Company Profile: Just Bagels is Not Just Bagels, its Big Business!

Recently I listened to a group of business owners tell their stories, from their early challenges to their current status. I was there looking for stories of successful small to mid-sized mainstream privately held companies. These companies were being honored as successful small businesses by Crain's New York fit the mold, based on the publicity.

As soon as the individual business owners began telling their story I knew I had come to the right place. Each was different in their approach to their business, the industry they are in, how long their company has been around, and the size of their enterprise.

One thing they had in common - their passionate belief in what they're doing.

After hearing first hand the story of "Just Bagels" as recounted by one of the founders, Clifford Nordguist, I will never again think of my daily breakfast as, "just bagels."

My knowledge of how bagels are made is probably the same as yours. Every morning our neighborhood deli has a couple of huge brown paper bags by the front door when Frank opens up. He takes them inside and distributes them by type in the case by the counter - where Tony is ready to apply the cream cheese (or butter if that's your pleasure.

That's all I knew, seemed simply enough to me, it was a miracle or something. Not so.

According to Clifford "everybody knows" (not including me) that making bagels right requires boiling them in water before piling them in the oven. And that all too many bakers don't do it that way. Who knew?

"It's not easy to find a water-bolied bagel, especially outside of New York," Clifford, president of Bronx-based Just Bagels Manufacturing Inc., told the audience of business owners at a recent event at a New York City hotel. "We just bake like a little bagel shop."

However, "Just Bagels" is a company that is pumping out its products around the clock, at a rate of 1.5 million a week (yes, million) in a 34,000 square foot plant. That doesn't sound like a little bake shop to me. I don't know how high 1.5 million bagels would be if they were stacked one on top of another or how many cows it takes to create the milk that becomes the cream cheese - but I bet it's a lot!

We all know that 80% of new businesses fail to reach their fifth anniversary. One surefire killer of entrepreneur founded business is that their product can't be differentiated in order to be sold against established competitors. From the beginning they had the recipe for successful bagels, theirs was a great product from day one - but sales, well that is a tough one for everybody. Clifford and his partner James O'Connell, like so many companies with a great product, fell short of sales.

So much so in fact that in 1994 they decided to throw in the towel and put the business up for sale. Instead of selling the place, they found a partner. This should be a "take away" pint for everyone. Before you give up and sell the business for ten cents on the dollar - see if you can find a partner who has what you lack.

Charles Contreras was a former banker and mortgage company owner. Instead of just buying their business he offered them his management experience plus a cash infusion, in exchange for a stake in the company.

The best of all worlds. Clifford and James experiences included sales and baking. Now here was Charles, with his background in finance and management, who was willing to add much needed capital to the pot. A match made in bagel heaven!

"Charlie brought a business plan and taught us how to sell through distributors," says Mr.Nordguist. He also brought a bigger appetite for risk.

They quickly set up a much larger production facility and then began soliciting wholesale accounts. Within three years they had signed up Dean & DeLuca and American Airlines.

As with any business things have not always been smooth sailing. In 2001 their expansion plans resulted in some belt tightening when a subtennant of the newest facility backed out. But they, like all successful business owners, sucked it up - focused on the mission and continued to execute their strategy.

As of 2005 they had rebounded enough to double their plant capacity to the current 34,000 square feet and expanded to 90 staffers. They expect revenues to hit more than $10 million (yes, million) this year (2006).

There are millions of companies like "Just Bagels" that have found the recipe for a winning product, a winning strategy, and a winning team.

We are telling their stories.