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.

Behind the Scenes Highlights of our 2020 Cider of the Month Gift Box

Did you hear the news? We just released a gift box that features the 12 unique Ciders of the Month that we released in 2020! We wanted to review 2020 through the lens of this gift box in the blog today. This is from my perspective (Andrea) - if you want a LOT more information on how the ciders were made and how they should be consumed, you need to get one of the boxes to access to some awesome behind-the-scenes content written by Joseph, our Cidermaker. :)

The Background: Though we’d done the CoTM program for four years, we had never canned the releases. We decided in mid-2019 that we wanted to go that route, and had spent the latter half of the year designing the label, picking the flavors, and brainstorming how to make the program even more successful. In fact, we’d already decided to save some back and release a gift box at the end of the year!

This gift box is a great walk down memory lane, as each cider is tied to a specific time in a really wild year. Here are a few behind-the-scenes stories from some of the releases.

February, 2020 - Blueberry Lavender - Every year, Aaron and I and several of staff members go to CiderCON, which falls over the first weekend in February. This year, Devour Indy, a city-wide dining event and the Blueberry Lavender release both fell on February 1st, which happened to be a Saturday, and also happened to be when a lot of our staff would be in Oakland, CA. Now that we’ve done this for four years, I get a bit of a spidey-sense when a release is going to be big, and Blueberry Lavender was going to be BIG. In preparation, I even sent out one of the rare Facebook messages to people who were interested in the release, telling them to NOT come on the 1st if they didn’t have to because we were going to be so crowded. We opened up our warehouse and added tables and a second layer of staff to ease the pressure. I compulsively checked the sales from my phone and texted our tasting room staff for status updates from San Francisco. Apparently it was a well-controlled zoo and everyone loved the cider! It’s one of our most popular releases from 2020.

April 2020 - Mango Lassi - This was our first post-shutdown release. We offered carryout cider only from mid-March through the end of May, and we were running things with limited hours and staff. We had no idea what to expect of a cider release during COVID. Luckily, there was a lot of community support for small businesses in April, and our fans really showed up! It was so fun to have our team here, busily getting orders ready, answering the phone as people pulled for curbside pickup, and running cider outside. It felt great to be busy and gave me a sense that maybe we could make things work during the COVID shutdowns after all. Little did we know we’d be doing these same things for the rest of the year!

May 2020 - Margarita - We always try to do a fun cider that could pair with Mexican food for our May CoTM because of Cinco de Mayo, and this year we thought a Margarita cider would fit the bill. But BOY did we underestimate how popular this cider would be!

A little peak behind the curtain on this one: when we process a finished cider, it goes from a Brite tank, through our canning line (which at the time was a manual canning line that did 8 cans per minute), into a hot water bath for 20 minutes, cooled in a cold water bath, and then for the CoTM brand, run through a manual labeling machine and finally hand-stickered.

For some reason, we thought it’d be fine if we canned Margarita starting at 10am on the morning it was released. We’d have the first batch of cans (8 cases worth) out of the Pasteurizer by 11, and they could be labeled and ready to go by the time we opened at noon. We were still carryout only, so how hard could it be to keep up?

Just what we needed during one of our most stressful releases ever - a huge, expensive, long-awaited piece of equipment to be delivered!

WRONG. As often happens, it took a little longer to get started than we thought, and then things didn’t run as perfectly as we hoped once we got going. Meanwhile, the number of online pre-orders climbed over 100, most of which included at least a 4-pack of Margarita and several that wanted an entire case. We were behind before we even opened. Our meticulously lined-up pre-orders were sitting on the bar, but as customers popped in without a pre-order, we stole cans from the pre-ordered pile to keep the lines down. But then someone who had ordered hours before would come in and we wouldn’t have their order ready! Or in the heat of the moment, we’d forget to mark an order as picked up and we’d re-make an order that wasn’t necessary. It was just a mess the entire day. Bartenders who had been furloughed but came by to pick up some cider were immediately asked to help run orders outside, or label cans as they came out of the Pasteurizer. Customers were calling asking if it was okay that the cider they just picked up was still hot.

The whole time it was happening, I was thrilled that we were making money and getting people a cider they were excited about, but I was STRESSING about the lines outside.

Oh, and did I mention, right as we opened and started to realize how nutty the day was about to be, a freight truck with our new canning line arrived, which pulled three of the production guys from canning into one of the most intricate, time-consuming, and stressful forklift removals we’ve ever had?

Yeah. It was a wild day that I will never forget.

Watermelons coming in fresh from the fields! They were in the cider within 12 hours.

August 2020 - Watermelon - This was a fun one! We try to use local fruits as often as we can, and hoped to do so for our watermelon cider. I found out that Hackman Family Farm was doing their first watermelon harvest on July 27th, 4 days before the cider would be released. I drove down to Seymour, IN in the morning, and arrived when the first truck of watermelons was being brought in on a tractor. They were hot from the sun. I could tell that everyone at the farm was excited to get the watermelon season started, as one of the workers ran a watermelon over to a table and the Hackmans cut it open, chopped it up, and handed it around for everyone to taste. It was SO GOOD. I’ve never had a warm watermelon before, but it was still so refreshing! Truly the best watermelon I’ve ever had.

They loaded up my car with 37 watermelons and I headed back up to Indy. I didn’t realize how heavy my car was, and at the very first stop on the way home, a rogue watermelon came flying into the front and smashed my hand a bit. I drove a lot more carefully after that!

I got back to the cidery around 1, and the production team quickly unloaded my car, started chopping up the watermelons, and running them through the juicer. The fresh watermelon juice was added to the cider that night. From field to cider in 12 hours!! You can really taste the freshness in this cider - I think it may be my favorite one.

December 2020 - Cranberry Rum - We didn’t realize until after we’d announced our that our gift box would be released on Black Friday that it meant we had to have Cranberry Rum finished in enough time to can it, Pasteurize it, sticker it, and put it in the box several days before the official release date. Luckily, our production team was able to switch some things around and make it happen for us, so Cranberry Rum is the first Cider of the Month that was done DAYS EARLY. It made the release in the tasting room really smooth, which was great because this one had a lot of traction on social media. Thank goodness we didn’t have a repeat of Margarita!

I hope you enjoyed some of these stories as much as I enjoyed telling them! Part of what makes supporting a small business worth it are stories like these - you get to know the people that make the cider, the team in the tasting room, and the customers you see every week. We hope that 2021 brings more in-person gatherings and shared stories, but for 2020, this is about the best we can do. We hope you get one of these gift boxes and create some stories of your own too. Merry Christmas and Happy Holidays!

How do you Finance a Craft Cidery?

Finances are a tricky thing. Talking about money is generally considered poor manners, and asking other people to give you money is straight uncomfortable, but if you want to start a business, you’re going to need some cash. There are a few ways to finance your business, including funding it yourself, bringing in investors, or taking out loans, and there are plusses and minuses to each option. Here’s a brief rundown of our thoughts and experiences with each of them.

Self-Funded - If you fund a business yourself, you have to either be wealthy, or you have to start on a small scale. This is especially true in the brewing/fermenting industry. While it’s possible to start on a shoe-string budget, you’d still need upwards of a couple hundred thousand dollars to be on the safe side. The amount of capital equipment you need to get started is expensive, and for the permitting process to even begin, you have to have a signed lease, meaning fronting at least 6 months of rent before you can make your first sale (unless you have a real estate agent who makes some good negotiations on your behalf). If you can manage to fund your business yourself, your growth can only occur by reinvesting your profits into the business. But one of the down sides of starting small is that you can only sell what you can make, and with small equipment, you probably won’t be able to make enough to grow quickly.

Pros: You own 100% of the business, and it’s a much less risky venture than the other options – in some ways! It might not feel less risky to put your life savings into a business, but at least if things go south, no creditors will come looking for you.

Cons: You’ll only be able to start as big as you can afford, and in this industry, that won’t be very big. Growth will be slow and there’s no room for error.

Investor-Funded – If you can’t finance the whole thing yourself, another option is to bring in investors who get a percentage of ownership of your business for the funds they give you. If you’re well-connected to people with both wealth and an entrepreneurial spirit, raising your funds this way can be relatively quick. If you aren’t, it may take a while to reach your target. Luckily, with the rise of successful craft breweries in Indianapolis, investors around here are familiar with the model and in some cases, are itching to get involved.

Pros: You’ll have more funds to get started, and it takes money to make money. You may also benefit from the networks of business contacts, accounting, legal services, etc. your investors bring to the table. In some cases, they can even act as a board of advisors.

Cons: You own less of your company, and someday when you hit it big, you only get a percentage of your earnings. If you don’t maintain majority ownership you could also run into conflict, or in the worst case, be cut out of the management of your company by the other owners.

Debt-Funded – Getting a loan to start your business is a feasible way to raise money, but in today’s climate, small-business loans are fewer and farther between than they have been in the past. Plus, with debt comes interest and repayment terms. One the plus side, the equipment needed for your business has a great re-sale value, which makes a loan a lot less risky from a bank’s perspective. If things go bad and you have to go out of business, you can sell all of your equipment for close to what you paid for it and may be able to walk away cleanly.

Pros: You don’t give away any equity in your business when you take out a loan, so you still own 100%. Banks can also be good partners for the future of your business, so establishing this relationship will help when you want to fund future expansion or get a line of credit opened.

Cons: Making debt repayments early-on, especially as you’re just getting started, can be a tough pill to swallow if you aren’t meeting your sales projections, and defaulting on a loan is scary business.

So what are we doing? Well…all three of course! We put a chunk of our own savings into the business to get things off the ground at the very beginning. We were able to cover the costs of hiring a graphic designer, a legal team, some expanded equipment for testing our recipes, and a fair amount of research and development (traveling to visit cideries and attend conferences). We have some investors on board who believe in our business and also see an opportunity to get a good return on their investment. Finally, we are working with lenders who think we’ll be a good addition to their portfolio.

We’re about 85% of the way funded now, which is happening at just the right time to take this show on the road.

The business side of small business ownership may not be as fascinating to everyone else as it is to us, but we’ve found it to be a constant and rewarding learning experience. If you enjoy learning about business startups, here are a few of the resources we've found valuable:

•  StartUp Podcast -  This podcast follows the ups and downs of starting a business.
• SCORE - A branch of the Small Business Association pairs retired former business executives with new business owners. Our SCORE mentor has been a huge help to us.
• Indy Chamber - The Indianapolis chapter of the Chamber of Commerce provides business support as well as networking opportunities with other business owners in the city. 

Here’s to getting fully-funded in the near future and to entrepreneurship!

Where Will We Get Our Apples?

A lot of people ask us where we’ll get our apples from. When we started working on this project a year ago, our plan was to work with local orchards to source apples for our cider. We met with an old friend whose family owns an apple orchard, and she dropped some wisdom on us that was a bit surprising: Indiana sells all the apples they grow, and in fact, we have to import apples from Washington state and China just to supply everyone with enough apples to eat! In other words, while we have several orchards sprinkled throughout the state, we don’t come close to having enough extras laying around to fuel a large cider company.

Another issue: the great majority of apples grown in Indiana are considered dessert apples - the kind you can pick up and eat or use to make an apple pie. Historically, those aren’t the kinds of apples that are used in traditional cider-making. Now, lots of cideries in the States use dessert apples to make their cider. We plan to, too, for a lot of our products. But having traditional cider apples available can bring a complexity to cider that is hard to get with dessert apples alone. Can’t we have both?

Luckily, our friendly neighbor to the north, Michigan, is an apple powerhouse. They are usually tied for second place in the nation with New York (behind Washington) in apple production in the States, and they also have the infrastructure to package, store, and ship their apples. They have a seemingly endless supply of dessert apples, but they also have a lot of folks growing traditional cider apples as well plenty of apples that are good for cider-making as well as eating, like Northern Spy, Jonagold and Gold Rush.

So, what’s our plan? For the majority of our ciders, we’ll ship juice down from Michigan. We can get different blends to fit with the style of cider we’re making and get a good mix of sweet, tart, and bitter to make a flavorful cider with a lot of complexity.

We’ll also work with those Indiana orchards as much as possible. The busy season for apple orchards usually runs from Labor Day weekend through Thanksgiving, but come December 1st, people aren’t thinking about apples anymore. Unfortunately, plenty of apples are still on trees in December, so orchards end up pressing the juice to stock their shelves throughout the winter or having an excess of apples that they can’t sell. This is where we hope to come in and help them extend their growing season by buying up those late winter apples so that we can showcase the orchards around the state and make a truly local cider. We can’t wait to share it with you!