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Josie Rudderham, left and Nicole Miller of Cake and Loaf.

Glenn Lowson/The Globe and Mail

Cake & Loaf Bakery Ltd. is one of the five semi-finalists in The Globe and Mail's Small Business Challenge Contest. (Check out the other four here and vote for your favourite.) The 2016 contest drew more than 3,400 entries, and a panel of judges selected the semi-finalists. The winner of the $100,000 business grant – and a suite of secondary prizes – will be announced in September.

It takes a lot of willpower to walk by the cinder-block and red-brick house that serves as storefront and artisanal kitchen for the Hamilton business launched six years ago by Josie Rudderham and Nicole Miller.

After all, who can resist the smell of freshly baked bread, or the sight of cakes, pies, eclairs and cupcakes displayed so prettily in tiered glass cases?

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"We have definitely become a destination for people," says Ms. Rudderham, co-founder of Cake & Loaf Bakery, which hit $1-million in annual revenue this year and employs close to two dozen workers. "A lot of our regular customers are local to Hamilton, but we also have people who drive in from Toronto, Oakville, St. Catharines and even London."

Ms. Rudderham and Ms. Miller met while studying pastry arts at Niagara College in Niagara-on-the-Lake, Ont. "We literally sat down for one coffee and decided we would start a business," recalls Ms. Rudderham. "We were both really jaded about bakeries, which were using a lot of frozen products and turning bakeries into factories."

That was 2008. The two women bought a house for their new business, but the recession hit shortly after and the bakery was put on hold. Two years later, after Ms. Rudderham was laid off from a job in the mortgage brokerage industry, she and Ms. Miller decided to have another go at their bakery.

The business took off quickly. Initially, Cake & Loaf adopted a shares-based business model where members each got baskets of assorted baked goods. But once the company opened a storefront, this model didn't work any more, says Ms. Rudderham.

Click here to vote for your favourite Small Business Challenge semi-finalist in this year's contest

Cake & Loaf now has two locations, with the second one in the Hamilton Farmers' Market. The company has five departments: pastry, bread, custom cakes, savoury foods, and candy. Their goods are produced from scratch using local ingredients, she says.

"One of the things we're really proud of is the fact that we're creating quality employment that pays as well as is possible for our business," Ms. Rudderham says. "It's a physically demanding place to work, but people here love their jobs."

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As Cake & Loaf continues to grow, Ms. Rudderham and Ms. Miller want to keep the personal touch that's become as much of a trademark of their business as their baked goods. They believe investing in a customer relationship management system will help them do this.

They would also like to expand Cake & Loaf's original store to include a public space where customers can sit down to eat, and where they can play host to baking classes and community events. Ms. Rudderham estimates this expansion will cost about $150,000 and hopes to finance it with money from the Challenge contest and from community fundraising.

"Right now, there's no place to sit down – people come here to pick up and there's just a few benches outside for those who want to linger," she says. "We're in a neighbourhood that's very residential but is seeing more businesses popping up along the street, so we would like to grow as the neighbourhood grows."

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