Smart Tips for Starting a Business from the Co-Founder of a Cupcake Empire
O's financial expert, Farnoosh Torabi, asks Baked by Melissa cofounder Melissa Ben-Ishay how she started her cupcake empire—and how you can cook up a business plan of your own.
Photo: Courtesy of Baked by Melissa
I've always been fascinated by tales of entrepreneurs who hit it big, and Melissa Ben-Ishay's story is a doozy. After losing her corporate job in the thick of the 2008 recession, she turned to what she knew best and loved most: cupcakes. In her spare time, Ben-Ishay had been busily baking for friends and family, she says, "for as long as I can remember." Within a week of cofounding her company, she had her first official order. Almost ten years later, her business, Baked by Melissa, is a beloved purveyor of bite-size cupcakes, with 13 retail outlets and approximately 30 million treats distributed in 2017 alone (and a recently released cookbook, Cakes by Melissa, to boot).
Whether or not you're handy with a whisk, Ben-Ishay's journey is an inspiring peek into what it takes to build a thriving business. I asked the cupcake queen to share her triumphs and stumbles, plus the revelations that propelled her to sweet success.
Take us back to the day you lost your job.
It was the worst. I remember being called to HR on a Wednesday at 11 a.m., thinking I was getting a promotion. Afterward I called my brother—now my business partner—in tears. He said, "Don't worry. This is the best thing that ever could have happened. Now go home and bake your cupcakes." I made 250 that night and gave some to my friend's little sister, who had an internship at a big PR firm. Her boss ended up loving them and put me in touch with her caterer, who invited me to his house for a tasting; eventually, he ordered hundreds.
Why such tiny cupcakes?
We knew we needed to be different, and we wanted to give everyone a chance to try every flavor without the postdessert guilt trip—all our cupcakes have fewer than 50 calories apiece. Plus, when I started the company at the end of the recession, people weren't spending a lot, and ours cost just $1 each.
Photo: Baked by Melissa
What money memories do you have from growing up?
My parents tried to instill financial responsibility in me at an early age: I babysat, worked at birthday parties, and always saved. I had friends who had more than I did, and it was natural to compare myself to them and be jealous. But my mom always said, "You're beautiful. You don't need those extra things." And somehow I believed her.
So you can start a business without a ton of money?
Sure, but don't quit your day job right away. Do it on the side first. That's how our product was developed; before I got laid off, I was making cupcakes at home for fun. Every day, do one small thing to keep moving the idea forward. And along the way, get rid of any debt, so it'll be easier to get loans.
What are the financial lessons you learned from starting a business?
You never know when something will go wrong. Case in point: We opened a dedicated gluten-free location, and after almost a year, the sales wouldn't support the rent. We had to act quickly. So we closed the shop and instead offered gluten-free options in our other stores. If you can't recognize when you've made a mistake and learn from it speedily, it can be detrimental—especially if it's costing money.
Are you a saver or a spender?
I'm a liver! I'd rather experience things than buy them. I pretty much wear one of three hooded sweatshirts every day, but I pay for a personal trainer, who makes me feel great from the inside. And I love printing pictures for my scrapbook—to me, that's priceless. I'm often so busy that I don't have time to spend money, which works out pretty nicely. Yesterday I had to email myself a reminder to buy moisturizer. I get my daughter ready for school, go to work and give 110 percent, then do it all again.
But is there something you'd be happy to splurge on?
I start every morning unloading my dishwasher, so having someone come over to clean my house is definitely one of my ultimate life goals.
What's your key advice for aspiring business owners?
Surround yourself with people who support you and have skills different from yours. My brother had more entrepreneurial experience than I did, and we got help with our website and packaging design. Keeping an eye out for new ways to attract customers is also so important. That's how Baked by Melissa got to where we are: We're self-aware, we're motivated, and we get stuff done.
By the Numbers
250 Baked by Melissa employees in the U.S.
$532 million Sales of cakes and cupcakes at U.S. retail bakeries in 2016
3,000 to 5,000 Cupcakes sold daily at Baked by Melissa's original NYC flagship
7.2% Expected average annual increase in sales at U.S. retail bakeries between 2016 and 2021
Farnoosh Torabi is a personal finance expert, the author of When She Makes More, and the host of CNBC's Follow the Leader and the award-winning podcast So Money.
Whether or not you're handy with a whisk, Ben-Ishay's journey is an inspiring peek into what it takes to build a thriving business. I asked the cupcake queen to share her triumphs and stumbles, plus the revelations that propelled her to sweet success.
Take us back to the day you lost your job.
It was the worst. I remember being called to HR on a Wednesday at 11 a.m., thinking I was getting a promotion. Afterward I called my brother—now my business partner—in tears. He said, "Don't worry. This is the best thing that ever could have happened. Now go home and bake your cupcakes." I made 250 that night and gave some to my friend's little sister, who had an internship at a big PR firm. Her boss ended up loving them and put me in touch with her caterer, who invited me to his house for a tasting; eventually, he ordered hundreds.
Why such tiny cupcakes?
We knew we needed to be different, and we wanted to give everyone a chance to try every flavor without the postdessert guilt trip—all our cupcakes have fewer than 50 calories apiece. Plus, when I started the company at the end of the recession, people weren't spending a lot, and ours cost just $1 each.
Photo: Baked by Melissa
What money memories do you have from growing up?
My parents tried to instill financial responsibility in me at an early age: I babysat, worked at birthday parties, and always saved. I had friends who had more than I did, and it was natural to compare myself to them and be jealous. But my mom always said, "You're beautiful. You don't need those extra things." And somehow I believed her.
So you can start a business without a ton of money?
Sure, but don't quit your day job right away. Do it on the side first. That's how our product was developed; before I got laid off, I was making cupcakes at home for fun. Every day, do one small thing to keep moving the idea forward. And along the way, get rid of any debt, so it'll be easier to get loans.
What are the financial lessons you learned from starting a business?
You never know when something will go wrong. Case in point: We opened a dedicated gluten-free location, and after almost a year, the sales wouldn't support the rent. We had to act quickly. So we closed the shop and instead offered gluten-free options in our other stores. If you can't recognize when you've made a mistake and learn from it speedily, it can be detrimental—especially if it's costing money.
Are you a saver or a spender?
I'm a liver! I'd rather experience things than buy them. I pretty much wear one of three hooded sweatshirts every day, but I pay for a personal trainer, who makes me feel great from the inside. And I love printing pictures for my scrapbook—to me, that's priceless. I'm often so busy that I don't have time to spend money, which works out pretty nicely. Yesterday I had to email myself a reminder to buy moisturizer. I get my daughter ready for school, go to work and give 110 percent, then do it all again.
But is there something you'd be happy to splurge on?
I start every morning unloading my dishwasher, so having someone come over to clean my house is definitely one of my ultimate life goals.
What's your key advice for aspiring business owners?
Surround yourself with people who support you and have skills different from yours. My brother had more entrepreneurial experience than I did, and we got help with our website and packaging design. Keeping an eye out for new ways to attract customers is also so important. That's how Baked by Melissa got to where we are: We're self-aware, we're motivated, and we get stuff done.
By the Numbers
Farnoosh Torabi is a personal finance expert, the author of When She Makes More, and the host of CNBC's Follow the Leader and the award-winning podcast So Money.
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