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Candy couple’s sweet return

IT was passion that led Jeff and Cassandra Stipanicev to open their hand-made candy business; it was their passion that nearly cost them the business, and potentially Ms Stipanicev her life; and it was that same passion that saved them. Theirs is a story of a naïve approach to a new business they fell in love with, made worse by a lack of professional advice and a cancer scare amid mounting debts as the pair struggled to come to terms with a business they knew very little about. After a five-year struggle to rescue the near-dead company, Walker’s Candy Co has turned the corner and just clinched a couple of major new contracts. After returning from the mining industry in the north of the state, then operating a diesel repair business, Jeff, 41, and Cassandra, 39, started looking for a business in the food manufacturing field, an area known to Ms Stipanicev’s family. In 2001, a business broker suggested the Walker Candy Co, part of a company originally established by the Walker family in Perth in the early 1980s. “We fell in love with the idea of making a range of high-quality traditional hand-made candy. We were very naive and thought renovating a business was like renovating a house,” Ms Stipanicev told WA Business News. The pair was provided with a glossy report which detailed the business and was couched in such a way as to indicate an annual net profit of $84,000. “It was a powerful document, but it was all about future potential. We didn’t even understand a balance sheet,” Ms Stipanicev said. So they took the document to a family accountant for a professional evaluation; a procedure the Stipanicevs understood to be a due diligence study. “But the accountant didn’t question it [the broker’s report] and I didn’t know what questions to ask. I expected him to come back and tell me what the numbers meant, whether the business was profitable and was a good buy or not,” Ms Stipanicev said. They later found that when certain necessary business costs, such as directors’ wages (which the Stipanicevs were obviously going to need), were added back to the supplied figures, they showed the business was operating at a loss. The deal was done and the couple handed over a low six figure sum for a business “that was almost dead”, Ms Stipanicev said. Within three months, the reality dawned and the aftershocks just kept coming. “The customer and supplier list was woefully incomplete, with people we had never heard of calling to see if the company was still in business,” she said. Some of the confectionary making equipment was not there and the business was also badly under capitalised at $20,000, when more like $100,000 was needed. After about six months and with debt up around $220,000, the desperate couple consulted a lawyer about suing both the business broker and accountant, who they refused to pay for the evaluation. The action was not pursued. “Even at this stage, we thought the business had potential and we’d been through so much,” Ms Stipanicev told WA Business News. Bankruptcy was an option. Instead, they sold the house in Hillarys that was home to their two young children, their two cars, paid off all the debts and rented in Helena Valley. Soon after, Ms Stipanicev was diagnosed with breast cancer, “which I attribute entirely to the stress from the business”. The business pressures also put their own relationship to the test. “The stress was unbelievable. We just stuck together, us and the kids. Jeff and I have a fundamental belief in each other and what we are doing at Walker’s Candy Co,” Ms Stipanicev said. The battle continued, but by this time the couple had recognised the limits of their individual expertise. They did personal development training courses with Landmark Education and attended the Curtin business improvement program, both of which Ms Stipanicev said were excellent. After returning to work, cancer free, Ms Stipanicev embarked on an Internet-based advertising campaign that netted two eastern states clients now among Walker Candy Co’s top four. They have recently been joined by the WA-based Candy Cow group and another. Despite all the trials and tribulations, turnover has risen substantially each year from $70,000 in part of 2001-02, to $330,000 in 2004-05, with the company targeting $600,000 this financial year. For the first two years, Walker’s Candy Co was just the Stipanicevs. The company now has a permanent staff of three and seven casuals operating out of cramped office and factory space in Morley. “We are still growing and we need bigger premises, but we are still under capitalised,” Ms Stipanicev said. They are discussing that with their new accountant. Looking back, Ms Stipanicev said their problems all stemmed from not thoroughly investigating and understanding the business they were about to buy. “I’m not saying that everyone out there is misrepresenting business, it’s just that, in many cases, what is written up about a business is not necessarily the way it is.”

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