Growing Pains Part 2

The last blog I published was in June, called Growing Pains Part 1. In it, I described some of the big projects we’d undertaken in 2021, which led to serious growth and serious growing pains (namely, always being on the verge of running out of cider).

In that blog, I promised to write a second part that was less of a report on what was causing the growing pains and focused on more how businesses can manage big growth phases. Of course, we’re a relatively young and small business, so this blog about big growth is coming less from the place of ‘this is what other businesses should do’ and more from a ‘this is what we’re trying to do’ place.

Here are some of the pitfalls of big growth and how we’re attempting to manage them.

1. Growth costs a lot, and usually it costs a lot before you’ve actually grown revenues.

   In late 2019 (let’s just forget 2020 happened, because we remained at a static state for most of that year), we were flirting with the edge of maxing out our production equipment. That meant that we couldn’t really make much more cider without having to make major investments in our infrastructure and equipment. Over the years, Joseph had come up with work-arounds and tricks to squeeze more cider out of what equipment we had, but if we wanted to make any more cider, we’d need to put hundreds of thousands of dollars toward it. This was because we couldn’t just buy a new tank. If we increased our tank capacity, we’d have to cut a new concrete pad that could handle the extra weight. If we did that, our glycol chiller wouldn’t be able to keep up with new tanks, so we’d have to get a second chiller. But if we did that, we’d have to upgrade the electrical service and the power to the building. And if we did all of those things and could make more cider, our bottleneck would be Pasteurizing it all, so we’d need a better solution there.

   A lot of small businesses find themselves in similar situations. You either have to stop when you’ve maximized your equipment, or you practically have to double everything at once, which costs lots of money and is based on the general ~vibe~ that you’ll be able to grow your sales enough to cover the added expense of this growth. If you are able to find the money to do a major expansion, there are still several possible outcomes. You might find out that it’s going to take longer for sales to pick than you expected and you might run out of cash or even go out of business because your debt burden becomes too much. You could adapt and start offering other services to cover that gap in revenue until sales pick up, like making cider for someone else, or canning cold brew coffee for a local business. In the best situation, your gamble that the demand is out there turns out to be true, and you’re very grateful you had the equipment to handle it.

   We are really fortunate to have a lender we’ve worked with since we opened who believed us when we said we needed money to capture this anticipated interest. Luckily, we were right that the demand was there and that the sales would be there on the other side. PHEW. But these major growth periods present a super risky phase for any company, and it puts of lot of promising companies out of business.

2. Growth means a lot of new people, and potentially, a change of culture. One thing that’s been really important to us since we opened is our company culture. We have a short mission, vision, and values statement as a company, and one of the few values that made the cut was ‘Be nice.’ We want to provide excellent customer service. We want to provide good wages and a good work environment. And we also really want our employees to be nice to each other; to assume the best of each other and give the benefit of the doubt when there are conflicts. To say, “Hey, how are you?” when you see each other instead of, “Did you do this yet?”

   We knew, as we were on the verge of opening the restaurant, that we were about to hire a bunch of new people and that our culture could change pretty quickly if we weren’t on top of it. We had a very intentional meeting with all of our manager-level staff to reiterate what our values were, how we expect managers to behave and handle conflict, and how we want lines of communication to flow. This meeting definitely helped remind everyone of what our expectations were.

   A couple months after we opened the restaurant, we started to sense some tensions rising in our staff, both within small teams and across teams. It happens - any time you double the number of people in your company and ratchet up the stress several notches, the culture is at risk. We had to model ourselves the kind of conflict management we want to see in our managers in a few tough conversations. We had to let some people go who just didn’t fit into the vibe we were trying to cultivate. And we had to publicly acknowledge some of the ways we needed to do better.

   This is the kind of thing that we’ll have to pay close attention to for as long as we’re in business, but a strong culture of people who support each other is worth the effort it takes.

3. Growth means most, if not all, systems have to get redone. We have never been the best at creating replicable systems, but we were managing. Then, we added 8 farmers markets every week, a new full-service restaurant, a huge cider subscription program, and grocery sales onto our tenuous-at-best-processes, and most of our systems buckled under the pressure. We’re doing our best, gritting our teeth and holding on as we get through this extremely hectic and stressful busy season (people love cider in the fall!), but we know that we have a whole lot of shoring up to do during our down season this winter. We’ll (hopefully) have some time to review what worked in 2021 and what didn’t, and to create new systems. So while 2020 was the year of Pandemic Pauses and 2021 was the year of Big Growth, we hope that 2022 will be the year of Replicable Systems and Delivering on 2021 Promises. It’s not so catchy, but it will be pretty important if we want another growth phase in the future (2023??)

Thanks for hanging with us as we’ve grown this year; without customers who are passionate and involved, we wouldn’t have the opportunity to take these big steps.

Business in the Time of COVID - Part 2

It’s hard to believe that five months have passed since our last blog about what it was like as a business owner in the early days of COVID-19. A lot has changed, but, sadly, a lot has remained the same. We’re still fighting the pandemic as a country, with higher rates of infection than there were in April. We still don’t have any sense of how the future will play out. Government support (for both small businesses and individuals) has ended in spite of still not being able to fully function.

I wouldn’t choose to go back to April of 2020 again, ever, but at least it felt like everyone was working together and doing their part to work their way out of a really tough situation. Now it feels like the hard work and sacrifices we all made didn’t really achieve anything, and the only way to navigate our business forward is to pretend things are back to normal and hope our customers will do the same.

Most every small business owner I work with in Indianapolis (which is a small sample of mostly brewery, restaurant, and other hospitality-minded folks) feels the conflict of trying to capitalize on local support, pent-up demand, and extended patios for the time being while looking a couple months into the future and seeing the dreaded winter months barreling toward us. January and February are bleak, not just because of cold weather, but because folks are dieting, giving up alcohol and spending less after over-indulging during the holidays. Most bars, restaurants, and breweries rely on busy summer and fall months to create a cash cushion to sustain losses in January and February. Part of what made the timing of COVID so bad is that we’d just all just gotten through the tough months and were low on cash and then had to shut down for the months that usually help us build back our reserves. Now, we’ve mostly made it through the best parts of our year with limitations on dining and operations, and are headed back into the bleak winter days.

Who wants an ice cold cider?

Without big changes and improvements, we’re in for many more permanent closures in the coming months. I don’t want to end this by saying, ‘So support your local small businesses if you don’t want them to go under!’ because I feel like the government should be stepping in with either a solid plan to get us out of this mess quickly OR with support for families and small businesses (ideally both) and they’re doing neither, but…if you have the means and you care about your neighborhood businesses, they will need help.

Once again I’ve written a blog very different than the one I planned on writing! It’s a much more macro versus micro view, so I’ll get off my soapbox and share some information about how we, specifically, are doing as a business and some of the interesting things we’ve had to manage over the last 5 months.

1. Our team is mostly back and we’re all healthy. First and foremost, we’ve been able to hire most every full-time staff member back that we had to furlough, as well as the part-time staff who have expressed an interest in coming back. We’ve had to navigate how to handle employees with fevers or coughs, but for the 15-20 COVID tests taken among our staff over the last several months, no one has tested positive. We’re very grateful for a staff full of people who have taken our COVID precautions seriously and have been relieved every time someone’s cold turned out to be just that.

2. We were really lucky to receive government funding, but it’s gone now. We were truly lucky in that we received PPP funds as well as an Economic Injury Disaster Loan. We used the PPP to keep our production staff and tasting room part-time crew paid and to cover a couple months of rent. We used the EIDL funds to cover other operational expenses. Without both, things would have been MUCH more difficult for us, and we are grateful that we received them. I’m not sure how other businesses who received only one or neither of these funds will be able to navigate the next few months.

3. Our loyal customers showed up in droves! We’ve always felt like our customers are some of the best around, but the last few months have proved it. When some segments of our revenue dropped to near zero in March, April and May, (distribution sales), other revenue streams increased greatly, especially carryout package. We sold four times the amount of packaged cider out of our tasting room from March to May than we did in those same months in 2019, and it was all one-by-one as customers came in to stock up their cider stashes. We were able to keep from using too much of our cash cushion because of you guys.

4. Sometimes getting a breather is a good thing. Right before the pandemic, we were anticipating big growth in 2020 (see…DOMINATE). We had paid for 50% of a new fully automatic canning line that would help us quadruple our canned cider output with the goal of expanding into other states regionally and into more grocery stores. We were able to get the canning line delivered to our cidery in early May, and because so many of our revenue streams had ground to a halt, we actually had time to get the canning line up and running smoothly. We moved everything out of the space, treated the floors, installed new plumbing and electrical work and air compressors and CO2 tanks, all in between cider batches, because we had TIME to do it. If we hadn’t had the pandemic, it is truly possible that the canning line would have arrived, we’d have set it up quickly without the right tools because we needed to use it, and we’d still be running it rough-shod today. Having a moment to breathe in the midst of our usually-busy schedule really helped get us into a good place by the time June rolled around. Which is a really good thing because….

5. We’ve had three of our biggest months ever all in a row. I almost feel bad talking about it because I know that this isn’t really the norm, but we’ve had bigger revenues the last three months than we’ve ever had before. Part of it is making up for our worst month ever in May. Part of it is that when every restaurant and bar and liquor store is opening again for the first time in months, they all need your product at the same time. A big part of it is that we were already on a serious growth curve and with a semi-return to normalcy, we’re simply catching up to where it would have been without the pandemic. And I think another part of it is that we’re making some of the best ciders we’ve ever made - our Cider of the Month program has blown up this year with great flavors like Mango Lassi, Margarita (so popular we had to apologize to our customers for how nuts things went, we ran out a few times, and we’re doing a re-release next week!), Strawberry Lemonade, and Watermelon.

So here we are. We’re doing okay. Our team is doing okay. We are optimistic about our growth as a business and what the future holds in the short and long term, but the medium term is still murky. Support your local small businesses, take care of each other, and don’t forget to VOTE in November!

Business in the Time of COVID - Part 1

I’m currently sitting on my couch, crying. I’ve been texting with one of our employees, who we had to furlough shortly after Governor Holcomb’s closure of in-person dining for bars and restaurants in Indiana. A couple weeks ago, I let her and a few other key employees know that we would be able to bring them back because we were approved for the Payment Protection Program. But as time passed, the funds didn’t come, and when they finally did, it was less than we were approved for. Since finding out about the fund reduction, I've been kicking myself for mentioning anything about returning to work in the first place. Why did I make promises to people about their livelihoods before all of the details had been clarified? Why, as a business owner, was I regularly frustrated with my previous self for saying too much, promising too much, being too transparent, when it consistently meant I had to come back and say, “Well, actually, things have changed and that’s not really the case any more.” In one of these hard conversations over the years, I told the person that I have a problem of falling in love with people when I talk to them and I want to give them everything in that moment, and instead of thinking it, I say it out loud. It’s a bad trait for a business owner, and a person. When would I learn? 

I finally worked through the self loathing and started to break the news to each person that we actually wouldn’t be bringing them back as soon as we hoped. We had to keep our production staff working, and that plus staffing our bar for limited carryout hours would exhaust the PPP funds. Without a date for reopening on the table, it felt foolhardy to spend more than absolutely necessary right now. She let me know that she’d just gotten her first unemployment check and that she and her family would be fine. And then she thanked me for all the hard work I was putting into trying to do the best thing for our employees and to make sure we’d be there with a good job and steady pay on the other side of the COVID-19 pandemic. That’s when I started crying. She couldn’t know what a relief that was, to know that she could see I cared, even though I was delivering bad news.

As a business owner, I’ve really struggled with decisions that mean choosing between profits and people. I want everyone to make a truly liveable wage, even in an industry where that isn’t the norm. I want to give people raises who work hard and have been loyal to us. I want our employees to get to do work that is meaningful and exciting, even if it isn’t exactly what they were hired to do. But it’s really hard to do that when your company still isn’t making enough of a profit to upgrade needed equipment, for example. It’s really hard to do that when you yourself haven’t taken a salary in 5 years. The most stressful moments of owning a business can all be tied to moments like this. I want to be seen as a competent leader who knows how to navigate the realities of starting a business and who is caring and generous with our employees, but sometimes it is truly the wrong decision if we want to keep operating. 

The COVID-19 pandemic has really brought these kinds of decisions to the fore, with an added layer of uncertainty about the future that is unprecedented and fully out of our control. When the noise about COVID-19 started to pick up in early March, I felt like I was making life-altering decisions on behalf of our employees every day. In early March, before mandated shutdowns were announced, I read articles chastising people for going out to bars. They blamed the people, yes, but they also blamed the bar owners for not shutting down. I have a Master’s in Public Health and a concentration in Epidemiology. I actually know more than the average person about the spread and mitigation of diseases. From that perspective, the answer was clear. But as a business owner, it was murky. Should we shut down? Should we reduce our hours? Is it fair to ask an employee to deal with the public, even if I wouldn’t be comfortable doing so myself? Is it fair to tell someone we’re prematurely closing and effectively fire them, even though other bars and restaurants in our city are staying open until the bitter end? They have kids, and bills, and they want to keep working. How do I, a measly person who opened a small business a few years ago, have this kind of power over someone else’s life? 

So far, all of our staff understands that the circumstances we’re under aren’t normal; of course we wouldn’t have chosen to have a pandemic just as our business was starting to really take off and make some important strides. They’ve been kind and understanding about how complex and difficult these choices are, and graceful when we’ve had to give them bad news. I wouldn’t wish this situation on others, but the silver lining, at least for me in the present moment, is a renewed gratitude for our team, our customers, and our friends who have been so kind even in the midst of their own stresses. 

This wasn’t really the COVID-19 blog I set out to write, and I hope to do another one that’s a little more objective and business-focused, but this is the blog that came out of me today. Thanks to everyone who has supported us over the last 6 weeks, especially our employees who keep showing up to work and have thanked me for a continuing paycheck, and those who have stayed away and reassured me that they will be happy to return once we are ready. It has been one of the few things keeping me from losing it and I can’t be more grateful, no matter what the future holds.  

From 'Opening' to 'Open'

Guys, we did it! We opened a cidery and it only took us 2.5 years!

Now that we’re open, our focus has changed from fundraising, seeking legal counsel, location hunting, permitting, and general contracting to managing daily operations. These are the things we’re focusing our energy on these days:

1.       Staffing. Up until May of this year, we were a pretty lean operation of me (Andrea) keeping everything moving and Aaron helping out with production and overall business decisions on nights and weekends. In May we hired our first employee, Joseph, as an Assistant Cider Maker. He put in long hours leading up to our opening to make sure we had cider ready, kegs were cleaned of all the little tiny rust spots that settled in from unloading them in the rain and not wiping them off (my bad), and improving the efficiency of the production process. Then we hired Melissa to run our tasting room and kitchen, who helped create our menu, made sure we had everything we needed to run a retail storefront, and taught me about standard serving practices. Finally, we hired Wes to make sure every customer is treated well in the tasting room and to turn visitors into regulars.

My job has changed from creating job descriptions and making hiring decisions to worrying about whether our employees like their jobs, are getting enough hours, and are as excited about the future of Ash & Elm as we are. For the record, I’m pretty sure we lucked out with each of them, but I still spend a lot of time thinking about how to make sure they are all getting out of Ash & Elm what they hoped to when they signed on to this crazy ride.

The whole team! From left to right: Joseph, Wes, Aaron, Andrea, and Melissa

2.       Distribution. A lot of folks have asked when they can get our cider from bars and restaurants. Of course, there’s a short and a long answer. The short: ‘Soon, hopefully!’ The long: The state alcohol permit we need to make and sell cider (a Farm Winery permit, for those interested) doesn’t allow self-distribution. Which means I could have bars and restaurants with checks in hand waiting to put our cider on tap, but legally I can’t sell it to them. Instead, I have to sell the cider to a distributor, who would then sell it to the bar.

Fun fact! Our tasting room is on the ground floor of a three story building, and our Farm Winery permit only covers the first floor. If one of the businesses operating on the top two floors wanted cider, we would have to sell it to a distributor, who would then have to drive 10 miles away to their warehouse, who would then have to load it back up and bring it back to our building to sell to the top floor. Silly laws.

We have had meetings with multiple distributors, and our goal is to have that relationship lined up and going by the end of summer. Hang tight, we’ll get there, and we’ll make sure you all know about it!

3.       Getting the word out. Our tasting room has been open for three weeks now. A lot of my focus is shifting to marketing, sales, and promotions. In the short term, that will happen via events in the tasting room and participation in festivals throughout the city. Longer term, that means pounding the pavement to get bars and restaurants to buy into our product (see #2 on why that hasn’t happened yet). New menu options, seasonal ciders, consistency, and sponsorships/partnerships are always on my mind as avenues to explore as we grow our business.

Our first big event is Ciderside Chats! Head over to the event page by clicking on the photo.

4.       Data Crunching. If you know Aaron and me, you know that we both LOOOOOVVVEEE data and Excel. Fun fact #2! Aaron is an electrical engineer, and I have a Master’s in Public Health with a concentration in epidemiology, so using data to predict the future gets us more excited than it really should. Anyway, now that we actually have tasting room sales and numbers, we can start crunching data. How much on average does a person spend in the tasting room? How many ounces of cider does the average customer drink, and how much does that increase if the customer also orders food? Which ciders are selling the best, and given sales in our first month, can we predict what our annual sales might be? When does it make sense to add another employee?

Truly, it is so nice to be open after such a long time. Transitioning from ‘starting’ to ‘managing’ has been invigorating. Thanks for joining us for the start-up phase of the business, and I hope you continue to enjoy the ride!