An online campaign kept a St. Paul cookie company from crumbling.
Soaring commodity prices and mounting bills were a recipe for financial disaster for Katherine Novotny, owner of St. Paul Classic Cookie Co.
She wrote a blog entry about her woes one night in early March, saying her small downtown bakery needed some extra cash -- quick -- to stay open.
"I'm like, OK, this is a last-ditch effort," said Novotny, whose shop is in the food court on the skyway level of the Alliance Bank Center building on E. 6th Street. "I'm not going to go out and end up closing and not have tried everything. So I put it on my blog that we sort of had this emergency situation."
She posted the blog item and e-mailed it to some friends.
From there, forwarded countless times, it took on a life of its own. By the next morning, in one instance, more than 3,400 subscribers to a weekly downtown electronic newsletter had the news of her plight in their in-boxes.
Novotny, unaware of the buzz that her blog had touched off, only knew she could barely keep up with orders that day and for the rest of the week.
"We love what we do and we love our customers," Novotny said. "It was this really scary situation where we might not be doing this anymore. To have that kind of support come out when we just needed it the most, it was phenomenal."
It's the kind of boost most retailers could use in what often is seen as a slumbering downtown business district.
That's something that Michael Belaen, a loyal customer of Novotny's and manager of economic development for the St. Paul Area Chamber of Commerce, has been working to address.
"I'm really happy for her, getting some people down there," said Belaen, a fan of Novotny's chocolate-smothered Rice Krispies bars. "There are 65,000 to 70,000 employees downtown, but there remains this lack of retail awareness, which could be contributing to the lack of retail itself."
The chamber, Belaen said, is planning a series of public meetings to discuss downtown retailing and what people like and dislike about it.
"We're going to see if we can create a unifying vision that all the organizations in downtown can be part of," he said. "We need to get everybody on the same page and working together."
Networking saves the day
Belaen got an e-mail about Novotny's cash crunch from Lisa Cotter Metwaly, owner of the Q Kindness Cafe, another downtown business. Linda LaBarre, a professional home organizer who had met Novotny through a networking group, took it upon herself to pass out fliers encouraging people to get a treat from St. Paul Classic Cookie.
"We wanted to buy cookies and do whatever we could," LaBarre said. "I was really happy that she found a way to keep the business going. It's tough times, you know?
"She's a great person and she has great cookies."
With her bills paid and commodity prices leveling off at least for now, Novotny feels confident that she will stay in business.
She hopes to see revenue, close to $125,000 last year, grow to $150,000 to $175,000 this year.
St. Paul Classic Cookie sells baked goods to a couple of coffee shops now. Within two or three years, Novotny hopes to open a wholesale bakery so she can increase that part of her business.
She is reluctant to seek financing to expand. "We're just trying to pay for things as we go," Novotny said. "It's frustrating in that it takes a little bit longer, but at the same time, I'm not owing anybody any money."
The extra attention her blog generated gave Novotny a chance to explain to customers why she was going to raise her prices.
While she had absorbed sharp increases in the prices of walnuts and other ingredients, she couldn't continue to do so once a 50-pound bag of flour, which cost $10 last summer, had risen to $30 in February.
"The other things, I was just personally taking the hit, trying to keep prices low, but when it's flour and it's like 90 percent of your mix, you're caught," Novotny said. "We had some other bills, we had deadlines and we couldn't pay them. It almost spun out of control so fast."
Novotny started her business in January 2006, putting in about $5,000 with her husband, Ebba Benti.
He opens the store and works the first part of the day while she takes care of their two young children. Then they switch, and he looks after the kids while she finishes the workday.
Novotny's brother, Darren, mixes up the batter for 17 kinds of cookies, 15 varieties of muffins, and other baked goods. She has introduced new items such as a jasmine tea cupcake, and the Ultimate, a cookie version of a seven-layer bar. She also added seasonal goods such as German Christmas stollen and Viking fruitcake.
Novotny's mother, Jill Wolfe, owned and operated a bakery in the same spot for 12 years until she had to stop because of health concerns, Novotny said.
"I didn't realize what an important tradition it was until I put the plea out," Novotny said. "And then all of a sudden people were coming and saying, 'I need to buy a dozen, you guys have to stay open. We'll do whatever we can to help you.' "
The expert says: Business consultant Sam Zordich said Novotny should consider a "pay-it-forward" campaign to reward "this great base of people who want to see her stay in business," and further build loyalty. One example might be to offer something free to a regular who brings in a new customer, said Zordich, CEO of Stongate Growth Strategies Ltd. in Golden Valley.
Building a cash reserve to pay for expansion into a wholesale bakery, Zordich said, might be the way forward for Novotny. She is reluctant to take on debt anyway, and investment capital may not be readily available for her kind of company, Zordich said.
With the additional business, Novotny might find herself in position to open a wholesale bakery within as little as a year, Zordich said.