Create a letterbox small business on a shoestring budget

Vegans everywhere are indebted to Katie Cross, as her bakery business focuses on delivering delicious vegan goodies.

After losing 90% of her customers overnight, Katie didn’t let this deter her.

Instead, with nothing but a shoestring budget, she thought of a way to adapt her passions into a small business that would overcome the barriers of lockdown.

With a passion for food and a background in wholesale, Katie tells all about how she changed her business module and the new elements that came with this, which she had to learn along the way.

Have a cup of tea and a biscuit ready, because this episode is going to make you hungry!

Using your passions to build a small business

Friendly feedback—the perfect way to find your niche

Adapt your business to save it from crumbling

Relocation: City prices in the countryside

Finding your dream unit isn’t always a piece of cake

How much do I need to fork out? Here’s a bite-sized breakdown

Food for thought: Innovation is crucial

When it comes to packaging, learn from the experts

Missing mail: There’s always room for human error

What to consider when calculating your margins

Finding time outside your business can be a challenge

Mental health: Remembering it’s not really ‘Cake or Death’

I like money but I don’t understand it—an accountant is a must

Learn from past mistakes to overcome the Christmas madness

Pivoting your business post-lockdown—is this something to consider?

Leftovers anyone? How to limit your food waste and where it goes

Using your passions to build a small business

Bex Burn-Callander:

Ooh, you are in for a treat today.

I’m joined by Katie Cross, the founder of vegan brownie business Cake or Death. She’s going to tell us how she lost 90% of her business overnight and came back fighting. She’s also going to talk about the realities of running a company selling freshly made bakes.

This is Sound Advice: get year one in business right, the startup podcast brought to you by Sage. I’m your host, Bex Burn-Callander, and apologies if my voice lacks oomph, I have Covid and I’m recording this from isolation in my plague pit.

But enough about me. Let’s meet Katie.

Hi, Katie, thank you so much for joining me on the show today. How are you?

Katie Cross:

I’m very well. Hello. Thanks very much for having me.

Bex Burn-Callander:

Tell me everything about Cake or Death. Why are vegan brownies your passion?

Katie Cross:

Why are vegan brownies my passion? That’s quite a long story.

I think I really felt at the beginning of setting up the business that there just wasn’t enough really great quality vegan treats on the market and throughout the course of the first year of my business I developed a really amazing vegan brownie recipe, and it was really the product that people were very, very excited about.

So that’s kind of where we are now, what we’ve really moved forward with, almost a single product company actually at the moment, despite being called Cake or Death, we should probably be called Brownies or Death.

Bex Burn-Callander:

But are you a professional chef or was this something that you came up with sort of on your kitchen table through iterations?

How did you uncover the ultimate vegan brownie recipe?

Katie Cross:

Yeah, I’m not, I’m absolutely not a professional chef. I am a great lover of food and cooking and I wanted to open a food business for some time. I baked a lot with family when I was a kid.

I think it all kind of stemmed from my attempt to get on the Great British Bake Off at the end of 2017, which sadly I didn’t end up getting on the programme.

Although I did get quite far through the selection process, like far enough to think that I might get on the programme, so that’s really disappointing.

But after that, I just thought, “Right, I really want to sort of set up my own business,” and food was the obvious thing and I guess I started off making vegan cake.

We made a huge kind of variety of things, but I remember it was one cafe that I went to see, and they said, “If you could get me a vegan brownie that was actually tasty and didn’t look like dry cake, then you would do very well.”

So I just went home, and I think that very afternoon, I just got tray after tray of brownie in the oven and started feeding them to my husband until we were happy.

And honestly, since that day the recipe had hasn’t changed a single jot, even having now employed professional pastry chefs to make the brownies.

Obviously, I’ve got a bigger team now, and the recipe is still exactly the same as that day that I first developed it.

Bex Burn-Callander:

Can you tell us your secret or is that closely guarded in a safe somewhere?

Katie Cross:

Yeah, unsurprisingly, I cannot.

I think there’s five people that know the recipe now, and they’re all under pain of death.

In fact, even my husband, who co-owns the business, doesn’t actually know the recipe, not that he would be able to make it if he did.

Yeah, so it’s a secret. I might release it one day, just before I die. I am willing to say that it involves a lot of melted chocolate.

Bex Burn-Callander:

OK.

Katie Cross:

And I think that’s really the key to it. I think when you get a kind of dry, cakey brownie, whether it’s vegan or not, and you sort of think, “Hmm, it’s not that great,” it’s just because it’s straight cocoa powder and not…

Bex Burn-Callander:

Not unctuous, delicious, drippy chocolate, ooh.

Katie Cross:

Exactly.

Friendly feedback—the perfect way to find your niche

Bex Burn-Callander:

I wish I was eating them now while talking to you.

But I love your approach, that you wanted to do something foody, so you actually went and asked a cafe what they’d like.

That is so different to many people’s approach which is, “I’m going to make this thing and then I’m going to sell it.”

You just spotted a gap in the market.

Katie Cross:

So what happened was, I was doing Veganuary and, as I’m sure you’re aware, Veganuary is a huge thing now, where every January people decide to eat vegan food for a month.

So I was doing that, and I did a vegan afternoon tea because at the time I was just messing around with events.

I was still working my job but desperate to really be baking. I did a vegan afternoon tea and just taught myself to make vegan cake and the overwhelming feedback from that was, “Wow. You know that you’ve done really well here, I wouldn’t have known it was vegan.”

And somebody at that event, a woman called Moko Sellars, said to me, “You should make your business vegan,” because everyone knew I was about to start a business, she said, “because it’s the future.” And I just thought, “She’s absolutely right.”

I started off as a wholesale business, so I just went around cafes and said, “If you were going to buy from me, what would you buy?”

And they said, “Well, if you could make a range of vegan cake which was really, really delicious we’d buy it and sell it to everybody, and we might not even say it was all vegan.”

Because obviously some people don’t think that it’s going to be nice, maybe less so now. But back when I started, we just kind of learned, and I just think with every business you go through several iterations before you really hit on the thing that works.

So we began as a wholesale business supplying cafes.

We went and did market stalls in London, standing in the cold and not selling anything or selling far too much. Then we just started our letterbox business and the pandemic hit and the rest is history there.

Adapt your business to save it from crumbling

Bex Burn-Callander:

Well, yeah, because your business has gone through two major kinds of cataclysmic changes. One was the move from London to Exeter and the other was a complete change of model.

So do you want to tell me first about the losing most of your business overnight and what on earth you did?

Did you tear out your hair? Were there some sleepless nights or did you immediately know, “I’m going to do this other thing”?

Katie Cross:

No, I just thought I was going to lose the business, to be honest, because, as I say, we were a wholesale business, and we supplied cafes and restaurants across London.

And that business was growing, and I was sort of feeling pretty positive about it.

Then of course, as we all know, when Boris [Johnson] came on TV and said, “Right, everyone’s got to stay at home,” and even before that, because it was really in the offing wasn’t it, all of these restaurants and cafes started closing.

I think within a week to 10 days, 90% of my customers just straight cancelled their order, so I just lost all of the income and I closed the bakery.

To be honest, the baker that I had at the time, he got Covid and so of course we closed because we needed to self-isolate and there was no testing or anything then.

We didn’t know what to do, so I closed the bakery down and I just sat at home, and I thought, “Well, that’s been a fun 14 months so probably that’s it then, isn’t it?”

However, over the course of that time at home, that enforced isolation, I had thought about sending brownies through the post and there were a few companies doing it.

Unbelievably there are, goodness knows, hundreds now but there were only a handful back then and I had been dabbling in it.

I’d been sending them to friends. I was packing them, I had a pile of boxes, like a hundred or something, so I thought, “Well, that’s the only thing I could do.”

So I just went on Instagram and Facebook and just said, “Listen, you know, either I pack up my bags here or you start ordering brownies and, giving you’re all stuck in your houses, maybe you should do that.”

Bex Burn-Callander:

And need a treat.

Katie Cross:

Yeah, exactly, and that’s exactly what happened.

So it started off with friends and family going, “Oh, probably buy them as a sympathy purchase,” but then sending them to people as a way of connecting with family and friends that they couldn’t see.

Then as soon as those people got them, they were like, “Well actually these were really nice. I’m going to send them to someone else,” or “I’m going to buy some more for myself.”

So, it just snowballed and snowballed and realised by April, when everyone was recovered from Covid and getting back, we thought, “Well actually we’ve actually got a lot of orders here.”

Then we were head first into a world that we had no idea how to behave in.

It’s very different going from having 20 wholesale customers every week, to hundreds of individual customers, all going to different addresses, all of whom have wanted to send you an email because they need to change something, or they need to add a message.

I mean, the workload was insane and then added to all the other difficulties of sourcing ingredients and organising the delivery, that was a fun introduction to e-commerce.

Relocation: City prices in the countryside

Bex Burn-Callander:

Well, I definitely want to come back to how you created this letterbox business because I have lots of questions about that but first I wanted to talk about the move.

So presumably, it’s a lot more expensive to run a bakery in London compared to Exeter. Was that the sort of main reason behind the decision to move?

Did you really want to get out of London anyway? Why go through all the pain of moving your entire business?

Katie Cross:

Yes, why, why indeed?

I suppose initially we thought, “Oh yeah, why would you have a business in London when suddenly we’re a footloose business, we can be anywhere?”

So then really it was a personal decision.

My husband and I had wanted to move to Devon for years. It had always been impossible because his job was very much London-based and my business was in London supplying London customers.

He started working from home, which was unprecedented in his industry, he’s in the film industry and that was never an option, but it very much is now.

That really made us think, “Oh wow, well we could, probably.”

Then my baker who, you know, I loved dear Keith, he’s not dead, he’s still alive. But he decided to move back to Australia, I think because they were closing the gates on that one, weren’t they?

I think with those two things combined, I thought, “Well, if Keith’s going, and we can…” So we decided to move to Exeter as a family and I thought, “The bonus will be that running the business from Exeter will be cheaper.”

Now, in actual fact that’s not the case at all, but it is what you might assume, because in fact rents in Exeter are relatively high.

I mean, it’s a little less but not very much. It’s a vibrant kind of affluent city, it’s at the end of the M5, a lot of small businesses want to be based here.

So it was actually incredibly difficult to find a commercial unit when I arrived, which was a horrible surprise, and I wasted absolutely loads of money on legal fees chasing after really bad idea of units.

Then the other thing is I pay my staff the same as I did in London.

I just think it’s hard to attract staff at the moment across hospitality and the first thing you want to do is pay people properly. So I just kept my London wage down in Devon and that has enabled me to attract really good staff.

So, in fact, weirdly, it hasn’t saved money and it has been a massive, massive hassle.

But, having said that, as a family, we’re flourishing and love living down here.

I think that’s got to be the upside, surely of running your own business, is you get to call shots like that and be like, “Let’s move to Devon,” because you’d never be able to do that normally.

Finding your dream unit isn’t always a piece of cake

Bex Burn-Callander:

Absolutely, but tell me about the nightmare finding units. That sounds like a podcast all in itself.

How many units did you go after? What was wrong with them? Why did it end up bleeding you dry?

Katie Cross:

The first mistake I made was to hand in the notice on the London bakery before I’d found a replacement in Exeter.

I naively thought that they would be calling me up to offer me a workspace in Exeter, but when I arrived all of the estate agents I spoke to said, “What? You want a 200 square metre bakery? That’s never going to happen, everyone wants that.”

So, we looked at a warehouse and the lease was just ridiculous. It had an asbestos roof that needed replacing.

It was one of those insuring and repairing leases, where you’re responsible for the whole building without actually having the benefit of owning it.

You realise, as a commercial tenant, that generally, commercial leases are massively stacked against you, and I was completely naive. I didn’t have a lease like that in London.

My arrangement in London was very relaxed, like, “Lovely, set up a bakery and pay us rent every month, and we won’t bother you.” It was literally one A4 side.

I was in this situation of needing a solicitor and spending thousands on legal fees. Then because I pulled out at a late stage, because I just got scared about this warehouse, I had to pay the landlord’s legal fees as well.

So I wasted, I think, £7,000 and came away with absolutely nothing.

And then I was just walking along the road one day and saw this little shop unit in quite an ‘out-of-the-way’ location, but it was empty.

So, I phoned the landlord, and he was sort of relaxed, like, “Yeah, sure, put a bakery in it. Sounds great.”

How much do I need to fork out? Here’s a bite-sized breakdown

Bex Burn-Callander:

But presumably when you first started you didn’t have a huge budget.

Can you share with me how much it took initially just to get Cake or Death off the ground?

Katie Cross:

Just nothing at all really. We did it on a shoestring.

I left my job and I literally had £2,000 in my bank account. It is worth saying that my husband, since I started the business, has paid our mortgage and our living costs out of his salary.

I know that’s not something that most new businesses have the luxury of, so I would’ve had to have taken some kind of loan finance or investment to start the business if that hadn’t been the case.

But because it was the case, I started the business on a shoestring.

Because I couldn’t bake from home due to a boring technicality with our house, I started baking from a community kitchen that had a pretty nicely set up professional kitchen and paid them, I think, £300 a month rent or something.

So really, really doable.

Then it was just a question of making sales, getting a bit of profit in, and then reinvesting it in the business.

I think I moved into two more shared kitchens after that, just basically camping in people’s kitchens who had nice ovens and operating from there.

Then it was only nine months after I started the business, that I had enough to go and set up the bakery in Dalston, and I had a little bit of profit to invest. I think I put about £5,000 on a credit card as well.

I set that initial bakery up for probably about £7,500, I would say, really not much.

As my old baker, Keith, said, “This isn’t a kitchen, this is a room with an oven in it.”

It was extremely basic, and I sort of now look back and think, “How did we actually operate in that?”

Since then, we’ve reinvested profits into the business, so then we set up the new bakery and the new bakery in Exeter is all-singing, all-dancing.

It was like an old, weird shop with smelly carpet, so we’ve had to do the electrics, the plumbing, the flooring, decoration, everything.

As well as put all the equipment in, and I think that cost about £40,000.

So that’s been a major expense for us, but we did that still on a shoestring. I still did it project managing myself, not employing a kitchen designer to go in and just sort it all for me because that would’ve been probably twice the price.

I think a rule of thumb for me with expenditure is, I try to do as much as I can myself. But I now try not to buy cheap equipment, because it just ends in tears, basically, it ends in replacement.

Bex Burn-Callander:

That’s really useful. That’s an amazing breakdown of cost because I think that gives people a real overview of what goes in at different stages as well.

How you have to constantly reinvest because you can bootstrap, you can put a little bit in, but then you have to always be conscious that you’ve got cash in the business to fund the next bigger order of ingredients, or the better mixer or whatever.

Food for thought: Innovation is crucial

Bex Burn-Callander:

So how have you managed to wow people, keep customers coming back, giving them something new?

Tell us about what’s really worked in terms of innovation.

Katie Cross:

In terms of innovation, you’re absolutely right. The brownie recipe hasn’t changed. I think its presentation has changed somewhat.

Bringing professional pastry chefs on board has really helped. I mean, you look at the early brownies that I was making, you’re like, “OK, yeah, they look messy,” whereas they look super, super neat now, which is really nice.

I think a major thing that was a turning point for the business was moving to our leopard print box, which happened early mid last year.

First, we were sending out in just plain white boxes, that didn’t go through the letter box.

Then I thought, “I think this needs to go through the letterbox,” but I came up with a very classy, coral pink design that was plain. I did show people the leopard print version and a lot of people, well, people as in friends, said, “Oh no, I don’t think so.”

Then I thought about it again and I thought, “You know what? I just want something that’s really loud and really out there,” and I love a pink leopard print, it makes me feel happy to look at it.

And as soon as we brought out those boxes people just went absolutely crazy!

I think people buy them for the packaging as much as they do the brownies.

Because you know it’s going to arrive at someone’s house and, typically, 80% of our brownies are sent as gifts, you want it to arrive and people to be like, “Oh wow, what’s this?” and then wonder why on earth the box has got Cake or Death written on it, which is just completely weird but anyway.

So I think that getting that box right, and I still, thank goodness, and I’ll be very angry when this does happen, but I still haven’t come across another letterbox brownie company that’s doing better packaging than us.

And I don’t think there’s anyone that’s doing better brownies than us either and I’ve tried quite a few, but then I am pretty much biased on that side of things.

Other than that, there’s been things like shifting our website from Squarespace to Shopify, which was a major turning point.

Shopify, if you are serious about having an e-commerce business, is really the only place you should be, and they’re not paying me, sadly, to say that but that is where everyone is.

It just integrates better with everything. If you need apps, then you can add them in and it’s all very easy.

I think another thing is that we set up a subscription service, which is where people can order brownies every month. Even though that’s still a small part of the business, really only about 10%, it’s really brilliant to have that guaranteed income come in, and you know that those customers are going to buy those brownies every single month.

It’s something I really want to expand on next year and I’ve got tons of really exciting ideas about creating a proper brownie club.

Something that is a bit more exciting to be part of, where you can select the flavours that you put in your box because at the moment, that’s not possible and no one offers that, so that’ll be really exciting.

We’re launching that in about a month.

Other than that, it’s really been getting a team in place and properly training them, so that other people are able to do the job that I was doing.

I think that this is a major lesson when you are in the first few years of a business, is to properly systematise what you do.

Whether you are creating a training scheme or a handbook, or just a list of instructions, is ensuring that at a basic level, someone could step in and do it, because that just allows you to expand.

You know, a lot of small business owners just hold on to what they’re doing, they don’t want to share it or haven’t got time to explain to somebody else, but you really need to do that.

When it comes to packaging, learn from the experts

Bex Burn-Callander:

I want to come back to the packaging, just briefly, because it struck me when I saw that you were sending brownies through the letterbox, that there must be so much that can go wrong because you want them to arrive looking beautiful.

They can so easily be shaken or broken.

So can you tell me anything about how you designed the packaging, to make sure that how the brownies go in are exactly how they look when they come out when they’re received?

Katie Cross:

So I think, first of all, it’s a really robust product.

The brownies we make are incredibly fudgy, and so they don’t fall apart or flake. You can kick them downstairs, and they’ll still be OK.

They’re also really tightly packed, so while it’s quite a soft product, certainly at room temperature it’s pretty soft, they’re just all bunched in together, and so they’re not really moving.

The box is designed to fit them exactly, so they’re super, super snug in their packaging.

And then I thought, “How do I protect the box on the outside?”

In the beginning I was just sending the box out in a plastic bag, which obviously is not good because it’s a plastic bag and that plastic bag only gives rain protection.

And then they’re mostly going to be sat in a postal warehouse or whatever, so it doesn’t really help you that much. So then, I just went to our friends at Amazon and thought, “What do they do with their products?”

Because, for example, books actually can be easily scuffed and of course when you order a book from Amazon, it comes in a wrap and the wrap overhangs on the corners and that means if you get a scuff on the corner, it just hurts the box, it doesn’t hurt the product inside.

So I worked with my packaging supplier to design a bespoke wrap that exactly fitted our boxes.

They came up with this ingenious design that kind of has a cut in it, and it needs to be folded as you wrap the product.

It is so ingenious that the first time they sent it to me, I had to call them and say, “Right, I need you to explain how I put this around the box, like as if you’re talking to a Labrador, because I have absolutely no idea how this works.”

It’s just such a clever design and it all comes flat packed, and then we just tape it up with paper tape, so I rarely have a problem with spoiled goods.

You do have to be careful what toppings you put on the brownies.

I think the salted caramel we realised was coming off on the greaseproof paper, so we have to put a little bit of cardboard in between the brownies, just to hold the paper off like a tent.

There’ll be a few products where that will happen and then, unfortunately, about once a year, a dog eats the brownies and has a very expensive trip to the vet, which is always a little bit of a shame.

Haven’t lost a dog yet though but, yeah, you have to be mindful…

Bex Burn-Callander:

… that they’re all still barking.

Katie Cross:

They are…

Bex Burn-Callander:

Once a year though, that’s manageable.

Katie Cross:

Yeah, so it hasn’t been too challenging. I think the main challenging thing about delivery is do they arrive in the first place?

I don’t know what Royal Mail does with the brownies, but we do lose brownies.

Missing mail: There’s always room for human error

Bex Burn-Callander:

That’s crazy. Do you not have any recourse if they go missing?

I suppose, can you complain?

Katie Cross:

You can, but there’s lots of rules around how long you’d have to wait and prove that they definitely weren’t delivered, because obviously if a customer contacts me and says, “I didn’t get my brownies,” I just take that at face value.

I don’t feel like my customers are lying and thinking, “We’ll get a second box, we’ll tell her they didn’t arrive.”

No one’s doing that. I just don’t think they are.

Bex Burn-Callander:

But what about looking at a different delivery service as well, because you watch TV and there’s about four providers desperately vying for the small business logistical chain at the moment.

Would you consider swapping?

Katie Cross:

So we did swap. I won’t mention who because it was an absolute disaster. I lost 5% of my parcels with them, despite it being on a track service. I think I lost about five parcels bit, just straight eaten by rats, in their warehouse.

So we only worked with them for two months and the number of complaints I got, it was just like, “This is like business ending stuff,” to be honest.

What to consider when calculating your margins

Bex Burn-Callander:

Do you factor that in, then, when you are looking at margin because presumably when you’re thinking about price point and everything, this all plays into it because you’re going to have to replace 1% of boxes every year.

Katie Cross:

It does and indeed it should.

But I think when I calculated my margins, I didn’t account for losses, and losses have become much higher than they ever were because of the explosion in online shopping, and the lack of delivery drivers and just the pressure.

I mean, you know, obviously, if anyone from Royal Mail is listening to this they’ll probably hate me now.

Obviously they do a very hard job, and they deliver millions and millions of parcels every day and of course they’re going to lose some.

Bex Burn-Callander:

And you said you don’t really factor that in.

Katie Cross:

I didn’t factor it in when I first calculated margins because I didn’t realise what the losses would be and, to be honest, I’m in a bit of a quandary about this at the moment, about what to do about prices.

I haven’t changed my prices for two years actually and my costs have gone up enormously in terms of ingredients costs.

The cost of cardboard has gone up, I think 40% my box price has gone up by, and I still pay a public price for Royal Mail deliveries because I don’t have a business account.

I’m pretty sure that’s because I have still got to submit my first-year accounts. So it’s quite hard to get the kind of credit, to pass a credit check that Royal Mail requires, for you to have a business account with them.

So I’m sort of in a situation where I know my costs have gone up considerably, but I haven’t changed my prices.

Do I raise prices because I need to, I’m making less money now, or will it impact sales? I don’t know.

Bex Burn-Callander:

The eternal quandary.

Do I raise my prices? Will people pay more?

Katie Cross:

Probably.

Bex Burn-Callander:

Oh yeah, two years is a long time. And with those kind of cost pressures, I think customers would probably understand, but I understand there is just a kind of visceral feeling like, “Oh, I don’t want to do this thing.”

Finding time outside your business can be a challenge

Bex Burn-Callander:

How has running a fast-growing business affected the relationships around you?

Katie Cross:

It’s funny, you said earlier, “Oh, it’s interesting listening to you talk about the business, it’s like you are in love or something.”

And I really feel like my husband felt like I wasn’t really that interested in him anymore, and all that I really care about is the business.

Bex Burn-Callander:

I was going to say, how do you battle that? Like, do you have to just make a special effort not to talk about the business?

Katie Cross:

I just try and hide it.

Bex Burn-Callander:

Hide it, hide it.

Katie Cross:

No, really, all I want to do is like, “Do you think I should do this? Do you think I should do that? I was just wondering about this new product,” or “I was wondering how to answer this customer enquiry, it’s a bit of a gnarly one.” 90% of the time, because he also co-owns the business, but he’s a silent partner. So he’ll be like, “Yeah, cool. Let’s talk about it.”

Then the other 10% he sort of thinks, “Do you know what? It doesn’t have to be 100% of your life anymore.” Like, “You don’t read books anymore.”

I think it’s really difficult not to get subsumed into this vortex of it being the only thing you care about. I’ll occasionally look up to speak to my eight-year-old child but, other than that, it’s just like it’s what I live and breathe.

I think it’s something I’m trying to drag myself out of because it’s just not very well-rounded, isn’t it?

I don’t think it’s very good for your mental health, but no one tells you. It’s like if you have a baby, no one tells you what it’s like afterwards.

Bex Burn-Callander:

Because if they did, then you wouldn’t believe them. You’d be like everyone just thinks, “It’ll be different for me, I’ll have more control. I’ll be able to have more balance. It won’t change me.”

That’s what everyone thinks about starting a business and having a baby.

Katie Cross:

Yeah, but it just does every time and if you care enough about it, if you’re just messing around and doing it as a hobby, then fine, I’m sure you can achieve that balance.

But if you actually have a sense that you need to get some money out of this, and it’s got to work then, it can be scary.

Mental health: Remembering it’s not really ‘Cake or Death’

Bex Burn-Callander:

You mentioned in your point about your relationship, how starting growing a business takes a toll on your mental health.

So I want to know how you’ve tackled that, and if you have any coping mechanisms that you can share with our listeners.

Katie Cross:

I haven’t really tackled it.

Bex Burn-Callander:

Wine, wine, wine on an Italian veranda.

Katie Cross:

I think I’m getting it better at dealing with it.

It is always, for sure, to talk to my husband about it. He is generally incredibly understanding and a really good ear and is my best friend anyway.

He is the person who I would talk to things like that about, but without being sort of flippant about it, the everyday pressure is always there.

I just need to always try and take a breath.

Every single week I’ll have one day where I’m like, “Oh, I’ve got to take a big deep breath here and just remember, it’s only cake, nobody died, yet, and it doesn’t actually matter that much.”

Please remember to enjoy your life and enjoy living your life, rather than just think, “I’ll just crawl, crawl to retirement, then this’ll be over.”

Bex Burn-Callander:

It’s not really cake or death, Katie, it’s not really death. That’s not the actual other option.

Katie Cross:

No, exactly.

I like money but I don’t understand it—an accountant is a must

Bex Burn-Callander:

We are recording this towards the end of the year, Self Assessment deadlines are coming up, are you prepared?

Are you still doing everything? Are you doing your accounts? You’re shaking your head vigorously.

Katie Cross:

No, me and money don’t get on very well, sadly. I like money but I don’t understand it, so I have an accountant and have had for some time.

I got an accountant right in the middle of my first year, in fact, gosh, even before that, and I would say that that is an absolute must, to sort these things out.

Then they got me on to an online accounting system, and all the receipts that flow automatically into there and reconciliation’s pretty easy to do.

So, no, I mean, luckily end of year does not hold fear for me because I know that it’s in hand. You don’t need that on your plate, you’ve got enough to deal with.

Make sure someone’s doing your money for you. That is your first, that’s the first bill, is get an accountant.

Bex Burn-Callander:

Good advice and it’s exactly what I did, so I’m on board.

Learn from past mistakes to overcome the Christmas madness

Bex Burn-Callander:

The other question is, I read online that basically Christmas 2020 was bananas for you, and you had to shut down the business for a bit because you were overwhelmed with orders.

Can you tell me a bit about that and also tell me what you’ve done this year to make sure that doesn’t happen?

Katie Cross:

So yes, it completely took us by surprise because obviously we’d never done a Christmas with letterbox brownies.

So we didn’t know what it was and then most of the country got locked down to a greater, or lesser extent, in a tier three or four, whatever system they had at that point.

We had one baker, we had one oven, we just didn’t have enough equipment or staff. So I had to close for new orders, I think on the 12th of December, so I lost 10 days of trading, which was annoying, but we had far too much to do.

This year we’re in a different situation.

We’ve got two ovens and two bakers and two mixers, which you wouldn’t believe how much brownie they can turn out.

If anything, our slight limitation is packing space, but you can make anything work. We’ve got lots of good systems in the bakery, that me and Rhi sort of use space efficiently, and we’ve got a really, really quick team, so we won’t be closing early this Christmas.

This Christmas is a really different kettle of fish.

People are not locked in their houses anymore. The shops are far, far busier and orders are lower than they were last Christmas. I think that’s got to be expected because we aren’t in lockdown.

They’re still above anywhere in my wildest dreams, to be honest, that I could have hoped for in the past.

But it’s just a constantly changing picture, where you are sort of wondering what is the new normal now?

Is it actually that people are going into shops?

Our bakery indeed is getting busier and busier, where people are actually coming in, in Exeter, so it’s kind of a hard thing to predict.

We also have a system where people pre-book their orders so that’s a really nice thing, you know that you are going to have a certain number to do in those very, very busy weeks just before Christmas.

But I don’t think we’ll be closing this year because something very bad will have to happen, or very good, for us to close early this year.

Pivoting your business post-lockdown—is this something to consider?

Bex Burn-Callander:

But the end of the lockdown effect, can you see yourself pivoting again towards maybe doing more wholesale again?

Or do you feel like that’s just a dead alley?

Katie Cross:

No, I wouldn’t do wholesale again.

The profit margin on wholesale’s very low, because obviously those businesses are hoping to sell your cake on themselves, so you can typically only charge about 50% of what they’re going to charge for it.

You need to be doing wholesale in enormous volumes to make any money from it, and I really mean like then you need to be setting up a brownie factory and that’s not what I want to do.

I do think there might be interesting pivots next year.

We’ve really loved doing the Exeter Cathedral Christmas market, and I think that there might be interesting opportunities for us at markets and events next year.

It tends to be that if we put a stall full of brownies out and there is footfall, we sell a lot because people love brownies, and so they tend to work quite well for us.

And I’ve got other ideas. I have got some interesting third-party partnerships in the offing, and we’ll see what they do.

I think that could be an interesting route to look at, what other companies could be selling brownies for us on our behalf, or in partnership with us and looking at that. So I think that’s probably the route I’m going to go down next year.

There is the option of opening another bakery somewhere else. That’s something we’ll always consider, but, yeah, we haven’t made a decision on it yet.

Leftovers anyone? How to limit your food waste and where it goes

Bex Burn-Callander:

Ooh, exciting. Brand partnerships. I’m going to be watching your Instagram like a hawk.

And, just finally, I know that most of your brownie orders, I think, are made to order, but do you ever come out of a market stall or whatever and have loads of leftover brownie?

What do you do with unsold stock?

Katie Cross:

We don’t do that many markets. We take from the bakery what we need because we’re really close by, so we don’t need to take up loads really extra.

I think we are really lucky in that our product keeps incredibly well, and it also freezes.

So we have very little wastage.

The only wastage we do have is a bit of broken brownie, which, as you’re packing, one will fall off the side and just break in half or something like that, so that’s the only wastage we do have, but that only really amounts to a couple of tubs a week.

And it tends we’ll either give it to a customer that we particularly like, like over the counter if someone’s friendly they might get a bit of broken brownie as well, or staff will take it home.

I think I do need to look next year at going on something like Too Good To Go or seeing whether there’s a local shelter or something that would want them.

The only problem is that you’ve got all your allergens mixed up and stuff, so you need to be sure that people eating it don’t have any allergies.

But we’re really lucky that we have very, very little food waste, because we’ve got a really good idea of how much we need to bake on a daily basis.

Then if anything is left over, it’s happy in the fridge for a couple of days, no problem.

Bex Burn-Callander:

That’s really good to know. Thank you. You are so honest and just upfront about everything. I just feel like it’s just like doing an MBA in the letter box brownies talking to you.

Ah, you’ve been a phenomenal guest.

Katie Cross:

Oh, it’s been really lovely to talk to you. Thank you for inviting me.

Bex Burn-Callander:

I’m hungry. Are you hungry?

Thanks so much to Katie for her brilliant advice, wisdom, start-up insights. She’s on Instagram @cakeordeathldn so go check out her bakes and order a box or two. See you in two weeks for more Sound Advice.

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