Harvey Nelson is almost, maybe, possibly ready to exit Main Street Gourmet

Shifting to wholesale set off rapid growth that required them to leave their 1,800-square-foot shop on Main Street and move into the 10,000-square-foot building of a former fish distributor to get much-needed freezer space. With growth again accelerating, the business was operating 24/7. Nelson had to start putting his trust in employees, delegating and creating processes that could be followed without his direct oversight.
Seven years in, the company was selling in the Midwest and on the East Coast through distributors. The business grew exponentially during that time, earning it successive spots on the Inc. 500 list of fastest-growing companies.
Again squeezed for space, they decided to build their own facility — at initially 25,000 square feet, it would grow through two expansions to be the building in which the business currently operates. And that’s when Nelson realized exactly how big everything had gotten, and how deeply he had gotten into it.
“It was one Sunday I came here — we were building so nothing was going on — and I got out of my car and I looked, and I was like, ‘This is crazy. I mean, how are we going to do this?’ It might have been just that I saw it, physically saw it. And that was the first time it hit me.”
Risky position
Two years later, Marks and Nelson were investing just about everything back into the business to keep it churning when someone from a venture capital fund approached them. He asked Marks and Nelson if they were looking to sell. They were. And they made a deal.
They sold a majority share to the VC, and around 1996, a person was brought on board to focus on buying companies, with a plan grow aggressively through acquisitions. A COO was also brought in. They tried some different things, but the arrangement didn’t work out. The founders, ready to walk, couldn’t, because they were unable to trust that someone would take over the business and run it successfully. And they couldn’t watch it fail.
“At that point, it is your baby,” Nelson says. “I could let go, but who’s going to do it? It was always back and forth in my head of staying or going.”
Meanwhile, in the market, bigger companies were starting to supply muffin batter. Local retailers were losing out to chains, and food distributors were consolidating, all of which threatened Main Street’s wholesale business. But the chains didn’t want to all have the same muffin batter. Marks and Nelson saw the market demand for a unique product, so they went to work on the infrastructure needed to sell custom batters.
The company was still under VC ownership, but the fund was nearing its end. Marks and Nelson negotiated hard to get their business back, knowing they could capitalize on new opportunities. To do that, they would have to personally guarantee it all and go into debt. But they were confident it would be worth it.