Small Business Startup: How A Beer Company Turned Problems Into Profits

by Brian Armstrong - Date: 2007-04-04 - Word Count: 868 Share This!

If you've ever been to Texas, you may have noticed a peculiar beverage for sale called St. Arnold's Beer.

It comes in a distinct bottle, with a picture of St. Arnold himself (the patron saint of brewing) right on the label, and it happens to be the most successful micro brewery company in Houston.

But St. Arnold's was not always the profitable small business startup that it is today. In fact, their 13 year history is full of false starts, missed opportunities, and near failures.

I recently had the opportunity to meet Brock Wagner, the founder of St. Arnold's, and his story had a profound effect on me. It all started back in 1994, when Brock had an important realization: time was running out.

At the time, Brock was working in the financial services industry making a good salary, but when his father unexpectedly passed away, it gave Brock a chance to reflect. He realized that time was limited, and that he didn't want to spend the rest of his life at a job he didn't love.

He sat down one day and made a list of what he loved. Near the top were two items: drinking beer, and making beer.

To the average person, these may have seemed like poor opportunities for a career change. After all, his entire background was in financial services. What was he going to do, go drive a delivery truck for Budweiser?

But Brock decided to just follow his heart, and set about getting financing to create Houston's first micro-brewery.

From the beginning there were problems with his small business startup idea. Money was scarce for such a risky venture. Investors were reluctant to put their hard earned dollars into a business where the founder had no beverage industry experience. But after more than a year, Brock had secured barely enough to get started (one of his early investors was Kenneth Lay of Enron, which is an entire other story).

Several years into the project, Brock had secured a facility, constructed all the brewery equipment, and was ready to start making beer! But about a week before he was ready to launch, there was another major setback: a city inspector who had been testing the pipelines made a mistake with a pressure valve, and ended up destroying $100,000 worth of brewery equipment, in just 30 seconds!

What a blow, and just a week before they were set to launch. The next few years were spent in various courtrooms before being reimbursed by the city, but Brock was not deterred. He raised more money, rebuilt the facility, six months later finally shipped his first bottle of St. Arnold's beer.

It should have been a time to celebrate, but initial sales of the product were disappointing. In fact, five years after shipping their first bottle of beer, St. Arnold's had yet to turn a profit. How easy would it have been to pack things up and go home? Even the most die hard entrepreneur would have admit defeat after five years right? Maybe Houston wasn't ready for it's own micro-brewery.

It was at this time that Brock's business partner decided to back out of the company. Brock bought out his shares (generously ensuring that he would at least recover his initial investment, even though the company was losing money) and they parted on good terms.

This was the lowest point for St. Arnold's, and for Brock. With a struggling business, and very few customers, it was difficult to stay optimistic. But over the next five years, Brock was able to slowly but surely turn the company around. Today St. Arnold's is not only profitable, but it is admired and loved as a Houston tradition. People ask for the product if a particular bar or restaurant doesn't carry it, and the brewery holds a tour every Saturday that is open to the public. Houston and St. Arnold's have become synonymous, and it is all due to Brock's refusal to accept defeat.

As entrepreneur's we can learn a lot from Brock's story, as we attempt our own small business startup.

First, never, ever, ever give up. I have yet to hear a single story of a successful small business startup that didn't face setback after setback. It took Brock a year to raise enough money. Most people would have quit after a few months of failed meetings. The week before his launch all his equipment was destroyed in a freak accident (at a cost of $100,000). Most people would have given up then, after such bad luck. And finally, after five years of losing money, Brock continued to persist, after nearly everyone would have admitted defeat.

Second, I think it's safe to say that the only reason Brock succeeded is that he loved what he was doing. If he had to face all those setbacks and he didn't even like making beer, he surely wouldn't have been successful. Loving your job and company is a prerequisite for success in any small business startup, because even if things look bleak, at least you are doing what you love.

The challenge for us all is to find our own St. Arnold's Brewery...a business we love. And to spend as long as it takes to make it successful, no matter what setbacks we may encounter.

Related Tags: small business, industry, entrepreneurship, startup, beer, struggle, beverage, perseverance

Brian Armstrong makes it easy to learn the secrets of todays top business owners. To discover the "7 Essential Steps to Starting a Business" in his Free Online Course, visit this site now: Small Business Startup

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