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General Category => Going Pro => Topic started by: jessup42 on March 24, 2014, 12:26:19 AM

Title: Doubling/Tripling your estimated start-up costs. Where?
Post by: jessup42 on March 24, 2014, 12:26:19 AM
Hey all!  For years I've been researching the nano dream.  It would be a nano with a taproom to sell everything retail and little, if any, self distribution.  After reading/researching, emailing people in the biz and just getting a handle on all facets of the business everyone says to double or triple your initial investment expectations.  My question is: where are the major hiccups where I can expect to have to double or triple my finances.  Where are people hitting the big roadblocks where more money is needed?  I'm sure the answer will vary, but are there any unanimous answers to this question??  Places that are more suspect than any others?  I am confident that I have a good handle on things, but with the majority repeating the same thing it worries the hell out of me...  Any good advice out there on the areas to expect the major source of headaches?  Thanks in advance :)
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: jamminbrew on March 24, 2014, 12:34:35 AM
Construction/remodeling/building. That gets expensive in a hurry.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: hopfenundmalz on March 24, 2014, 01:10:53 AM
The building is a big one for $$$. Another is to have enough operating funds to make it through the start up production phase.

I am just an observer who knows guys that went pro . Some from the forum will tell their experience.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 24, 2014, 02:37:27 AM
I own a brewery I started as a nano in 2010, now a sate wide production brewery hoping to go regional.. I can tell you that the build out cost us about 60k or more by the time we satisfied health department and local building ordinances. But the biggest cost was working my ass off for free for almost 3 years and still working for cheap now. Hard ass work, lots of money to spend. And the thing is it never ends. You are constantly buying bits and bobs. Equipment wears out. Pump seals fail. Gaskets disappear. Kegs disappear. Tap handles disappear. solid waste disposal needs emptied. Glycol unit is down. Never ending story.

Be sure you have plenty of friggen money. It's expensive. Feel free to PM me and I can give you any nitty gritty details. Btw it's also a lot of damn fun. ;) but be sure you have some capital reserves. It's not cheap to run a brewery.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 24, 2014, 02:55:20 AM
Just a walking cooler can be 10k

My joke is that every equipment cost 10k.
Wanna fermenter? 10k
Wanna bright tank? 10k
Wanna glycol chiller? 10K

Wanna more?

Not to mean to scare you but it cost money to start.
Nano is too small to my opinion.
All sales thru taproom is quite viable.
Forget about draught sales.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: klickitat jim on March 24, 2014, 04:15:43 AM
It seems like a nano brew pub could work in the perfect scenario. Like if you were in a town of over 50k people with very limited craft beer available and you could run the whole thing by yourself.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: coolman26 on March 24, 2014, 02:34:46 PM
I agree that nano is a very difficult model.  So many stars have to line up.  Not that it can't be done.  Many here have proven that.  I think the most difficult and unforeseen costs are the capital needed after start-up.  That goes for any business.  It takes a long time to get the ball rolling.  All that time it is eating cash.  When I opened my current business I was 75k in the hole before I made my first deal.  I never thought it would take that long.  Be prepared to have enough reserves in the tank for survival.  Wishing you nothing but the best and good luck. 
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: reverseapachemaster on March 24, 2014, 02:48:21 PM
Having unrealistic expectations about how cheap and how fast you can get up and running is a surefire way to end up spending way more money than you thought you would. That sounds like such an obvious thing to say but it's something that needs to be said for anybody opening any type of business. There are a lot of guys out there who think they are going to open a nano and do it on the cheap because they're going to work part time and they'll just wheel their homebrew set up into some warehouse space and build a tap wall. Then they are surprised when the local authorities say no propane burners in the building, you need to construct drains, comply with ADA regulations, local health and safety code, zoning issues, etc. and once you get past all of that then you can start worrying about your brewing permit. All of that means you're buying equipment and paying for a lease for months before you can brew and the longer it takes you to deal with issues you didn't know would come up and don't have the funds allocated to handle them the more money you are losing up front before you've poured a drop of beer.

I'm not saying you can't start a small brewery on a limited budget because obviously there are many who have done it or are doing it but for every one nano out there operating at a profit (or even breaking even) there are dozens who are still trying to get off the ground or gave up because they didn't do the planning up front. The start up process for a brewery is primarily a legal battle and a race against time to start selling beer before you run out of money.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 25, 2014, 02:57:25 AM
May be we should define what that limited budget is.

Three minivans?
Just be realistic.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: klickitat jim on March 25, 2014, 04:09:02 AM
I've heard it takes money to make money. If a guy wanted to 1) make money, 2) make beer, it might be way bigger than a barrel or three system. But if you want to 1) make beer, 2) make money... you might be able to do both once in a while.

In my opinion the nano is not a horrible start if you have very little into it. And any brick n mortar investment is ready for growth.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 25, 2014, 04:43:00 AM
We're just getting started, so it's hard to say where the tripping points will be.  But we're expecting to dump money into the floors, equipment, the build out, etc.  Getting enough kegs alone is a big price tag.  But mostly I think the costs are going to come from places we didn't anticipate.  Like $100 to scan the blueprints from the space.  Seriously.  And $750 to have a guy come in for an hour with a laser tape measure and do as-builts that we can give to the engineer and architect so they can do their jobs.  That kind of stuff adds up fast.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: klickitat jim on March 25, 2014, 08:08:34 AM
Ive always thought the best place for a brew pub would be on a large military base. I imagine it would be difficult to get started, but youd have a ton of business
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 25, 2014, 12:20:59 PM
Here are some of the things I was surprised about

Explosion proof grain room - required by city. Cost us almost 5K
Solid waste trap - required by city. Cost us over 5K
"Food grade lights" - required by city. Cost us almost 5K

There were other things as well, but that's just off the top of my head. We probably over spent for the lights. If you are just going to set up a big homebrew set up in the corner of a building it night not be that bad (but the city is still going to probably have some expensive requirements, like those I mentioned above) but you should be aware that this really isn;t a viable business plan. You probably need a 3 bbl system at the very least and you will need to be brewing constantly to stay on top of paying bills. And any business plan needs to have room for growth so you may as well build the growth into your current facility. For instance, we started with a rigged together 3 bbl system but had the wet floor build to hold much bigger and many more fermentors.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: hopfenundmalz on March 25, 2014, 12:28:45 PM
Here are some of the things I was surprised about

Explosion proof grain room - required by city. Cost us almost 5K
Solid waste trap - required by city. Cost us over 5K
"Food grade lights" - required by city. Cost us almost 5K

There were other things as well, but that's just off the top of my head. We probably over spent for the lights. If you are just going to set up a big homebrew set up in the corner of a building it night not be that bad (but the city is still going to probably have some expensive requirements, like those I mentioned above) but you should be aware that this really isn;t a viable business plan. You probably need a 3 bbl system at the very least and you will need to be brewing constantly to stay on top of paying bills. And any business plan needs to have room for growth so you may as well build the growth into your current facility. For instance, we started with a rigged together 3 bbl system but had the wet floor build to hold much bigger and many more fermentors.
Leo's list was 10k for beer items.
Yours is 5k for unplanned infrastructure items.
It was just something I noticed.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 25, 2014, 12:45:02 PM
What's really amazing is when you are starting up you are like "OMG! That's 5K!" Then, 4 years in you are like "OMG! That's ONLY 5K!!!" ;)
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: boulderbrewer on March 25, 2014, 03:32:04 PM
Some we encountered, are a "solid" surface parking lot, enough bathrooms for customers, customer safety things (disability access,exits and lights), city and state permits for building use (include an architect). 
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 25, 2014, 06:03:53 PM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Pinski on March 25, 2014, 08:03:54 PM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.

I'm assuming the 50K is for the city's system development charge?  Doesn't make it any easier to swallow but it's more than simply granting permission. 
Do you actually need more capacity or could you achieve the desired result by submetering?
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 25, 2014, 09:48:46 PM
What's really amazing is when you are starting up you are like "OMG! That's 5K!" Then, 4 years in you are like "OMG! That's ONLY 5K!!!" ;)
How true is that.
I am still sticking to 10k.

When I started up I was unprepared to hear walking cooler cost.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 26, 2014, 06:08:04 AM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.

I'm assuming the 50K is for the city's system development charge?  Doesn't make it any easier to swallow but it's more than simply granting permission. 
Do you actually need more capacity or could you achieve the desired result by submetering?
It is:
$18,220 "Connection Charge"
$30,925.75 "CWA includes 3% admin fee"

The CWA is a "Regional Water Connection Charge":
Regional Water Connection Charge (CWA): There is established a regional water connection charge which is imposed upon all owners of real property seeking to connect said property and improvements to the City water system.

I don't know if that's for more than permission, but to me that's the effect.

As for what we need, we could use a 1.5" line for sure.  But instead we're going to split off a smaller line after the meter, probably add a submeter (although we don't have to), and use a cold liquor tank for our on-demand supply.  It will fill as we go and should keep up pretty well, but it will keep us from being affected by water usage in other areas of the building.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 26, 2014, 11:19:52 AM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.

I'm assuming the 50K is for the city's system development charge?  Doesn't make it any easier to swallow but it's more than simply granting permission. 
Do you actually need more capacity or could you achieve the desired result by submetering?
It is:
$18,220 "Connection Charge"
$30,925.75 "CWA includes 3% admin fee"

The CWA is a "Regional Water Connection Charge":
Regional Water Connection Charge (CWA): There is established a regional water connection charge which is imposed upon all owners of real property seeking to connect said property and improvements to the City water system.

I don't know if that's for more than permission, but to me that's the effect.

As for what we need, we could use a 1.5" line for sure.  But instead we're going to split off a smaller line after the meter, probably add a submeter (although we don't have to), and use a cold liquor tank for our on-demand supply.  It will fill as we go and should keep up pretty well, but it will keep us from being affected by water usage in other areas of the building.

If you get to know the right people some of those charges can be waived. Talk to your local district councilman. Promise him a fundraiser when your doors are open.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Pinski on March 26, 2014, 02:58:59 PM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.

I'm assuming the 50K is for the city's system development charge?  Doesn't make it any easier to swallow but it's more than simply granting permission. 
Do you actually need more capacity or could you achieve the desired result by submetering?
It is:
$18,220 "Connection Charge"
$30,925.75 "CWA includes 3% admin fee"

The CWA is a "Regional Water Connection Charge":
Regional Water Connection Charge (CWA): There is established a regional water connection charge which is imposed upon all owners of real property seeking to connect said property and improvements to the City water system.

I don't know if that's for more than permission, but to me that's the effect.

As for what we need, we could use a 1.5" line for sure.  But instead we're going to split off a smaller line after the meter, probably add a submeter (although we don't have to), and use a cold liquor tank for our on-demand supply.  It will fill as we go and should keep up pretty well, but it will keep us from being affected by water usage in other areas of the building.

Yes, it is very expensive to increase capacity or add new connections to municpal water systems.  It's also extremely expensive to operate and maintain the storage, treatment and distribution systems that provide most of us with safe, reliable and (in the pacific northwest notably high) quality drinking water. Not to mention fantastic brewing water. Every time someone requests permission to add or expand a connection's capacity, greater demands are placed on the existing system capacity and infrastructure.

I wouldn't hold my breath hoping to get a waiver on charges but I would recommend three things. 
1. Invite a city water engineer to visit your site and talk about your plans. Again, while I doubt any fees would be waived I have seen instances where SDCs are phased in based on an average annual consumption agreement. As your production and consumption increases, you renew your agreement until the full SDC is met.
2. Consider adding a submeter that will capture your "production" water or more specifically, water that is not returned to the wastewater system.  These days many wastewater treatment agencies will provide a credit for volumes that you are able to demonstrate do not return to their system.  Most wastewater agencies will bill you for wastewater based on your winter average potable water consumption. You might be able to save a lot of money by deducting your production water that goes out the door as opposed to down the drain.
3. I bet you've already thought about it but just in case, try to capture and reuse your cooling water. Single pass cooling is a tremendously inefficient use of potable water. 
 
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 26, 2014, 07:51:04 PM
Yeah, we need to add a bathroom for the tasting room, that's going to be ~$15k.

Oh, and if we want to install a new 1.5" water meter and line for dedicated water to the brewery, the city will charge us $50k for the privilege of doing so.  That's for permission to do it, to actually install it and run the line is more.  I don't know how much more because we won't be doing that.

I'm assuming the 50K is for the city's system development charge?  Doesn't make it any easier to swallow but it's more than simply granting permission. 
Do you actually need more capacity or could you achieve the desired result by submetering?
It is:
$18,220 "Connection Charge"
$30,925.75 "CWA includes 3% admin fee"

The CWA is a "Regional Water Connection Charge":
Regional Water Connection Charge (CWA): There is established a regional water connection charge which is imposed upon all owners of real property seeking to connect said property and improvements to the City water system.

I don't know if that's for more than permission, but to me that's the effect.

As for what we need, we could use a 1.5" line for sure.  But instead we're going to split off a smaller line after the meter, probably add a submeter (although we don't have to), and use a cold liquor tank for our on-demand supply.  It will fill as we go and should keep up pretty well, but it will keep us from being affected by water usage in other areas of the building.

Yes, it is very expensive to increase capacity or add new connections to municpal water systems.  It's also extremely expensive to operate and maintain the storage, treatment and distribution systems that provide most of us with safe, reliable and (in the pacific northwest notably high) quality drinking water. Not to mention fantastic brewing water. Every time someone requests permission to add or expand a connection's capacity, greater demands are placed on the existing system capacity and infrastructure.

I wouldn't hold my breath hoping to get a waiver on charges but I would recommend three things. 
1. Invite a city water engineer to visit your site and talk about your plans. Again, while I doubt any fees would be waived I have seen instances where SDCs are phased in based on an average annual consumption agreement. As your production and consumption increases, you renew your agreement until the full SDC is met.
2. Consider adding a submeter that will capture your "production" water or more specifically, water that is not returned to the wastewater system.  These days many wastewater treatment agencies will provide a credit for volumes that you are able to demonstrate do not return to their system.  Most wastewater agencies will bill you for wastewater based on your winter average potable water consumption. You might be able to save a lot of money by deducting your production water that goes out the door as opposed to down the drain.
3. I bet you've already thought about it but just in case, try to capture and reuse your cooling water. Single pass cooling is a tremendously inefficient use of potable water. 
 
1. We might do that for a future expansion, but for now we are sticking with a CLT and smaller pipe.  The same goes for trying to get the fees waived.

2. We will definitely add a submeter if they will credit us, that is still TBD.

3. This is certain.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 27, 2014, 01:55:39 AM
Tom,

CLT is the way to go.
Just size it appropriately.
If you have 1" water main, it can deliver fair amount of water.

Even with lager water main you would want to have CLT.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 27, 2014, 08:17:02 AM
Tom,

CLT is the way to go.
Just size it appropriately.
If you have 1" water main, it can deliver fair amount of water.

Even with lager water main you would want to have CLT.
I think you're right.  Many breweries in the area start without them because our ground water is generally cold enough all year round.  But given the potential water supply issues, adding a CLT is a pretty good solution.  We have ordered a 30 bbl glycol jacketed CLT for our 15 bbl system, which I think is big enough.  Would you agree?  The HLT will be 45 bbls if the floor will support it.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 27, 2014, 05:55:52 PM
Generally I would agree.

it depends how are you going to brew on it.
If you would brew around the clock you would need bigg
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: Thirsty_Monk on March 27, 2014, 06:00:38 PM
I would agree.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: jessup42 on March 30, 2014, 01:15:06 AM
Hopefully I will not have to deal with many of the listed reasons for huge increases in start-up.  After things get moving it may be a different story.  I will be occupying a building that's currently a wine bar, so many of the necessary items are already present.  There's even a floor drain in the brewing area!  Not saying the pitch is correct but it's a good start.  The place has a bar, double sink with dishwasher for glass ware, looks really nice in the "taproom" area and I have most all the equipment for the 2 bbl system.  Ramps for handicap access are present so compliance with the ADA looks good.  The only problem is there's no natural gas in the building so I'll have to continue using propane and brew just outside the garage door that's there.  Hopefully that isn't going to be a problem since with all the other costs going electric won't really be feasible.  At least I won't need an exhaust hood or any ventilation items.  The town is small and it seems like they really want a brewery to be able to tap into the huge craft beer market in Asheville.  Even the town Mayor who also works for the County said he'll do all he can to make sure all goes well.  Having the township on my side is a huge relief!!  The rest of the brewing community has also been a huge help with figuring out the costs for liability insurance, tax questions, TTB paperwork questions, and other logistics that have me scratching my head.  As long as I can get the Conditional Use Permit approved by the town committee for manufacturing alcohol I should be in good shape.

Do the plans and 2D CAD drawings need the raised seal by an engineer?  If so that will be a cost I didn't anticipate...
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: a10t2 on March 30, 2014, 02:11:13 AM
The only problem is there's no natural gas in the building so I'll have to continue using propane and brew just outside the garage door that's there.  Hopefully that isn't going to be a problem since with all the other costs going electric won't really be feasible.

What are the other costs? Propane is massively more expensive than electricity. For a nano system, I wouldn't consider anything other than electric.

If you do go with propane, make sure your health codes will allow food production outdoors. What if it rains? You might want to at least figure out what a hood would cost to put in.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 30, 2014, 11:37:54 AM
Yeah, I'd highly recommend going electric. Why is it "out of the question?" I used two 5500 watt low density element for my 3 bbl brewery when I first got started. Only part that was a problem was clenaing the elements.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: jessup42 on March 31, 2014, 01:42:20 AM
there's an overhead roof just outside of the garage door so no worries with inclement weather.  it's a given that it will suck outside in the cold with the garage door open, but it will be a price i will have to pay.  maybe i'll have to pull the brew rig up to the garage door and not go outside.  to go electric with elements, control panels, exhaust hoods and permits, potential for scorching, cleaning elements, very limited electrical experience and everything else that goes with it i'd rather stick with what i'm comfortable with.  propane costs will be the least of my worries.  over time there will be definite conveniences added, but i need to see if it's even worth my time.  right now the overhead is very reasonable and the demand may very well make it at least profitable.  at the very least it will be a good learning experience to live and grow by. 

there are numerous breweries in the area (within 30miles) doing legit 10 gallon breweries on Sabco systems that i can't believe are turning a profit, but somehow they are with staff and all.  possibly the "best" brewery in town is doing 1 bbl batches and is doing really well.  i'm hoping to have even half their success.  considering i have a 2 bbl system and can double their capacity hopefully i will be so lucky.  it sounds ridiculous but it is true.  if i can sell out of beer then i can consider this a success and will consider expanding or at least adding some conveniences.  if not, well, then you can all say i told you so....  time will tell.  5/5 will be the "condition use permit" town committee determination so if that doesn't happen then nothing will for the time being. 
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: majorvices on March 31, 2014, 12:08:37 PM
Honestly, unless they are serving other beer along side their own I DON't BELIEVE anyone is making a profit on a 10 gallon Sabco system. It's just not possible unless they are selling pints for $50 each.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on March 31, 2014, 10:18:32 PM
When people running 10 gallon systems talk about profit, they are rarely considering everything that it costs to produce and serve the beer.  It is easy to make a "profit" selling beer, especially if rent, utilities, and NNN are free because it is at your house or part of another business that is paying those costs anyway, and if you are not paying yourself for the time to make or pour the beer.  It's like kids with a lemonade stand who think they made $3 selling lemonade at $.25 per glass, never considering that they didn't buy the sugar, lemons, water, cups, pitcher, ice, ice maker or trays, electricity to make the ice, table, chairs, cardboard for the sign, markers for the sign, and a few other things I'm probably leaving out.

It's fine if it pays for the cost of doing business and you are doing it because you love it, but to me that is not the same as making a profit.  In my book, you are not (and we will not be) profitable unless you can afford to pay someone (or yourself) a fair wage to do all of the work, pay all of the bills, put money away for maintenance when something inevitably breaks, and have a penny left over.  That penny is your profit.

I know some people running nanos in my area.  The only way they are "profitable" is when they do it on their own property so they have no lease costs to deal with, and several of the other costs are just part of their regular household costs.  No one submeters their own garage.  They also either keep their day jobs or have spouses to help pay the bills.  Maybe they can pull a little money occasionally or afford to upgrade equipment, but they are not paying themselves what their time is worth.  I think Mic of Dungeness Brewing is a good example here, maybe he will weigh in.

This is not meant to discourage anyone from doing it, but don't expect to make a living at it.  If you think that is the right path for you and will help you build your name while you build a bigger brewery, or if you are doing it as a hobby business, go for it!  There are success stories of people who started small and built a good brand that became a reliable source of income.  But I ran the numbers, and for my area and the associated costs I didn't think we could make enough money for it to be my full-time job with less than a 10 bbl system.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: hopfenundmalz on March 31, 2014, 11:40:02 PM
When people running 10 gallon systems talk about profit, they are rarely considering everything that it costs to produce and serve the beer.  It is easy to make a "profit" selling beer, especially if rent, utilities, and NNN are free because it is at your house or part of another business that is paying those costs anyway, and if you are not paying yourself for the time to make or pour the beer.  It's like kids with a lemonade stand who think they made $3 selling lemonade at $.25 per glass, never considering that they didn't buy the sugar, lemons, water, cups, pitcher, ice, ice maker or trays, electricity to make the ice, table, chairs, cardboard for the sign, markers for the sign, and a few other things I'm probably leaving out.

It's fine if it pays for the cost of doing business and you are doing it because you love it, but to me that is not the same as making a profit.  In my book, you are not (and we will not be) profitable unless you can afford to pay someone (or yourself) a fair wage to do all of the work, pay all of the bills, put money away for maintenance when something inevitably breaks, and have a penny left over.  That penny is your profit.

I know some people running nanos in my area.  The only way they are "profitable" is when they do it on their own property so they have no lease costs to deal with, and several of the other costs are just part of their regular household costs.  No one submeters their own garage.  They also either keep their day jobs or have spouses to help pay the bills.  Maybe they can pull a little money occasionally or afford to upgrade equipment, but they are not paying themselves what their time is worth.  I think Mic of Dungeness Brewing is a good example here, maybe he will weigh in.

This is not meant to discourage anyone from doing it, but don't expect to make a living at it.  If you think that is the right path for you and will help you build your name while you build a bigger brewery, or if you are doing it as a hobby business, go for it!  There are success stories of people who started small and built a good brand that became a reliable source of income.  But I ran the numbers, and for my area and the associated costs I didn't think we could make enough money for it to be my full-time job with less than a 10 bbl system.
Tom, this sums it up so concisely. Should be a sticky.
Title: Re: Doubling/Tripling your estimated start-up costs. Where?
Post by: tschmidlin on April 01, 2014, 04:52:41 AM
When people running 10 gallon systems talk about profit, they are rarely considering everything that it costs to produce and serve the beer.  It is easy to make a "profit" selling beer, especially if rent, utilities, and NNN are free because it is at your house or part of another business that is paying those costs anyway, and if you are not paying yourself for the time to make or pour the beer.  It's like kids with a lemonade stand who think they made $3 selling lemonade at $.25 per glass, never considering that they didn't buy the sugar, lemons, water, cups, pitcher, ice, ice maker or trays, electricity to make the ice, table, chairs, cardboard for the sign, markers for the sign, and a few other things I'm probably leaving out.

It's fine if it pays for the cost of doing business and you are doing it because you love it, but to me that is not the same as making a profit.  In my book, you are not (and we will not be) profitable unless you can afford to pay someone (or yourself) a fair wage to do all of the work, pay all of the bills, put money away for maintenance when something inevitably breaks, and have a penny left over.  That penny is your profit.

I know some people running nanos in my area.  The only way they are "profitable" is when they do it on their own property so they have no lease costs to deal with, and several of the other costs are just part of their regular household costs.  No one submeters their own garage.  They also either keep their day jobs or have spouses to help pay the bills.  Maybe they can pull a little money occasionally or afford to upgrade equipment, but they are not paying themselves what their time is worth.  I think Mic of Dungeness Brewing is a good example here, maybe he will weigh in.

This is not meant to discourage anyone from doing it, but don't expect to make a living at it.  If you think that is the right path for you and will help you build your name while you build a bigger brewery, or if you are doing it as a hobby business, go for it!  There are success stories of people who started small and built a good brand that became a reliable source of income.  But I ran the numbers, and for my area and the associated costs I didn't think we could make enough money for it to be my full-time job with less than a 10 bbl system.
Tom, this sums it up so concisely. Should be a sticky.
I don't know if I would say it is concise, but thanks :)