By SMB Group’s Kelly Teal, Contributing Analyst, and Laurie McCabe, Co-founder
Sometimes you just want to enjoy a few cocktails with friends. Then, before you know it, your hobby turns into a business.
At least, that’s the case for Timothy Felkner, CEO of Uncle Tim’s Cocktails, a Denver-based company that sells boutique-grade, ready-made alcoholic drinks, including variations on the Manhattan and Negroni.
Felkner, a serial entrepreneur in the hospitality sector, took on his latest role after a decade of serving pre-bottled cocktails to friends and family. “I would give them out as gifts or bring them to dinner parties so I wouldn’t get stuck behind a bar,” he says. And while he’s been an uncle since the age of 11, that’s not how Uncle Tim’s Cocktails attracted its name.
“It’s actually a nickname a friend gave me,” Felkner says. “She said, ‘You’re like the cool uncle that’s always introducing us to new tastes and flavors, and we love it.’ That name just kind of stuck among my friend group. I started writing it on the bottles and people started asking me where they could buy them. And that was where I got the idea for the business and the name.”
“Everything you need is in the bottle. All you have to do is pour over ice.”
—Uncle Tim’s Cocktails Founder Timothy Felkner
Uncle Tim’s Cocktails really started coming to life in 2020, smack during the craziness of COVID-19 lockdowns. After about 15 years in the restaurant business, in every role from bartending to ownership, Felkner was enjoying a break but didn’t want to ditch his love of sharing food and drinks. So, he decided to take on a new challenge: selling pre-mixed cocktails in three-bottle sets.
“I finally had time to work on it and also saw that people were stuck at home. A lot of people trying bartending realized it was a little harder than it looks,” Felkner says. “And they couldn’t necessarily go to a restaurant or bar for their favorite cocktail.”
That’s part of why Uncle Tim’s Cocktails took about two years to fully get off the ground. In between jumping the typical hurdles related to securing liquor licenses and launching a new business, Felkner also decided to wait for live gatherings to return.
“We look for ways to get in front of people because [many] … have had either a canned cocktail or a bottled cocktail that just wasn’t very high quality,” Felkner says. “I was going for restaurant- and craft-cocktail quality, so it’s sometimes a shock for people when they’re like, ‘Oh, this is as good as anything. I would order out.’ It starts by using really high-quality ingredients.”
Felkner’s patience paid off. In the first part of 2022, Uncle Tim’s Cocktails rolled out in Colorado, with four full-time staff (plus eight part-timers during the holiday crush), a tasting room in Denver, a mobile bar (a converted horse trailer) for catering, some distribution in local liquor stores, booths at Denver-area farmer’s markets, and local delivery for consumer website sales.
These efforts spelled success for Uncle Tim’s Cocktails first year, with “an amazing holiday season” playing a big role in the final numbers.
Felkner has expansion in mind for Uncle Tim’s Cocktails in 2023, aiming to secure liquor licenses in two more states.
Xero: A Key to Uncle Tim’s Cocktails Success
One of the main reasons Uncle Tim’s Cocktails has fared so well in a tricky economic environment is Felkner’s attention to the books. In addition to serving as CEO, Felkner also handles finances and procurement for the company.
Felkner turned once again to cloud accounting software vendor Xero. “I’ve used Xero for the last three businesses I’ve run, so we know our cash situation at all times. With access to real-time data, we can make decisions quickly and not have to wait for the next month’s reports to come out. It also helps keep track of our inventory.”
Insights from Xero enable Uncle Tim’s Cocktails to keep fewer costly supplies on hand but also track the lead times for reordering. That’s especially important for supplies such as glass bottles, which remain in short supply. These capabilities, along with forecasting, proved essential to Uncle Tim’s Cocktails meeting demand during its first-ever holiday season.
“Going into the holidays last year, we’d just launched our box sets and we weren’t quite sure how many we were going to need to order,” Felkner says. “We looked at our sales over the previous three months, did some estimation, and put in some forecasts—and It turned out to be almost the exact right amount.”
Other aspects of Xero that help Felkner keep Uncle Tim’s Cocktails running smoothly include being able to access the cloud application over the web, so he can access information anytime from any PC, laptop or phone; automated transaction-loading; budgeting functionality; automatic alerts that remind wholesale buyers to pay; and integrations to third-party apps,
“Sometimes it’s like having extra staff on hand,” Felkner says of the software. Xero, he says, is “a time saver and a money saver.”
Xero’s platform also is vital for Uncle Tim’s Cocktails when it comes to raising capital. That’s because Xero’s reports deliver the insights potential investors want. “That is really helpful,” Felkner says. “The data tells a story, which is really what data should do. It should help you make decisions and help inform you and any other potential decision-makers in your business.”
Felkner also says that bookkeeping and accounting advisers have supplied great benefits to his business, helping him to stay on top of taxes and compliance requirements, and also providing him with more strategic business guidance.
In fact, Uncle Tim’s Cocktails just opened its second fundraising round at the beginning of the year.
“We have some current investors that are investing again, and we have new investors that are interested in coming on,” Felkner says.
As for what he’ll do with the new infusion of capital, Felkner plans to hire more employees and underwrite Uncle Tim’s Cocktails entrance into those aforementioned two new markets. In addition, look for Uncle Tim’s Cocktails to debut its take on the Old Fashioned, as well as another series, which Felkner isn’t yet ready to reveal.
Perspective
Starting and growing a new business is never an easy task, particularly given the headwinds in the current macroeconomic environment. In our latest survey, SMB Business and Technology Challenges and Priorities for 2023, SMB Group found that 66% of respondents said they’re worried about inflation potentially having a negative impact on their business, and 53% were very concerned about recession. Amid these worries, SMBs cite controlling/reducing costs, attracting new customers, and improving customer satisfaction and retention as their top business challenges.
Combined, these issues look like daunting challenges. But they are not insurmountable. Felkner’s journey testifies to the power of perseverance and attention to detail that small businesses need to get off the ground and thrive. His experience underscores how important it is to take advantage of accounting software and services—not only to automate day-to-day accounting operations and monitor cash flow but to also get the insights required to make better business decisions.
This post was sponsored by Xero.
© SMB Group, 2023