Today’s small business success story interview is with Daniel Lowenstein of Red Hawk Premium Peppers. Red Hawk, and its gourmet hot sauce products, is located in Central Pennsylvania.
Dan bought a vinyl banner from us to advertise his sauces at fairs and other events where he sells his product. His banner (“Award Winning…”) in action can be seen below.
Tell us about yourself
I am Dan Lowenstein, the owner and head saucemaker at Red Hawk Premium Peppers. After a lifetime of being a chilehead, my wife Stephanie and I decided to open our business in 2011.
What does your company do?
Red Hawk Premium Peppers makes our award winning, gourmet hot sauces and hot pepper products from some of the most exotic and hottest peppers from around the world.
What kind of facilities do you have to produce/package your sauces? If so, how did you overcome the fear of the financial outlay to get started?
Presently, we rent a commercial kitchen located in a community center for our processing needs. Using this facility helps us support our local community by providing support to the local township owned facility. To take some of the strain off of the ever growing demand for our products, we are working with a co-packer. We are fortunate enough to have found a co-packer who not only works well for us but allows us to produce our products in medium size volume so the financial strain up front isn’t as much as it would be if larger batches were required. Financial responsibilities are always scary when starting a new business but we are fortunate that we have been able to taper some of that burden by growing our own peppers, which just happens to be the main ingredient in our products. Moving forward, we are trying to keep the business financially self supporting. Once we have our first product in production with a co-packer, we are anticipating using at least half of the profit from sales to move the next product into production while using the remaining profit to continue supporting our current handmade process. We are currently exploring the possibility of building our own packing facility in the future.
Where did the idea for your company come from?
I am a chilehead by birth. I was graced with a little Irish grandmother that loved spicy foods and never left home without a travel bottle of sauce or pepper flake shaker. Along with my Grandmother, I have also inherited my Father’s “green thumb” and have always enjoyed growing and eating fiery foods! Since I am also the owner of a forestry consulting company, I already knew what would be involved in getting another business off the ground. With the support and encouragement of my family and friends, Red Hawk Premium Peppers was born.
How did you determine there was demand for such a product? Did you create a business plan or just go for it? Would you anything differently on your pre-launch process if you did it again?
I have always been a member of hot pepper forums and a consumer of hot pepper products. To find the balance of heat and flavor I desired, I have been making my own pepper products for nearly a decade. In 2011, we decided to use the products we had already been making for personal use and bring them into the market.
What sets you apart from your competition OR what is your unique selling proposition?
There are a lot of hot sauces on the market that ONLY focus on heat. We at Red Hawk Premium Peppers are able to make an amazingly flavorful and unique product using anything from the current world record holding Carolina Reaper pepper, to rare uncultivated wild varieties in our products. Opening peoples’ eyes to a whole new world of spice is our specialty! Since I am a chilihead at heart, I taste each pepper fresh to get its flavor profile. This helps me to pair it with what I feel would be a great culinary match of flavor. I also take great pride in making sure that the flavor, heat and consistency of every sauce is perfect before ever offering it to the public.
What is one specific strategy or tactic for gaining customers that you have been successful with? Is there an area that you’ve struggled with that you believe is critical to future success? If so, how are you overcoming that?
Our business strategy is simple; provide a quality product in a quality manner. Our motto: “Come for the HEAT….. Stay for the FLAVOR!!!!” We love our customers. We try to match them up with the perfect product and if we feel we don’t have what they want, we don’t try to force it. We get to know our customers and build a great relationship with them because in the end, it is the customers who decide if our business with fail or succeed. Our primary means of acquiring new customers is fairs, festivals and through social media. We have a large following throughout the country and on Facebook.
One major struggle that is critical to any business is the speed in which you grow and staying within the confines of your abilities. It is very easy to fall into the idea that bigger and faster is better. I believe that our growing success is directly linked to the idea of slow and steady wins the race. This is also directly tied into the question of financial stress. We started out small making sure that we stayed within our financial constraints. It is very difficult to keep this frame of mind when you are working with some of the biggest names in the industry. Building a solid foundation allows us to now be able to take the next step in growing our business with less financial stress as well as less stress over success. We have a proven product and the demand is growing which gives us the confidence that we are on the right track. Many businesses jump in to quickly and don’t allow time for a good foundation. This doesn’t allow the business to grow fast enough to support the financial strain.
Any plans to allow for online ordering through your website? Do you think this would alleviate any short term challenges with gaining distribution and meeting demand?
Red Hawk does currently offer online ordering and we are in the process of improving our website (www.redhawkpeppers.com). Our online sales are a large portion of our business.
How do you compete with bigger and more well-established hot sauce competitors on the market?
As mentioned before, we compete with larger companies by offering a product with unmatched flavor and quality. We have gone toe-to-toe with some of the leaders in the industry and held our own without a problem. Like any other business, we use trial and error to see what will work. Competing and working side by side with some of the larger companies in our industry gives us the opportunity to see what they have gone through. A young business owner should never be shy in asking for advice.
What is one of the biggest challenges you have had with your business and how did you overcome it?
One of our biggest challenges right now is space and capital. We currently grow the majority of the chiles used in our products. Due to increasing popularity, we are struggling to meet the demand. This limits us on the amount of wholesaling opportunities we can capitalize on since we have finite stock. We are looking into purchasing more ground and even considering partnering with a co-packer. This is a crucial time for a business owner. Taking the next step in growing your business is always scary. Managing the stress and financial strain is very difficult. I think the best way for any business owner to succeed is to have a solid business plan and an end goal to move towards.
If you could rewind time is there anything you’d do differently? If so, what?
If I had to change one thing, I would have had a better functioning website before launching the company.
If you had advice for other SMB owners, within your industry or otherwise, what would it be?
Always use quality ingredients and stand behind your product!
How do you “WOW” your customers?
Our “WOW” factor comes from the outstanding and unique flavors featured in our products. We truly love watching our customers’ faces as they try flavor combinations that no one would believe! I think what also ‘Wows’ our customers is the fact that we not only sell our products, we use and stand behind them. We are family owned and love what we do. I think that really comes across to our customers when we talk to each of them individually and tell our story.
In what ways other than your online store are you trying to distribute your sauces?
We distribute our products in many ways. I am currently the Vice President of the Tuesday Farmer’s Market Association in downtown State College, Pennsylvania where we sell our products alongside other local produce from April through November. In addition, we have our products on the shelves at multiple locally owned gift shops, restaurants, grocery stores and other local businesses. We currently have offers from several regional supermarket chains and will be placing our products there in the near future. Stay tuned! We also work almost every weekend selling our products at fairs, craft shows and beer, wine and food fests. Again, this is a very family oriented business. My wife usually joins me at shows as well as our 8 year old son and 5 year old daughter. The first year was a bit rough of traveling and getting the word out regarding our product. But now that we have built that foundation, we get return customers bringing new customers our way.
What success and failures have you had and what did you learn? Any advice for other owners who are trying to grow distribution channels with similar products?
We started with small scale distribution to maximize our profit margins which allowed us to grow faster. Although we were limited in our wholesale opportunities in the beginning, our patience has paid off and we are now able to wholesale a known product to an established customer base.
What success and failures have you had and what did you learn?
Within the first year of opening our business, Red Hawk Premium Peppers has won awards across the country including at nationally recognized competitions like ZestFest in Irving, Texas. Our company has been a great success since we were able to stay in the green from the beginning. I think that we have learned that we can’t win all the time. The first time we did a show and ended in the red was not a good experience but it was an experience we came to realize that many business have more frequently than us. It wasn’t a failure but a good lesson.
In what ways have you closed personal knowledge/skill gaps to grow your business? Friends? Hired consultants? Self-taught? Any advice for other SMB owners/entrepreneurs facing similar challenges/gaps?
I have been very blessed with very supportive friends, family members and colleagues with this business. I’m more than happy to pick my friends’ brains for ideas and tips. Along with this support, I was able to apply the knowledge gained from my other successful business in a completely different field. Who says Forestry doesn’t apply to Peppers??? Not all competitors in an industry are as welcoming as the pepper industry. Reviewing the knowledge of companies who have been in the industry for years has been great because we were able to avoid some mistakes and pitfalls that they have already done. Along with that, we try to push our knowledge down the line. Any customer interested in growing, we are more than willing to help and we have found that the ‘pay it forward’ method really takes root in this industry. Trial and error is also the age old proven method of learning and closing those gaps. Don’t be afraid to experiment with ideas and ask opinions as you move forward.
Hot sauce testing and video marketing seem to be a perfect match for viral video marketing as people react to the sauce. Have you done any of this type of marketing? Or anything similar?
We have had many of our products reviewed by online reviewers, bloggers, etc. Besides the sheer entertainment value, they have brought us some new customers. The one thing every business needs to keep in mind when using any form of social media to advertise and push their products, is that there is always a risk. Not all reviewers are fair or appropriate. Don’t jump in too fast, make sure to investigate the social media you intend to use to make sure it is reputable and appropriate for the audience you are trying to reach.
What do you think the future holds for your business?
If the last couple years are an indicator of things to come, then the sky’s the limit for Red Hawk Premium Peppers. We would like to start moving our products into production with a co-pack to take some of the demand stress off. This will allow us to review and revise our business plan on how we want to move towards the end goal of creating our own co-packing facility. We are going to continue to soar!!!
From the start, we stuck to a strict financial structure and budget. Because we stuck to the budget, we were able to stay in the green. After reviewing our first years sales, we were able to anticipate where we were able to grow and take some more financial risks. Now that we have three years of data, we can see the steady rising trend of profit as well as demand. I have no doubt this will continue if we stay on the slow and steady path.
Where can you be found on the internet? (website, social, etc)
Editor’s Note: Thanks to Daniel for taking the time to interview with us. Daniel, like other small business owners we’ve interviewed, is a great example of someone who not only pursues his passion but has focused on building his businesses in a financially viable way. Not only has Daniel grown his business without needing outside money (which typically means a loss of control) but has done so in a deliberately methodical fashion. While most owners make the mistake of growing as fast as possible regardless of the outcome Daniel and Red Hawk Peppers is a great example of not growing too fast. Daniel has built a great foundation for future growth rather than falling behind in the constant battle to have the necessary capital to grow. Thanks Daniel!