A blog series that focuses on challenges and opportunities faces by aspiring entrepreneurs and small business owners.
Food waste is a staggering issue. In the United States, approximately 30% to 40% of the food supply is wasted each year, which translates to around 133 billion pounds. Growing up around his family’s 100-year-old specialty bakery, John Rotella saw hundreds of tons of products each year that did not meet specifications for sale. He didn’t want to see a lopsided loaf of fresh bread or a perfectly good bakery item with incorrect packaging head to the landfill. John decided to do something to rescue the bakery byproducts and came up with a unique idea: Turn baked goods into great tasting upcycled treats for dogs.
Read on to learn how John started Ag-Alchemy Animal Nutrition LLCopens in a new window using a viable business model.
Mixing Up a Sustainable Solution
Now a fourth-generation small business owner, John grew up in the bakery industry. Although his background is in construction and mechanical engineering, John has worked alongside his grandfather Lou Rotella Sr, his father Lou Rotella Jr and his brother Lou Rotella III at the Nebraska-based family company for years, wearing many hats.
“I learned a lot from my father and grandfather,” said John. “But the most important thing was to be honest and treat everyone with respect. I started with the company cleaning the facility as a teenager and worked my way up and learned there is no job more important than the other. It doesn't matter if you’re sweeping the floors and cleaning the facility; treat others the same as you want to be treated.”
He currently is general manager of the business, helping oversee operations with his brother Lou Rotella III.
“Even though we make our manufacturing plants as efficient as possible, there is always going to be a percentage of bakery byproduct,” said John. “But, my father, brother and I wanted to minimize anything that goes to the landfill. We started looking at what we could do with our bakery waste. First, we started by crumbling and pelletizing it. Then we began creating other formulas for the ag arena and companion animal side, producing bones and biscuits.”
In 2018, John knew that he was onto something. In one of the buildings on their 32 acre campus next to the bakery Lou Rotella Jr gave John 20,000-square-feet to do research and development, and invested in processing equipment to bring his vision to life. Then he began product development and testing. In 2020 Lou Rotella III joined the company helping bring the company to fruition and to the next level by helping gather a great team.
“We first focused on feed ingredients for the agriculture side, hence the name Ag-Alchemy,” said John. “Then we added animal nutrition to grow our product line.”
In 2020, during the COVID-19 pandemic, John used the time to focus on R&D, working with nutritionists and furry focus groups to develop pet treats. When businesses started opening after the pandemic, he worked on developing the company’s distribution process and growing his team.
Today, the company is focused on the companion animal side of the business, primarily offering dog treats.
“We took an idea for a product, developed it and now it’s on the shelf,” said John. “That’s what I love to do and the most rewarding part of being a small business owner. It’s exciting to see that within a matter of 5 to 6 years we’re in approximately 6,000 stores in the United States and expanding into Canada. We also work with National Companions doing private label and some co-packing.”
The Right Ingredient: Northwest Bank
As Ag-Alchemy grew, especially the online business portion, John realized that he needed financing services to support his business. Seeking assistance, John approached his local community bank.
“I’ve had a relationship with Northwest Bank for over 20 years,” said John. “It started with a mortgage for my first home in 2010 and then grew from there. I’ve always enjoyed working with a smaller bank because of the great customer service and support.”
Payroll, line of credit and online banking have all been services that have been key to his success. Automated clearing house (ACH) services and direct deposit allow Ag-Alchemy to send and receive electronic payments — including payroll. Using ACH direct deposit for payroll provides John’s employees with a faster, easier way to access their paycheck.
John also takes advantage of the bank’s online banking app so he can manage the daily financial needs of the business any time of day.
“Our company’s online business has grown about 150%,” said John. “So we opened up another account just for our online orders. We wanted to make it as easy as possible to keep track of everything coming in through our online store.”
This banking partnership has enabled Ag-Alchemy to enhance its operations, create new jobs and continue making delicious dog treats.
Rising Business Goals
Strategic planning, fostering strong employee relationships, and growth and expansion are key components to Ag-Alchemy’s success.
“We're looking at putting in a second shift and potentially a third shift,” said John. “Then we’re going to be hiring about 10 to 15 more employees within the next couple months for these additional shifts because we want to eventually run 24/7 just like our family bakery does. We’re also designing a new line which would consist of new mixers, ovens and packaging for 2025 and 2026.”
While that’s a short-term goal for the company, long-term John said they will be continuing to develop a fantastic company and culture.
“While the bakery is our bread and butter, no pun intended, we are excited for the future of Ag-Alchemy,” said John. “We’re growing faster than any other type of startup business in our industry because of our experiences, the right employees and smart business tactics, like partnering with a community bank.”
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