This story first published on 8/14/2013
Suzie and Todd Ford opened the doors of NoDa Brewing Co. on Oct. 29, 2011, to a line of expectant customers that snaked around the 11,400-square-foot building on North Davidson Street.
They served more than 1,000 people that night, Suzie says.
But the couple knew it'd take more than a big opening night to prove their gamble - rolling nearly all of their retirement savings into a startup - was a worthy investment.
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Now entrenched in Charlotte's rapidly growing craft beer scene, NoDa Brewing Co. boasts of a crowded tap room every night, more than 300 vendors, a top prize from the Great American Beer Festival for their Coco Loco Porter ("the Oscars of the beer world," Suzie says) and a student documentary about their hops-infused journey scheduled to be released in October.
And the success of the Fords' West Coast-style ales and brewery (the third to open in the Charlotte region) has inspired the launch of a handful of other breweries, including their next-door neighbor Birdsong Brewery, Heist Brewery, Triple C Brewery and Unknown Brewing Co., which broke ground in South End earlier this year.
But the Fords' decision to start their own business coincided with a shrinking pool of available capital.
Banks that just years earlier were approving mortgages for people with bad credit and part-time jobs, had raised the bar so high that even careerists like Todd, now 51, and Suzie, 46, were turned down repeatedly.
So, like many entrepreneurs, the Fords turned to their biggest assets: their 401(k)s.
Banks reluctant to lend
The recession, and the years leading up to it, hit the Fords hard.
Suzie, a former sports marketer turned banker, was laid off from her job. And Todd, a captain and pilot with Airborne Express, was demoted to first officer when DHL purchased his airline.
After the merger, his day shifts and domestic flights became weeks-long journeys overseas and overnight. His salary was cut and his health insurance costs rose considerably.
So they weighed their options. Todd, a home brewer since 1995, had long considered making a career of his hobby. And, they reasoned, Suzie had the business acumen to run the logistical side of the business.
But the banks they approached weren't sold on the idea.
"We were a brand new business, we had not been in this industry before, and they were obviously concerned about lending money at that particular time, " Todd says.
And though craft beer was booming nationally, Charlotte's scene was small with only two breweries: The Olde Mecklenburg Brewery, near the intersection of Old Pineville and Woodlawn roads, and Four Friends Brewery in southwest Charlotte.
The Fords saw the market as ripe for expansion. Banks saw it as a risky venture.
And though they secured a $150,000 loan with RBC Bank (now PNC), the money, slated for purchasing equipment, wouldn't be nearly enough.
Then, one of Suzie's best friends, a certified public accountant, made a suggestion: Had they heard of ROBS?
From savings to big spending
Short for Rollovers as Business Startups, ROBS plans allow business owners to use their retirement funds to pay for new business startup costs without the typical IRS taxes.
The IRS criticized the method in a 2010 report, saying that "while not considered an abusive tax avoidance transaction, (ROBS plans) are questionable because they may solely benefit one individual, the individual who rolls his or her existing retirement funds."
The IRS also reported that the success stories were outweighed by the many stories of ROBS entrepreneurs who eventually grappled with bankruptcy, liens and failed businesses.
Nick Foy, a Charlotte certified financial planner and portfolio manager at CAVU Wealth Advisors, said the decision to pool low-risk retirement investments into a single enterprise can be risky.
For one, simply because of psychology. Most people innately believe they're more likely to succeed than statistics show, he says.
"There are studies where they'll ask a room full of people if they believe they're a better-than-average driver, average or lower-than-average driver, " Foy says. "Seventy to 80 percent say they're better than average."
And even if you, the entrepreneur, do everything right, Foy says, there's a built-in element of risk that's out of your control, such as the Charlotte economy and the trickle-down effect any major disruptions can cause.
However, he adds, many people are attracted to investments they can see and work with.
"The fruits of their labor are tangible versus a mutual fund or stock where all you get every month is a statement, " Foy says.
Todd says that's exactly what NoDa Brewing Co. was for him and his wife: autonomy.
Before, "we fell victim to whatever bad business decisions our companies made, " Todd said. "We were striving for a little more control over our future."
'I had a mini panic attack'
The Fords worked with an investing firm, Guidant Financial, to execute their ROBS plan. The whole process, start to finish, took about two months.
Todd still had his pension through Airborne Express. But the rest of the money he'd saved and all their investments over the years were poured into their new enterprise.
They spent $850,000 outfitting the building at 2229 N. Davidson St., once a fiber optics facility, with tanks, office space and a tap room.
The decision to liquidate their nest egg wasn't one they made quickly, Suzie says. Nor was it without angst.
"When we opened, I had a mini panic attack," Suzie says. "We were investing in ourselves, but it was still a roll of the dice."
Now, after two years and three expansions (from 75 barrels to 255 barrels), the couple is confident their decision was the right one.
The pair also is looking to the next three years: a possible expansion, new ways to attract customers and a greater focus on bottling and canning.
Suzie and Todd acknowledge there are no guarantees, but both say they have faith in their nest egg. And, they add, it finally feels
Tips for using startup funds
Think about growth from Day 1: Todd and Suzie Ford bought tanks and equipment bigger than needed to save on those buildout costs later, as they grew. Now, Todd says, they're grateful they did.
Consider the little things: Todd and Suzie never wanted their brewery to be a late-night spot, which is why their hours are 4-8:30 p.m. on weeknights and slightly later on the weekends. To attract families (and their pets), they offer free juice boxes and dog biscuits.
Know your strengths: Todd knew how to brew good beer. He didn't know how to make good food. So rather than do both, they stuck with beer, and five days a week local food trucks park outside the brewery. It's great for the customers, supports other small businesses and didn't require investment, Todd says.