The popularity of craft beer has been on the rise nationwide, gaining a double-digit market share of the beer industry for the last five years. Entrepreneur David Hawley is capitalizing on that popularity with a distinctive bricks and mortar shop.
Located 30 miles west of Chicago, The Beer Cellar,LLC offers a wide selection of fresh, craft beer both in-store and online.
When David needed to increase their inventory and move to a larger location to keep up with growing demand, he came to SmartBiz. Now he’s set for explosive growth this year with the help of a low-cost SBA loan. Here’s the story of his success.
Dave isn’t a first time entrepreneur. He dabbled with startups in his late teens and early 20s. “Unfortunately, those businesses failed. I actually had to come back home and live with my dad but I was always thinking of the next thing.” He ended up selling insurance and going to school, earning a degree in counseling. However, he wanted to be true to his entrepreneurial spirit and eventually found the industry he wanted to join.
In his 20s, Hawley took at trip to Colorado. “I actually hated beer at that time but I visited the New Belgium Brewing Company and tasted a sour brown ale. I became a huge beer geek.” A few years later, Dave visited San Francisco’s City Beer Store. He fell in love with the concept of a shop dedicated to creative and unique beers.
Back in his hometown of Chicago, the beer landscape was bleak. “I would go beer shopping at the local mega store. They had 3,000 beers to choose from but most of them would just sit on the shelf and get old and dusty.”
David launched The Beer Cellar in a 600 square foot basement space located underneath a women’s boutique store. “Not exactly an ideal location,” he laughs. “My business plan for The Beer Cellar was purely selfish – there was no place in my community to purchase fresh craft beer.”
Initial sales were strong because local beer lovers were on board. “Our community is pretty old school conservative but they all rallied around the business.” He was able to easily obtain the licenses and permits required to run a liquor establishment in Illinois.
Like many entrepreneurs, Dave self-funded at first. He put every penny he and his wife had into the store and took out a small loan from a friend. After a year of success, they opened an online store as well.
How does he attract new customers? Word of mouth is very strong. Dave tried local paper advertising but it didn’t give him the return he was seeking. Now he concentrates on social media and gets the most traction via The Beer Cellar’s Twitter feed. He’s also active on Facebook and Instagram but he doesn’t pay for advertising, growing his follower base organically.
The Beer Cellar isn’t a one-man show. Dave admits he’s disorganized and his wife handles all of the accounting. “She does work for the store everyday but also has a full-time job. We have a 10-week old baby girl so we’re about to get busier and busier.”
After three successful years in business, Dave outgrew his original small space and started researching funding options so he could relocate and increase his inventory.
“I went to the local bank and they wouldn’t lend to me. They didn’t give a good reason.” The Beer Cellar’s profits had increased by $100,000 annually but the bank still gave him a firm “no”.
He spoke to friends and they all suggested that he look into a Small Business Administration loan because of the great rates. He returned to the bank to ask them about SBA loans but his loan officer simply said, “We don’t like to do them.”
Dave wasn’t deterred – he started researching and quickly discovered that SmartBiz was the best way to facilitate an SBA loan. “It took a ton of paperwork,” he says. “But it was a very easy process. All of the documents were uploaded right away.” He admits that he’s not organized and said his wife’s part-time work with the shop helped get it done in a short amount of time.
“The low rate is the big thing with an SBA loan,” he says. “Some of the other loan options sound great initially,” he says. “But once you read the fine print you go ‘Wow, this is a terrible deal’.” Dave secured a SmartBiz SBA loan for $100,000 and immediately put the funds to work expanding his business.
The Beer Cellar relocated to a new storefront in downtown Glen Ellyn. “We added more space, more inventory and more volume,” he says. “We now have eight rotating taps so you can drink a beer or two while you browse.” If you don’t know what you’re in the mood for, Dave and his knowledgeable staff – two full-time and four part-time employees – are there to help you find a beer that you’ll love. The store carries wide variety of styles from local breweries and as far away as Belgium. Whether you want a fresh IPA or the darkest stout, The Beer Cellar has you covered. With so many options, is there a bestseller? “There is,” says Dave. “Anti Hero IPA by Revolution Brewing tastes great, it’s local and delivered really fresh. It’s my favorite too.”
Since he’s staffed up, he has a little more freedom. “For the first 3 years, we didn’t go anywhere,” he says. “Now I trust my team to run the store when I’m away. We actually took a cruise last year.” When asked about the most challenging aspect of running his own business, Dave says, “The time commitment is way more that I ever thought it would be. Even when I’m home relaxing, my brain never stops thinking about how to run the business better. It’s not unusual for me to run back to the store after the end of the day to finish a project.”
What’s his advice for the budding entrepreneur? “Start small and start with what you could afford. Prove your concept.”
We spoke with Dave on Valentine’s Day. Does he have any special promotions or events going on? “Nope,” he said with a laugh. “Nothing. However, one of my full time employees is single. Maybe I’ll take to social media and encourage the single ladies to come in and have a drink with him today.”
Best of luck to David and his team (especially the single guy) as they scale up! Would you like to try their craft beers? Check out the Beer Cellar website to order online. If you’re in the Chicago area, stop by and tell them SmartBiz sent you.
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