Single mom-of-seven turns her last $5 into a million-dollar cupcake business

Mignon Francois and her family moved to Nashville, Tennessee, in 2005 with the promise of a job for her then-husband. However, things quickly began to unravel soon after their arrival as the job offer fell through and he ended up going to work as a foreman. Left with a limited income to raise their kids and manage their household, everyday expenses like food and transportation became a struggle. So much so that Francois would live in the dark during the day so that her kids would have enough power in the generator when they came home from school.

"I'd find myself often walking to the Kroger on the corner near my house to buy water to fill up the tub so that my babies could take a bath. And by babies, I mean all the way from 3-years-old up to high school graduates," Francois told Insider. The hardships fueled her passion and drive to succeed, to "make it." The turning point came when she heard a story on the radio of someone getting out of debt by having a bake sale, reports Entrepreneur. Despite having no experience in baking, Francois decided to give it a shot.

"I put these three-by-three signs outside of my house. They said, 'Bakery coming soon.' Then I felt like the whole world had seen it—I couldn't back out now. I had to figure out how to bake," she revealed. Francois had set the ball in motion and as she sat in the dark one afternoon in 2007, a neighbor knocked on her door asking her for an order of 600 cupcakes at $1 each. However, the amateur baker did not have the money to purchase ingredients for all 600 and hence agreed to bake 60 at first.

"When I closed the door, I had a real come-to-Jesus moment with God and said like, 'Seriously? You offer me this opportunity when I don't have any money? I literally have $5 to feed us,'" Francois said. She put on her shoes and walked over to the store to buy the required ingredients with the last $5 she had. That evening, she got paid $60 for the first batch of the order. She put that $5 back into the dinner budget and kept on baking. By late 2008, the mom-of-seven had saved up enough to launch her business, The Cupcake Collection — which sells specialty cupcakes and cakes nationwide — that now generates nearly $1 million in sales each year.

Francois credits smart money habits and rigorous budgeting for being able to scale her operation from baking in her kitchen to running a nationwide cupcake empire. Looking back at the initial days of her business, she recalls how she never knew how much money the family would have from month to month since they didn't have a set income. She couldn't afford to have a bank account due to the risk of fees and overdraft charges. As a Black woman, Francois also didn't feel she had access to the same opportunities as White people when it came to relationships with bankers.

"I think a lot of times in my community, we often have been used to rejection from banks," Francois said. "Having my money in a bank account at that time, if I had messed up even a dollar, it would have caused me to get a bank overdraft, which would have cost me $30, and then that's just a vicious cycle of snowballing in a negative way." With limited options, Francois set up her own system and began dividing her money into envelopes based on necessary expenses. She followed finance advisor Dave Ramsey's advice, in which you pay your four walls — shelter, utilities, transportation, and food — before tackling other expenses.

Francois also divided her profits and taxes into envelopes, setting 20 percent aside for taxes. Money spent on supplies was always put back in an envelope to purchase the next batch of supplies. Since she didn't have access to a credit card, Francois had to be intentional and have a plan for every dollar in advance so she wouldn't get caught in a situation where she couldn't purchase something she needed. Following Ramsey's 7 Baby Steps strategy, she set an emergency fund savings goal of $1000. Once she reached it, Francois aimed to save three months' living expenses and then six. "That envelope system changed my life because when I looked up, there was a lot of money in there," she said.