Module 4: Post-Class Discussion #2 - Big Bottom Market Cash Flow IssuesUpon reviewing the article about Big Bottom Market, clearly summarize the issues and describe what YOU would do to correct the company's largest areas of concern.

Michael Volpatt, one of the three founders of the Big Bottom Market in Guerneville, Calif. Credit Jim Wilson/The New York Times

Big Bottom Market is a year-old restaurant and specialty food store in Guerneville, Calif., that also sells wine and locally made crafts. It is a moonlighting venture for its three owners, among them a San Francisco public relations executive, Michael Volpatt, who saw an opportunity to fill a local need after buying a weekend home in this Sonoma County town of 6,500.

THE CHALLENGE How to survive the lean months, October through April, when visitors to the Russian River getaway dwindle. After opening in July 2011, the market posted encouraging weekly sales of $20,000 to $24,000 in August -that plummeted to as low as $4,000 by November, prompting staff layoffs and an emergency retreat to assess options.

THE BACKGROUND Mr. Volpatt, who describes himself as a "serious foodie and serious oenophile," had long dreamed of opening a specialty food and wine store. He decided to go ahead after settling deeper into the community of Guerneville, a once booming logging town formerly known as Big Bottom for its location on the alluvial flats of the Russian River. Nowadays, the gay-friendly town is popular with weekenders and vacationers visiting nearby vineyards, kayaking on the river or hiking in nearby Armstrong Woods in what remains of the old-growth redwoods.

Mr. Volpatt, 40, would keep his lucrative day job: he owns half of a 10-year-old bicoastal public relations firm, Larkin/Volpatt Communications, serving clients such as the digital divisions of Publishers Clearing House and Hearst. Mr. Volpatt and his business partner, Kate Larkin, 45, who is based in New York, had already invested some of their earnings in real estate, including part ownership in an apartment building in St. Louis.

Both felt a market/breakfast and lunch spot was just what Guerneville needed. Chasing that opportunity was a leap into the unfamiliar world of retailing and restaurants but one they cushioned by entrusting the kitchen and market operations to a third founding partner with food and hospitality experience. Mr. Volpatt had become friends with Crista Luedtke, a San Francisco mortgage broker and hands-on owner of Boon Hotel and

Spa and Boon Eat and Drink, two popular Guerneville businesses. With Ms. Luedtke overseeing day-to-day operations, Ms. Larkin acting as chief financial officer and Mr. Volpatt in charge of marketing, Big Bottom Market opened in a 1,500-square-foot Main Street storefront. The three partners provided $100,000 to transform the space, stock the shelves and supply operating

capital.

The new look was hip-casual. Hardwood floors, plenty of barn board, funky metal chairs at nine tables, stools at a counter and a communal table. The executive chef, Tricia Brown, off a stint at New York's Gramercy Tavern, created a menu featuring baguette sandwiches, soups and salads, and a signature-item-in-the making: Big Bottom biscuits (regular, Cheddar and thyme, ham and cheese, even a "sea biscuit" with house-smoked salmon and capers and pickled red onions). The biscuit recipe belonged to Ms. Luedtke's mother, who, as one of 20 employees, helped with the baking.

Sales rose like the biscuit dough in the peak summer weeks and then tapered off in September. Still, the business remained profitable, and with the biscuits getting good buzz, the fledgling owners pondered a spinoff venture, considering wholesaling

batches of frozen biscuits beyond the ones they sold from their own freezer cases. Then, in October and November, the bottom fell out for Big Bottom. "At the rate you guys are going," their accountant warned, "You're going to have to close your doors."

Yes, the owners had expected a downturn. "We thought maybe

we'd lose about 30 to 40 percent of our business," Mr. Volpatt said. But not 80 percent. "This is my first time at the rodeo, and I'll tell you, we were freaking out."

What would you recommend to the owners?