Opening a small business is a challenge in the best of circumstances. This column recounts my experiences opening a small retail-wholesale bakery in South Bend, Wash. Knot Just Another Baking Co. operated for 5½ years. As with any business that closes, there are some bitter memories, but there are also countless happy memories that well cherish.

For those considering opening a small business, Ill share some of the pitfalls in hopes that you can avoid making the same mistakes; Ill also share some of the happiest memories of my life, brought to me by visitors as close as next door and as far away as Africa.

My wife and I had just sold our home in Seattle and moved into a 100-year-old house in South Bend. Heidi found work immediately as a speech pathologist; I was a journalist looking for an opportunity.

I had always enjoyed baking specialty breads at home, and there was a lack of specialty breads in the Raymond-South Bend area. Opportunity seemed close at hand.

We wanted to call our bakery Twist of Fate Baking Co., a play on words that keyed on the twist in our signature item, soft pretzels, and the twist that brought us to Pacific County in 2004.

Unfortunately a business in the Puget Sound area was already using the Twist of Fate name, so we had to come up with something else. After shooting down Twist and Shout Bakery, Knotty Baked Goods and a few others, we settled on Knot Just Another Baking Company.

Our business plan relied heavily on my 80-plus hours a week labor and Heidis ability to continue working outside the bakery. It didnt include enough contingencies for problems beyond our control, and it was severely undercapitalized.

Know When to Fold Em

That should have been the end of it, but like so many starry-eyed entrepreneurs, we forged ahead. Our space in back of a restaurant fit the wholesale part of the plan perfectly, but it failed the retail plan.

Still, the locals were eager for good bread, and we met many of our neighbors and some new friends in that out-of-the-way space. It also suggested that a better location could make all the difference.

So as Heidi continued to work I found a great location right on Highway 101 and began renovating it. It was a challenge to run the bakery while cleaning, painting and rearranging in a new location.

That got easier when our ancient oven finally quit. It took two weeks to get a new double oven shipped in for the right price. We had to close in the interim.

The move cost thousands, even doing most of the work myself; if we had pulled the plug instead of moving it would have saved us thousands more.

Episode IV: A New Hope

Nevertheless, the first summer in the new location was hopeful. The steady stream of RVs, bikes, motorcycles and tourists from around the world tripled our revenue overnight.

We learned that the German tourists were friendly, ebullient and loved soft pretzels. And there were plenty of both. The bicyclists who started their trip in Tierra del Fuego and were continuing on up the Alaska-Canadian Highway get my vote for longest journey and best travel log.

To keep up with demand, we expanded, first into espresso, then later into sandwiches. The business plan included those, but it didnt have specific details for how to get there. The costs of expansion simply increased our debt.

Didnt See That Coming

That might have worked out anyway except for the sudden spike in prices. It was 2007 or 2008 (after a few years of working 2 a.m.-5 p.m. it all runs together) when the price of flour doubled in two weeks. Talk about sticker shock.

Eggs, milk and other key ingredients followed. All the while gasoline, wages and other costs also continued to climb.

Our business plan wasnt strong enough for that.

By late 2009 it was clear the bakery was in trouble. We announced that we would close on April 30, 2010.

Lessons Learned

Used food service equipment generally sells for pennies on the dollar. We sold as much as we could. The one thing I just couldnt part with for a pittance was my 20-quart mixer. I still use it for heavy bread dough; its never let me down.

Knot Just Another Baking Company ended up costing us many thousand dollars that well never see again. But we made several lasting friendships there. And we met people from around the world.

The man from Zimbabwe stopped twice: first on his way north, then on his way back down the coast.

One of the most surreal moments occurred when the building filled with young Buddhist monks in long flowing robes. I think they were from Thailand. The apparent chaperone appeared to be in his 70s and spoke English. The rest, young men and two young women, ranged in age from about 13-25.

Some robes were saffron yellow; others were burgundy. I dont know if anybody else spoke English, but they were all smiles. All in all, a peaceful day.

I learned the value of a smile to weary travelers. If you can give an honest smile, a bucket of water and some towels to the mom whose youngest just lost her lunch in the back seat, shes grateful.

It may not be until next year that theyre able to express their gratitude, but theyll stop and buy a nonfat grande latte and a cinnamon roll. I know this, because that mom made a point of saying thanks when she came back through the following spring.

Local Support is Key

The support we received from the Raymond, South Bend, Willapa Valley area was tremendous. We knew more of our neighbors here after two years than we did after nine years living in Seattle.

We were proud to support our community with jobs and tax contributions.

Some of our elected officials became good customers.

But the words of one official still ring (sting) in my ears. He stopped in for cinnamon rolls for the first time in September, 2009, nearly five years after we opened, and said to me You know, the only reason youre doing so well is because youre right next to the public restroom.

I realize our business failed because I made some bad decisions and didnt always react to changing situations appropriately. But I cant help but wonder if his attitude had any affect on the business.

It certainly didnt help. Still, I cant fault him for my decisions.

If youre thinking of opening a small business, be aware of all the risks and do your homework. And understand that having a great product is no guarantee youll have all the customers you need and all the support you deserve.

Just food for thoughttasty, tasty food for thought.