Butler did it

With $33 in her checking account and $4,500 in rent due, Gina Butler's vision, to bake and sell sumptuous cupcakes with a swirly mountain of frosting, was on the verge of despair.

That was Butler's first month in business, back in February 2008. And it was fitting, if not a little ironic, that Butler's cupcake business was in Nashville — epicenter of country music, which knows all about stories of anguish and gloom. Butler herself had been a country music singer for a time. She performed on tours and in some Nashville hotspots, like Tootsie's and The Stage on Broadway.

But Butler, who had also run a cleaning business and was a server at Red Lobster, refused to quit. Days before her first rent payment was due, long lines began to form outside the cupcake store in downtown Nashville. Both locals and tourists chomped on cupcakes, in flavors from Kentucky Bourbon to Blackberry Cobbler. Crisis was averted.

Five years later that business, Gigi's Cupcakes, has $33 million in annual sales and 94 stores in 23 states, including five in Florida and three on Gulf Coast. The franchise operation remains based in Nashville. Butler's aim is to have 250 stores within a few years, and the Sunshine State, she says, is a big part of the growth plan. The latest store opened in east Manatee County in October, which followed an Orlando opening in June.

An Oklahoma native who grew up there and in Los Angeles, Butler recently spent a day at the Manatee County Gigi's for a grand opening celebration. She spoke with the Business Observer after the event about her career. Edited excerpts:

You started your business with next to nothing. How did you overcome the fear?
My dad was an entrepreneur. He owned five restaurants, a video arcade, a hair salon and he was an L.A. County fireman. He did everything. He taught me never to be afraid to fail. That's a big part of my success. I've always been like, 'if I fail, oh well, I will just pick myself up and start again.' I've always had that mindset. You don't know what's going to happen. You just have to be prepared to fail and be OK with that.

How did you deal with rejection in the early going?
I went to four banks and they laughed in my face. But I was determined to do it. And I had great credit and a little bit of savings. So I took out a $100,000 cash advance loan on my credit cards and just did it.

How have you dealt with a core entrepreneurial challenge, that the bigger the company gets, the less time you have to do what you did when the business first started?
It's been really difficult for me because operations are my skill set, more than just being the face of the business. I'd rather be back there, showing them how to be successful. I've had a hard time taking off the apron.
But about a year ago, a really wise man, a counselor for Fortune 15 companies, asked me if I was going to be a cupcake baker or a franchisor? I said, 'Well, I can do both,' and he said: 'No you can't. You can't do both.'

What advice would you give to other aspiring entrepreneurs?
No matter what someone is doing, whether it's the top of the company or cleaning someone's floor, everyone's work should be valued. You never know if that person cleaning the floor will be a CEO of a company someday. Always treat people with fairness and kindness. I don't succeed at that every second of every day, but I try.

What companies do you admire?
There were three companies I wanted to emulate when I first started out in this business: Martha Stewart, Victoria's Secret and Tiffany's. They all sell class and they all sell an experience. We sell different things, but when you see someone walking in a parking lot with a blue Tiffany's box, you immediately think someone has something special. When people have a Gigi's box, I want them to emotionally and mentally feel the same thing.

How will you sustain the growth at the company, given the cupcake trend trailed off somewhat when the economy faltered?
You need to offer a unique product and great customer service. Everyone likes sweets. Cake has been around since the early 1700s. Cake is not going out of style; it's just how we package it and how we sell it. It's all about finding a need, whether it's a birthday party or a soccer game. The owner in a certain market has to find and fulfill the need in their community. Also, I have really great people around me who helped me grow from one store to 100. I have some really good people in place.

What other growth goals do you have for the company, beyond the target of 250 stores?
By January we will have 100 stores. I really want to get into more “A” markets. I'd love to put a cupcake shop in downtown Chicago and New York City. I'd love to be in Boca Raton, Miami and Fort Lauderdale. Those would be fabulous markets. I think Florida is a great market for us. There are so many places for us here. We have stores in Gainesville and Tallahassee that will open next month.

What decisions have you made with Gigi's Cupcakes that you would like a do-over on?
I would have sought better legal counsel in the beginning. I can't expect a lawyer in charge of properties to look at franchise documents — which I did. That was a big mistake.

What worries keep you up at night about the business?
Providing a future for my daughter is one. And we are at a place now where we need capital to grow. I need to follow the steps to grow successfully and not implode.

What's your favorite Gigi's flavor?
Cookie dough. It's just to die for. I love it.

Book It
Cupcake entrepreneur Gina Butler is voracious reader of business books. Her favorite, one she's read several times, is “The E-Myth: Why Most Business Don't Work and What to Do About It.”

The book, written by business consultant Michael Gerber and first published in 1986, set forth a question for all entrepreneurs: Do you work in your business, which makes you a technician, or do you work on your business, which makes you an entrepreneur?

Gerber, in the book, contends technicians who work in their business will have a job, not a sustainable company. An entrepreneur who sets up a process others can duplicate, however, is on a clearer path to long-term success. Following the principles of the book is a work in progress for Butler. “I've been a technician for five years, and I'm starting to get into management,” she says. “But I really need to be an entrepreneur.”