Entrepreneur Insight

Dots Cupcakes: How a First Business Achieved Sweet Success

The owner of Dots Cupcakes is opening a new café and shares tips for entrepreneurs.

Hailey Kwon is a cupcake pioneer. In 2006, before there was a cupcake shop on every corner, she decided she wanted to open one. Now she has two cupcake shops in Pasadena, Calif., with annual revenue of more than a million dollars. Her gourmet cupcakes have been featured in numerous magazines and at celebrity events, and now she is about to realize her dream of opening a new sitdown café this summer.

Stepping into one of her shops is like entering confectionary heaven: the counters are filled with candles, sparklers, cards, stickers – everything you need to celebrate a special occasion. And then there are the cupcakes: up to 32 flavors, ranging from red velvet and strawberry shortcake to chocolate bacon, in full size or mini-size, all freshly baked and hand-decorated every day. “We almost sell a form of happiness,” Kwon says.

It’s hard to believe that all this happiness was born out of a tragedy in her life.

The inspiration

Kwon was working as an event coordinator with the Los Angeles Dodgers when she got the shocking news that her father had died of a heart attack. Devastated by the loss, she quit her job to help her mother run the family dry cleaning business, which her parents had opened in Southern California after emigrating from Korea.

“If my father had known that he was going to pass at such a young age, I think he would have taken a different course in life. I think he would have fought harder to live a better life,” she says, tears welling up in her eyes. “Life is very short, so you’re going to do exactly what you need to do. Just go for it. Even if you fail, you’re going to risk it.”

Even as she grieved, an idea began brewing for a business that involved two things: gift giving and desserts. She hit upon the idea of cupcakes because they can be individually boxed and wrapped, and she sensed the timing might be right.

“I thought, this could be a good idea because it’s in the early stages and there weren’t many cupcake shops that existed,” she says. “Once I made a decision to do it, I was going to find the resources in order to open up the store,” she says.

She spotted a small vacant space on a main thoroughfare — a shabby former motel room suite —and signed a lease. With a $100 deposit, she was able to get a revolving line of credit from a bank. (Kwon says this was in 2006, when credit was more readily available.) She also signed up for every credit card offer that came her way.

Then she had to learn how to bake.

“I didn’t know how to bake. I initially thought cake came out of a box. I went to the library, grabbed books and started baking. I probably baked over 2,500 recipes before I really found what I liked.” She worked around the clock, baking, cleaning, picking up supplies, overseeing construction and pulling permits, until she opened the shop three months later. The bright-pink storefront on a busy street attracted curiosity and foot traffic, and pretty soon she was doing a brisk business. Two years later, she opened a second location, and now she sells about a thousand cupcakes a day.

Working with mentors

As a first-time business owner, Kwon drew heavily upon the advice of her mentor, lawyer Curtis Jung, whom she worked for right out of college at the Asian Business League of Southern California.

Jung says his first question to her was, “Are you sure you really want to do this?” But he knew she had a tremendous work ethic, and an ability to keep up with trends.

“She knows what is relevant, she’s well-read, she knows what’s hot. Every business needs to do that in order to succeed,” Jung says.

“He pointed me to a lot of resources, from insurance brokers to graphic designers, and showed me how to file legal papers, and apply for copyright and a trademark,” Kwon says.

“Getting insurance, dealing with employees, the financial aspects – if she had a question, we discussed it, and I made some referrals,” Jung says, “because that’s important: who you work with, the right partners, the right team.”

When she decided to purchase a building to open up a café, Jung introduced her to East West Bank, and commercial loans relationship manager Larry Wong.

“It was an ordinary real estate project, but with an extraordinary concept and carefully planned by a visionary entrepreneur,” Wong says.

The bank, Kwon says, “initially provided the loan for the actual building, [but] then it was: OK, we have a building, but how am I going to have the money to do the construction? They almost knew what were the next steps, what would help get me to my goal.”

She talks more about the experience here:

First-time entrepreneur lessons

Despite the fears she had in the beginning, Kwon says she managed her fear through action – by showing up and working hard every day. “Fear is a natural human instinct. To overcome it, you just have to work through it, figure out what people like, celebrate the little accomplishments, and move on.”

That said, you have to relinquish control of certain aspects of the business in order to scale up, according to Kwon. In the beginning, she picked up all the baking supplies herself, including a high-quality cocoa powder. She says she would go to five different Whole Foods and clear out the entire supply at each one, until one day someone suggested that she get in touch with the supplier and buy in bulk. Now she gets the cocoa powder delivered and she saves money. “You don’t think about those things when you’re just going and going, but sometimes you have to stop and make some changes,” she says.

Expansion

This summer, Kwon will be able to realize her dream, to open up a sit-down café. She has purchased a 4,000-square-foot space in East Pasadena. Dots Café will feature a full-scale kitchen, bakery and dessert bar, as well as a learning space where people can take baking classes.

“The vision was always to have a community restaurant where people can come together, have dessert together, have sandwiches and food and celebrate different moments in their life,” she says.

Now that vision is about to become a reality, and she can share in those special life moments with her customers.

“I almost feel like we all have some kind of calling in life, right? So if we’re able to kind of forget about all the fears and ‘what if’s and really go for it, that will propel you to succeed,” she says.