Top tips to run a successful start up: Part 2

For those with the ambition to make their first foray into the fiercely competitive spirits arena, this final instalment of expert tips for start up success is a must.

Be as happy as this guy and follow the tips in this handy guide when launching your own spirits brand

Rounding up the advice given during the What’s the right deal to take? seminar at Tales of the Cocktail in New Orleans last week, this is an insightful look at what it takes to launch a success spirits brand or service.

Following on from the first 12 tips from the seminar, revealed earlier this week, here are the final nuggets of advice from the event’s expert panelists: Dan Gasper, COO of Distil Ventures, a Diageo-funded company that specialises in aiding new spirits firms, the panel consisted of Chip Tate, founder of Balcones and now Tate & Co; Simon Ford, founder of the 86 & Co; and Brian Ellison, founder of Death’s Door Spirits.

Dan Gasper, COO of Distill Ventures, led a recent seminar discussing how to run a successful spirits start up

 

In the first installment of this roundup, the panel discussed topics such as sensible spending, growth and distribution. Now, they turn their attention to retail focus, etiquette and more money issues.

Click through the following pages to discover the final tips on how to run a successful spirits start up. If you think any have been missed out, let us know by leaving a comment below.

To view the “Top tips to run a successful start-up: Part One”, click here.

13. Go deep not wide

A lot of entrepreneurs try to sell to anyone and everyone with products that have multi-purposes, but Gasper recommends “focusing on your audience and how to reach that core consumer”.

14. It’s a small pool

“Play nice; be courteous,” says Ellison. “People hop around between jobs but they all stay in this industry.” Some people may represent the competition but retaliation to their movements in a negative manner will only come back around to bite you. “If you’re the nicest guy in the room people will want you to win.”

15. You’ll need more money

“It will take you twice as long as you thought and twice as much money,” says Ford, claiming lawyers and designers “cost more money than you’d ever imagine”.

16. Debt costs money but equity costs more

“Don’t forget that with equity people need to be involved, but the earlier they get involved the more expensive it gets,” says Tate. “The earlier you dish out equity the harder it is to get terms agreed.” He advises researching other ways of raising capital than simply giving out equity and to seek advise on the issue.

17. The difficulties of being a company on more than one person

“This is one of the things I have the most trouble with,” says Ellison. As founder he explains how he can “totally get in the way” of the rest of his team. He suggests talking with your team to understand how they will change and grow. “When building your company make sure you really build your team,” he says.

18. An overnight success takes five years

“Don’t give up on your day job until you have a product in hand,” advises Ford, who struggled to get 86 Co off the ground for the first five years. “If you make it through each year at the start, you’re lucky,” he adds.

19. Smart money

Getting cash is not just about obtaining money, it’s about smart money. “Can these investors introduce you to contacts or understand a small business, or more importantly, the drinks industry?” asks Gasper.

20. Capital requirements are expensive and unknown

“Banks don’t have a sense of humour at all,” says Tate, adding that when communicating with them it’s best to come across as confident and in control. “You must lie to them; never tell them the truth. This is a confidence game.” He adds that when requesting a loan it’s best to over-guess what you might need, then when you spend less “you’re a hero”.

21. Sharpie is mightier than the sword

When the 86 Co was starting out its cash flow was in a delicate state. Then the TTB refused to release its stock over complaints its labelling did not comply with regulations. Re-labelling the stock would have cost thousands, and would have pushed the company into bankruptcy. To overcome the problem, Ford and his team took a simple approach. “We paid a friend to go into the government’s warehouses and literally Sharpie over the offending items on the label,” he says. “That meant our first product went on shelves with Sharpie all over it.” The moral of the story? “Always be prepared to do what it takes.”

22. Never have enough money to do anything stupid

Rather than obtain all the money you will need in the first few years straight up, request a regular allowance from investors. “Be up-front and honest with your investors, and keep yourself poor in the beginning,” says Ellison. Austerity means, that unlike Ford, you won’t be tempted to go splash the cash at The French Laundry on a meal you can’t afford.