Early on during the pandemic, in March, Nailah Ellis-Brown, who owns Detroit-based Ellis Infinity Beverage Company, was nervous because she wasn’t getting any purchase orders. But by May her tea was flying off store shelves.
“My product couldn’t be replenished fast enough because they couldn’t handle the traffic,” she says. “People went with products they were familiar with at first and then they started to try new things so that was good for my business.”
As with most retailers in the food and beverage sector, Ellis-Brown, 32, operates a business that was deemed essential in the state of Michigan, and she saw a 50% surge in sales by mid-May. Unlike many small businesses that had to downsize, she was able to keep all her employees on payroll and keep the production facility running for her iced-tea company, Ellis Island Tea.
When she was 20, Ellis-Brown ventured into small business when she decided to forgo college and the vision she had to work on Wall Street in favor of entrepreneurship, her ultimate goal. The company, which was brought to life from a handcrafted family recipe created by her great-great grandfather, a Jamaican-born immigrant, started from humble beginnings. Selling 32oz bottles of tea for eight dollars out of a cooler from her trunk, eventually led to nationwide distribution deals with Sam’s Club and Whole Foods and she became the largest black female beverage manufacturer in the country.
What’s Working
In what has been a financially agonizing period for small businesses, Black-owned businesses have felt the brunt of the impact of the pandemic. 41% of small Black-owned businesses permanently closed between February and April 2020, according to the National Bureau of Economic Research. The realization has been a somber reminder for Ellis-Brown about the economic fragility many Black-owned businesses and workers face.
“I started this business to provide jobs for people who look like me and I’ve got a lot of people depending on me,” she says. “My priority is still taking extra precautions to keep all of my staff safe and employed.”
After unsuccessfully applying for the federal government’s Paycheck Protection Program, Ellis-Brown was able to secure an Economic Injury Disaster Loan, or EDIL, through the Small Business Administration.
Currently, hiring more workers to ramp up production is on her immediate agenda. African Americans make up the majority of the population in Detroit and nearly half of residents have lost jobs since the start of the pandemic. And, despite a rebound in payroll jobs, unemployment is still at a staggering 24% in Detroit and the worst on record since the 2008-09 financial crisis for the state of Michigan.
In a city where many African-Americans were already reeling from financial insecurity, the killing of George Floyd by a police officer in Minneapolis, which spawned protests for racial justice across the country, added insult to injury.
On June 19—or Juneteenth, a holiday celebrating the emancipation of slavery in the United States, some A-list celebrities shared the names of Black-owned businesses to support.” We saw a big boost in our online sales that day,” Ellis-Brown says.
“Sales were going crazy and that’s when I started receiving calls and text messages that myself and other Black-owned businesses were being featured on Beyonce’s website.”
Ellis-Brown says this led to an increase in revenue for in-store sales as well as online sales, which has been a prolonged pain point for Ellis-Brown.
“E-commerce has always been a challenge for us because no one usually buys beverages online,” Ellis-Brown says. “But, since the pandemic there has been this huge shift to people shopping online.”
Challenges
Pre-pandemic, Ellis-Brown decided to extend a line of credit and used some initial seed money to purchase more efficient production equipment that would help transition her product packaging from glass to plastic, which would save her money on shipping costs. That decision started to make her uneasy when the pandemic struck and conversations with retailers to stock her product and potential angel investors were put on hold.
“I’ve been in this business for 12 years and we’re just now doing our first big capital raise for $1.7 million, which has been extremely difficult,” Ellis-Brown says. “A lot of people are scaling back on investments and aren’t taking much risk because they are waiting to see what the new trends are going to be.”
Up until this year, most of the revenue that was generated went right back into Ellis-Brown’s business, “I wasn’t able to pay myself a salary until this year because nearly every dollar went right back into the business,” she says.
Now that she has brought a leadership team on board to help out with strategic planning and daily operations, “it freed me up to start working on the company and not in it,” Ellis-Brown says.
Advice
“This is just more than about tea, it was my ticket to carry on my family legacy,” Ellis-Brown says. “Stay true to your core values and never forget your ‘Why’ in starting your business in the first place.”
This attitude is what has kept Ellis-Brown optimistic and one that she hopes to instill in her employees and business partners. While she acknowledged that this is an extremely precarious time for small businesses, giving in to fear shouldn’t be an option.
“I can’t tell everyone to stay the course because it’s really hard right now for small businesses and society in general,” Ellis-Brown says. But, I do believe if you stay focused and true to yourself you can make it through.”
***
Small Business in Crisis
Barron’s in coming months will be exploring how the pandemic’s impact on small business is playing out, and how small businesses’ struggles will affect the broader economy and financial markets. Please reach out to us with your stories, questions, and tips to editors@barrons.com.
Credit: Source link
