Small Businesses Meet Success in Rural/Urban Nebraska

Bill Abel (left) and Tim Bader (right) mix some top secret hot sauce. (Photo by Brandon McDermott, NET News)
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January 24, 2018 - 6:45am

Across the country, more than 80 percent of small businesses fail within the first 18 months. So the importance of succeeding early on is vital to a business’ growth. 

At Volcanic Peppers brick and mortar store in Bellevue, a worker gets ready to mix some secret recipe hot sauce.

When owner Tim Bader’s business started, it was no business at all. He was at home, concocting all kinds of hot sauce mixtures from some of the world’s hottest peppers he grew in his garden. He had the idea to sell his hot sauces and spice rubs at farmers markets in the Omaha area. Soon, he realized there was a big demand for his product. So he decided to start his own business.

Bill Abel (left) and Tim Bader (right) make their red reaper hot sauce. (Photo by Brandon McDermott, NET News)

“You better have some money in a bank and you better have a plan and you better have some help,” Bader said.

Bader had a career working in IT. He said he was making good money, but his heart just wasn’t in it.

"Either keep your job and build your business, slowly get investors or have some money," Bader said. "On something like this, being a food manufacturer, you’re not going to make a bunch of money overnight."

Then, Volcanic Peppers' sales started to pick up.

“It's tough because when you're starting a company and growing a company -- every time you get ahead a little bit you need something, some new ingredients or a new refrigerator,” Bader said.

Needing funds to grow, Bader quit his day job and took advantage of the Value Added Producer Grant offered by the USDA. It gives help to ag producers expanding and processing new products. The grant matched funds which helped him when it came to re-branding.

"But as we grew you know we started getting on to more shelves and we started finding that all of our products looked the same," Bader said.

He said as a business owner you have to have a keen sense of your surroundings.

It's just one of those things, you just got to keep your eyes and ears open for opportunities,” Bader said. “Some of them are going to be stinkers and some are going to help you flourish.”

Bader also needed a better way to grow his peppers. He purchased the seeds and a greenhouse and found a farmer in Tecumseh who rents his acreage out. The farmer grows the crop and Bader gets locally grown peppers. Bader said he’s just now getting to the point where he has some room to breathe financially.

A vat of some of the world's spiciest hot sauce at Volcanic Peppers. (Photo by Brandon McDermott, NET News)

It's real tough,” Bader said. “You think you have a great product that's going to take off, you’re going to make millions -- maybe you will, but you're going to work really, really hard.”

After creating a website for his products, Bader opened a store in Plattsmouth in 2012, before moving to a new location in Bellevue in 2013. Volcanic Peppers is also selling hot sauces in Omaha and Lincoln at Hy-Vee stores. Bader has his eyes on expanding perhaps to Kansas City, Des Moines or even Denver.

“It just went over so well and then we actually had other stores calling us asking to carry it,” Bader said. “They wanted to carry this also too because of the success of the first two stores.”

Leon Milobar is the director of the U.S. Small Business Administration's Nebraska district. He said 48 percent of loan activity from his office goes to start-ups or businesses which are bought and sold.

"There's money available for small business owners," Milobar said. "You just have to do your homework and you need to be prepared."

Milobar said business owners are having trouble keeping up with demand for new workers.

"With the low unemployment we have here in Nebraska, there are many businesses they can’t expand or it's costing them more to hire employees," Milobar said.

Some of the selection of hot sauce at Volcanic Peppers. (Photo by Brandon McDermott, NET News)

Small business owners like Bader in urban areas may have more resources that rural business owners don’t. That’s where the Rural Enterprise Assistance Program or REAP comes in. REAP is the largest rural-only micro-enterprise program in the country. They help business owners with loans, technical assistance and training. Mentoring is available for new business owners as well. 

We can help them with the business plan together their financial projections, working with inspections, their licenses and all the paperwork that it needs to start a business,” said Juan Sandoval, the Latino business director with REAP. 

The main concerns Sandoval hears from clients when they are starting a new business is running out of money, having the wrong inventory or not having the traffic they thought they’d have. Time is usually another concern.

People start businesses because sometime they feel (like) they can have more flexibility in their schedules and sometimes that is not true,” Sandoval said. “They (begin to) realize that the business is taking more than eight hours, sometimes its 12 and sometimes its 20.”

Sandoval said entrepreneurs worry about paying employees for worker’s compensation, insurance, medicare and social security. Also, business owners may also not be up to date on building codes. Things like having elevators, bathrooms and paved concrete outside their business.

Leticia Arenillas is one business owner who has gotten help from REAP. Originally from California, she moved to Nebraska City four and a half years ago with her husband and three daughters. In June 2016, she opened El Mercadito, a grocery store where she sells items geared toward the Hispanic and Latino community. REAP representatives still keep in touch with Arenillas.

“Without them (REAP), I doubt that I'd be doing as (well) as I am doing right now,” Arenillas said.

Arenillas had a plan and a dream. But she didn’t know where to begin. Was she supposed to get a permit first, or do business training first? That’s where the Rural Enterprise Assistance Program gave her the guidance she needed.

“I started having a clear light to the tunnel,” Arenillas said. “She did help me, not only to go step-by-step, but it give me an idea of how to run the store.”

She took a few of the courses REAP offered, each about three hours long. Those helped her understand how to use a program on the computer to streamline her inventory and create marketing for the store.

Like Bader, Arenillas found a place with a demand for her services. The Hispanic and Latino population in Nebraska City make up about 1,100 people, about 14 percent of the city’s population. Now she wants to help the next entrepreneur with an idea.

I have to inspire others to try to (start) their own businesses,” Arenillas said. “I offer my help to them I say, ‘If you want to open a business, just come over here and I’ll show you step-by-step how to do it. And I can put you in contact with someone else who can offer you a loan to begin your business.'”

Arenillas feels a strong bond to Nebraska City. She said she is doing her part to make it better.

“But not only because of the business made me good -- but because I'm giving something to the community,” Arenillas said.

Whether or not a business succeeds or fails has a lot to do with resources and strategy. Both Bader and Arenillas made it past the 18 month benchmark, the time when most small businesses fail. Now they hope to focus not just on survival – but growing their businesses.



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