The Real Source of Profit = Creativity

I generally think that's true in the most basic sense. Continuing on that same theme, and in the spirit of optimism we currently find ourselves in two days after electing a transformative figure to the American presidency….

“Creativity is intrinsically surprising and the source of all real profit and growth” says George Gilder of Forbes Magazine. This article on the Coming Creativity Boom spells out the new technologies and developments that will be changing the American economy after our current state of crisis fades:

1) “cloud computing”
2) graphics processing
3) nanotech engineering
4) energy-saving construction materials.

Gilder speaks from the perspective of a venture capitalist who sees how much these firms and hedge funds deal and manage in the field of creativity, entrepreneurship and innovation. One fact that was a “wow” to me: the venture capital industry generated 17.6% of the United States GDP in 2006.

The “Coming Creativity Boom” is a great read if you’re in the mood for some optimism after all of the economized gloom and doom on the cable news networks.

Future Financing Rules

In case you haven’t noticed, it’s not the grandest time to start a business. But because the Guy and I are always dreaming up new business plans, this article on venture capital caught my eye. Reading things like this makes me realize how long my to-do list is to even be able to articulate what a business plan would look like. The basics of the capital structure are crucial, I’m learning. A few guiding principles I took away:

1) Ensure that you maintain control from investors with a controlling stake.
2) Even Institutional investors may demand a different CEO, even without a majority stake – so be careful about terms.
3) Start-up capital is precious. Do not deplete working-capital reserves until the venture is kicking off positive cash-flow.

In essence, watch your (company’s) back and your bottom line! I guess I’ll just tuck this one away for now….

The Convention

So my current city is hosting the Republican National Convention this year and the money and people influx this summer will be pretty impressive. Minnesota Monthly magazine is predicting that there should be more protestors (50,000 estimated) than attendees (45,000). The Guy is planning to rent out his condo to make some money. A couple thousand for the week! Too bad I can’t do the same, since I already rent! Rah!

Update on the 'Sweet' Side Business

I wrote awhile ago about potentially milking some profit out of an after-work pursuit that I get a lot of pleasure out of: baking cupcakes. :o) I spend a ton of money on premium ingredients for cupcakes for my friends, and why not make a little cupcake catering business out of it? Very low budget, on the side kind of thing.

I also recently read an online article on whether or not your great idea could be a real business. According to Forbes, the three questions you have to answer in order to know:

--- Do you have a compelling value proposition?
In other words, will people pay for it? On a per unit basis, yes, I think so. Because these are small purchase items, and people find it easier to part with $2 than $20 regardless of what the price/value is. The real trick will be keeping total price low for a dozen, while still making a good enough margin.

--- Is there a viable market for your new product or service?
So, is there a large enough market for it, and is there room for growth? Not sure about this one frankly. There are a lot of good, reputable, convenient cupcake shops in our area. The benefits of this would be personalized designs and free customization at no extra costs.

--- How hard are you willing to work?
This one I’m not sure about either. The other question I’m unsure of – how much I want to invest to make this work. I don’t know how hard I’m willing to work, but I know I can work a bit harder than I have been. My new to-do list: Create a menu of flavors, names & descriptions, and then create a blogsite for cupcakes so I can refer to people.

How To Make A Million Before You Turn 20... or 30.

On the subject of business... this was an interesting article I ran across about tips from five young entrepreneurs who made quick fortunes on various businesses. Everything from greeting cards to internet ideas, British jams and social networking for high-schoolers. “Their common thread: preternatural business sense and demon drive to turn ideas into reality.” The variety of enterprises they (and many older business-men and women) have engaged prove it’s more that “demon drive” and the faith to believe in your own ideas.

Side Business?

Thought I'd start Monday off with a wacky idea. A friend of mine owns a custard shop with her husband. She grew up working the counter at the custard shop, and decided one day, when she was financially viable enough to get a loan, to buy the place. This has recently inspired me to daydream…. what if I had my own little side business? Because I am in no way ready to commit to a location yet (especially not my current one), this side business would need to be portable. And it would need to be something that afforded me with deep satisfaction, since I would have to spend so much extra time and energy to keep it going alongside my normal job (and writing aspirations).

What affords me great satisfaction is not custard, but cupcakes. I’m from the South originally, and while I never quite submitted to the mother/grandmother’s voice in the head telling me that my personal worth was tied to my execution of the perfect grits / biscuits/ red velvet cake, to me, baking is pure pleasure. The aromas, indulgent tastes, working with your hands to physically transform ingredients – it’s one of the most relaxing and rewarding activities. And the cupcake is the perfect representation of the nonessential, wonderfully playful treat.

So now my daydream revealed: I should start a cupcake catering business (that would of course eventually transform into a cutesy retail empire). Why cupcakes and why I think there is a demand for a cupcake catering business right now? Jamie Fahey of the newly-opened Atlanta Cupcake Factory was recently quoted in a cupcake-themed blog saying: “The world has become such a harsh place in so many ways and cupcakes bring comfort and a sense of well being to many people.”

I feel a little like a girl with a lemonade stand right now, but what the hell, I’ll try a little pricing exercise to see how much I’d have to sell my cupcakes for to make a profit. First the expenses, on the smallest scale: I figured around $100 for one-time start-up costs (business cards, portable storage, etc.) and then around $18 per dozen for ingredient/décor costs. This might be a little high for the flour, vanilla, etc., but I’d rather overestimate my costs than the opposite.
After doing some research, I find that cupcakes range anywhere from $2-$4, but I think $2.50 / cake sounds about right for me. If I gave a slight discount per dozen $28/dozen, I’d have to sell about 10 dozen to break even on the enterprise, and from there it’s all profit positive. Plus, I would have the pure pleasure of having someone else pay me for playing in the kitchen. Next steps, I think will be to create a portfolio and start capturing some of my past work. In order to do this I will have to overcome my strong dislike for taking pictures of food. Small price to pay!
More to come on whether this side business ever gets off the ground…