When Jim Koch launched the Sam Adams brewery from his family’s kitchen in 1984, he had multiple Harvard University degrees and several years experience at a high-paying consulting gig.
But that strong business background didn’t prepare him for everything he’d need to know to launch a business, he says — including how to pay his employees.
“It turns out, there’s all these nuts and bolts-y things that even to a reasonably intelligent person are not immediately visible,” Koch tells CNBC Make It. “Experience can sometimes be a lot more important than intelligence.”
Koch attended Harvard as an undergraduate, and holds both a law degree and a masters of business administration (MBA) from the university. But early on, he was still mystified by one aspect of running a business that sounds simple enough: figuring out how to pay his employees.
When he launched Sam Adams with his first employee and co-founder, Rhonda Kallman, Koch says he was too busy to figure out how to navigate the complexities of payroll deductions for taxes and other purposes. He says he simply cut Kallman a check for her gross pay and hoped he wouldn’t run afoul of the Internal Revenue Service.
If Sam Adams failed, “nobody’s going to come after us, because we’re bankrupt,” Koch says he reasoned at the time. “And if we do [succeed], we’ll hire an accountant to fix all of these problems.” Ultimately, a bar manager clued him in on the existence of payroll services who could handle that aspect of the business for him, he adds.
Over the ensuing decades, Sam Adams grew into Boston Beer Company, which employs more than 2,500 people and has annual revenue of more than $2 billion. Koch, the company’s chairman, eventually got the hang of running a business, from making sure employees got paid properly and learning how to sell beer to distributors to finding a brewing space outside his family’s kitchen.
In 2008, the company launched its Brewing the American Dream program to provide small-business owners in the food and beverage space with access to loans and mentorship to help grow their businesses. Koch says the initiative was born from his own early struggles running the business, despite his formal education.
The two things he says he could have used at the time: “One, access to loan capital. And, two, probably more important, access to nuts-and-bolts business advice.”
Since 2008, Boston Beer Company has handed out more than $79 million in loans to over 3,600 small businesses across the country, the company says. Sam Adams also launched a craft beer “experienceship” in 2012, where one small-scale craft brewer per year gets money and mentorship from the brand’s executives.
Those resources could be the difference between success and failure for anyone trying to launch a new idea, Koch says. Without them, you’re likely to “mess up” in one form or another — and you just have to hope your mistakes aren’t fatal.
“You think you’re the CEO and you can tell people what to do,” Koch says. “But you are the one who does all these things that you’ve never done before — and you’re likely to do [them] badly.”