Small Business Spotlight: SteadyServ; On Twitter @SteadyServ
Who: Steve Hershberger, CEO of SteadyServ
What: A mobile inventory and order management system for the beer industry. SteadyServ provides real-time intelligence about which beers are in stock, which are running low and which ones are empty.
When: February 2012
Where: Indianapolis, Ind.
How: Five years ago, SteadyServ CEO Steve Hershberger co-founded craft brewery Flat12 Bierwerks. Wanting to improve on beer orders, he spoke with bartenders, distribution representatives and consumers and says he was surprised to learn the beer industry used a just in time (JIT) inventory method – meaning they order what they need just before they need it – without having a system to process it all.
So, Hershberger launched SteadyServ.
“For our customers, distributors and retailers, draft beer makes up the largest contributor to marginal profit for both categories,” Hershberger says. “But they were both making the biggest purchase decisions on an annual basis on draft beer by guessing and guessing is bad business.”
Hershberger says an average keg weighs roughly 170 pounds. To gauge how much and which beers are left is hard work, he explains, because you have to weigh each keg to calculate the remainder. Needless to say, taking inventory by shaking a half-dozen kegs and guessing the percent left is the more used practice. But that can cost brewers thousands of dollars a week in guesswork, he says.
Using their iKeg system, SteadyServ offers restaurant owners a digital-tracker app that lists how much is left of each keg, when it will run out, how much they need and of what kinds. He says one goal is to help retailers see which are the most popular or profitable, so as to make better purchase decisions going forward.
A restaurant or bar can make about $1.2 million a year just on their draft beer sales, according to Hershberger. Each keg holds about 150 pints of beer, so for retailers who purchase kegs for about $145 a piece and sell it buy the pint, 130 pours can make them $1,100 per keg.
“That’s why every bar wants to sell as much draft beer as they can,” Hershberger says. “It’s insanely profitable.”
He’s not the only one who thinks so. Angel investors have already poured $6.5 million into the app, according to Hershberger.
Biggest challenge: “There’s been a couple,” Hershberger says. “The engineering, to start, was on the scale of building iTunes from scratch and making it work. Then, making it usable in a way that is third-grade simple and is intensely intuitive was the second big one. The third is convincing and really educating the marketplace that the pain they experience today […] doesn’t have to stay the state of normal.”
Moment in time: “I’m a big believer in hiring people that are intensely talented, motivated and serious,” Hershberger says. “One of the guys who works for me trains new reps we sign on. He’s a home brewer, but he spent the last couple of years working behind the service desk of a used car chain and he thought he was going to be stuck for the rest of his life there. Giving him the opportunity to do something he loves and is incredibly good at, that’s huge! We changed the course of the rest of his career.”
Best advice: “Follow your heart. If you’re not passionate about it, you will fail,” Hershberger says. “When in doubt, act. If you’re always moving forward, you can always recover.”