A soup peddling entrepreneur uses a credit card to finance his career switch

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On correspondence, David Ansel includes two lines beneath his name — “Principal Soup Maker” and “Soup Is Love.” Soup has been good to 33-year-old Ansel, even though he lives in temperate Austin, Texas. Gross sales of the Soup Peddler, the homemade-soup business he started in 2002 after quitting his job in software development, have been growing by 10 percent a year and are slated to reach $1 million by 2008. The soup is delivered chilled and is reheated at home. His original delivery method, a yellow bike made up of bike scraps, bumper stickers and a trailer holding a blue cooler emblazoned with a “Soup Peddler” logo, has been retired. Now Ansel’s customers order from an online menu a week ahead and arrange for pickup at the Austin store or for home delivery. These customers are still called Soupies,” but in the fall of 2005, Ansel added nonsoup items such as homemade desserts, quiches, pot pies and sandwiches to the bill of fare. He’s the author of “The Soup Peddler’s Slow & Difficult Soups: Recipes and Reveries,” published in 2005, and is currently at work on a second book, on entrepreneurship.

David AnselTell us a bit about why and how you started the Soup Peddler.
It started out as a desperation thing in 2002 after I decided to leave the corporate world. I had seen a woman selling gorditas, which are similar to tortillas, from a cart on the street in Mexico. That inspired me. So I went to work. I had never taken a cooking class or worked in a restaurant before getting into the food business — a business I knew had a very high failure rate, by the way!

Did anyone advise you on financing?
I spoke with other restaurateurs. Since food businesses are among the highest risk of all entrepreneurial businesses, they are generally financed by partnerships because banks won’t touch them. I didn’t want to be beholden to other people in the community; my family doesn’t have a lot of money so I didn’t want to borrow from them; and I couldn’t get financing from a bank, so I turned to a credit card.

And I wanted to pull myself up by my own bootstraps. I used one card, a First USA card that had a $29,000 spending limit and a 3.99 percent introductory rate if you used the convenience checks they offered. The checks work like a cash advance, but you don’t get charged the high interest rate of a typical cash advance. Frankly, I couldn’t believe how good the terms were. I talked to 20 different people to find out what the catch was. There wasn’t one — except that if you missed a payment the interest rate jumped up to 18 percent. Of course, you have to pay off the inexpensive money first. I borrowed $20,000 and went to work. I never missed a payment.

How long did it take to pay back the credit card loan?
It took about a year and a half to pay back the money. By my second week in business I had 21 regular customers, all from word of mouth, so I felt I was onto something. I delivered the soup in reusable plastic buckets, by bicycle. It was great advertising. After three years in business, I expanded beyond soup to other menu items. Today, soup is less than half of my $800,000 in gross sales.

What percentage of your startup financing was on the credit card?
Pretty much 100 percent. I used the $20,000 in courtesy checks until I had some cash flow, which provided the leverage to get the rest of the funds for the Soup Peddler. Pretty soon the two enormous pots I had bought at a used restaurant supply shop were no longer sufficient for making the soup. Neither was my home stove or the refrigerator I used. So I made a deal with a local Thai restaurant to cook at midnight, after they’d shut down for the night. By the end of my first season I had a base of 48 regular customers — people who ordered pretty much every week. That was enough to get me going.

In 2003 I took out a bank loan of $60,000 for my next expansion. I had a decent track record at that point. I found a hip loan officer who had a passion for the creative class and for entrepreneurs. I signed a lease on a 900-square-foot kitchen that allowed me to grow the business to what it is today.

Was there a downside to credit card financing?
I got my credit card loan for 3.99 percent. That’s a far cry better than any bank will ever give a young entrepreneur. The payback is flexible. I can’t see any downside in my example. I didn’t really need to borrow all that much money, though. It’d be more complicated if I had used several cards and was juggling them.

What role do credit cards play in your business today? Do you use them for ongoing expenses, such as supplies, advertising, computers and payroll? 

I use credit cards pretty extensively to run my business. It can be pretty rough for the Soup Peddler during the summer months — it’s very hot in Austin then, and soup doesn’t sell so well — so I load up on credit cards. I like the Advanta MasterCard. It has great rates and balance-transfer deals such as 0 percent financing for the first year. I hope I won’t have to use credit cards this summer, though, as I’ve expanded into other menu items.

So why pick soup as the basis of the business? Was it the warm, fuzzy connotation?
I picked it because I thought it would have a good shelf life and it would fit into the reusable buckets I wanted to use for the business — the soup was delivered in the buckets. Now I use food-grade plastic bags. It also seemed like an extendable theme. Obviously, as I went on, I realized the power that soup has in people’s lives; it has been a nice, meaningful, artistic vehicle for that reason.

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