SMALL BUSINESS


How to Build a $1 Million Business

Allison Evanow, 46, of Novato, Cal., is CEO of Square One Organic Spirits. Founded in 2006 to capitalize on Evanow's idea for a niche business, the company makes organic vodka and other spirits. It brought in $1 million in annual revenues within the first three years.

You were already working in the spirits industry. When did you decide to go out on your own? In August of 2004. It hit me literally in the middle of the night. I woke up the next morning, turned to my husband and said, "I have this crazy idea." I wrote the business plan that fall.

Why organic vodka? In San Francisco, there's a very, very sophisticated and energized cocktail movement that's been going on for eight or ten years. A lot of bartenders in San Francisco were focusing on using fresh, organic ingredients and taking a chef-like approach to making cocktails. I saw that they were taking all this care to use organic ingredients in cocktails but using industrial-brand spirits. So there was a disconnect there.

How does organic vodka differ from ordinary vodka? We work with an organic farming co-op in Montana that grows all the rye grain organically. In the distiller, we have to use processing aids for fermentation and distillation that are allowed under organic standards. The yeast has to be all-natural. It's all certified organic.

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Where did you get your financing? The company is 97% owned by me and my sister, Deborah Jones. Both of us mortgaged our homes and used the freed-up equity, and we took out some savings. We put everything on the line. My husband, our brother and our former public relations firm own the other 3%.

Where do you get your best advice? My sister is a banker. She is really a strategic adviser, and she's a great sounding board. It's good that she's not in the spirits industry because she has to ask questions. She pored through the business plan with a fine-toothed comb and made sure everything was solid, that key questions had not gone unanswered. Also, I heard about Make Mine a Million $ Business, a program sponsored by American Express to help businesses owned by women reach more than $1 million in revenues. I was selected for the program and received public relations and other support.

What is the key to your success? In our industry, distribution is the biggest barrier. It's a highly regulated industry. You can't just make a product and start selling. You need licensed distributors. Our main strategy -- which worked -- was to introduce the vodka ourselves. I hired a part-time brand ambassador who worked in a cocktail bar and was entrenched in the organic culture. He and I went out in California and in New York with bottles and presented the vodka. In six months, we had opened up 100 restaurant accounts and had gotten our brand on cocktail menus, all based on the fact that it was organic. Once we had two big states selling it, a lot of other distributors were willing to jump on board. We're now nationwide and international.

And your biggest mistake? We did a marketing program two years ago that used a miniature CD with videos of us making cocktails and demonstrating recipes. It came in a nice little packet that would hang on the bottle. It was great marketing, but it was expensive and it didn't help us at all from a sales perspective. I forgot to keep in mind that if an idea doesn't drive sales, don't do it.

What's your next move? Our growth is coming from spirits with unusual flavors, such as cucumber vodka. We're about to release a fourth spirit, Square One Basil. It gives us a niche, and I don't think, all of a sudden, a big company is going to come up with a basil vodka. Even if one does, we make things in such a different way that it's hard to copy us.

Read more stories of financial success:

How to Stash $1 Million+ in Savings
How to Erase $70,000 in Debt
How to Pay for College on Your Own

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