Thursday, June 29, 2006

June Updates for Square One Organic Vodka

Can you say whirlwind? June was replete with a combination of drama, exhilaration, nail-biting and fun cocktail times. Like the rest of you, June kicked off with a dramatic bang with the M3 win, followed immediately after award ceremonies with a party that Square One Organic Vodka was a sponsor of - the premiere of the movie "An Inconvenient Truth". After wrapping up the next day with M3, Sunday morning brought a trip to NYC for our media and trade launch party and "official" debut of Square One in NY. Our cracker jack PR agency had secured an amazing roster of media attendees - NY Times, Self, Plenty, Nation's Restaurant News, Wine & Spirits Journal and many more. And even Nell made it there! For those winners who said "marketing" was an important strategy for growing your business, I can't say enough about PR as an effective and cost-efficient marketing strategy. We held our launch party at an expensive, sustainable/organic restaurant in NYC and it cost us a fortune relative to our overall marketing budget. But to put it into perspective, the total cost of our event (with over 40 media attendees from major pubs as you saw above) was 1/4 of what it would cost for ONE AD in a magazine like Gourmet or Bon Appetit or Food & Wine. So don't skip out on PR as part of your marketing strategy! Here is a cool photo from our event.

After a great event and a trip back home, reality set in. Now all the fun stuff was done and we actually had to start getting some cases in the door! Oh, and those little things called "cashflow" and "we need more money" raised their stubborn heads. So the rest of June was filled with phone calls, interviews, emails and the like to make sure we get the ball rolling on the financial side of things, all the while overseeing our new sales people and distributors in CA, NY and NM . . . and appointing new distributors in WA, OR, ID, UT, MT, WY and AK. Whew! And to top it off, we have a huge account in Washington, D.C. who is ready to place a big order, but we can't find a distributor to take us in there. How frustrating is that?? But we are closing in on it as June wraps up. When I presented at M3 on June 2, we were in about 40 accounts in 3 states. By the end of June, we are in over 60 accounts in 4 states, and just landed a deal with Il Fornaio restaurants to put Square One on the back bar in all 23 of their restaurants in CA, WA, CO and NV. Woohoo!

So since funding seems to be a critical thing for everybody, I'll throw out tidbits from our financial explorations/discussions: 1) We can confirm what Nell/Margery and everybody else probably already knows. Nobody really wants to loan you money until you are already a success, so you better be a big risk-taker or have people lined up to "give" you money for a chunk of the action. 2) We explored a SBA7A and quickly determined that since they were going to put liens on our houses and other assets, we might as well forgo the headache and upfront "points fees" of the SBA and just take on more risk. Gulp . . . 3) Factoring . . . great idea, but not when you have such a complex distribution system like beverage alcohol where the cash flow cycle is so long. And of course we are still too small for that right now anyway . . . But ask your banker about it if you have dependable receivables as its a good source of short-term cashflow and Susan Knapp from A Perfect Pear is doing it 4) Angels - no way. We'd give up too much for now. But it is always on our radar just in case we need to pull the trigger.

So in the end, we decided to take on more risk ourselves because we are hitting the key milestones laid out in our business plan. Since we are "where we expected to be", with no red flags in sight, we decided we can infuse some more capital ourselves. Our attorney recommended that we evaluate our "big picture" situation EVERY SINGLE MONTH so that we don't miss out on an opporutnity to change our financing strategy if needed. That doesn't count just tracking our regular financial performance and cashflow. He was talking about re-evaluating our strategic financing position every month! So yes, no matter how great an idea we have and how much our consumers and account customers are supporting us, its all a big fat money game isn't it gals?

June was a fantastic month for media and sales are gaining momentum, but money and resources always seem to temper the highs with the "watch outs". Hoping July is full of new distribution, more sales, and a tightening up of our financials!

Monday, June 19, 2006

July 2006

Another month filled with lots of great news, milestones achieved and hard business decisions to make. Lots of press coverage - finally came through (hey, 3 million men read it a week and they drink a lot of vodka, so why not?), lots of great trade press that has generated distribution inquiries and some great new distribuiton gains in high profile accounts in San Francisco, New York and Los Angeles. Our Phase 1 distribution strategy of seeding the brand ourselves in SF and NYC with a tiny fulfillment wholesaler before appointing a traditional distributor has paid off, not so much in terms of sales revenue, which we expected, but in terms of getting us placed in some of the best possible accounts for a new brand. As a result of that, we decided to officially move to Phase 2 of our distribution strategy, which is to appoint traditional large wholesale distributors in CA and NY so we can cover the whole market in those states. Our strategy paid off as we now have several distributors in both markets interested in us whereas we most likely would never have gotten interest from them in the beginning if we had gone to them before we proved what a great product and marketing concept we had. So in August's blog, I will be sharing who wins our distribution contracts in those markets!

We hosted some great consumer and trade events, including a high profile event in conjunction with the Kimpton Hotel Group and The Trust for Public land, a charity the Kimption group supports. We mixed some of our signature cocktails for both consumers and top execs from many of the Kimpton Hotels and restaurants (think Postrio in San Francisco, Hotel Triton, hotel Monaco, etc.). They have both a "Women in Touch" program and an "Eco Care" program that fit us well. As a result, we got placed in the Executive Club Lounge at The Prescott Hotel, which also houses Postrio. We're hoping to get into Postrio next! And we now have the green light to speak with other Kimpton hotels and restaurants in other states, so hopefully we'll be there soon!

Not everything was super-rosy though, although we only experienced some minor hiccups. Oregon is the #1 organic product consumption state in the U.S., yet the Liquor Control Board (Oregon is one of those states where the government runs the distribution and retail for spirits so they have to approve your listing) chose not to accept our request for a state listing. So together with our broker we are working on a special order program to get some traction going in that market in hopes of getting listed the next time around. Other control markets like Oregon are dragging their feet getting us in there, but we've been helped along by direct inquiries through our website from restaurants who want to carry our product. It sure does help us when we can tell the distributor they are missing out on sales if they don't hurry up and get our product in their state! :-)

We are also now exploring financing options outside of self-financing. We'll see where it leads us, but we are exploring all avenues.

There is more to share, but I'll sign off for now and maybe come back and update July a bit more.

And since we are writing about blogs, check out our website and our new blog feature! Feel free to comment on any subject you like! Go to "Town Square/Circle in the Square".