Small Business Saturday: Make Candy, Make People Happy

For a man who was once featured on the television show “America’s Funniest People” and spent years working as a sales manager for IBM, making and selling delicate chocolates for a living doesn’t necessarily seem like a natural fit.

But really, what is the ideal profile for a chocolate maker?

For San Diego’s Jerry Swain, owner of the booming Jer’s Chocolates (which just opened a new store in San Diego International Airport), the penchant for chocolate making can be traced back to college.

That’s when Swain introduced his famous homemade chocolate-covered peanut butter balls as gifts for friends, typically handing them out at Christmastime and also right before finals.

After graduation, the San Diego resident went to work for IBM, but his friends didn’t forget about the mouth-watering annual chocolate tradition he started and called upon Swain to keep the chocolates coming.

Happy to oblige, each year Swain hosted a Christmas party where he would serve the famous chocolate-covered peanut butter balls.

“That tradition carried on for nine years,” Swain recalled during a recent interview. “After a while I changed it into a fundraiser for a local food bank. After the second or third year, it got so big I was renting out hotels or restaurants for the party.”

Still working at IBM during these years, Swain recalls having a conversation with his father that planted the seed that grew into what is now Jer’s Chocolates.

“I was home with my dad at Christmastime, talking to him about some of the things I wanted to do. Most of it was about high tech. And he said, ‘Tell me what you like doing. Don’t tell me what you want to do. Tell me what you like to do,’” says Swain.

That question and conversation, which seemed ordinary enough at the time, turned out to be pivotal. It made Swain realize that he wanted to do something for a living that allowed him to be closer to the customer and market a consumer product.

When Swain shared these thoughts with his father, his father asked: “Have you ever thought about the chocolates?”

Voila.

That question sent Swain on a path of research, attending chocolate industry conferences and establishing his own advisory board of business professionals who would serve as mentors. All of which culminated in 2001 with the launch of Jer’s Chocolates, with a store in Solana Beach, Calif., and now San Diego International Airport.

Jer’s Chocolates specializes in the chocolate-covered peanut butter balls he began making as a college student, but the company also offers an array of other tasty products, including milk chocolate peanut butter bars, Pretzo Change-O Milk Chocolate Peanut Butter Bars (made with pretzels), and Toffee Break Dark Chocolate Peanut Butter Bars.

Swain also recently launched a new product called Jer’s Squares, a line of everyday, bite-size treats that combine chocolate and peanut butter, chocolate and toffee, or chocolate and pretzel.

All of his chocolates are elegantly packaged and made with only gourmet ingredients.

“I didn’t want to be a ‘me too’ product,” Swain says. “I wanted to have a niche product. When I looked into the industry, no one was doing peanut butter at a gourmet level. We use a special peanut butter and a premium chocolate.”

Swain describes the chocolates he makes and sells as having more of a comfort appeal, rather then being something cutting-edge or trendy.

“There are certainly chocolate bars out there that sound interesting that people try, but they may never eat them again. We want people to buy our product over and over,” he says.

As it turns out, customers are doing just that – coming back again and again.

It took at least three years of being in business, however, before Swain was making enough money from selling chocolates to quit his other job as a consultant.

Selling chocolates, he warns, is a seasonal business – with the busy times being the winter holidays between November and December, Valentine’s Day, and Mother’s Day, and a slight uptick around Easter.

Be prepared for the lean times throughout the remainder of the year and have some products in your lineup that will likely sell year-round – such as the chocolate bars Swain sells.

And while it may seem like Swain’s chocolate business springs from his love of making those chocolate-covered peanut butter balls, or a love of cooking in general, that’s not the case.

“For me, the passion wasn’t being in the kitchen. The passion was having a product that made people happy,” he says, adding that a love of being in the kitchen and cooking is not necessary to be successful in this line of business.

Swain’s isn’t the only San Diego chocolate company that came into being in such a roundabout manner.

Neither Gretchen nor Lisa Bender has a culinary background. Lisa was a stay-at-home mom and Gretchen was a community college dean and before that an elected official and a consultant.

But that didn’t stop the couple from launching the wildly successful Sea Salt Candy Co.

Sea Salt Candy Co. store on Valentine's Day

‘Branding is the single most critical thing you can do when starting your business,’ says Gretchen Bender of Sea Salt Candy Co. Photo: Sea Salt Candy Co. via Facebook

The inspiration in this case initially came from Gretchen’s dad, Jim, who lost his sense of taste to throat cancer, but never lost his love of food.

The two women began whipping up a variety of interesting concoctions to satisfy Jim’s sweet tooth. Nothing, however, satisfied him as much as Gretchen’s homemade caramel.

Lisa specialized in toffee, coming from a family that owned a candy business in Chico, Calif., for many years.

When the recession hit in 2008, Gretchen lost all her consulting contracts nearly overnight. After that, the women decided to create a company specializing in salted caramels and salted toffees.

“I had this caramel recipe. She had this toffee recipe. So on a whim, we started the business,” recalls Gretchen Bender. “I jumped on GoDaddy and found that Sea Salt Candy was available as a domain name and the umbrella company Sea Salt Candy Inc. was created.”

Launched at the weekly Leucadia Farmer’s Market, Gretchen Bender says the company was almost immediately successful.

“We did almost $100,000 in sales during our first six months of business,” she says. “We hit this sweet spot at the time – of all-natural, gluten-free, super-premium ingredients. Everything we make is absolutely made by hand, there’s no corn syrup, no GMOs, and we keep our footprint really small. Then there is the whole salty sweet candy movement, that also contributed to our success.”

Gretchen Bender believes the third contributor to their success has to do with branding.

“Our branding and our story really touched the more affluent consumer,” she explains, noting that one of the things the couple did right early on was invest in professional packaging and branding.

The Sea Salt Candy Co. spent its initial years expanding through local farmer’s markets, while also picking up some wholesale accounts along the way, and also selling individual orders through a company website. They never had any investors.

Just recently the Benders relocated from San Diego to Chico to cut down on overhead costs, such as renting commercial space to cook their candies and the cost of importing their ingredients from Northern California.

“We had annual sales of up to $300,000, but we were still sinking and not turning a profit,” explains Gretchen of the recent move. “We had exhausted all of our personal finances. I spent my personal retirement, Lisa’s trust fund. So even with our commitment to being local, we said, you know what, we need to go back to Chico, it’s cheaper in Northern California.

“We’ve decided to just go back to our roots” she adds of the business. “We’re scaling back here a bit. We’re not going to open a retail store right away. We’re going to focus on our online business, special events, corporate gifting, and more limited wholesale.”

The Benders also just signed a deal with a Hawaii company that will produce and sell Sea Salt Co. candies under the Hawaiian company’s brand. All of which is good news for the scaled-back but still surviving company.

Meanwhile, it’s not unusual for customers, upon tasting the Benders’ confections for the first time, to feel suddenly inspired to share a story about the county fair, childhood vacations at the beach, or perhaps the first time they sampled kettle corn.

The burst of sea salt sprinkled on top of each toffee or caramel creation brings on such memories. The Benders call it the moment of bliss that is associated with eating their candy.

Swain, of Jer’s Chocolates, says he, too, takes particular joy in watching people in his store, savoring and enjoying the chocolates.

“I would say there are moments in time when I think, ‘What have I done?’ when I look in the mirror,” says Swain. “But I really enjoy the journey, now more than I ever have. … There is the time at the beginning that is the roughest. It makes it more fulfilling when you can get past all that. I love when I’m at the store and seeing people come in, and they love the product. That’s so fulfilling.”

Here’s some of the other advice shared by Swain and Gretchen Bender:

Invest in Professional Packaging and Branding

Expect to spend about $10,000 at the outset on packaging and branding for your chocolates, says Gretchen Bender. That figure could be higher depending on how much packaging you order, but $10,000 will get you started.

Branding, says Bender, will be key to making your business a success.

“Branding is the single most critical thing you can do when starting your business,” she says. “You only get one opportunity to launch. And you have to think about how you want to be perceived. What sort of company are you? Who is your target consumer? We could have launched as a quaint little homemade farmer’s market company. But we knew our vision was much more far-reaching than that. Our vision was to be a national company in 10 years. And if that is your vision, you have to start out like that – with the end in mind.”

Swain agrees, noting that a large part of his initial expenditure went toward the purchase of professional packaging for the candies.

“The tough part about a consumer product is that you have to buy packaging before you sell anything. There is a cash investment necessity on front end to be able to do this,” says Swain.

Where to Make and Sell Your Chocolates

There are several options, including renting a retail shop that has a kitchen in the back, renting a commercial kitchen or contracting with a commercial kitchen to cook the candy for you.

“Some folks start off in a retail shop where you can sell product and cook in back,” says Swain. “We went the route of outsourcing to a commercial kitchen. We work with them on recipes, and they provided the packaged product and we sold it.”

While still in San Diego, the Benders chose to rent an old restaurant space, cook the candy themselves, and use a portion of the restaurant as a storefront. Now in Chico, they are only selling product through their website and filling orders from home.

Come Up With a Different Product

Don’t try to copy Godiva, See’s or any of the other big-name chocolate makers. Do your own thing.

“We wanted to offer a differentiating product, a niche product,” says Swain. “We’ve seen a lot of people come into the business as almost copycats. When it comes to copycats, some make it – a lot don’t. You need to differentiate it just a little bit.”

Key Industry Associations and Events

Bender recommends getting involved with the Fancy Foods Show, a specialty foods/trade convention show held in San Francisco. In particular, she recommends going as part of the “Made in California” contingent.

“Join the organization and sit with those folks,” Bender says of the California group. “We got some business from show.”

Early on in his chocolate-making journey Swain joined Retail Confectioners International, a decision he says was very helpful.

The group has an advisory board. “If you wanted to talk about making packaging, or making caramels, or shelf life or labeling, they had people available to help you,” Swain says. 

Don’t Quit Your Day Job

Make sure you have a secondary means of income when first getting into the chocolate business. And wait a few years before quitting that other job.

“I quit my day job too soon, the company was less then one year old,” says Gretchen Bender. “It too much pressure on the business to support itself and us. It cost $20,000 a month for the company to support itself and us and a family.”

The other piece of advice Bender offers: Take it slow.

“When we were first starting out and things were going so well, we thought we are going to be like Hershey’s, and one year later you’re like, ‘What have I done?’” she says. “Taking a slow approach, especially in an area of business that is new to you, is a better approach.”

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