Making Sense of your Cents

31 - Small Business 101: Managing Your Side Hustle

• First Century Bank • Season 2 • Episode 31

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Are you ready to turn your hobby into a business? In this episode, Daniel and Shanna are joined by Chris Rodes, founder of Hangar 37 Coffee, to discuss the transition from side hustle to small business owner. We explore the "Shoebox Moment," the importance of drawing a "Clean Line" between personal and business funds, and why local decisions are the true engine of growth. Tune in to learn how to roast your numbers before you roast your beans, the 30% tax rule you can't afford to ignore, and a simple actionable tip to professionalize your passion today

Where to Find Hangar 37 Coffee

Tazewell Store: 925 Main St. New Tazewell, TN 37825

Harrogate Store: 116 Nettleton Road, Harrogate, TN, 37752

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Shanna Browning

Hey Daniel. Now you know I love being part of Dollywood Arts Festival. So I was at a local craft fair this past weekend and it was amazing. So I saw everything from ham poured candles to woodworking.

Daniel Hill

It's amazing how much talent is tucked away in our neighborhoods, isn't it?

Shanna Browning

It really truly is. But I was talking to one of the vendors and she makes these beautiful leather goods, which I'm always going to buy. And so she tells me that she's terrified of her own success. Terrified? Why? Well, she said, I love making the bags, but the money part of this business is an absolute mess. And I'm just using my personal checking account. So she has no idea if she's making a profit or she says she's dreading tax season because she hasn't tracked a single receipt.

Daniel Hill

That is the classic side hustle headache. We see it all the time. Someone starts a hobby because they love the craft, and then suddenly the business side of things starts to feel like a second, much more stressful job.

Shanna Browning

Well, and she said exactly that, that she was drowning in the logistics. So today, we're gonna throw a live vest to all of our entrepreneurs and side hustlers. We're gonna talk about how to move from hobbyist to business owner without losing your mind or your shirt.

Daniel Hill

This is Making Sense of Your Cents. I'm Daniel Hill.

Shanna Browning

And I'm your friend here, doing this with Daniel. Again, I'm Shanna Browning, and we're continuing our main focus on growth and cleaning up your finances. So today, we're joined by our special friend Chris, who has lived this transition firsthand.

Daniel Hill

Chris Rhodes and his wife are the founders of Hangar 37 Coffee. And if you spent any time in Tazwell, Maynerville, or even Harrogate now, you've probably seen and hopefully tasted his work. Chris, welcome to the show.

Chris Rodes

So thanks for having me, Daniel Shana. Uh it's great to be here and talk about the grind of a small business, and the pun is intended.

Shanna Browning

Well, we love the puns and we sure love the coffee. But you didn't wake up with a fully scaled coffee roasting business. You started where exactly many of our listeners are starting with the passion and a side hustle to do it.

Daniel Hill

Today, we're going to use Chris's story as a roadmap, as bumpy as it may be. Um, we'll talk about the threshold of when you know it's time to get serious, the importance of the clean line between your money and the business's money, and how to build a foundation that can actually support your growth.

Shanna Browning

All right, Chris, as we were talking a little bit earlier, let's go back to the beginning. Hangar 37 didn't start in a commercial warehouse. Where'd you start?

Chris Rodes

Well, I started uh actually in the mountains of Ecuador. I was I met a coffee farmer because I thought I liked coffee, and I was I'd been a paramedic in a previous uh career. And um, so I'd always you know drank coffee just to stay awake, so forth and so on. But uh did a tour of this guy's coffee farm, and when I tasted this truly great coffee, I decided I was like, wow, this is amazing. I've never had a coffee quite this good. So I asked some questions about it, especially coffee and so forth. And after that, I decided that's I was like, I want to sell this in the States. I was like, I've never had coffee this amazing. And I said, and I so I started talking to him about that, and he's like, Well, we can, it's gonna be, you know, here's the headaches of it, and here's some of the stuff. And I said, Well, one day we're gonna start selling your coffee. So about six years later, we started.

Shanna Browning

Ah, that's pretty cool. That's a great moment.

Daniel Hill

And that moment right there of deciding that's what I want to do, and people tasting the coffee and saying, Can I buy a bag of that? What can you tell us about that moment?

Chris Rodes

So for for me, it was once I had introduced because a lot of people had, you know, been so used to their typical, you know, chain restaurants or gas station coffee or instant or whatever, uh, the stuff you make at home. Well, they were always, you know, they talk about how it hit their stomach. I can't drink coffee anymore and so forth and so on. So I was talking to them about some of these like higher quality coffees and the especially specialty coffee, and they how it doesn't hit your stomach is hard, how you you know it'll it won't have the jitters and the the acidity and stuff like that, and the different flavor profo profiles. And so after they, you know, I I even do some samples for some you know colleagues and friends, and after they're like, holy cow, this is amazing. And that's kind of what it started with. And then they're like, So they they try that, and they're like, Wow, like hey, where do I get it? So I reached out to my the same gentleman and bought the first shipment of coffee from him, and then we just kept going from there, and then we'd start bagging it up and and then sharing it with you know colleagues and things like that.

Daniel Hill

So the $15 here and there, it essentially felt like initially extra play, you know, not play money, but just extra side money. Once you started selling more bags, you know, it went from 10 bags to 20 bags, and now you're you're spending hundreds of dollars in in raw beans and packaging and equipment. Um, that's when the moment kind of felt a little more dangerous, right?

Chris Rodes

Oh, uh certainly. So for us it was, yeah, the the first few things like, oh, we'll buy a little here, buy a little there, and it'll slowly just start scaling. Well, then once it started selling, and in a day we did, you know, more business than I'd done in a week, and I'm like, holy cow, like now now, uh, now we're now we're out. Uh now we've got to start ordering more, start trying to scale a little bit, and and not having a background in that, you're you're learning really fast. It kind of transitions from that hobby to more of a business. And then of course that creates its own little issues.

Shanna Browning

But that's right. That's exactly right. So that's when I think I hear you say you realize it's not a hobby anymore. We're we're at a business. So then when you realize you've got to order more, you got to get organized, what was the first logistical step that you took?

Chris Rodes

Well, besides trying to order stuff like that, uh knowing where your money is, like, okay, how am I gonna afford this? How much money am I spending? Where where do I where do I get this? And how, you know, especially if I'm gonna start running out a week or two weeks worth of, or or further out three or four weeks, depending on what I need. Um, so it's like, okay, well, how much am I making, number one?

Shanna Browning

That's right. How much am I making? So at that point, I think you probably look at who can help me, right? And so if you're going to the bank, are you using at this point? Are you still using your personal account?

Chris Rodes

Yes.

Shanna Browning

Okay.

Chris Rodes

And personal credit cards and whatever else you had to do to try to, you know, try to like, oh, because that's when you know initially, like, we weren't even a business. And I like, I went and I did the paperwork initially, and then I'm like, okay, I filed my LLC. I think I need that. And then I was like, okay, we need to get control of our finances because obviously we're I'm using, I'm like, well, what's personal and what's not? And then you're hearing about you know these different things with LLCs and piercing veils and all these other things. I'm like, uh, and it's kind of overwhelming, especially starting a business.

Shanna Browning

Well, and I'm I'm not laughing at you. I'm laughing at the thought that you just liked coffee from Ecuador. And here you are. That's exactly it. And here you are.

Daniel Hill

So So at what point did you realize this is getting big? I need to take some different steps. And and what did you do?

Chris Rodes

So initially, after that first part of like, oh, filing initial paperwork, and I went to the my you know my my local bank and opened up an uh a business checking account and said, Oh, you know, what do I need? Because there again, uh you know came here first entry and I was like, Hey, what paperwork do I need? And they're like, and they you know, here's a list, here's what you need. And I had most of that in order. So I was able to go and I think it was within the same day or the next day, I was able to have a business checking account.

Daniel Hill

That's great. And you know, as a banker, this is where I really just want to stand up and cheer, you know, woohoo. You know, that's that's the clean line that we always talk about. We want that to be your defining moment of okay, now I'm not just in a hobby, I'm not just in a in a side hustle. This is this is real. And it gives you that opportunity to to your point to realize, okay, this is how much money I've got. This is what I can do. And it also shows you your growth. It's it really is a a huge, huge game changer.

Chris Rodes

Oh, yeah, definitely. It removed a lot of the mental load that I had. Um, so initially, like if I was buying a you know bags of beans or uh cups or whatever I might be using, I I I can go and I can look at one source, one statement, and it's all there, versus trying to go, okay, what's on this account, what's on this credit card over here, and what have you. And so it just makes it a whole lot easier. It's a lot less stressful and because entrepreneurship is stressful.

Shanna Browning

So well, we talked about um one of our episodes about tax time too, which I think for you becomes an issue to. Are you drinking a lot of coffee during tax time? Oh, yeah. I can imagine. So instead of that and having to separate it out, now it's separated out for you. And and I think from a banking perspective, we're grateful that we can at least give you some peace of mind about that.

Daniel Hill

You know, and it's not just about the taxes either. It really is about liability. Um, if you're running a business or, you know, and to that point, even a side hustle out of your personal account, you're commingling funds. If someone ever had a legal issue, you know, somebody choked on a coffee bean or something, you know, that lack of a clear line could potentially put not just your business, but your personal assets at risk. And so a separate account is like a protective firewall for your family.

Chris Rodes

Exactly. That's part of what changed my mindset as far as when I had heard about those some of those risks. And I was like, of course, I'm like, I didn't understand any of that, you know, that's not my background. But once I did the business account and saw that, you know, I could, you know, have a balance growing over here, and I could keep I could see where I was going with you know, growing the business. And it's not just like, okay, where's this money? Because if of course a lot of times with me, if I if I have money, I'm gonna spend it.

Shanna Browning

So you and everybody else, Chris, you're good.

Chris Rodes

But instead of taking money from my family, or uh that I can see what the business is doing, and then I can then say, okay, we can invest in this or we can invest in that, or okay, maybe we need to hold off for a little while versus, you know, so I'm not robbing Peter to pay Paul all the time.

Shanna Browning

That's a great, great analogy. And as a banker, I'm so grateful that you felt comfortable having that conversation with us. And so once you get those accounts settled, so now how do you handle the scale the side of it? So hangar 37, you're a local store, just opened a new one, and so you have a very dedicated following. So as you're growing, how do you realize it's that time to grow? What was that pivotal moment for you?

Chris Rodes

Well, my goal is, I mean, honestly, I'll go ahead and give you a little inside information. I want to put once we had 37 on the hangar, we decided, hey, I think that's a good number. That's how many, that's how many locations I want to have. Uh and I was like, I'm pretty simple. So that's uh, but as far as scaling, um, once we had the one space that, you know, the commercial space that we leased, um, we sat down and we looked at cash flow and things like that. And obviously we looked at uh over the last six months and even the last year, and that's when I was like, okay, there's there's opportunity for growth. Um, I can see you can see profit margins, you can see um a lot of your trends, and then you can kind of start to really understand how the business works, and it's its own entity.

Daniel Hill

So that's great. And you know, working closely with uh your local community banker, and you know, we did we did an episode here a couple weeks ago about being rooted in community and how we as your banker we're in the same community. We're we live here, we work here, we play here. We can have a common sense partnership with you. You know, we don't want to just give you a loan, right? We want to see your business thrive as much as you do. I mean, I personally I'm in your shop once or twice a week.

Chris Rodes

Um rookie numbers, you gotta bump them up.

Daniel Hill

I know, I know. We need to get up to about seven days a week.

Chris Rodes

What you you're what you're saying there is is absolutely it's it's such a huge part of the community. We like we see a lot of we we get people on their first name basis. I mean, sometimes it's a first drink basis, but like first name basis where we learn about their children. And I mean, even from the bank standpoint, it's like I don't think it's just like a loan, like uh with some national banks and things like that, where it's just you're just numbers. I one thing I like about the smaller banks um is you're a person. You get to know the person, you're not just a number on a screen. And and it's not just a loan, it's sometimes an investment in your community. And it's investing in my family, it's investing in the I mean, like we've got several staff now. We're like, I think we're up to 20-something folks. So it's like those are jobs that the opportunity that all of us working together in a community all uh support. So customers are part of the community. That's we wouldn't be here without our customers or our community.

Shanna Browning

So I love every piece of this, I love every bit of it. So let's switch it just for a second. So you've decided you've like coffee from Ecuador, you want to bring it over here, you give to your colleagues and your friends, and you started this business that is growing, which is exactly what we're excited about. We want to see happen. So what advice do you have for the person who's either roasting coffee or making sewing bags on their dining room table?

Chris Rodes

Don't be afraid to just do it. Don't overthink it. Overthinking will cause you to just keep overthinking, and that's all you'll do, and it'll be a regret that you wish you had done and then you didn't do it. Sometimes you're just taking that leap. I mean, you gotta have a little bit of faith, believe in yourself, and just do it.

Shanna Browning

I love that. I love that.

Daniel Hill

You know, Chris, your story is so relatable, it's so rooted in our community. And we get a lot of questions at our branches from people who are just like you were not long ago.

Shanna Browning

And one of the big ones we really hear is what you just talked about. Do I need an LLC? What does that look like? Is that incorporated? Is it LLC, sole proprietor? There's so many, or what's that formal business structures that we see who just want to sell their items?

Daniel Hill

You know, that's a great question. Now, you can technically operate as a sole proprietor using your social security number. We almost always recommend looking into an LLC. It's relatively inexpensive to set up in Tennessee. Uh, there may be some hoops that you have to jump through and this, that, or the other, but it does provide that legal corporate veil that protects your home and your personal savings from business debts or lawsuits.

Shanna Browning

And so I think another one we get is taxes that you've learned from business growing, I'm guessing too. So, how much do you recommend, or how much have you learned that you just kind of set aside for a side hustle?

Chris Rodes

Well, I learned this one the hard way. So don't we all I still learn at times, but we've had that conversation.

Shanna Browning

Yeah, yeah. We've had that conversation.

Daniel Hill

You know, I think the general rule of thumb is to set aside 25 to 30 percent of your net profit. Not your total sales, but what's left after your expenses? If you put that into a separate savings account every single time you get paid, you know, April 15th just becomes another day instead of financial catastrophe.

Shanna Browning

All right, Chris, I got another one for you. So your your wife, Tiffany, is in this business with you. You all have children. So how are you balancing a full-time job as a business owner, but you're still learning to grow your business? And how are you planning on doing that without just burning out? Because you want to have 37 locations, 35 more at this point.

Chris Rodes

So lots of coffee. Um you gotta have boundaries. Um, you like there's times when it's super stressful, you're gonna pull all nighters and things like that. That that could absolutely be a reality. Um, but knowing set aside time, and that's the biggest thing. I was like, you've got to make sure that you take care of your yourself and your family, um, and when whatever that might mean. Um because uh if for me, I'm just I'll get into that work zone and just keep working. And then I I mean, I remember when I first was starting, like I was losing weight and I wasn't eating like I should. And those are real things. Like someone's like, hey, you need to like just take it, it it'll be okay. And it's having that voice, like my wife, she's like she does, you know, probably more work than I do on the backside, especially you might see her face more than I you see mine, but um, she was just there, like, hey, make sure you hey, here's some food, you know, make sure you eat, you know, make sure you know, hey, why don't you you know you can you can it can take it can wait till tomorrow on some things, so just make sure you take time for yourself. Um and if you have to schedule, if if like for me, I was like, I'm not always the best for planning, uh more of like shoot from the hip, but having a like being up, you know, planning is a good thing. Um and laying out and even if it's just time slots, okay, I'm gonna take 20 minutes now, and or I'm gonna take an hour, or I'm gonna take a day, and you know, taking that day of like a rest of it with your family is immensely you know, absolutely, it's a great mental mental break more than anything.

Shanna Browning

Physical, yes, but mental for sure.

Daniel Hill

And you know, I've I've I've heard people say this too that if you don't schedule your rest, your business will eventually schedule it for you in in the form of burnout. Yep.

Shanna Browning

That's right.

Daniel Hill

And uh, you know, this has been just powerful conversation. And Chris, we thank you for being so transparent about the the ups and the downs and the highs and the lows. But uh, let's wrap this up with our actionable tip for this week.

Shanna Browning

All right, your tip for this week is to draw the clean line.

Daniel Hill

If you have any money coming in from a side project, whether it's from mowing lawns or selling crafts or consulting, stop using your personal checking account for it today.

Shanna Browning

And sometime this week, come into any of our branches if you're local here with us or wherever you're banking, wherever you're hearing us, and talk to a relationship banker. Tell them you have a side job, you're making some extra money, and you want to open a dedicated account for it.

Daniel Hill

You don't need a complicated, complex business account just yet. Sometimes a separate, simple checking account is the perfect starting point. The goal there is to have a dedicated debit card and a dedicated statement.

Chris Rodes

It'll change the way you see your business for sure. It kind of turns it from extra cash into capital.

Shanna Browning

And there it is, right there. Extra cash from something that you loved became capital and a full-time job for you. Chris, you're amazing. Thank you for joining us. And where can we find you? Where's Hangar 37?

Chris Rodes

Uh we have the one location in New Tazel is 925 Main Street, and we have one in Harrigate, uh, Tennessee at one one is one sixteen Nettleton Road.

Daniel Hill

I love it. You can tell that's a new location because he's having to think about that address. It's right across from LMU, so it's there and and people can find you online too at hangar37coffee.com.

Chris Rodes

That or I mean, honestly, the e social media is the easiest way to contact us in a lot of ways, is uh, you know, Facebook, uh, Instagram, now TikTok, any of those things. I mean, it's you know, trying to like that's it's amazing how many people you reach that way.

Shanna Browning

So that's a side business all of it. Within a business.

Daniel Hill

Well, what we'll do, Chris, is we will put your links in our show notes. That way the listeners can can find you on social media and follow you and see what all you've got going on and and uh the progress you're making. And if you get a chance, stop by and and taste some of that coffee from Ecuador. And you know, it I know it will change your life just like it changed Chris's life.

Shanna Browning

And Daniel going in there all the time.

Daniel Hill

I know I need to I need to up my game on that.

Shanna Browning

You do, you got called out.

Daniel Hill

Next week, we're moving from the roastery to the digital wallet.

Shanna Browning

It's a big job.

Daniel Hill

We're gonna talk about P2P mastery. We'll show you how to use Zell, Venmo, and Cash App to buy your coffee without getting scammed.

Shanna Browning

And we always talk about it's using all of those but having safety in the digital age. So please subscribe so you don't miss it.

Daniel Hill

For Shanna Browning and our guest Chris Rhodes. I'm Daniel Hill. Now go out and make some sense of your cents.

Shanna Browning

And buy coffee.

Daniel Hill

Yes.

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Daniel Hill

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Shanna Browning

Co-host