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the challenge contest

Josie Rudderham, left, and Nicole Miller opened Cake & Loaf Bakery in Hamilton five years ago.Glenn Lowson/The Globe and Mail

Josie Rudderham and Nicole Miller have big dreams for the small business they started five years ago in a house in Hamilton, Ont.

The owners of Cake & Loaf Bakery Ltd. – a million-dollar business that bakes goods from scratch using local ingredients – want to expand their main location to include eat-in and meeting spaces for baking classes and community events. They also want to build a customer relationship management program that can help them maintain the personal touch that's become a key part of their brand.

It'll take a lot of cash – at least $150,000 for the space expansion alone – to turn this wish list into reality. But there's no stopping Ms. Rudderham and Ms. Miller now; the business partners and former college classmates have won this year's Small Business Challenge contest, sponsored by The Globe and Mail and Telus Corp., beating out more than 3,300 entries.

Now in its sixth year, the contest awards the winning business a grand prize of $100,000, giving Cake & Loaf a big chunk of the capital they need to move their plans forward. The founders also will receive $10,000 to donate to their favourite charity.

"It was a bit of a shock to find out that we had won – we were like, 'Are you sure it's really us?'" recalls Ms. Rudderham, who, together with Ms. Miller, has built Cake & Loaf into a thriving business with five departments, close to two dozen employees and two locations. "This is going to be transformational for our business."

After the initial round of judging, Cake & Loaf was shortlisted with four other semi-finalists: online babysitting platform DateNight, composting bin manufacturer Autom River Inc., high-end playhouse maker Charmed Playhouses Inc., and Caesar cocktail mix producer Brutus Beverages Inc.

Suzanne Trusdale, a Challenge judge and vice-president of small business solutions at Telus, says she and the six other judges were won over by Cake & Loaf's compelling story – of two passionate entrepreneurs committed to the craft and philosophy of from-scratch baking, and to building a business that bucks the industry trend by paying employees a living wage.

"All of the semi-finalists were amazing, but Cake & Loaf just knocked it out of the park on so many fronts," says Ms. Trusdale. "I'm not at all surprised that they were chosen as this year's winner."

Through their written entry and in-person pitch to the judges, Cake & Loaf's owners did a great job of sharing their story and vision for the business, says Ms. Trusdale. They also impressed the judges with their rapid pace of growth.

"In the last two years, they grew from eight members to 23 – that's huge for a small business," says Ms. Trusdale. "What I find also amazing is how they've stayed true to their original vision, which is to build a neighbourhood bakery that makes high-quality products with organic, local ingredients."

Mandy Rennehan, founder and chief executive officer of Freshco, a full-service retail maintenance and construction company based in Oakville, Ont., calls Ms. Rudderham and Ms. Miller "enlightened entrepreneurs" whose path to success is likely to take their business beyond the boundaries of its home community.

"I believe that at some point in the near future there will be a Cake & Loaf in every city in Canada," she says. "These two women have demonstrated the true vision of entrepreneurship – with humility and creativity, they have built a scalable and sustainable enterprise with superior products and solid business fundamentals."

Since it first fired up its ovens, Cake & Loaf has become a popular destination for Hamilton residents and out-of-towners. But customers who want to linger have to make do with a few seats along the storefront sidewalk.

Armed with their $100,000 cash prize, Ms. Rudderham and Ms. Miller plan to raise funds from their community to help cover the cost of building a space where customers can sit down and eat, and where Hamilton residents can gather for special events.

Ms. Miller says the Challenge contest means so much more than winning a chunk of cash.

"Just entering the contest gives a small business like us an opportunity to think bigger, dream bigger and put their best face forward," she says. "It was also really interesting to meet the other semi-finalists, see what they were doing in their business and how they were thinking bigger."

The founders plan to celebrate their win with a community festival and an end-of-year party for their employees. Ms. Rudderham and Ms. Miller say they expect the bakery to be extremely busy between now and Christmas, but they hope to start working on the store expansion early next year.

Ms. Miller says entering the Challenge contest felt like a long shot, but she's glad she and her partner took the chance.

"I learned that, as a business owner, you have to just put yourself out there for anything and everything because you never know where things can lead," she says. "I want to encourage all the other small businesses to put themselves out there and join the next Challenge contest."