Nexdoorganics - Brooklyn, NY
It did not take long to sell busy Brooklynites on Nextdoorganics, a subscription-based organic food service that Joshua Cook and Kris Schumacher founded in 2011. In fact, people were so drawn to the idea of having high-quality, hyper-locally sourced produce and dry goods delivered to their homes that the small start-up was operating at capacity soon after it started.
Cook admits that reaching capacity was an understandable dilemma. In the beginning, the business was operating under some pretty cramped conditions: first from a farmer's market, then from the back of Cook's car, and eventually from a shipping container in downtown Brooklyn. Following a couple more unconventional locations, in 2014 Nextdoorganics landed space in a 1,100-square-foot storefront in New York City’s Bedford-Stuyvesant neighborhood.
The new location is expected to generate $1.3 million in revenue in 2015. At maximum capacity, the site offers the potential to generate between $3 million and $6 million in annual revenue. Growth has been brisk, due in large part to a $95,000 Community Advantage loan. The Small Business Administration's Community Advantage fund focuses on small businesses in underserved communities, with a goal of driving economic growth and creating jobs. The targeted program was launched in early 2011 and provides 7(a) loans up to $250,000 for business acquisitions, leasehold improvements, financing debt, equipment and working capital.
"Had we not gotten the loan, our growth would have been really hampered. We would have had to delay restructuring until we could grow from our cash flow," Cook says. The $95,000 loan is paying off high-interest debt that Nextdoorganics incurred when moving into an earlier location. It also supplied working capital to furnish the new location with equipment. Part of the loan was used to increase cold-storage capacity and enable meat storage, an investment that brought in new customers and increased orders from existing ones.
Nextdoorganics, with 1,150 members, fills 500 orders a week with an average value of $35. Its mission outlines a lofty goal of replacing the industrial food system by supporting and purchasing goods from start-up farmers and food banks. As such, the company sources hyper-local produce, meats, seafood, and dry goods from 100 local farmers and small-batch manufacturers whose innovative techniques include hydroponics, foraging for mushrooms, and other sustainable methods.
One critical component of the business model is developing long-term, continuous relationships with customers. Today, 60 percent of Nextdoorganics' members have placed orders for at least six months on a twice-monthly basis. Many customers subscribe to the company’s popular home-delivery service.
Dave Hanold, vice president of The 504 Company, says "Nextdoorganics aligns perfectly with the goals of the Community Advantage program, which calls for creating jobs in low- to moderate-income neighborhoods." The company now employs seven full-time food packers, van drivers and cargo-bike drivers, and operates a small, walk-in retail component.
"Their recently established food hub in Bedford-Stuyvesant is becoming a center for their customers, delivery employees, and on-site staff as they organize and distribute locally sourced food," Hanold says. "Further, the company's application demonstrated solid growth trends, while still being an early-stage company that would have trouble accessing traditional bank financing."
Cook and Schumacher recently began a round of seed-level, or "angel capital," funding to buy more efficient technology and help drive the opening of three new Nextdoorganics food hubs in Manhattan and Queens. The partners are also eyeing Washington, D.C. and Boston, Mass., as future locations.