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Dallas / Fort Worth District Office Success Stories

Dallas / Fort Worth District Office Success Stories

Bear Creek Smokehouse Succeeds with Help from SBA

Nestled in the East Texas piney woods of Bear Bottom, four generations of family tradition surrounds Bear Creek Smokehouse. Originating in 1943, Hick and Nellie Shoults have raised and cured their own smoked meats. Since then, the Smokehouse has grown from a backyard venture with 600 birds to one of East Texas’ largest USDA approved food processing facilities producing a wide variety of smoked delights. Bear Creek Smokehouse’s retail location is one of the oldest stores in East Texas still in operation, offering products such as ham, peppered pork tenderloins, smoked ribs, pork loins, brisket, a variety of birds and much more. The store also offers a range of soups and beverage mixes, along with chocolate fudge and praline pecan desserts.

Bear Creek Smokehouse’s first customers were local grocers who placed orders at the local Agricultural Extension office. Today, their customers reach into the thousands and can order over the phone, by mail, fax or online. With their mouth-watering Bear Creek smoked meats, the company has become a holiday tradition in homes across the nation.

Bear Creek Smokehouse began working with the Kilgore College Small Business Development Center (SBDC) in an attempt to improve their cash flow and diversify their existing product line to offset the seasonality of their business. After meeting with the Kilgore College SBDC counselor, the counselor reviewed all current loans and financials with the company leadership. The Kilgore College SBDC went to work on developing various scenarios for the company to improve cash flow. The Kilgore College SBDC determined that all debt of the company could be combined into one consolidation loan and the equity from the land and building could be used to collateralize the entire loan, thus freeing up personal assets and all equipment in the business. Secondly, the Kilgore College SBDC determined that Bear Creek Smokehouse could use the savings from their current loan payments and increase their line of credit and begin to purchase food goods for processing new orders, thus diversifying their product line and moving the company away from seasonal items.

The Kilgore College SBDC also determined that Bear Creek Smokehouse could possibly receive a job incentive grant from Marshall Economic Development Corporation (MEDCO) if new jobs could be created from the new products diversification. This grant would cover the cost of additional equipment needed to grow their increasing product lines. Bear Creek Smokehouse currently employs 56 workers averaging $25.94/hour, with 90% of those listing Marshall, TX has their home address.

Once a plan of action was in place, the Kilgore College SBDC began to work with various banks on the new strategies. The Kilgore College SBDC was successful in locating a bank that was willing to work with Bear Creek Smokehouse on their aggressive plan of action. A debt consolidation loan was approved for $835,000 at a variable rate based on LIBOR for 2.55%, an unbelievable savings from their current average loans of 6.5%. The debt consolidation loan improved cash flow dramatically for the business. Also, a line of credit was approved at a variable rate of 3.81% for $350,000 allowing Bear Creek Smokehouse the ability to buy food products to be used in their new product lines. After the debt consolidation loan and the new line of credit was approved by the bank, the Kilgore College SBDC began to prepare a grant proposal for Marshall Economic Development Corporation (MEDCO) for $48,000 to be used toward the purchase of new equipment in the business for the new product lines. This job incentive grant was unanimously approved by the MEDCO board and $48,000 will be awarded to the company for the new equipment purchases in June of 2012.

Bear Creek Smokehouse intends to create a minimum of 19 additional jobs over a five year span. The newly created jobs would be considered full time jobs and have an average hourly rate of at least $10 per hour, well above the federal mandated minimum wage rate. Bear Creek Smokehouse also projects that this increase of 19 jobs could grow larger due to the expanded product line.

Bear Creek Smokehouse with the assistance of the Kilgore College SBDC has within a short period of time, improved their cash flow, saved thousands of dollars in interest fees, freed up multiple personal assets from lenders, structured to be able to pay off principal debt faster, acquired new machinery, hired new employees, retained current employee levels, increased their line of credit and financially become more sound in all areas of operations.

Owner, Robbie Shoults said, “Working with the SBDC has been a great experience. They have helped sustain our company in various ways by showing us how to improve our cash flow, our bottom line and our competitiveness in the market place through resources available to small businesses in East Texas. The Kilgore College SBDC has been a pleasure to work with through this process and have been very attentive to our individual business requirements. I would highly recommend any small business owner to the SBDC staff and let them put their expertise to work for you.”