Spokane residents Jeff and Shawna Miller have shouldered their share of challenges in their small-business ventures here in the last year.

Jeff Miller says that although his eyes may have glazed over a few times at the circumstances he's faced in opening and operating the couple's HoneyBaked Ham Co. & Caf franchise outlets here, being a small-business owner feeds his entrepreneurial spirit.

"It's a freedom most people never experience," he says of owning his own businesses, which include two HoneyBaked Ham specialty meat market and sandwich shop outlets here as well two Auntie Anne's pretzel outlets, in Spokane Valley and Yakima, Wash.

Now, Miller hopes that the two HoneyBaked Ham stores will have a good run during this holiday season.

The franchisees have faced challenges over the last year, including committing to a 10-year lease for a second HoneyBaked Ham location right before the stock market fell a year ago, then learning that the anchor tenant of the commercial center that houses their first HoneyBaked Ham location in Spokane Valley was folding, leaving them marooned in a virtually empty commercial center. Despite those unforeseen difficulties, Miller says he enjoys his work

"It's been challenging, but really fun," Miller says.

All four of the company's stores are holding their own, he says. Though he declines to disclose the stores' revenues, they all are profitable, which he says has allowed the couple to reinvest in the businesses and to expand. Miller says it takes an investment of about $350,000 to open each of the franchise locations.

The couple's stores now include HoneyBaked Ham outlets at 4805 N. Division and at 13910 E. Indiana, an Auntie Anne's pretzel shop in the Spokane Valley Mall, and another at the Valley Mall in Union Gap, Wash., near Yakima. Altogether, they employ about 25 people all year and a total of between 35 and 45 people during busy holiday periods.

The HoneyBaked Ham store receives its hams from the HoneyBaked Ham Co.'s midwest distribution center fully cooked and spiral sliced. Miller says that at the store, employees inspect the hams and glaze them before packaging them for retail sale. The stores also sell fully cooked turkeys and turkey breasts, a variety of premade side dishes, and barbecued pork.

Auntie Anne's sells a sampling of plain and specialty-flavored pretzels that it makes daily, including pepperoni pizza-style and pretzel-wrapped hotdogs, as well as dipping sauces and some pre-packaged carry-out items.

Miller says that much of HoneyBaked Ham's business comes from business-to-business gift sales, and that it also supplements its non-holiday sales by catering sandwich orders for lunches. He says about 60 percent of its sales come from the specialty grocery side.

A trying year

After enjoying a good first year at the store on Indiana in a development west of Spokane Valley Mall that at that time was anchored by Joe's Sports & Outdoor, the big sporting goods outlet, the Millers signed a lease for a second franchise location of HoneyBaked Ham here. Jeff Miller manages the HoneyBaked Ham store on Indiana himself and has hired managers for all of the couple's other retail outlets. He says walk-in sandwich sales, which accounted for about 20 percent of the location's sales, were hurt dramatically by the closure of Joe's.

The Millers opened their second HoneyBaked Ham outlet here in June at the recently developed Northtown Square. Though he wasn't thrilled about opening a heavily seasonal retail store in June, he says the location was so good it was worth putting up with a slower start. With the Northtown Square location, the Millers feel they have good accessibility for residents throughout the Spokane area, he says.

They signed the lease for that location in August of 2008, just before the economy "tanked" and shortly before Joe's closed, Miller says. Adding to the difficulties was the heavy snow last winter, with more than 82 inches of the white stuff falling before Christmas, eating into holiday sales at HoneyBaked Ham.

"Joe's closure was a big issue," but the store on Indiana seems to be picking up sales volume and standing on its own in the center as a destination as people seek out the precooked glazed hams and ready-to-serve turkey breasts that HoneyBaked Ham sells, Miller says.

Small business, big investment

Miller says he started out in the business after 10 years as a financial planner. Miller was dissatisfied with the financial planning industry, and he and his wife were seeking a business opportunity as an investment strategy, he says.

"The yield you can get on franchising can be better than the stock market," Miller says, adding that there's also more risk involved.

"It's not easy, and it's a lot of work, but for the right people it can make sense," he says of operating franchise outlets. "You need to be well-capitalized and have a good partner."

Even though the Millers are franchisees, Jeff Miller says the challenges he's faced are an example of how local and independent each outlet still is.

"You're with a franchise, but they don't know the local factors, so you have to figure it out," he says.

The Millers have been successful by persevering and by diligently reinvesting in the businesses, financing their own expansions, he says.

"It would be crazy to do this unless you have been aggressively paying down debt and managing cash flow," he says. Now, with two HoneyBaked Ham outlets, there's enough economy of scale to justify investing in billboard, television, and radio advertising, which Miller hopes will help boost sales further.

One of the Millers' strategies has been choosing to operate two different types of food stores that appeal to different customers and have different ebbs and flows in sales. The smaller ticket, steady-volume pretzel business helps smooth out the seasonal nature of HoneyBaked Ham, which in turn provides a higher volume of sales during its high seasons.

Counting himself lucky so far, Miller says he's holding his breath in hopes of a good holiday season, and feels positive about the ventures.

He says he has no specific plans to open new stores, but is open to opportunities. He says that in the HoneyBaked Ham franchise network, he essentially has the rights to Spokane and Kootenai counties. With those options also comes a commitment to the franchisor that he will open a Kootenai County store if sales reach a certain level in Spokane. Auntie Anne's is a per-store agreement, he says.