From Customers to Owners: Buying a Small Homebrew Supply
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Image via Home Fermenter.
Jason and Jennifer Alderman became unexpected small business owners when they saw potential in a homebrewing supply store that was on the brink of closure.
Editor’s note: This month, we’re sharing the stories of small businesses that have successfully navigated the startup process, and taking a look at what challenges they faced during year one and beyond.
We wanted to know: What growing pains do business owners face once they have opened their doors? What are their struggles and successes? Check back in next week—we’ll be telling the unique story of another small business. You can find last week’s article here.
“The store was on its way out.”
That’s not what you’d expect to hear from someone who has taken over ownership of an existing business, but that was the case for Jason Alderman. Outdated ordering systems, unpopular inventory, and unhappy rumblings from customers contributed to the decline of a once-healthy business—yet Jason and his wife Jennifer believed the business still had potential.
In 2014, the Aldermans bought Home Fermenter Center (which they’ve since rebranded as Home Fermenter) in Eugene, Oregon. The Aldermans loved the shop so much that instead of going to closer shops or ordering online, they drove an hour south from their home in Albany to get their supplies for homebrewing beer and making fermented foods.
“I really connected with the prior owner,” says Jason Alderman. “We found ourselves talking about gardening and what was going on in our lives, instead of brewing. A friendship formed.”
In January 2014, the owners pulled them aside. They were ready to retire and wanted to sell the shop.
Despite planning and evaluating the decision, the Aldermans didn’t realized the full scope of the challenges of living in one area while planning to buy a business in another city. “I didn’t realize he had rubbed so much of the local brewing community the wrong way,” says Alderman about the previous owner. “The shop had gotten a reputation of not being helpful or willing to special order stuff. I had to rebound from how the store was perceived.”
Fate ferments a big change
Prohibition made homebrewing—the making of beer or wine at home—illegal nationwide in 1919. Even though Prohibition was repealed in 1933, homebrewing was only federally legalized in 1978. Founded in 1979, Home Fermenter was among the first shops in the country to supply the equipment and ingredients to make, store, and serve beer or wine at home. Over the years, it also became a hub for people wanting to make cheese, soda, kombucha, kefir, yogurt, and other fermented foods and beverages.
Alderman got into homebrewing in 2007. It was an enjoyable hobby that provided downtime from a hectic, fast-paced career in retail distribution. “I was getting tired of the corporate jobs, and I felt like some company values weren’t in line with my own,” he says. “I was worn out. I was making the best money I ever had in my life, but it was high demand, high stress, high accountability. I got to where I just wanted to be accountable to myself.”
“I was worn out. I was making the best money I ever had in my life, but it was high demand, high stress, high accountability. I got to where I just wanted to be accountable to myself.”
― Jason Alderman
On the drive down to Eugene that day in January when the owners expressed their interest in selling the business, Jennifer mentioned that the shop’s owners were at retirement age, and wouldn’t it be interesting if they said they wanted to sell the store?
“It’s like it was fate,” says Alderman. “With my current occupation, I would retire well off, but I didn’t think I’d live that long. So I thought I’d start my semi-retirement now. I work a lot, but it’s better work. I get to talk about beer, wine, and fermented foods all day.”
After that conversation with the owners, the Aldermans left the store with an opportunity—and a massive lifestyle change—on the table. They started examining numbers, planning, and discussing, both for the shop and for their personal lives. Alderman also turned to his network of friends and colleagues, seeking advice, showing them plans, and asking what was missing.
They would relocate to Eugene (where Jennifer currently still works full-time at another job), and Jason would leave his high-paying job. Between inventory problems, system updates, remodeling the store, and repairing the brand’s reputation, it wasn’t going to be easy. But the Aldermans were planning for that. After three months of soul-searching, planning, number-crunching, and advice-seeking, on April 7, 2014, they officially took over Home Fermenter.
Then the trouble began.
Problems and surprises
“The biggest surprise from the start was, since he didn’t have good records, it was hard to make an assessment of how things actually ran,” says Alderman. “You could see tax reports and financials, but beyond that, categories were missing.”
Vague and incomplete organization made it hard to decipher the shop’s accounting and inventory records. Once Alderman put together as complete a picture as he could, it turned out that inventory was off tens of thousands of dollars, prices were too high, and a good deal of inventory needed to be liquidated and replaced with more in-demand products.
“I knew a challenge would be that the shop never updated to the digital age,” says Alderman. There was an old, analog cash register, and the previous owners used print catalogs and fax forms to place orders with distributors. Alderman knew he would need to upgrade to digital ordering and implementing inventory and point-of-sale systems.
But the problems with inventory and accounting meant big problems for the Aldermans. They would have to make significant changes their budget and financial outlook.
“Day one, my expendable money buffer was gone,” says Alderman. “I thought I had left enough buffer, but I should have negotiated that differently. I should have put a cap on the inventory expense since we didn’t know an accurate number.”
The Aldermans pivoted as best they could. They decreased their budget for their wages and invested in inventory. They also paused plans to hire staff (though Alderman says the shop is on track for adding employees later in 2017).
Changing perceptions through amazing customer service
Refreshing inventory required broader, more strategic ordering. Remodeling entailed improving lighting in the dim shop, painting, adding a new exterior sign (with updated logo and name), and replacing the store’s display shelves, many of which had been in use since Home Fermenter opened in 1979.
Winemaking had been the shop’s main business, but the Aldermans bumped up ingredients and supplies for beer making. Jennifer led the way on diversifying fermented foods supplies. She also experimented more with different ingredients and techniques, so she could share fermentation experiences with customers.
Throughout the first two years, the Aldermans focused on improving service and inventory. They also saw opportunity in the modified name. “When we bought the business, the name of the store really stuck out to us. We wanted to embrace all the home fermenters,” says Alderman. “I thought the name was an excellent branding opportunity. It encompassed the person.”
That more expansive, supportive customer service would be the key to turning around Home Fermenter. “I put myself in the shoes of a customer. I focused on excellent customer service, giving people a reason to start coming back, start talking up the place,” explains Alderman. “We focused on keeping things fresh and exciting. People would walk in and go, ‘Wow! New owners?’”
Over the last three years, the Aldermans have tripled inventory to over 3,200 items available—and they’re happy to take special orders.
“Approachability is important,” says Alderman. “People have to feel comfortable asking questions. You have to give honest feedback. I want to get people what they want, instead of telling people what they want. I’ll offer my advice and help people find their own conclusions.”
The strategy is paying off.
“After the first year we had turned a corner with how the community perceived the shop,” says Alderman. Closed only on Sundays, Home Fermenter was even open on holidays. One Fourth of July, a customer came in needing an emergency keg repair. Instead of the $100 fix he was expecting, Alderman fixed it for $13.
“We made his day. He still comes back, and I know he’s told a lot of people,” says Alderman. “Give people good experiences, and they’re going to talk about it.”
“Give people good experiences, and they’re going to talk about it.” ― Jason Alderman
New challenges
Though many big improvements are complete, changes, additions, and upgrades continue. The Aldermans continue adding jars and other supplies for fermented foods. They’ve added more parts and draft systems for pouring beer, and have diversified winemaking equipment based on customer requests.
Updating inventory has also opened up new challenges that the Aldermans are figuring out how to handle.
Previously used only at the commercial level, stainless steel brewing equipment, especially conical tanks, have become more popular in the homebrewing world. “I brought some in as a showpiece, to show I could get them,” says Alderman. “Then I wound up selling more than I expected.” Now Alderman is making sure he has regular access to more stainless steel gear, along with the associated replacement parts and fittings needed to maintain a brewing system long-term.
“Keeping up with new gadgets, new malts, new hops, has been challenging,” says Alderman, who also follows hobby publications to stay current on trends. “There has been so much more coming out. Some product lines really snowball.”
During the first year of ownership, the Aldermans had hoped to revamp and relaunch Home Fermenter’s basic website—complete with a brand-new online store and updated software systems. While integrating ecommerce has taken longer than expected, Home Fermenter’s online store will be launching soon.
“We’ve got the branding on track. It’s a little behind schedule, but we had to budget that out,” says Alderman. “The beer side of the business has rebounded. Expanding the draft area was important to me. I also get a little business for parts from the local commercial breweries, and they refer customers my way for brewing supplies.”
Shoe leather management and other advice for retailers
Alderman likes to learn on his feet—literally—and he is always striving to improve his knowledge of the business, the industry, and what Home Fermenter customers want. To keep up with inventory, customer needs, and how the online store will handle fulfillment, Alderman comes back to a simple philosophy of “shoe leather management.” He walks the shop himself and examines displays; if a product is literally gathering dust, it’s time to clear it out.
Alderman has a few other tips for retailers or anyone planning to open their own store:
- Go above and beyond on service, and people will spread the word about you.
- When people have questions, listen and don’t assume you know their problem. Ask probing questions. Seek to understand the obstacles they’re facing from their perspective.
- Planning and running a store is complicated. Prioritize as best you can on what is most critical each day. Break down larger or long-term projects into smaller categories and individual tasks.
- Showcase eye-catching products that will excite customers and keep them coming back.
- Keep popular and heavier items at the “golden level” between waist and chest height, so they are more visible and are accessible with minimal strain or effort.
- Get rid of products that don’t move. Free up the capital and try again.
- Plan, partner, budget, and educate. Have a solid plan. Find good partners and advisors. Make a solid budget. Educate the heck out of yourself.
- Have a good attorney.
“If I could go back, I would’ve kept a tighter budget,” says Alderman. “The improvements and inventory have tied up a lot of capital. I’m pretty much there now, so going forward it’s paying off and earning money on those investments. Going forward, I’ll keep a tighter budget and a better plan.”
The Aldermans have transformed Home Fermenter into a great community resource. Customers often comment on changes in the shop, or stop and look at the shiny stainless steel brewing gear or a home kombucha kit as soon as they enter the store. After meeting initial challenges, the Aldermans look forward to the online store increasing the shop’s national recognition, while still maintaining a mom-and-pop, community-friendly feel at home.
“I’m glad I did this change. I’m doing more of what I should be doing as a career, and I’ve learned a whole lot,” says Alderman. The early years have had their challenges, but through planning, service, and perseverance, Home Fermenter is becoming the store the Aldermans knew it could be when these former customers made it their own.
