Article Good beer, Bad Shepherd: talking craft beer and entrepreneurship with Dereck Hales. 3 November 2022 Read time: 4 min A story of evolution, ingenuity and how Bad Shepherd leads us into temptation. At Kearney Group, we’re interested in the stories of entrepreneurs. Change-makers who go all-in, who solve consumer problems and who adapt with a changing market. Put simply, we like good business. We love great beer too. That’s why we get along with Bad Shepherd. We sat down with our friend, client and Bad Shepherd co-founder Dereck Hales to chat about the unlikely story and evolution of their brand. Kraft to craft: the journey from finance to brewing. Dereck Hales is a CPA by training; analytical, strategic and pragmatic. Though after the gear-change of a lifetime, he’s now the co-founder of Bad Shepherd, a craft beer company and brewpub in Melbourne. Bad Shepherd is now a household name in the city, and expanding year on year. So, how’d it come to be the brainchild of accountant Dereck and his co-founder Diti? “You might say insanity, you might say inspiration. In my finance role at Kraft, I could never quite break through middle management with ideas that I had planned, budgeted for and presented to upper management. It was frustrating, because I couldn’t achieve what I knew the company or I were capable of,” Dereck says. So, the only sure way to build something market-moving, was for Dereck to do his own thing. Bad Shepherd actually started as a home brewing hobby. “I’m financially oriented, artistically terrible,” says Dereck. As in, Fs-in-art and can’t-draw-stick-figures, terrible. “But I did discover an outlet… I had creativity when it came to beer. It just clicked.” Then along followed Dereck’s finance brain. “I also saw craft beer was a growing market that was underdeveloped in Melbourne at the time. So, I thought maybe this is my ‘thing’.” Dereck put together a business plan and dropped down to 4 days a week at Kraft, where he’d worked for 15 years. He began interning at a Mornington brewery and completed professional studies in brewing. By 2014 and 2015 respectively, he and his co-founder Diti were ready to quit their jobs and ‘jump in feet-first’. And so, Bad Shepherd was born. I really enjoy the intersection of art and science when it comes to brewing. Dereck Hales, co-founder, Bad Shepherd Bad Shepherd’s good advice for budding entrepreneurs. Knowing when to ‘jump’ Dereck distinctly remembers when he knew he was ready to go full-time in Bad Shepherd. “I was still doing the brewing at the start. In fact our first beers were actually brewed in another location – I’d pay them rent and they’d give me the keys. By this time we had enough experience in brewing, we just needed the location.” They had their value proposition or unique selling point within the brand concept ready, too. “At the time, we took quite a new concept to Melbourne, which was to create a place you could actually go to enjoy craft beer. So when we found the right brewery and restaurant site in 2014, we knew it was right” and they jumped into Bad Shepherd full-time. Hiring vs. taking on more yourself When scaling a business, there’s always a tension between time and money: keep responsibility of a function as co-founder, resource internally, or hire. Dereck has a guiding principle that helps him to navigate this. ‘Surround yourself with people that do a job better than you,’ he says. ‘For example, our Head of Sales is much more effective at building and leveraging relationships long-term in a way that genuinely benefits everyone. Or take our Head Brewer, who is fantastic at resource management in the manufacturing environment. I bring people on that can accomplish a function better or more efficiently than I could.’ As a qualified CPA, Dereck admits he found the ‘finance hat the hardest to take off’. So, when did he know it was time to engage Kearney Group? ‘When I noticed I wasn’t able to treat a function, like finance, like a leader or head of department. That’s when I knew it’s time to engage an expert. That’s the turning point.’ Creating a cut-through brand: the customer journey When doing market research (i.e. of the friend and family variety), Dereck and Diti actually experienced some dissent about the word ‘Bad’ in their brand name. But they stuck to their guns; opting for daring and cheeky in an industry they knew afforded the playfulness. This decision and way of thinking has set the tone beautifully for the cut-through brand they’ve built since. “We do not compromise on quality. We use the best ingredients, we take time to innovate and we’re particular about how to tell our story and we value our customer. It’s not just about the beer, it’s about the customer journey and placing how they feel at the centre of the experience. We want to delight our customers from first spotting our cans, to seeing the strong design and collateral, to reading our distinct copy, to taking their first sip.” To safeguard and improve the brand, Dereck also notes Bad Shepherd’s attitude to criticism from their customers. “Diti says if people are willing to speak up, they care. So, we have to show up and hear what they’re saying.” Where’s the value of me as a leader within Bad Shepherd? Is it working out the ins and outs of the cash and finance? Or is it actually how can we expand our presence? Dereck Hales, co-founder, Bad Shepherd A num-beer of reasons to love working with Kearney Group. *See what we did there?* Yep, you did. So how did Bad Shepherd find their way to Kearney Group? Like many clients, Dereck came looking for more than just your average accountants. We were getting frustrated with lack of support and advisory with our previous accountants, who were great for transactional representation, but we needed more. “We needed help with restructuring because we started the business in quite a complex way. Kearney Group helped us to untangle that into something straightforward.” The business advisory work during the restructure “prompted us to contemplate how to plan for cash-flow, and to build a budget with targets and forecasts – something we now track ourselves against,” says Dereck. Today, Kearney Group and Bad Shepherd work together on accounting, business advisory, lending and personal financial advice for Dereck and Diti. Kearney Group also has provided occasional interim bookkeeping as a stopgap function when needed. Most of all, Dereck values Kearney Group and his Integrated Advice Team “as a sounding board; someone able to scope and present something concrete as opposed to just what’s in my head. That has helped me make informed decisions.” Overall, “Kearney Group has really got us thinking about a better planning model. Their financial advice has helped us to become more structured, organised and purposeful in our decisions. We love working with Kearney Group.” Looking ahead for Bad Shepherd. So, what’s changed since Bad Shepherd’s launch in 2014? Pretty much everything. Bad Shepherd is now a widely loved Victorian brand. You can find it pretty much everywhere – from your little local craft bottle shop, through to Dan Murphy’s. They’re on the up and up, continually experiencing ‘40-50% year on year growth’ even in their 8th year of business. And, what’s planned for the brand in 2023 and beyond? Well Bad Shepherd is currently working on their customer journey to make it more accessible, “whether that be with satellite tap rooms or even a new location.” Dereck hints with a grin, never giving too much away. Whatever direction they take, we’re certain Dereck, Diti and the Bad Shepherd team will continue to go from strength to strength, leading us into temptation with their brilliant brews. Want to know more about working with Kearney Group? If you’re keen to transform your business and household, get in touch. Let's chat.