Why would the founder of one of the country’s most successful microbreweries give money and advice to another microbrewer trying to break into the industry?
Doesn’t that just mean for competition for him?
Jim Koch, founder of Sam Adams, doesn’t see it that way. The man that brought microbrew to the masses says that when he talks to entrepreneurs in the beverage and restaurant industry, he sees himself, nearly 30 years ago, when he first went into business. “I didn’t know how to set up a payroll, make a sales call, negotiate a lease,” he told CNBC.com. “What could I really use but didn’t get? Loan money, and good advice. I learned by trial and error.”
He started the “Brewing the American Dream” project to help others in the restaurant, beverage and hospitality industries avoid the trial and error that can add up to costly mistakes and closed businesses.
The program, which began four years ago as an outgrowth of a community service day he did with Sam Adams employees, has given loans in amounts ranging from $2,000 to $25,0000 to 150 small businesses — and counseled nearly 3,000 — in the New England region over the past four years. This week, the program is rolling out nationally, with an additional $1 million in lending capital from microfinance lender and partner Accion, along with more opportunities for start ups to access business advice. (To learn more about the program, go to the Sam Adams website and click on "passion.")
The goal, said Koch, is to “get these businesses to a place where they don’t need us. Where they become creditworthy, and are able to find banks are willing to lend to them.”
It worked according to plan for Brooklyn Homebrew, a supplier to home brewers and small commercial brewers in Brooklyn, N.Y., that was in need of cash for upgrading its facilities.
"We had been in business for about three years, and any time we tried to get a loan, no bank would come near us."
“We had been in business for about three years, and any time we tried to get a loan, no bank would come near us,” says Danielle Cefaro, co-owner, along with her husband, Benjamin Stutz. Brooklyn Homebrew received a $10,000 loan last August, which it used to update the store with a larger refrigerator and new air conditioning system, and expand its warehouse, a project that is ongoing.
The couple paid back the loan in January, and just six weeks ago received its first bank loan. Paying back that $10,000 in full, she says, helped them secure the bank loan.
Starting a business is always tough, says Koch, no matter the economy. “The economy goes up and down. Small business is always tough, but there is always opportunity for success.” And, he admits, not every business that has participated in “Brewing the American Dream” has made it. But most pay back the loans — they have a 95 percent payback rate, he proudly states — and that money is then lent out to other businesses.
My experience is, if [a business is] offering a product that is giving real value to consumer, and if they can figure out how to produce and deliver that product to the consumer in cost-effective way, they can make it.”
Of course, “shipping money out the door,” says Koch, only goes so far. It’s the advice on how to use the money, that has helped businesses thrive. As the national program rolls out, he and his team can’t possibly be everywhere. Moderated online forums, webinars and podcasts will take the place of some face-to-face meetings. But as the number of people who have gained experience through the program grows, says Koch, the idea is that they will then go out into their communities and advise even newer businesses.
“We’ve learned how to assemble good coaches from our core people, while bringing in people from the local community who are excited about helping small businesses grow.”
And maybe nurture some Sam Adams retailers?
“There is no connection,” says Koch. “Of the 150 loan recipients — fewer than 10 are pubs or restaurants. Those few recipients make their own selection of beers. So it’s completely up to them whether to carry Sam Adams or not.”
Gary Hemphill, managing director, information services at Beverage Marketing Corporation, says, “He is truly an American success story. He built the company from the ground up. I think he sees kindred souls in what these entrepreneurs are doing.” Besides, says Hemphill, from what he knows of Koch, “I think he’d say, ‘If I can create better brewers creating better beer, I’m taking the industry to a higher standard.’ I think it’s his way of staying true to his roots.”
Koch says as much.
“When I’m coaching, I find that these new businesses all have the same problems I had to face.” It keeps our entire company in contact with our entrepreneurial roots,” he said. “We’re just like them. We’re a small business that made it.”