Unlike many food and beverage companies that slowly build consumer awareness and distribution over several years – allowing them time to generate revenue to fund each next step – Hella Bitters became a national brand virtually overnight.
Co-founder Jomaree Pinkard explained the company had to triple production of its bitters overnight to fill unexpectedly large distribution orders placed at a major trade show in 2012.
“We knew people would like our craft cocktail bitters, but we didn’t know that they would like us that much, so we were not prepared” with sufficient glassware and ingredients, he said.
Luckily, Pinkard had a plan – and a Business Card from American Express OPEN, a division of the credit card company that caters specifically to small business needs.
“AMEX is a big component of our business. It allowed us to grow fast and on demand so that when we get a big order we can quickly get the supplies we need to fill it and keep growing,” which is what the company did immediately following the trade show in 2012, he said.
He explained getting loans from banks can take too long and can be too restrictive for new companies because they often are based on revenue, which might not be much in the first years of a business.
“Floating the debt on credit cards” until revenue comes in to pay expenses made sense to Pinkard, who acknowledged it might not be a long term strategy for everyone, but it is helpful in emergencies.
Pinkard chose American Express in part because he has carried the card for emergencies since he was a teenager, he said, adding: “American Express has always been trusted in my household and I chose it for my business because I already knew the features, I knew the credit line was good and that it would help me buy more than any other card,” he said.
His current relationship with American Express extends to creating several commercials for the company online and having his testimonial featured in the American Express OPEN website, among with many other small business owners.
Since that faithful trade show three years ago, Hella Bitters has continued to grow more than 300% year-over-year and has made more than 100,000 bottles of bitters, Pinkard said.
The company also has expanded its portfolio to include three more flavors of bitters in addition to its original two, a line of craft tonic syrups and two craft DIY kits – one for making Old Fashioneds and one for crafting bitters at home.
To better manage the diverse portfolio, Pinkard says the company is in the process of transitioning to become The Hella Company, which will be an umbrella for the other brands, including Hella Bitters.
Tip 2: Deliberately target distribution
Having financing was only one of several critical elements that helped fuel Hella Bitters growth so far, Pinkard said.
Another essential component was having a broad, but also deliberately targeted distribution strategy, he said. He explained from the beginning he knew Hella’s products should be distributed in high-end, luxury stores and boutiques to accommodate the premium price his products’ high quality ingredients demanded. But he also wanted to reach as many consumers as possible, so he created a smaller, less expensive version of his bitters and tonics that could be sold at more accessible retailers, such as Bed, Bath and Beyond.
Because he tailored the products to the different channels, he retained velocity, which can suffer when companies blindly agree to distribution in channels that do not fit their products.
Pinkard acknowledged that when companies first start they may be tempted to distribute their product to any channel and retailer that will take it, but that could cost them if they have to pay for production but then the product sits on store shelves and does not generate revenue.
“You need to figure out the different channels and the consumers at each one” and then offer products that best serve their needs, he said.
Tip 3: “Know who you are”
Entrepreneurs need to know who they are as individuals to build successful businesses, Pinkard also advises.
“Self-identification is No. 1. Do you want to be in sales? Manufacturing? Marketing? What can you do all the time and not get bored” after five or ten years, he said.
Once business owners know who they are they, are can better team with people who complement their skills so that the company overall is well-rounded and can access all available levers when they need, he said. This also will help firms better understand where they fall in the value and supply chains so they can better partner with other companies.
Tip 4: “Don’t compete with yourself”
As companies expand their portfolios, Pinkard says they should take care to introduce products that complement rather than compete with each other.
For example, Pinkard said Hella unlikely will introduce any more flavors of bitters because he does not want to detract from what he considers an existing solid line up. Rather, he is expanding into tonics, which means consumers will be able to buy two essential cocktail elements from him instead of just one.
Tip 5: Ask for help early and often
Another essential element of building a successful business is the ability to ask for help before the company runs into trouble, Pinkard said.
“When people are smart or making something amazing they don’t think they should ask for help, but for us we ask everything from everyone so that we can learn more and make quicker decisions in the future,” he said.