Craft beer has some new competition. Tarnished Truth Distilling Company turned a novel idea into a booming business. Here’s how a credit card helped launch the distilling company to new heights.
Move aside, craft beer. Artisanal liquors are wooing people seeking a more refined adult beverage.
Andrew Yancey is co-owner and operator of Tarnished Truth Distilling Company, located at the historic Cavalier Hotel in Virginia Beach, Virginia. He and his partner founded the company in 2013, and officially opened their doors to the public in 2018.
Tarnished Truth offers a wide variety of award-winning spirits in the tasting room, as well as the hotel’s restaurant, the Hunt Room. Using old-school style techniques, some of the unique libations created in the distillery include High Rye Bourbon, AVA Vodka and Fourth Handle Gin.
“I wanted to make something of my own, to manufacture something,” says Yancey. “After the trend of craft brewing, I was wondering why there wasn’t one here, in Virginia, for bourbon and other spirits. So, I started looking at different distilleries, but none of them were hospitality-focused.”
Opening a high-end distillery in a beautiful 1920s hotel wasn’t just a novel idea, it made sound business sense. Guests and residents have made the distillery a popular destination. Tarnished Truth offers tours, flight tastings and cocktail classes.
With a total of eight employees and expansion on the horizon, the company is swinging high. And a great credit card helps keep everything in sober order.
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Did you have to deal with any difficulties in the beginning?
Absolutely! The distilled spirits industry is heavily regulated by the federal and state government – which meant a lot of paperwork, permitting and licensing. It is also a very capital-intensive business as the equipment necessary for distilling is very expensive, and there aren’t a lot of quality manufacturers out there making it.
We had some surprise expenses, too. Everything in our distillery had to be explosion-proof, from the light switches to the motors and outlets on the wall. The cost was over three times more than your typical items, though. We had no clue that a single light switch would be hundreds of dollars.
Then there was the air conditioning. We planned $5,000 for it, but it turned out to be $15,000 for each unit – and we needed five of them. Essentially, we budgeted for building a house and we built a bomb shelter. In the end, it was double or triple what we expected to spend.
I understand you’ve been using credit cards for the business.
Yes, we have used a credit card for both pre-opening expenses and for operations. The card we use is The Platinum Card® from American Express. It’s a personal account, but I only charge business expenses with it. I keep everything separate, so it’s easy.
The rewards on this card are great incentives for me. Whether it’s taking advantage of airline miles, getting me access into airline lounges or one of the other many rewards, it’s nice to use a card that has benefits that are useful.
Although I only use the card to purchase things for the business, I do use the points that I accumulate for both personal and business travel.
See related: American Express Rewards guide
What do you charge and how do you manage the account?
We use the credit card in many ways. For instance, our gin uses botanicals that can be hard to find from large food manufacturers. Therefore, we have to go through boutique spice companies to purchase those ingredients.
We also use it for travel to industry conferences and educational seminars. Much of our day-to-day operational and office needs are typically purchased with credit cards as well.
As for how we manage it, I double-check all the numbers and review all the monthly income statements. It all goes through accounting, but I’m hands on with the expenses. They all pass through me before I approve them.
We remain as debt-free as possible. However, we are expanding our operations and are looking and taking on some debt to finance new automated equipment.
What is the present and future of Tarnished Truth?
We doubled our growth in the last year. There is a resurgence of craft brands and an appetite for quality. People are willing to spend more on a craft cocktail, and it’s great to be able to teach people how to make better drinks.
Our focus is on the experience. We gave over 10,000 tours last year. According to TripAdvisor, we’re the No. 1 thing to do in Virginia Beach.
Not only are we expanding our sales and products, we want to expand to two new markets: our neighboring states of North Carolina and Delaware. In fact, we’d like to branch out to two new markets a year.
As an owner, what have you learned about borrowing money and credit card use along the way?
Good partners are key to the success of our business. And you have to balance the need for money between financing and cash contributions, depending on what the funds will be used for.
Regarding credit cards, you’re going to need one, so look around for the account that has the best rewards and lowest interest rates. We do a lot of pre-pay items – such as custom bottles – and need to put in big orders to close the sale. There’s no getting around that and the costs can be huge. I’ve done $15,000 in purchases in a month – and that’s common.
You also have to keep your credit in good shape because you never know when you will need it for financing. Who knows, you may want to expand your business. Trust me, the bank will check, so pay your bills on time.
See related: Best business credit cards
Any advice to entrepreneurs who are just starting out?
Double the amount of funding that you think you need. Have a really good accountant or accounting partner that can guide you through the best way to fund the business.
When thinking of what you want to open, make sure it’s something unique within the space. For us, it was a distillery in a working hotel. That made our business because no one else has it. What will differentiate you from everyone else? Identify that!