You know you've got problems with your struggling young business when the best news you've heard in a while is that the Internal Revenue Service is about to audit you.

But that's what Andy MacPhail was facing in the spring of 2003, just one week after the concession trailer from which he dispensed mini-doughnuts at community events around the metro area was stolen.

Which was a drop in the deep-fat fryer alongside the unfortunate brainstorm he had in 2001 about how he was going to "cash in" with an appearance at the Sturgis, S.D., motorcycle rally. Convinced that the cash register would jingle merrily at such a popular venue, he hired seven people, promised them $750 each and rented a place in Sturgis to house them.

Alas, he miscalculated his clientele: "I was offering them mini-doughnuts," MacPhail lamented. "All they wanted was beer and brats." His total sales after a week of working in 100-degree temperatures: $500. His losses: about $15,000.

"It was a total disaster," said MacPhail, whose Minneapolis company, Drew's Concessions LLC, stayed in business thanks to "my best friends -- my parents and my credit cards."

But let's focus on the brighter side, starting with the IRS audit, which showed the feds actually owed MacPhail about $250. The news has been generally upbeat ever since.

The big reason: In 2007 MacPhail wangled a contract as a popcorn concessionaire at University of Minnesota sporting events, a move that hoisted his annual revenues from a previous peak of $38,000 in 2006 to $124,000 in 2009.

Not only did that allow him to begin reducing the mountain of debt he'd acquired over the years, but he was able to quit the part-time job he held until last year at a coffee shop in Richfield that provided health-care insurance for him and his wife, Lesley, an independent stylist at a St. Paul hair salon.

In short, it has been a long, slow, often painful climb for MacPhail, a college dropout who began his entrepreneurial career as a teenager, hauling bags of candy to school for resale "at a nice profit."

But the attraction to his current business started when he was 8 and helping to peddle popcorn, hot dogs and sodas at a concession stand his parents ran at an ice arena to raise money for kids' hockey programs.

So after being invited to leave one college at the end of an unspectacular first semester and deciding that "formal education was not for me" after a brief stint at another school, MacPhail was ready to go in 2000 when he heard about a Plymouth company that sold mobile mini-doughnut makers to independent vendors.

Well, "ready" might be an overstatement: "I screwed up a lot of doughnut batches at first," MacPhail said. "Heck, I even had trouble figuring out how to get the machine started." It took him four years to turn a profit and eight years to push his sales beyond $40,000.

The fact that he was a University of Minnesota hockey fan finally propelled the business. While attending a Gophers hockey game in 2006, he realized a mini-doughnut vendor he'd noticed before was gone. So he contacted U officials to offer his deep-frying talents, only to learn the doughnuts had been banished because of ventilation issues.

But would he be interested in a popcorn concession? MacPhail was asked.

"It meant more credit-card debt, a bank loan and learning a whole new business," he recalled. So, naturally, he jumped at the opportunity.

He started with one concession stand at Mariucci Arena for the 2007-08 hockey season, added locations at Williams Arena for men's and women's basketball in 2008 and now has two spots at TCF Bank Stadium for Gophers football.

As a result, sales are on track to top $130,000 this year, revenue growth that has been augmented by a popcorn product MacPhail actually knew something about.

"My grandfather used to make caramel corn for family events, and I liked it so much I asked him to show me how to make it," MacPhail said. Early in 2008 he began making caramel corn in the kettle he'd inherited when his granddad died.

The caramel corn, now made and packaged at a production plant MacPhail opened in south Minneapolis in 2008, accounts for 17 percent of sales, or about $17,000 in 2009. The mini-doughnuts, which he peddles during the summer, contributed more than $23,000 to last year's gross.

All of which raises the question: Given that taxpayers are unlikely to build any more sports venues in Gopherland in the near future, where will MacPhail find continuing growth?

One possibility under consideration is marketing his "Homemade Caramel Corn" to supermarkets and other food retailers hereabouts.

Of one thing he's certain, however: He has no plans to return to Sturgis anytime soon.

Dick Youngblood • 612-673-4439 •