You Can’t Scale a Secret

0:00It is tax season, and if you are self-employed or starting your own business, it can be a confusing time, especially with all the new tax reform laws. Being tax compliant is among small business owners' top concerns, but it is often time-consuming and research-intensive to figure out taxes on your own, and you've got a business to run. That is why TurboTax Experts for Business is here to help. They match people who are self-employed, sole proprietors, or single-member LLC owners with a tax expert who has the expertise and knowledge with your exact needs, giving business owners like you access to unlimited live expert help to ensure you have the confidence that your taxes are prepared and filed correctly.

0:42These conversations can literally save you money by helping you find every deduction and maximize your tax savings. And this isn't just for tax time. TurboTax Experts for Business provides unlimited year-round expert support at no extra cost and provides 100 % audit protection and accuracy guaranteed. So, ready to get the help you need and stop worrying about taxes? Learn more at TurboTax.com slash business. That's TurboTax.com slash business. this. Every year, tax season hits, and I am playing the same game. The game is called Who Actually Needs a 1099? It's a terrible game. And then comes the scavenger hunt.

1:27I dig through emails, invoices, half-forgotten Venmo requests, trying to reconstruct a year's worth of working relationships just so I can get people the paperwork they need before deadline. I used to think there has got to be a better way than this. Intuit QuickBooks' bill pay solves that problem by automating AP in QuickBooks. Every bill, vendor record, payment history, and 1099 are organized and streamlined in one powerful platform. In business, one of the biggest bottlenecks, not to mention one of the biggest threats to staying tax-ready, is a messy manual accounts payable process. With QuickBooks BillPay, you can say goodbye to manual bill entry.

2:08There's total control, zero chaos, and QuickBooks BillPay's unlimited 1099 e-filings keep compliance simple and stress-free. QuickBooks BillPay helps you streamline your accounts payable process and your time, so you have control and peace of mind to focus on keeping your business growing. Learn more at quickbooks.com slash billpay. Again, that is quickbooks.com slash billpay. Terms apply. Money movement services are provided by Intuit Payments, Inc., licensed as a money transmitter by the New York State Department of Financial Services. Especially when you have your own business, so much of it relies on you and your vision.

2:48And in my case, it's a bakery, right? So a lot of the recipes were and still are a secret. So a lot of it is dependent on me. But the business grew and grew. And now I went from a few dozen baked goods a day to now 15 ,000 a day. How could I possibly do it by myself? Running a business means solving problems. I tell you how the smartest entrepreneurs do it. Hi, I'm Jason Pfeiffer, editor-in-chief of Entrepreneur Magazine, and this is Problem Solvers.

3:23You know, there's this old saying, if you do something you love, you never work a day in your life or something like that. I don't know. But you know what? The thing about that is that it's not actually very true because if you do build a business off of a thing that you love, you get yourself into this trap. And the trap is that you know it so well that you also feel like you're the only person who can do all the things. And all the things have to come out of you. This is driven by your passion, your vision. You got to do that and that and that and that. And very soon, you have built something that is kind of unsustainable because you are only one person and you are stretched too thin and you haven't actually built out the systems that can replace you because it feels kind of crazy to replace you, right?

4:09In the thing that you built because of your passion. This is what tanks so many passion-based businesses. And this is what we are going to solve today because I am talking to someone who has done exactly that. Her name is Danielle Sepsey. She is the founder and creator of The Hungry Gnome, which is a Long Island city-based wholesale bakery that produces over 12 ,000 baked goods daily, distributed to more than 300 partners nationwide, and is the author of the new cookbook, The Scone Queen Bakes, which if that's not about scones, then I am very confused. Danielle, thank you for being here. Welcome to Problem Solvers.

4:45Thank you, Jason, for having me. Danielle, you have built this business. This is a passion-based business for you. Did you run into this problem? Did you stretch yourself so thin that this thing nearly collapsed on you? You know, although it maybe never collapsed, I think, you know, not only from my current business, but working in hospitality throughout my whole career, you know, it's something you go into, not because you think you're going to become a multimillionaire. It's such a passion based business. But you so many people in the industry, including myself, at times just become so burnt out.

5:23And it's because you, especially when you have your own business, so much of it relies on you and your vision. And in my case, it's a bakery, right? So a lot of the recipes were and still are a secret. So a lot of it is dependent on me. And so it really took me some soul searching in the beginning because I thought, okay, I'm the only one that can execute some of these recipes the way that I want them. But the business grew and grew. And now I went from a few dozen baked goods a day to now 15 ,000 a day. How could I possibly do it by myself? And so very quickly, you realize that it cannot solely depend on you and that you have to put systems in place.

6:15And really, so much of it was about hiring the right people. So let's start back there, actually, with hiring, because these early hires, especially in a business like this, where you consider yourself to be the expert, it's drawing from you, in your case, your recipes. So this isn't just any hire. How did you approach an early hire where this was probably as much a business issue as it was an emotional issue for you? Yeah. I mean, when I hire people, I don't always just look at who has a ton of experience in the world of baking. It's more an attitude and a drive and the willingness to want to learn.

7:05And so many of the people that started the business with me and worked with me, and some of them still work with me today, they had no baking experience. Some of them had worked in kitchens, but never had done baking. And so I can quickly see within, we always do a trail when we are hiring people. So they come in and they work with us for usually three to four hours. And as much as it is our way of seeing if they're the right fit, it's also a way for them to see if they want to be there too. But during that time, I'm looking for someone that has good intuition. They're super proactive. Um, they're, when they're done with the task, they're already asking, what can I do next?

7:50Or they're already jumping in without asking to do something to help somebody else. Um, it's an attitude. This, by the way, it feels a little counterintuitive. I bet for a lot of people, because what I think a lot of folks in those early higher days in a passion-based business think is I need to find someone who has done exactly this work. and is a master at this thing. And what you're saying is actually don't do that. No. Because, well, actually I have a hypothesis, which is that if you find that person, then they are going to come and they're going to do their thing the way that they know how to do it.

8:28But what you're looking for is actually someone who can be crafted into an extension of you, which means that they need the right raw material as learners and skilled people, but they also need to be in a position to be molded by you. And so you're looking for that. Am I right? Absolutely. And I've seen that time and time again, where, you know, I get resumes for people that have really extensive pastry background and they come in and they tell me they want to just start their own bakery. And as much as I admire that, because that was once me, I know that maybe the focus isn't going to be on helping me grow and sustain my business.

9:06And that they're kind of just looking to learn from me and then just get out and do their own thing. And so I really, it's about looking for hardworking people that have speed and have the passion, but also just, again, it's this intuition. And I can tell within the first few minutes really of someone being in the kitchen, if they've got that it factor or not. And it's just that drive and that intuition. A lot of people who build passion-based businesses don't have anything down on paper. They just know how to do it themselves. And so the ideas are in their head and the processes are in their head.

9:54And therefore, if somebody does join the team, they don't know what to do. And they certainly don't feel empowered to do something. So you had mentioned a little bit earlier that this is about training, but it's also about systems. And I'm wondering what you have found or what you teach others about how to take this knowledge that's in your head and turn it into something that is actually replicatable by other people. Yeah, I mean, it's something that I'm still working on myself. I mean, we have grown so much in the past six years and a lot of our training is super hands on because of just the nature of what we're doing.

10:32And also because I'm working with people from all different cultures and walks of life and levels of education and people that don't even speak the same language as me. So a lot of it is truly tactical work experience and working together. But as we're kind of entering this next stage of growth, my management team and I have discussed, you know, we need some SOPs, some standard operating procedures put down on paper. because now we sort of know what works, what doesn't work. So we're putting together these more formal job descriptions and whether it's also like cleaning. How do you clean the mixing, the mixers?

11:14How do you bake the items? Although, like I said, there's a level of intuition with baking because every oven is different, every day is different based on the temperature of the air and the time of year. But there's some level of, you know, there's a base there. And then we kind of need to be able to adjust on a daily basis. And so we're now putting together these SOPs to make sure that there is some formal, you know, physical manual that people can first read when they start. And then, again, it's a lot of it's going to be more hands-on experience from there. What have you guys been doing to try to standardize the way in which things are operating?

12:03Because it sounds like in many ways you're still in that transition where everything isn't stuck in your head now, but everything is stuck in a lot of people's heads. It is. It is. Yeah. I mean, it's, again, for me, you know, I'm actually not a naturally organized person. And so it was hiring the right people to help me do that. You know, so my director of operations, Angelina, is super organized and so, and more administrative. And so together, we kind of come together and kind of figured out what each, like I said, job, break it down by job and what each day looks like, which can vary. But what are their main duties and how you do those duties well and then break it down further?

12:49Again, like how do you clean a mixer? How do you work this particular oven? How do you work this particular oven? And how to packing, you know, it's another big thing. We have people that are just packing the baked goods every day. So how do you do that properly to avoid breakage, to make sure that everything remains fresh? And, you know, we are just putting together these, like I said, these standard operating procedure documents that just sort of break it down in layman's terms. And then from there, we're able to show people, you know, in person how to how to execute it. But it's it's a it's a challenge, you know, because, like I said, a lot of the people don't speak English or they're it's minimal.

13:38And so we're teaching people from their all walks of life, all levels of education. And we need to make sure that it's straightforward for everybody. Yeah. And how has your own experience of building all this in the early days, let's just say you, you know, you, you risk teetering onto burnout as you were trying to build all this yourself. What has been your experience as a founder, as you have? Every entrepreneur has the same problem. And that problem is time. You're doing too much and you definitely don't have time to chase down office supplies or tech gear from five different stores, that is why there's Walmart Business.

14:22With one free account at business.walmart.com, you get access to a huge selection of business essentials, from cleaning supplies and office tech to workwear and even fresh food, all at Walmart's everyday low prices. You can set up multiple user accounts for your team, automate your orders with subscriptions, and even track spending with built-in tools. Your stuff can be delivered or you can pick it up at your local Walmart. Want to make it even easier? With Walmart Business Plus, you get free shipping with no minimum, rewards on large orders, and powerful spend analytics to help you make smarter decisions.

14:57Walmart Business is built for entrepreneurs, saving you time, money, and hassle so you can get back to what matters, growing your business. Sign up today at business.walmart.com. Terms apply.

15:09Danielle Sepsy:Today we helped a Latte for Sam Coffee shop get an insurance quote simply and easily And made sure A floral delivery van was able to make someone's day We're the Hartford With decades of experience insuring millions of unique small businesses When it comes to your small business insurance Thank you One size absolutely does not fit all Get a quote or find an agent today at the Hartford.com slash small business. Brought in these hires and then run into the next problem, which is how to train them and how to standardize things and how to make this more efficient. I mean, do you feel like you are stretched too thin still?

15:56Do you feel like you have found your place in the business and how? Mm-hmm. So for me, I always, I have this like light at the end of the tunnel theory, as I call it, because I worked in hotels a lot of my career where there was no light at the end of the tunnel. So I was always just working endless hours and most weekends and holidays, and there just never seemed to be that light or something to look forward to. And as someone who's a really family oriented person, um, who likes to have some work-life balance and that, that really drives me. Uh, when I started my business, I wanted to make sure everybody had that.

16:42Um, and so, you know, I always make sure I schedule as much as I'm scheduling meetings and, you know, projects for work, I'm also scheduling my life, you know, and making sure that I always have stuff to look forward to outside of here and that my team also has a light at the end of the tunnel. And so, you know, people always ask me, why don't you have a retail store? You know, you do great because we're mostly wholesale and online. And it was partly because I knew that I had flexibility and that we could have some more work-life balance and that most weekends I probably wouldn't have to work.

17:25And my team, you know, except for when we have big projects going on, sometimes people will come in for a few hours on a weekend, whatever. For the most part, people work five days a week and most of the time they have their weekends off, which is unheard of in a hospitality-based business. And so that's part of our culture that I think has been so important through and through because people, it's not easy what we do. I would say it's not easy bake oven. It's high volume business. It's really physical. It's super demanding on the day to day and you have a 30 minute break and beyond that you're running.

18:04But there's always that light at the end of the tunnel. And so that's something that was really important to me when I was doing this, that no matter how much work we had or I had, that I would make sure I scheduled that personal time because it motivated me and it would encourage me to keep going in the business as well. You know, what you're reminding me of is a framework that I picked up from a woman named Dr. Taryn Stayskull. And she's a sort of expert on resilience and avoiding burnout. And she said that at all times we should be thinking about a short, medium, and long-term thing that we can schedule to look forward to.

18:46So the short-term thing could just be today I will take a walk. Today I will have coffee with a friend. And then the medium-term thing is you get tickets to a concert a couple months from now. And it's just a nice thing to look forward to. And then of course the long-term is some larger vacation or some kind of bigger life event. And that we should always be mindful of having these things because otherwise you're right. The work can feel totally endless and it's not really clear why you are doing it or when it is supposed to stop. And if we, you watch runners, I love these clips of people who are at the last, I don't know, 500 feet of a marathon.

19:35And you can see suddenly they get this energy burst and they are just charging to the end. And you can only find that energy inside of you when you see a finish line, because otherwise there's no, your body will literally not produce that energy because you will exhaust yourself. So you don't know how to pace yourself and you don't know where the end point is and you feel lost. So what I'm hearing from you is scheduling these things that seem really small, but are actually the rejuvenating elements that keep you going. And I'm wondering what that looks like for you. How are you scheduling them?

20:09Do you have a system for them? What kinds of things are you scheduling? How do you think about this? Well, in the workplace, I was just reminded that every Friday we do family meal. So yes, that's on site, you know, at the bakery, but I personally, or my, one of my other managers, we will cook a beautiful meal for everybody at the bakery. Um, and I really like, it's not just throwing, you know, some, whatever, like something basic, like today we made shrimp and Caesar salad and garlic bread and all this stuff. And we, I really treat them. And even though my team now is 38 people and it's fairly costly for me on a weekly basis, it's something I'll never stop because again, it's, you worked so hard all week and now it's Friday.

20:55You know, you can have that beautiful meal. We could all sit down together, eat, talk. Um, and I think it's those little things that make a huge difference and yeah, it's money out of my pocket, but it's money very well spent. Um, and then in my personal life, you know, it's, it's doing the things I love and seeing the people that I love. So always making plans. I mean, now I'm at the age where all my friends are having children, including myself, I'm pregnant. So that's another story. Um, but you know, we're saying, okay, every month, let's try to get a dinner on the calendar. Let's get a brunch on the calendar, something like that, where we plan it in advance, we make the reservation and we, we try our best to keep it.

21:36And, um, those things are just so important. And then it's just like health and wellness, you know, even though I'm so busy, people don't even believe me when I say, I usually exercise about five times a week, you know, even 45 minutes, having that time, um, to myself and to just exercise and, um, and just keep my mind, body and soul healthy is, is really important. Um, but really it's just scheduling events and dinners and simple things with family and friends that are super motivating for me. And that's, that's what I live for. yeah that's awesome hey so Danielle tell me uh for a moment about the scone queen bakes your new cookbook yes so uh scone queen bakes is 100 sweet focused baking recipes many of which are recipes that are were a secret actually still pretty much a secret until it comes out on Tuesday um but uh there are recipes that I thought I would take to the grave you know including my famous scone recipe that I developed when I was just 13 years old out of my parents' home.

22:45And at 13, I started selling them locally in my town and it sort of took off and started to grow. And I always knew that I wanted to build a bigger business around it. You know, I went to college and had some other jobs in the interim and then finally was able to do it now full time. And it's just grown so much, but I'm sharing some of those secret recipes, the scones, some of our famous muffins from the bakery, cookies, and then family recipes. So my grandmother, Rosemary, who was an amazing home baker, she taught me how to bake from the time I was maybe three years old. And some of her famous recipes and family recipes that have been passed down even to her for over a hundred years are in the book.

23:29So it's really about family. It's about also entrepreneurship and my business journey, as well as nostalgia. I mean, I'm a 90s kid, so there's a lot of really great 90s-inspired nostalgic recipes from like a cinnamon sugar pretzel that reminds you of Auntie Anne's in the mall to like a Funfetti scone that's reminiscent of, you know, like a Dunkaroo or a Funfetti cake. So all those fun flavors. And yeah, I'm really excited to get out into the world and see what everybody makes. Well, as a fellow 90s kid, that sounds really fun. Okay, final question, which your answer just made me think of, which is, tell me about your evolution from wanting to keep a recipe secret to being open with putting it out there.

24:17Yeah, I mean, I was scared to give it away because, like I said, I've been making them since I was a kid, And, um, I grew this business based around that scone initially. And, uh, I, in the beginning I didn't have as many customers. So if things felt sort of fragile, like anybody, another big company could just get my recipe and then replicate it and that's it. Um, but as we grew, you know, now we have 300 plus wholesale customers. Um, and I just felt like, A, it took me six plus years to get the business where it is now and doing the scale that we do. That's not easy to replicate, but more it's about the relationships.

25:02You know, I have these relationships with my customers, um, where I feel like they can really count on me and my colleagues. Um, and it's more than just a great product. It's the people buy people and they trust me. They trust my business. They know that I'm, um, I'm also, you know, trying to make their business as successful as possible. Um, I feel like I'm super communicative and, you know, I come from a front of house background, so that's always really in me. And, uh, I feel like people really feel taken care of by me and my team, which is historically not something I think that wholesale bakeries are like because there are these family businesses that are super old.

25:47They got passed down from their great grandpa and they're just sort of in it. And they're just about the volume and they're cranking out muffins and they don't care about the people. I'm really checking in with my customers as much as possible, building those relationships, sustaining those relationships. And so that's what I feel like I have to be confident in that those customers are going to be loyal to me. And also, you know, for me, food was always about community. My grandmother, like I said, taught me how to bake. I'm from a big Italian family. Food always brought us together. It built relationships and created such a strong family dynamic for me.

26:23And so that's also what it was about. You know, it was about these recipes, having people be able to make them with their family and build, you know, community and memories around this food is just, I feel like what I'm so passionate about. So it felt like it was time to do it. Well, that's really great, Danielle. You know, what I hope entrepreneurs hear from that, aside from go pick up the scone queen bakes, is what you're really saying there is that the product is not the moat. As great as the product is, You, the founder, are the moat. And what a funny tension that is as we think back about this conversation where we're talking about how to take you, the founder, the visionary in a business, and then scale you out because there's only so much of you.

27:18And how in the end, also, you still are the product, aren't you? And you still are the thing that drives the business. which means that it is ever more important to make sure that you can take as much off of your plate as possible so that you can focus on being healthy, on being there, on building relationships. You, Danielle, cannot build great relationships if you're stuck making scones all day. You need to be out there making the connections with the client so that they know that they trust you. They love the scones, but they trust you. And that is really the formula for great success. So Danielle, again, the book is called The Scone Queen Bakes.

27:57The business is the hungry gnome. I was going to say the happy gnome, but it's not the happy gnome. But a happy gnome too for the hungry gnome. Danielle, this has been so great. Thanks for joining me on Problem Solves. Thank you so much, Jason. Hope everyone enjoys the book.