How do you grow a business? For the founders of The Tap Room, it has often required the courage to scale back.
All the answers to your unique business lifestage questions
The Tap Room – a company that distributes craft beer and cider – has managed to turn a niche operation into a very successful business that’s on course to turn over R50 million in the next 12 months.
How have founders Lliam and Dyllan Roach managed this? Surprisingly, it has often meant letting some clients and suppliers go.
Related: Tapping the craft beer craze
In order to grow their business, the founders of The Tap Room have had to let some suppliers – and even some clients – go.
“As a distributor, we felt the need to take on as many suppliers as possible. We wanted to be able to supply any craft beer or cider that a client could ask for,” says Dyllan.
As the company grew, though – The Tap Room has managed to double its turnover for seven consecutive years – the Roach brothers realised that they needed so let some suppliers go.
“It became obvious that we needed to deal with suppliers that were able to provide a consistent product in the quantities we required,” says Lliam. “If you want to scale your business, you need suppliers who can scale with you.”
They also realised that they needed to be selective in who they took on as clients.
“When we looked at things carefully, we realised that clients who ordered small quantities on a regular basis were actually costing us money because of the logistical expenses involved,” says Dyllan.
“So, we needed to insist that clients place bigger orders from us. There is no point to being in business with someone who is costing you money.”
Related: Will the booming craft beer market increase hop farming?
- Looking to scale your operation? Make sure that your suppliers will be able to deal with the increase in demand
- Ensure that your profit margins are big enough. If you don’t crunch your numbers carefully, you’ll find that some clients might end up costing you money.