easier to sell a second, third, and fourth time.

Oh, and they’re happy to tell (or even bring) friends and family to you.

So treat all your customers well. Start those relationships strong. The entire journey will be a LOT easier. They’ll even be there in economic downturns.

4. Get creative with overhead costs

The lower your overhead, the more you can reinvest, and the faster your potential growth.

You might have to get creative.

For example, Mignon operated out of her home by necessity. Part of her house was dedicated to making and selling cupcakes.

She only moved out when that was untenable — which, conveniently, was when she was finally making enough money to pay rent for two places.

5. Reinvest every penny

Following up from #1: Don’t take a paycheck from your business until it’s your sole income source.

Pour every last penny back into the business. 

This is the fastest way to grow if you don’t want to or can’t get a loan.

Think about it: Owning a business is like owning 100% “stock” in your company. If it’s making money, and you put that money back into it…

Say hello to compounding.

4 types of Instagram photos food (and other) businesses can use to market themselves

One other low-cost way to grow a food business is to use Instagram. Great place to show off your food and built those customer relationships I mentioned.

Let’s explore how to use Instagram to grow a food business (and note that some of these apply to other kinds of businesses):

1. Delicious food photography

Presentation matters when selling food — take mouthwatering photos to get people excited to buy.

Here’s a shot of cupcake from The Cupcake Collection’s Instagram:

Getting “good enough” photography is doable on your own. But as you grow, you may consider hiring professional photographers.

2. Behind-the-scenes shots

Give customers a glimpse behind the scene. Capture the magic that happens in the kitchen and behind the counter. Adds a human element to your image.

For example, The Cupcake Collection posted a video of Mignon giving a tour of the new Hendersonville location a few days before the grand opening.

Days later, she had the ribbon-cutting filmed — sure to lead to a flood of sales.

3. Interactive content

Polls, questions, quizzes, and the like get customers to engage with your brand. More engagement leadsd to more sales.

AND, in some cases, you get valuable market research from these interactions.

Here’s a fun one The Cupcake Collection posted ahead of the 2024 Super Bowl:

The Cupcake Collection got a lot of responses regarding favorite flavors and likely scored a bunch of sales from people who needed some Super Bowl party snacks.

4. Seasonal and thematic content

Seasonal, thematic, and holiday types of posts never fail to garner attention and get sales.

For instance, The Cupcake Collection highlighted their signature King Cake cupcakes for Mardi Gras. It’s got all the colors and even some beads:

To wrap it all up…

People can do the unthinkable when the chips are down.

Just look at Mignon’s story. Everything was against her, from the economy to her initial lack of baking skills to her refusal to use debt.

And now, with two thriving locations beloved by their communities, she never has to worry about money again.

If Mignon can do it, we’re confident you can make it happen, too…

And we’re here to help.

One lucky winner of Upflip’s Podcast Contest gains FREE lifetime access to our new membership launching in April.

That includes access to online courses covering everything from starting a vending business to mastering Google ads and a community where you can ask business experts your questions.

Winner’s announced March 18 - enter ASAP for your chance to win!

Woah, check these out…

🍰 Another bakery business interview — the owner bought it instead of starting it, but there are plenty of good lessons here…

🍳 Got some skills in the kitchen? Check out our 24 food business ideas

🎙️ Don’t miss our latest podcast episode for more business inspiration and ideas…

🏆 And make sure you sign up for our contest — one lucky winner gets FREE lifetime access to our brand-new membership website launching in April!

What did you think of this week’s newsletter? Hit reply to let us know!

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