How plunging into debt led to sales of $1 million

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For 12 years, Andrea Herrera played it safe
and stayed out of debt.
The Chicago catering business she opened in
1995, Amazing Edibles, grew slowly but
steadily; 10 years after launching, the busi-
ness had annual sales of $650,000 and the
kind of debt-free balance sheet most business
owners fantasize about. Herrera, who
describes herself as "risk averse," was deter-
mined not to spend a single penny her com-
pany didn't have. She feared that if she could-
n't repay a loan, she would lose her savings
and business.
Amazing Edibles' new home finally has the
professional kitchen the catering business
needs.
But that caution came with a price: Herrera's
reluctance to expand was crimping her busi-
ness. She rented a 1,000-square-foot store-
front and relied on a six-burner range more
fitting for someone's kitchen then a profes-
sional caterer. She had an executive chef, but
Herrera did the marketing and sales herself to
keep costs down.
That's a common tactic for female entrepre-
neurs -- one that typically limits both their
risks and their rewards. Of the 10 million
female-owned businesses in the U.S. only 3%
have annual revenue of more than $1 million,
compared to 6% of all male-owned business-
es, the Center for Women's Business Research
reports.
To boost her business, Herrera in 2006 joined
the Accelerator program of the
Entrepreneurs' Organization, a networking
group for of business owners. Accelerator
offers mentoring for businesses in the
$250,000 to $750,000 range to help them
advance to the seven-figure sales level.
Participating in the program was like gradu-
ating with an MBA, she says. Encouraged by
her mentor, John Fairclough -- the CEO of
Resicom, a Chicago-area facility maintenance
company -- Herrera boosted profit margins
by culling through and slashing her expens-
es. Fairclough suggested that she hire a mar-
keting manager, and helped her learn to man-
age a bigger staff by delegating responsibili-
ties and crafting metrics for measuring her
workers' performance objectively.
But as her business savvy grew, her office
space couldn't keep up. Herrera decided to
bite the bullet: In 2007, she found a 5,000
square-foot commercial condo that would
cost $395,000 to buy and $300,000 to reno-
vate. Money Herrera didn't have.
She had enough saved for a $75,000 down
payment, and the condo sellers agreed to
finance the balance of the mortgage. But sev-
eral banks rejected her application for a loan
to fund the renovations. One said it consid-
ered catering businesses too risky; another
wanted her to finance the renovation herself
before it would consider a loan.
Herrera decided to put her personal credit on
the line. She borrowed $125,000 against her
home equity, and pulled another $50,000 out
of credit cards to fund the renovation work.
Leslie Grossman, co-founder of Women's
Leadership Exchange networking group, says
she's seeing more female entrepreneurs step
up and fight for the capital they need to grow
their ventures. Women are becoming "less
risk-adverse, funding their businesses better
and going for outside funding at a faster rate,"
she says.
Statistics compiled by the National Women's
Business Council back that up: The dollars
lent to women-owned businesses through the
Small Business Administration's lending pro-
grams rose 9.3% from 2004 to 2008, com-
pared to a 0.1% drop in overall SBA lending.
Herrera's new space debuted in 2008. The
light-filled brick loft includes a separate area
for small weddings and dinner parties, a
stove with 12 burners and two grills, a dou-
ble-stacked convection oven, a walk-in cool-
er and freezer, and a tasting room.
Amazing Edibles' staff has grown to eight full-
timers, including an operations manager,
new executive chef, sous chef and marketer -
- plus seven part-time workers. Marketing
manager Lisa Nuske has brought in steady
new clients such as the University of Chicago
and University of Illinois, and regained cor-
porate customers whose catering budgets had
been slashed. One of Chicago's marquee
businesses, Oprah Winfrey's Harpo
Productions, is now a client.
Nuske also devises promotions and distrib-
utes e-mail blasts and newsletters. "She frees
up my time so I can think about strategy and
manage the staff," Herrera says.
The capital investments are paying off. In
2009, Amazing Edibles crossed the $1 mil-
lion mark in annual revenue for the first time,
and it's on target for $1.3 million in 2010.
American Chartered Bank, a local bank spe-
cializing in small businesses, recently agreed
to consolidate Herrera's credit card, mortgage
and construction loans into a 30-year,
$400,000 loan.
Amazing Edibles is still profitable, though its
margins have taken a hit as the extra cash
from higher sales gets redeployed into paying
down the expansion costs. But Herrera is glad
she finally took the risk.
"Having a more beautiful facility has given me
the courage to go after clients like Harpo,"
she says. "We're not a little storefront any-
more. We can sit at the table with the big
boys."
By Gary M. Stern - CNNMoney.com
A

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