From starting their own accounting firms, to social enterprises in Rwanda, Luminari has managed to chat with some of the most interesting CPA entrepreneurs. John MacLellan of Cove Kombucha is no exception. Read on to learn how an EY manager teamed up with his brother to launch an extremely successful east coast kombucha company that went from their local farmers market to Costco Wholesale.
The Beginning of Cove Kombucha
Younger brother Ryan MacLellan was drinking a mason jar of homemade kombucha (a fermented probiotic tea that originated in China) when he offered a sip to John. John was astounded by the great taste and recalled witnessing the fast-growing kombucha trend in California months prior. Together, the brothers realized the business opportunity they had in Ryan’s homemade drink. With Ryan as the product guru and John as the CPA helming the business side, they launched Cove Kombucha, and hit the local farmer’s market to test their product.
“My brother and I used to get out of bed every Saturday and Sunday at 6am to go to the farmer’s market and just test our product with local customers.”
“We quickly had 3 local Halifax stores coming to ask if they could sell our product. That turned into 5, then 10, then 20, and all of a sudden we had 40 stores creating a buzz for our brand.”
The venture wasn’t backed by outside investors.
“It took a combination of debt financing from RBC and out of pocket-funding (putting in approx. $50K) to get it off the ground.”
John, an accounting manager at EY, stayed at his job for 6 months while side hustling with Cove Kombucha.
“There was a crossover period where I would work on CK at night and it was just a side hustle. That was until we landed a big contract with Sobeys that changed the whole dynamic of the company.”
“It originated from where our cottage is on the sunrise trail. Our mom actually came up with the name on the first night, and we haven’t changed it since.”
Scaling the Business
Sobey’s approached the brothers for a deal after finding them on Instagram (the company account run by Ryan). Eventually, they ended up in conversations with Costco as well. After a successful pitch at Costco head office in Ottawa, they snagged another big box deal. John explains how he managed to keep up with the growing demand for the kombucha by creating a successful foundation from the beginning:
“At the very beginning of the company, I made a list of all the components that would go into creating our products: the bottles, caps, labels, boxes, ingredients, etc – and started making cold calls to suppliers to learn pricing for both the short-term and long-term (when bulk ordering would be essential). I could then forecast our strategy appropriately and was prepared when our bigger deals did happen.
I found a local brewery that would rent us space (for the fermentation tanks) and co-pack our product along with theirs. All our fermentation tanks are at this location and host our inventory.”
“We didn’t make a cent for 6 to 8 months because we were selling everything at cost. But as soon as you land a Costco or a Sobeys, you find your money through the economy of scale in increased production.”
It’s Not About The Money
“It’s all about getting started. Just get enough money to test your product in the market.”
“You can do it off $1000. Our first test was only $150 – we only needed a few bottles, our kombucha ingredients, and a farmer’s market permit. It was about getting out there to get that feedback from potential customers. If you want your product to be successful you have to be willing to put yourself out there. That’s the key in the beginning.”
“Scaling comes in stages. You don’t need a bunch of money or savings, if you want to do something, don’t make excuses and just do it.”
John mentions how working as a CPA teaches you a skillset far beyond traditional accounting.
“One of the greatest skills I inherited at EY was communication. At firms, you learn how to deal day to day with people: email etiquette, how to present yourself in-front of others, and how to handle all types of conversations and different clients, etc. It also teaches you how to communicate effectively with your team and build an organizational structure that works.”
John left us with some of his best advice for the fellow accountant sitting at their desk looking to make the entrepreneurial leap.
“Be present. If you’re not enjoying the job, take in as much as you can regardless. There’s something to be said about being patient and that moment of great opportunity will come in time. When that time comes, you will have the skills, background, and network you need to succeed.”