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General Category => Going Pro => Topic started by: beerstache on August 09, 2011, 09:16:07 PM

Title: Brewery Financing for someone with no wealth/collateral
Post by: beerstache on August 09, 2011, 09:16:07 PM
As a typical homebrewer, I have always dreamed of opening my own brewery, but what are the chances of getting a loan in these tough economic times for someone with no family wealth to tap or collateral?  Why bother dreaming if you cant get the financing?  I have my life's savings of about $30,000, maybe a nano-brewery is more realilistic?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 09, 2011, 09:23:07 PM
You WILL need a solid business plan.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: EHall on August 09, 2011, 09:24:06 PM
'angel investors'
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 09, 2011, 10:15:06 PM
Is $30K enough? It will really depend on what your local regulations are, or what type of facility you can manage to find. I can tell you that the location we chose cost about $50-60 grand to facilitate into a brewery ready facility. Some of that had to do with local regulations. Also, if you don't have enough money to open up at least a 7bbl brewery expect to work 40-50 hours per week for free - or nearly for free.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 10, 2011, 01:34:28 AM
I've heard from tons of people that conventional wisdom is you need to open a big brewery. I've heard people recommend anywhere from 5-10bbl. What I haven't heard is much about how to actually get the beer out your door. What do you do with the 5-10bbl of beer you're producing if you can't sell it? Beer isn't a widget you can warehouse indefinitely.

Or maybe beer is a big enough seller that it sells itself? I really have no idea and haven't seen this covered before in these conversations. If you'll only ever sell 3bbl of beer a week, a 7bbl system is ridiculous. I get that you shouldn't start out undercapitalized, but being overcapitalized seems like a risk too.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 01:39:03 AM
Well, if you can only sell 3bbls of beer a week you are in trouble. Our problem has never been selling beer, its been keeping up with demand. It has been a HUGE problem. Let me just say that again: a FRIGGIN HUGE problem.

That said, our philosophy was to start out to create demand first and then fill that demand. Still wish I started out at the size I am now and grew into a 7 or 10 bbl system. The fact of the matter is any size brewery smaller than 3 bbl brewery means you will be working lots of hours for free. In fact, I have a 3bbl system and I am working 40-50 hours a week for free now.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 01:47:10 AM
One of the first things I would do, would be to estimate what my overhead costs will be. This will initially be a WAG. Then, find out what craft beer sells for, estimate your costs here and see what you need to break even, A spreadsheet is your friend here.

Once you do a rough estimate, you can delve into the details and refine/add to it. Due diligence is a must.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: hopfenundmalz on August 10, 2011, 01:48:30 AM
Well, if you can only sell 3bbls of beer a week you are in trouble. Our problem has never been selling beer, its been keeping up with demand. It has been a HUGE problem. Let me just say that again: a FRIGGIN HUGE problem.

That said, our philosophy was to start out to create demand first and then fill that demand. Still wish I started out at the size I am now and grew into a 7 or 10 bbl system. The fact of the matter is any size brewery smaller than 3 bbl brewery means you will be working lots of hours for free. In fact, I have a 3bbl system and I am working 40-50 hours a week for free now.

Or you do what some of the smaller breweries here did, hire another brewer and work 2 shifts to keep up with demand.  You have to figure out the cost of that and will it fit into your plans.  

If you can't afford to pay yourself, can you afford the brewer?

A bigger system allows one to spend more time on the business end, which is bigger than most homebrewers would think.

Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 02:03:31 AM
Yes, a bigger system allows you to clear a larger profit margin. A quick look at the math makes it clear. For instance, if you have a 1 bbl brewery that ends up being six 1/6 kegs you can sell for, say, $xx a piece for a low gravity beer. That's only $xxx for one work day and you haven;t even counted in the grain and hops costs, utilities, water, or other such overhead. On top of that you haven't even counted in the time that you spend cleaning, pitching yeast, managing fermentation and cellaring, let alone packaging and cleaning kegs.

That said, it takes about the same amount of man hours to make 7 bbls as it does to make 1 bbl (not counting packaging, though the correct equipment makes that go much faster). Now you are talking $x,xxx for one days work, not counting ingredients and overhead.

Speaking of packaging, you will most likely have to keg and kegs are not cheap and corny kegs are not useable by bars in all most every case. You are talking about a 5K investment in kegs alone just to get started off on a 1bbl brewery. And everytime you grow you need more kegs. Sometime you need more kegs all the sudden and you haven't grown at all. Cooperage is a HUGE pain in the ass.

I'm not trying to scare anyone, just look at what you are getting into. This stuff is expensive.


modified to xx the proposed sale price of the beer.   We cannot talk about or imply the sale price of beer here.   Fred Bonjour
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 12:19:20 PM
Thanks Fred - read the rules and forgot. Also up drinking late after a long day so started to rant again.  ::)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 12:23:51 PM
Well, if you can only sell 3bbls of beer a week you are in trouble. Our problem has never been selling beer, its been keeping up with demand. It has been a HUGE problem. Let me just say that again: a FRIGGIN HUGE problem.

That said, our philosophy was to start out to create demand first and then fill that demand. Still wish I started out at the size I am now and grew into a 7 or 10 bbl system. The fact of the matter is any size brewery smaller than 3 bbl brewery means you will be working lots of hours for free. In fact, I have a 3bbl system and I am working 40-50 hours a week for free now.

Or you do what some of the smaller breweries here did, hire another brewer and work 2 shifts to keep up with demand.  You have to figure out the cost of that and will it fit into your plans.  

If you can't afford to pay yourself, can you afford the brewer?

A bigger system allows one to spend more time on the business end, which is bigger than most homebrewers would think.



This is a very good suggestion. If you are short on equipment, hire someone to help you so you get the full use of it, IE 2nd or 3rd shifts. While everyone loves the thought of being totally independent and doing everything on their own, many times that's impossible with expensive and/or limited equipment. I've seen this happen and it resulted in a closed business. (Not brewing related.)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 12:31:08 PM
Thanks Fred - read the rules and forgot. Also up drinking late after a long day so started to rant again.  ::)

I must have missed something. I didn't see that you were ranting in this thread.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 12:44:33 PM
Well, if you can only sell 3bbls of beer a week you are in trouble. Our problem has never been selling beer, its been keeping up with demand. It has been a HUGE problem. Let me just say that again: a FRIGGIN HUGE problem.

That said, our philosophy was to start out to create demand first and then fill that demand. Still wish I started out at the size I am now and grew into a 7 or 10 bbl system. The fact of the matter is any size brewery smaller than 3 bbl brewery means you will be working lots of hours for free. In fact, I have a 3bbl system and I am working 40-50 hours a week for free now.

Or you do what some of the smaller breweries here did, hire another brewer and work 2 shifts to keep up with demand.  You have to figure out the cost of that and will it fit into your plans.  

If you can't afford to pay yourself, can you afford the brewer?

A bigger system allows one to spend more time on the business end, which is bigger than most homebrewers would think.



This is a very good suggestion. If you are short on equipment, hire someone to help you so you get the full use of it, IE 2nd or 3rd shifts. While everyone loves the thought of being totally independent and doing everything on their own, many times that's impossible with expensive and/or limited equipment. I've seen this happen and it resulted in a closed business. (Not brewing related.)

If you are short on equipment what are you going to be hiring people to fill? Doesn't make sense. Also, if you aren't making enough money to pay yourself a decent wage on a small system, where do you get the money to hire other shifts?

I guess it looks easy on the outside, but making it work doesn't happen by just snapping your fingers or inventing ideas. Hard work and dedication is what makes it work. That said, we are close to getting to the point where we could hire on a part time person at min. wage. There's no way I would trust just anyone to come in and brew though.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 01:20:52 PM
I'm sure your mash/lauter tuns aren't being run 24/7. So you invest a little more in fermenters or whatever equipment is needed to support them. The first rule in manufacturing anything is to balance your production line.

You hire someone else to manufacture more. Your overhead only goes up only a little. If you always think 1 shift/ 1 person, you will never grow. Of course is you're willing to work 18 hours or more a day, then you'll make even more money.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 01:29:19 PM
Sure, if you have the capital that can work, assuming you want to be a production brewery. We are talking at least 15 bbl brew house back to back to back brewing into 50bbl tanks. I've been to breweries that do this, Troeg's for one (though they are bigger than 15 bbl MT. Can't remember how big.)

Reality is, that's not what the OP is talking about with the amount of funds he has posited - not even close by a long shot. Surely you don't think you are going to hire 3 shifts on to fill carboys? That would be pretty funny actually.  :D
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 01:39:07 PM
Sure, if you have the capital that can work, assuming you want to be a production brewery. We are talking at least 15 bbl brew house back to back to back brewing into 50bbl tanks. I've been to breweries that do this, Troeg's for one (though they are bigger than 15 bbl MT. Can't remember how big.)

Reality is, that's not what the OP is talking about with the amount of funds he has posited - not even close by a long shot. Surely you don't think you are going to hire 3 shifts on to fill carboys? That would be pretty funny actually.  :D

That's absurd. You can't fill any kegs if you don't have the beer to fill them.

All I'm saying is that if you are working 40 hours a week and you can only break even, the only thing standing in your way of making money is the debt on your overhead. Once you work your butt off to pay that, then you will only be making what your payments were.

Now, maybe that line of thinking makes you happy, but I can brew beer for myself and be happy. If I was to get into it on a commercial basis, my primary goal would be to make money, not just to brew more.  Any commercial brewery is a production brewing, no matter what the size.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bluesman on August 10, 2011, 01:41:43 PM
I understand that a 15 bbl system is a benchmark for the break even point. With that you would obviously need the sales to support that. There should also be a plan for expansion in the event that the brewery sales increase beyond normal production levels.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: a10t2 on August 10, 2011, 02:02:06 PM
I'm sure your mash/lauter tuns aren't being run 24/7. So you invest a little more in fermenters or whatever equipment is needed to support them.

That's missing the point. On a nano-scale system, you can't overcome your labor costs, let alone amortize the capital of having 50-100 times your cast-out volume in fermenters. Running three shifts only digs the hole deeper.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 02:09:51 PM
I'm sure your mash/lauter tuns aren't being run 24/7. So you invest a little more in fermenters or whatever equipment is needed to support them.

That's missing the point. On a nano-scale system, you can't overcome your labor costs, let alone amortize the capital of having 50-100 times your cast-out volume in fermenters. Running three shifts only digs the hole deeper.

OK, so if you can't make any money running it yourself with one shift with your current equipment, how do you ever make money?

You need to utilize your equipment/overhead to the fullest and if you can't do that yourself, then you have to hire help or you will never get anywhere. Now, this assumes that you have the sales to support the increased production. Obviously, if you can't sell your beer, than you don't need to brew more.

I guess what I'm saying is if a nano operation is all your interested in, because you like to brew, then stay a homebrewer.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 10, 2011, 02:22:26 PM
The capital demands will vary quite a bit depending on where you're doing it. In Denver, I knew a guy who bought a small building outside of downtown for $1.5m. In Springfield, MO I saw a huge building downtown for sale for $500k. Labor in Denver costs a lot more than in MO too.

It's my understanding that the reason for having a, say, 15bbl system is to make enough product to overcome your overhead and make a profit. If your overhead is a lot lower, then I would assume your system could be a lot smaller.

Back to the OP's original question, depending on where you live and how much labor costs there. Here in MO you can get a whole building built for $10k, leaving $20k for brewing equipment. I'd bet if you're handy and can cobble it together yourself, you could get a 3bbl system for that much.

But, like I said, MO is a LOT cheaper than Denver.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: gimmeales on August 10, 2011, 02:31:02 PM
Some sound, (if somewhat grumpy) advice from someone in the industry here: http://www.soundbrew.com/small.html - despite the at-times discouraging tone, makes some salient points about the amount of effort vs. payoff, both in terms of job satisfaction and cash flow.  The fun parts of brewing (brewing, recipe formulation, experimentation) will lose some of their charms when brewing on a schedule for customers and those 'fun' parts will only be a small percentage of the time you will spend cleaning and maintaining the brewery and running a business.

There is no way around the fact that brewing professionally is extremely capital intensive (and from talking with pro brewers, breweries eat money), and volume-driven, so plan for success and build-in the capacity that will keep your customers happy and keep you from burn out.  Not trying to be a downer at all - I love the passion of American entrepreneurial vision and hope many of the nano-picos do very well and increase the quantity and quality of American beer, but it's a huge challenge.

I've spent the last year or so do fairly extensive research with a partner into opening a brewpub and I can say it's been an ehem, 'sobering' experience to learn all that goes into making our romantic hobby a viable profession.  While it's still a dream of mine (a nearly complete business plan that will continue to be tweaked), it's been put off for awhile down the road when we're better equipped (read lots of $$$$), to enter into it better leveraged and with eyes wide open.


Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 10, 2011, 03:01:34 PM
I'm sure your mash/lauter tuns aren't being run 24/7. So you invest a little more in fermenters or whatever equipment is needed to support them.

That's missing the point. On a nano-scale system, you can't overcome your labor costs, let alone amortize the capital of having 50-100 times your cast-out volume in fermenters. Running three shifts only digs the hole deeper.

OK, so if you can't make any money running it yourself with one shift with your current equipment, how do you ever make money?

You need to utilize your equipment/overhead to the fullest and if you can't do that yourself, then you have to hire help or you will never get anywhere. Now, this assumes that you have the sales to support the increased production. Obviously, if you can't sell your beer, than you don't need to brew more.

I guess what I'm saying is if a nano operation is all your interested in, because you like to brew, then stay a homebrewer.

The post is about starting a business with minimal wealth/collateral - this is not what you are talking about. If you can't stay on topic then please refrain from posting.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 10, 2011, 03:58:53 PM
I think you can get there with $30K, but you'll have to be careful. Obviously a leased building or something you already own. Remember that you also have to meet health laws. They can be as bad as licensing. 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 10, 2011, 04:08:25 PM
You WILL need a solid business plan.

Best advice in this thread.  You need to write a business plan and that will answer your question.

Advice is good, and there's a lot of it on this thread, but every business is different and only a business plan with a complete 5-year set of financial projections will tell you if $30K is enough, and if not, how much more you need to raise to fulfill your dream.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 11, 2011, 03:01:04 AM
I think you can get there with $30K, but you'll have to be careful. Obviously a leased building or something you already own. Remember that you also have to meet health laws. They can be as bad as licensing. 
Did you open a brewery?
Do you know what are you talking about?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 11, 2011, 03:04:55 AM
I helped someone  get into brewing on the equpment end and helped him save a ton of money. Now, that was on a larger basis, but I've been warned not to discuss that in this thread. However, based on that experience, I do believe that you can start a brewery on $30K. You may not make a ton of money, initially. Also, based on that experience, I learned that pro brewing is not the way I want to make money.

How about you? Do you know what you're talking about?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: akr71 on August 11, 2011, 03:08:57 AM
(http://www.freesmileys.org/smileys/smiley-basic/popcorn.gif)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 11, 2011, 03:34:36 AM
How about you? Do you know what you're talking about?
I think you are over optimistic in this time about your equipment cost.

And yes I do know what I am talking about.
I helped myself to open a brewery.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 11, 2011, 03:42:31 AM
How about you? Do you know what you're talking about?
I think you are over optimistic in this time about your equipment cost.

And yes I do know what I am talking about.
I helped myself to open a brewery.

You could be right and without me or you actually going out tomorrow and researching it, neither of us will know for sure. And while I haven't opened a brewery myself, I did run a successful manufacturing business for almost 20 years. All of the things mentioned here, business plans, local laws, securing a viable location, etc. are similar in nature to a brewery. I know this because of my involvement with the start-up brewery I mentioned before, so i do know what I'm talking about, as well.

Also, if you know what you're looking for, you can get equipment at a good deal, especially in this economy.Please remember, that this is a nano brewery.

I would love to hear details of your brewery, but that is a personal question and it shouldn't be answered in this thread anyway.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 11, 2011, 09:54:03 AM
 ::) You kids play nice.

--

I haven't commented much on this thread because I'm in an entirely different situation and don't want to gloat. That being said: 30-50k??? Permits??? BATF Licensing??? If you have 30-50k lying around, move to France and open a brewery. You'll have 20-40k left over. Seriously. There's a big beer movement starting here, and not much competition. Regulations? Ha! I just started my brewery and it cost me exactly $0. Because wine (and by legal extension, beer or any non-spirit alcohol) is such a big driver of the economy, there are just about zero regulations on the industry. Once my 150L plastic barrels get delivered, I'll be brewing entirely at home, in my spider-filled basement with no drain or tile or anything (not entirely true, of course, because I brew outside). Now, of course, I have a job already and am putting in extra hours to do the brewery thing, but jeez, my heart goes out to you guys.

In all seriousness, if you have the ability to move out of the US and start the brewery, I would recommend it, for no other reason than to avoid the archaic alcohol regulations that you have to deal with over there.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: ccarlson on August 11, 2011, 11:27:56 AM
You have local health inspectors to deal with, right?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: akr71 on August 11, 2011, 12:07:29 PM
In all seriousness, if you have the ability to move out of the US and start the brewery, I would recommend it, for no other reason than to avoid the archaic alcohol regulations that you have to deal with over there.

Just don't move north.  Our regulations are worse in Canada.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 11, 2011, 12:51:33 PM
How about you? Do you know what you're talking about?
I think you are over optimistic in this time about your equipment cost.

And yes I do know what I am talking about.
I helped myself to open a brewery.

You could be right and without me or you actually going out tomorrow and researching it, neither of us will know for sure. And while I haven't opened a brewery myself, I did run a successful manufacturing business for almost 20 years. All of the things mentioned here, business plans, local laws, securing a viable location, etc. are similar in nature to a brewery. I know this because of my involvement with the start-up brewery I mentioned before, so i do know what I'm talking about, as well.

Also, if you know what you're looking for, you can get equipment at a good deal, especially in this economy.Please remember, that this is a nano brewery.

I would love to hear details of your brewery, but that is a personal question and it shouldn't be answered in this thread anyway.

The point that thirsty and I have both been trying to make is that we have both been down this road and we both know what we are talking about - we both opened our existing breweries on shoe string budgets.  I do think it is possible to open brewery for $30K (though it would be very, very difficult to make quality beer on it). I just don't think you could raise enough capital to grow without getting further investment - and you certainly could not afford enough fermenters to hire on several shifts of brewers to fill with that amount of cash. That's just the honest truth. It's not hard to calculate the facts.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 11, 2011, 01:44:18 PM
You have local health inspectors to deal with, right?

Yep, but the law says you're allowed to brew in your barn if you want (protects the heritage vinyards), so...
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: hopfenundmalz on August 11, 2011, 01:51:17 PM
Every brewery owner I have heard interviewed about starting up states that the biggest mistake they made was not having enough start up capital.  They sometimes say have 2 times what you think it will take.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Pi on August 11, 2011, 08:26:02 PM
Read this: http://www.soundbrew.com/small.html
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 11, 2011, 09:01:47 PM
Read this: http://www.soundbrew.com/small.html

Ahhhhh I wish I would have thought about posting that. It should be made a sticky at the top of this section. I will say that starting small is a good way to build demand and grow into it (as well as attract investors) but my entire point all along is that you will be working for free at anything smaller than a 7 bbl. If you are starting off small - at the very least 1bbl - be sure to understand what you are getting into. Long, hard hours often in unheated, unACed conditions, large capital upfront costs and low profit margin. You don't do this because you wanna get rich. You do it because you love it.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 11, 2011, 09:17:48 PM
Soundbrew makes some good points about the cost of production vs the cost of buying craft beer at market prices.

If you can make fantastic beer, better than what others are making, and you can sell it for a substantial premium over other's prices, and you're good at marketing and open your brewery in the right market, you might be successful with a small system. But there are a lot of great breweries, and chances are slim that out-of-the-gate you'll make better beer than they do, and even if you do, you might not be able to convince people to pay more for your product.

If I were beer saavy, without a lot of money, and wanted to open a beer-business, I would open a small bar in a good location with a very good selection of rare/great beers on tap or in bottles.

There is a brewery not far from me that started off with a 10 gallon system. Yes, 10 GALLONS. They're still in business, and upgrading to a 10bbl system with a canning line. No idea about how/where they got the money for that. So if you're going to start small, start so small that you'll have no overhead. With no overhead, it shouldn't be hard to turn a profit.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 11, 2011, 09:27:30 PM
If it weren't against the rules I would post what I sell my kegs for. It's certainly a premium. We can not keep up with the demand so I assume our marketing must be working.

If someone climbed from a 10 gallon brewery to a 10 bbl brewery they did not do so by building off their own profit base. Money came in from somewhere.

Like I said in another thread, there's nothing wrong with starting small and trying to create demand as long as you know what you are getting into. You're not making the house payment on a 10 gallon system. A couple 5 dollar footlongs might be in your future, however.  ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: dhacker on August 12, 2011, 12:19:54 AM
A good time to again pull out the old adage about brewing for profit . .

" . . . The way to make a small fortune in brewing is to start with a big fortune . . ."

Here's an article about someone who had the same dream as the OP . .

http://www.murfreesboropost.com/roll-out-the-barrel-cms-27639 (http://www.murfreesboropost.com/roll-out-the-barrel-cms-27639)

I think the key point of the article is the guy has rounded up 10 investors. An imperative part of the plan IMO.
With the craziness of the stock market, who knows, perhaps there is some investor money out there looking for a different place to land.  
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 12, 2011, 04:15:01 AM
Read this: http://www.soundbrew.com/small.html

Ahhhhh I wish I would have thought about posting that. It should be made a sticky at the top of this section. I will say that starting small is a good way to build demand and grow into it (as well as attract investors) but my entire point all along is that you will be working for free at anything smaller than a 7 bbl. If you are starting off small - at the very least 1bbl - be sure to understand what you are getting into. Long, hard hours often in unheated, unACed conditions, large capital upfront costs and low profit margin. You don't do this because you wanna get rich. You do it because you love it.
Copy it make appropiate comments and stikie it

Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: dbeechum on August 12, 2011, 02:26:40 PM
http://www.homebrewersassociation.org/forum/index.php?topic=8734.0
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: HIJINX on August 16, 2011, 01:58:32 PM
www.kickstarter.com
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 16, 2011, 02:24:23 PM
There are quite a few websites that can link up investors with entrepreneurs. A google search for "start up capital" will provide a number of links. For instance: http://www.gobignetwork.com/

I would assume you'd need a really good business plan if you want to go that route. It seems like there are a ton of people who are long on brewing skill and short on business skill. So I would start with an honest assessment of what you bring to the table, and what your weaknesses are, and any plans should include plans to mitigate your personal weaknesses. Like, if you don't know anything about accounting, plan to learn about accounting.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 16, 2011, 03:06:59 PM
also check out the Hess brewing oddessy http://hessbrewing.blogspot.com/

also look at Healdsburg brewing company. these are two nanos that have been running for a couple of years now and Hess provides a ton of good info on the start up process. He quotes a 10K price tag for getting up and running at that scale. I think healdsburg might have even been less, but he kept his day job.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: beerstache on August 16, 2011, 10:03:01 PM
Thanks to everybody who has posted hear and for all the comments and suggestions.  Looks like a solid business plan is the way to start.  Anybody got examples on the web that I can use for a template?
Thanks
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 16, 2011, 10:09:04 PM
Among other things call Erin and talk to her.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 17, 2011, 11:21:51 AM
Who's Erin? I'm not sure this was covered in my welcome packet.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 17, 2011, 11:26:07 AM
http://www.homebrewersassociation.org/forum/index.php?topic=8649.0 (http://www.homebrewersassociation.org/forum/index.php?topic=8649.0)
Erin Glass of the BA
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 17, 2011, 12:31:38 PM
Ah, cool!
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 02:53:11 PM
Thanks to everybody who has posted hear and for all the comments and suggestions.  Looks like a solid business plan is the way to start.  Anybody got examples on the web that I can use for a template?
Thanks

Sent you some info in a PM.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 17, 2011, 02:56:04 PM
Thanks to everybody who has posted hear and for all the comments and suggestions.  Looks like a solid business plan is the way to start.  Anybody got examples on the web that I can use for a template?
Thanks

Sent you some info in a PM.

me too?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Kit B on August 17, 2011, 03:31:14 PM
Yeah...Please, share.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 03:48:54 PM
I will start a new thread in the Going Pro section detailing many of the resources available.  Folks can add to it with alternative resources and other important information.  Give me a few hours to get organized, I am drinking from the firehose today (and it's not beer).
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 17, 2011, 06:23:31 PM
This is precisely why I'm a member of the Flying Bike Cooperative Brewery in Seattle.  We hope to have our doors open by late 2012. 

I'm running for a position on the board this month.  http://tinyurl.com/3te5ppo
 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: jaybeerman on August 17, 2011, 07:54:22 PM
I understand that a 15 bbl system is a benchmark for the break even point.

With that you would obviously need the sales to support that. There should also be a plan for expansion in the event that the brewery sales increase beyond normal production levels.

This is a silly idea.  While you can't run a less-than-15 bbl production brewery forever you can certainly start smaller and increase the size as possible.  Seven barrels seems like a nice number for in house (non production) and I've seen a multitude of 10 bbl breweries make it just fine as production breweries.  All of those 10 bbl brewers (who are now big breweries) would advise against starting with the smaller system, but they don't recognize that they would have never made it with the increased costs of the larger systems.  Otherwise I agree with everything you said.  cheers, j

here's a big +1
majorvices - "You don't do this because you wanna get rich. You do it because you love it."

Edited to fix moronic mistakes
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 17, 2011, 07:56:05 PM
Epic Ales in Seattle has been successful on a 1-2 BBL system.

Granted, he has to be brewing constantly (and he only brews 'unusual' stuff). 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 17, 2011, 08:03:54 PM
This is a silly idea.  While you can't run a less-than-15 bbl production brewery forever you can certainly start smaller and increase the size as possible.  Seven barrels seems like a nice number for in house (non production) and I've seen a multitude of 10 bbl breweries make it just fine.  All of those 10 bbl breweries (who are now big breweries) would advice against starting with the smaller system, but they don't recognize that they would have never made it with the increased costs of the larger systems.  Otherwise I agree with everything you said.  cheers, j


That's a really good point. It's easy for brewers to look back at the "mistakes" they made and wish they could've started on a bigger system. But it's true a lot of them are still in business, and got started on a system that was too small. And for every brewer who says you need a bigger system, there are brewers getting by on smaller systems. Everyone who has started a business wishes they had started with more capital than they had.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 17, 2011, 08:57:07 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: jaybeerman on August 17, 2011, 09:15:19 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

I've run the numbers 10,000 times about 10,000 ways and cannot find a way to do less than 3.5 bbl without slight difficulty or the possibility that unforeseen occurrence could shut down the brewery.  The numbers for 7 bbl look acceptable to me for the tasting room style with the possibility of some off-site production.  That said it’s my personal goal to support anyone who tries a small business and produces a good product.  cheers, j
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 09:28:40 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

If I live in a shed in the woods I can probably make a living on a 1-2 BBL system.  It'll be the Grizzly Adams version of living, but, hey, it's living.

Where do I redeem my beer coupon?  :)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 09:35:05 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

I've run the numbers 10,000 times about 10,000 ways and cannot find a way to do less than 3.5 bbl without slight difficulty or the possibility that unforeseen occurrence could shut down the brewery.  The numbers for 7 bbl look acceptable to me for the tasting room style with the possibility of some off-site production.  That said it’s my personal goal to support anyone who tries a small business and produces a good product.  cheers, j

Numbers are relative and vary greatly from state to state and situation to situation.  For example, where I am you'd need about $1.5M in capital to run a successful brewery, and it won't break even for 24 months.  For some that's reasonable, for other's it's astronomically absurd.  To further complicate things, you can throw in some investors who want a 22% return because of the high risk involved in starting a brewery.  It's more than the 12% you'd pay for a bank loan, but it might be more accessible.

Starting any business is a unique endeavor and no two are alike for every conceivable notion.  For this reason I try to steer clear of trying to come up with a standard for success that applies across all business ideas.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: jaybeerman on August 17, 2011, 09:52:54 PM
Numbers are relative and vary greatly from state to state and situation to situation.  For example, where I am you'd need about $1.5M in capital to run a successful brewery, and it won't break even for 24 months.  For some that's reasonable, for other's it's astronomically absurd.  To further complicate things, you can throw in some investors who want a 22% return because of the high risk involved in starting a brewery.  It's more than the 12% you'd pay for a bank loan, but it might be more accessible.

Starting any business is a unique endeavor and no two are alike for every conceivable notion.  For this reason I try to steer clear of trying to come up with a standard for success that applies across all business ideas.

Very true;  I immediately ignore anyone who mentions the 1.5M number and I ignore what soundbrewing has to say as well, as they are in the business of selling large (expensive) brewing systems (although I have a HUGE amount of  respect for them and their business). 

There are still costs that can't be avoided and therefore some minimums.  Like I said, it's my personal goal to support anyone who chooses to start small and manages to produce a good product.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 10:28:05 PM
What's your version of small?

I cannot ignore the numbers regardless of what they are.  Every business is different.  The capital costs for starting a 10BBL brewery can be anywhere between $200K-$500K in brewing equipment alone.  Another $50K for building modifications, and at least $150K in annual advertising (hey, they gotta' know about you to buy your stuff).  $30K-$50K for a heavy-duty van or box truck to transport the product, consumables such as water, electricity, and gas.  Rent, which around here is anywhere from $12/sqft to $25/sqft.  You'll need about 4,000 sqft for a 10BBL system.  Salaries, taxes, insurance, the list goes on.  It adds up quickly.

Additionally, you'll need a wad of cash for operating capital.  If you run out of cash your business will come to a grinding halt.

Everything has to be considered and nothing can be ignored.  If your business plan becomes expensive, then you can start scaling back until you find a number you're more comfortable with.  However, if you get too lean, you will collapse under your own weight.  Poor planning or operating under assumptions are significant reasons why businesses fail within the first year.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 17, 2011, 10:35:27 PM
Major - I'm sure you're right about production facilities. It would be really silly for the OP to start a production brewery. I never even thought one might start up that way for that reason, and I don't think he was specific about what kind of distribution model he wanted to use.

I was picturing some hole-in-the-wall tap room type thing. Drydock Brewing in Denver started out that way. I don't remember exactly how big it was, but their current system is 7bbl and they just recently started distributing, and 7bbl is a lot bigger than their old system. Sue's Coffee House in St. Clair, MI has like a 1bbl extract-only system. Obviously they sell coffee and tea too, but they have a tiny brewery and I'm sure they have fun making their beer, and they're still in business so they must be making 'some' money.

I also agree with Tim and Jay that every business is different, and it's not really useful to say "every brewery must be X units large." There are lots of different kinds of breweries with different costs and opportunities. Also, everyone's version of "making a living" isn't the same, just as everyone's cost of living isn't the same. My whole house cost $5k. Many people's houses cost 100x that. And that's just one factor in determining what "making a living" is.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 17, 2011, 10:47:41 PM
What's your version of small?

I cannot ignore the numbers regardless of what they are.  Every business is different.  The capital costs for starting a 10BBL brewery can be anywhere between $200K-$500K in brewing equipment alone.  Another $50K for building modifications, and at least $150K in annual advertising (hey, they gotta' know about you to buy your stuff).  $30K-$50K for a heavy-duty van or box truck to transport the product, consumables such as water, electricity, and gas.  Rent, which around here is anywhere from $12/sqft to $25/sqft.  You'll need about 4,000 sqft for a 10BBL system.  Salaries, taxes, insurance, the list goes on.  It adds up quickly.

Additionally, you'll need a wad of cash for operating capital.  If you run out of cash your business will come to a grinding halt.

Everything has to be considered and nothing can be ignored.  If your business plan becomes expensive, then you can start scaling back until you find a number you're more comfortable with.  However, if you get too lean, you will collapse under your own weight.  Poor planning or operating under assumptions are significant reasons why businesses fail within the first year.

If you look at alot of the sucessful small breweries and how they got going you can knock out about 150k of the above expenses by not trying to advertise in teh traditional ways. you are never going to spend enough on advertising to compare with your more established competitors. Both brooklyn brewery and DFH never advertised until much later in their growth as a business. That's not to say they didn't get their names out there but they did it with free samples and appearances at, or helping to organize, events. Not so say it's easy but there are breweries out there starting up on ALOT less than 1.5 million. No one is getting rich but...
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 17, 2011, 11:06:37 PM
I cannot ignore the numbers regardless of what they are.  Every business is different.  The capital costs for starting a 10BBL brewery can be anywhere between $200K-$500K in brewing equipment alone.  Another $50K for building modifications, and at least $150K in annual advertising (hey, they gotta' know about you to buy your stuff).  $30K-$50K for a heavy-duty van or box truck to transport the product, consumables such as water, electricity, and gas.  Rent, which around here is anywhere from $12/sqft to $25/sqft.  You'll need about 4,000 sqft for a 10BBL system.  Salaries, taxes, insurance, the list goes on.  It adds up quickly.

Tim, where do you live? $50k-100k (I'm assuming per year) is a lot of rent. The rest of your numbers seem really high.

These are super back-of-the-envelope calculations, but here goes:
You can buy 40 acres here in Missouri with a giant barn on it plus a house and other buildings for $40k-ish. Labor is super cheap here too. You could hire some Mennonites to renovate the barn for probably $5k. You could use plastic inductor tanks like Hess Brewing. You can get a 110gal tank for $200, x3 you'd have 10bbl's worth of fermentors for $600+freight, so maybe $1k total. Add 3 more for bright tanks, that's $2k. Buy a bunch of kegs ($5k) make your own cleaning system or buy a used one ($1k), condition in the kegs. You'll need stuff like chillers and pumps, so maybe $5k for those?. Stout tanks makes a 145gal kettle for $2200, and a 120gal mash tun for $2k. So you could either brew 3 batches a day, or you could buy 3 kettles and tuns.

We're at $71k now, and you still need some hot liquor tanks, so maybe another $6k for those, so $77k. Let's say add an extra $23k for things I'm forgetting, and you're at $100k for a brewery, and a house to live in. The upside is you won't need to make much money to make a living, since your house is paid for. The downside is you now live in Missouri.

I was really amazed at how friggin cheap everything is here. It's like a third-world country. But, the flip-side is it allows me to be a partner in a business that grosses 2/3rds of what we paid for it each year, and we net about half of that. That means in 3 years it'll be paid off completely, and we'll sell it and move somewhere nicer.

Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 17, 2011, 11:09:27 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

If I live in a shed in the woods I can probably make a living on a 1-2 BBL system.  It'll be the Grizzly Adams version of living, but, hey, it's living.

Where do I redeem my beer coupon?  :)

No offense, but that didn't quite meet my criteria.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 11:21:32 PM
Marketing is important and most businesses spend a significant portion of their money on it.  Yes, there are non-traditional ways to market, and it can be very effective.  However, you have to ask your self some basic questions:

Who is my customer?
Where will they find my product?
How do I tell them about my product?

Defining your customer is critically important.  For example, your customer could be men, age 35-55, college education, married, kids, home owner, median family income $100K.  Knowing this you can start to position your brand in the marketplace.  Does your labeling and brand image appeal to this group?  Is it something they can relate with and want to be seen with?  You need to position your product in the marketplace for your customer.  Where will they buy it?  Taverns?  Retail?  Knowing this you can start to create an effective marketing plan to target these people, your customers.

Marketing isn't just ads.  There should be a good amount of analysis that goes into it prior to the ads.  It's also your bling.  Everyone loves pint glasses, coasters, T-shirts, etc.  If you decided to market your beer in a tavern, you can do a co-promotion with one tavern for instance and give out coasters and pint glasses to folks who buy your beer at the bar (this varies from state to state, so take the example with a grain of salt).  A few cases of glasses will cost you a few hundred dollars.  Giving them away to folks is an excellent way of getting your brand into the marketplace and the recipient will more than likely show off his pint glass to friends, further spreading the word.

Beer festivals also cost money.  Gotta' get a keg there, pay for the space (in some cases), and give out some bling to folks.  It's great giving out body tattoos and watching all the folks walk by displaying your logo.  Again, marketing costs.

And again, no two businesses are the same so you may find better and more cost effective marketing channels to reach your customers, depending on who that is.  However, you gotta' know who your customer is first.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 17, 2011, 11:31:36 PM
Tim, where do you live? $50k-100k (I'm assuming per year) is a lot of rent. The rest of your numbers seem really high.

I live in NJ where the cost of living is absurd.  The rent prices I threw out were actual rental costs in this area.  One brewery in our state is paying $12.50/sqft for 8,000 sqft of space, and that's very inexpensive.  Really brings home my point about how variable costs are depending on the business and the location.

I like your barn-raising idea but the devil's in the details.  You'll be generating a significant amount of waste water and will need to do something with that.  You'll probably want to condition the water and you'll be consuming a tremendous amount of electricity (heating, boiling, glycol chiller, bottling line, lights, etc.).  It all begins to add up quickly.

I once visited a commercial bakery that forgot to include utilities in their business plan.  They ran out of cash in four months and needed to be bailed out by additional investors to stay in business.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 18, 2011, 12:47:31 AM
Tim - Good point about utilities. They're the biggest "cost of doing business" expense we have. We run a RV campground and tackle store. We include utilities on most of our rentals, and we pay about $3-4k a month for electricity on 150 units, depending on the time of year. We have well water, but one of our wells went out and we had to spend $15k to drill another one. We're also not on city sewer, so if I were to make a brewery on our property, I don't know what I'd do with all the waste water.

There are so many things that can go wrong with a business. Our first year we had to replace the entire septic system, which was $100k, but we had made the previous owner put money in escrow for us on the contingency that the septic went out in the first year, so we didn't actually have to pay for it, but it could've been very expensive, and we didn't have any cash on hand at all at that point. That's where having a very well-researched business plan is crucial. I briefly considered putting a brewery in our barn, but after crunching some numbers I realized my heart wasn't in it, and I wouldn't have the time to run three businesses anyway.

We spent about 5 years working on our business plan, looking at campgrounds to buy, saving up to buy them, learning about business, etc. But after 5 years of work we found a great deal on a great business, and we had the knowledge to recognize the deal when we found it. After that, getting financing was surprisingly easy, even with the economy in the toilet. Every local bank we went to offered to finance us, so we were able to shop around and get a good deal on the loan.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 18, 2011, 06:10:29 AM
Marketing is important and most businesses spend a significant portion of their money on it.  Yes, there are non-traditional ways to market, and it can be very effective.  However, you have to ask your self some basic questions:

Who is my customer?
Where will they find my product?
How do I tell them about my product?

Defining your customer is critically important.  For example, your customer could be men, age 35-55, college education, married, kids, home owner, median family income $100K.  Knowing this you can start to position your brand in the marketplace.  Does your labeling and brand image appeal to this group?  Is it something they can relate with and want to be seen with?  You need to position your product in the marketplace for your customer.  Where will they buy it?  Taverns?  Retail?  Knowing this you can start to create an effective marketing plan to target these people, your customers.

Marketing isn't just ads.  There should be a good amount of analysis that goes into it prior to the ads.  It's also your bling.  Everyone loves pint glasses, coasters, T-shirts, etc.  If you decided to market your beer in a tavern, you can do a co-promotion with one tavern for instance and give out coasters and pint glasses to folks who buy your beer at the bar (this varies from state to state, so take the example with a grain of salt).  A few cases of glasses will cost you a few hundred dollars.  Giving them away to folks is an excellent way of getting your brand into the marketplace and the recipient will more than likely show off his pint glass to friends, further spreading the word.

Beer festivals also cost money.  Gotta' get a keg there, pay for the space (in some cases), and give out some bling to folks.  It's great giving out body tattoos and watching all the folks walk by displaying your logo.  Again, marketing costs.

And again, no two businesses are the same so you may find better and more cost effective marketing channels to reach your customers, depending on who that is.  However, you gotta' know who your customer is first.

Tim I agree. with all you are saying above and I would have to think twice before starting a brewery in NJ (given that I would be thinking 10 or 20 times before moving to NJ sort of clears that up a bit anyway). My point was mainly that your marketing costs can be significant or small depending on how you approach the process.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 10:47:42 AM
I believe in pretty much everything Tim M. is saying (except the brewing in a shed part). How you market yourself, and especially how you brand yourself, has much to do with how well you can succeed. Look at Magic Hat - mediocre beers (at best) excellent branding. They have no trouble selling beers. Having been in graphic design and marketing for 20+ years marketing has always been a bit second nature to me in my professional career - but I did find one resource that really helped me hone in our direction as a company. While I didn't read the book, I did take the personality test based on the interview on the blog I will post below.

http://www.personalbrandingblog.com/personal-branding-interview-2-sally-hogshead/

and the test

http://sallyhogshead.com/f-score-personality-test/
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bluesman on August 18, 2011, 10:56:41 AM
Making quality beer is very important but selling (sales/marketing) quality beer is more important to the success of any brewery just as Keith pointed out with MagicHat's success. One can produce the best beer on the planet, but if none knows it's available, the business will fail.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 18, 2011, 12:02:00 PM
I believe in pretty much everything Tim M. is saying (except the brewing in a shed part). How you market yourself, and especially how you brand yourself, has much to do with how well you can succeed. Look at Magic Hat - mediocre beers (at best) excellent branding. They have no trouble selling beers. Having been in graphic design and marketing for 20+ years marketing has always been a bit second nature to me in my professional career - but I did find one resource that really helped me hone in our direction as a company. While I didn't read the book, I did take the personality test based on the interview on the blog I will post below.

http://www.personalbrandingblog.com/personal-branding-interview-2-sally-hogshead/

and the test

http://sallyhogshead.com/f-score-personality-test/

Interesting test! Thanks for linking.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 04:02:39 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system. 

http://www.epicales.com/brewery#theBrewery
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 04:20:19 PM
I see that discussion have moved from financing to marketing.

While cleaning 40 1/2 BBL kegs I was thinking about it.
There are two kind of people who open breweries.
1) with love of the beer
2) with love of the money.

if you are in 1) category:

You decide what you want to be.
Pick the slogan what best represent you.
Pick the customer who you want to sell your product.
and finally do you have enough customers in your targeted area.
SO if you are in it for the love of beer you are setting up the expectations.

If you are in 2) category:
you buy a market research for demographics in targeted area (because your investors would not believe your analysis).
you target only people wit $$$ amount of household income.
You spend a lot of time and money in Point of sale items.
You spend a good amount of money on public image.
and you brew a beer to the intended demographics expectations (mostly contract brewing because brewing equipment is expensive).

May be I am a fool but that is how I see it.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on August 18, 2011, 04:28:32 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system.  

http://www.epicales.com/brewery#theBrewery
It remains to be seen if he can make a living though.  I was embarrassed when an AHA bigwig was in town and was given a bottle that had clear contamination.  I've gotten some bad bottles myself, and now mostly avoid the brand.  His recipes are interesting and I hope he will be successful.  But he's got to get the issues worked out or he'll fail no matter what the size of his system.  Maybe he's already cleaned things up but I wouldn't know because, like I said, I'm avoiding the brand.  I guess some people will keep going back for phenol-bombs, but not me.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 18, 2011, 04:42:59 PM
There are two kind of people who open breweries.
1) with love of the beer
2) with love of the money.
May be I am a fool but that is how I see it.

I think that's a good way to look at it, but I also think you need both kinds of person to run a business.

I obviously don't have a brewery, but a widget is a widget, and a business is a business (more or less). In my business we have one partner who provided most of the capital, and is very cautious/fastidious with money matters, one partner who has the passion and love for the business but isn't very good at saving or keeping money, and me who mostly provides sweat equity and a different perspective and makes the whole thing run smoothly.

I guess what I'm saying is, to start a business without much capital, along with all the other things you need we've talked about already, you need some business partners you can trust and who have the skills/personality you lack.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 04:47:47 PM
May be I am a fool but that is how I see it.

Nope, I don't think you are a fool at all. There are a few "breweries" that have been popping up that have T-Shirts, Glasses, Coasters, Stickers, even tap handles - but no beer! Seriously! Talk about putting your cart before the horse.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 04:54:46 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system. 

http://www.epicales.com/brewery#theBrewery

No where does this show me he is making a living. I never said a 1bbl brewery couldn't exist. hell, I ran one for about 6 months. I just think it is pointless.

That said, the tasting room is a big bonus, and the fact that he bottles some of his beer for sale. I can't do either of those in my location. (Actually, legislation just went through to allow me to open a tasting room, but i don't have the resources right now).

That said, brewing and kegging ona  one bbl brewery is a full time job. I can't imagine bottling and running/and or manning a tasting room.. He either works 100+ hours a week or has a full time voluteer staff.

Now ask yourself, how long do you think this is gonna last at 1bbl?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 04:55:59 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system.  

http://www.epicales.com/brewery#theBrewery
It remains to be seen if he can make a living though.  I was embarrassed when an AHA bigwig was in town and was given a bottle that had clear contamination.  I've gotten some bad bottles myself, and now mostly avoid the brand.  His recipes are interesting and I hope he will be successful.  But he's got to get the issues worked out or he'll fail no matter what the size of his system.  Maybe he's already cleaned things up but I wouldn't know because, like I said, I'm avoiding the brand.  I guess some people will keep going back for phenol-bombs, but not me.

I've only ever been to the brewery once - and I don't generally buy his beers.  I was just giving an example of someone giving it a go on a serously small system.  I've only had it out of the bottle once - and I got a non-infected bottle.  The others were on tap.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 04:57:42 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system.  

http://www.epicales.com/brewery#theBrewery

No where does this show me he is making a living. I never said a 1bbl brewery couldn't exist. hell, I ran one for about 6 months. I just think it is pointless.

That said, the tasting room is a big bonus, and the fact that he bottles some of his beer for sale. I can't do either of those in my location. (Actually, legislation just went through to allow me to open a tasting room, but i don't have the resources right now).

That said, brewing and kegging ona  one bbl brewery is a full time job. I can't imagine bottling and running/and or manning a tasting room.. He either works 100+ hours a week or has a full time voluteer staff.

Now ask yourself, how long do you think this is gonna last at 1bbl?

I have no idea whether he's making any money or not.  If he is, it can't be much.  I was really just showing you an example of someone actually trying to go commercial w/ a system that small.  

I'd never try it.  I'd have no life - be brewing 24/7 to try and keep up. 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 05:05:15 PM
Brew Monger - I guess you didn't see where I said I am an example of brewing on a 1bbl system. I'm still running a pro brewery on a system that is incredibly too small! I certainly know you can make it work, as long as you don't mind making it work without paying yourself anything. This is the only warning I have been trying to make through the entire thread - understand what you are getting into. You are talking about years of hard work, very little (if any) pay, and lots of over head capital and very litttle profit coming in. the only way to grow at a 1bbbl capacity is to either dig deeper into your savings, get a loan or find investors. because you will always only be making ends meet.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 05:07:51 PM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.

Here is the website (Specificlly a photo showing his' brewery') for Epic Ales in Seattle.  His beers can be found in local bars & local bottle shops.  And apparently I exaggerated. He brews on a ONE barrel system.  

http://www.epicales.com/brewery#theBrewery
It remains to be seen if he can make a living though.  I was embarrassed when an AHA bigwig was in town and was given a bottle that had clear contamination.  I've gotten some bad bottles myself, and now mostly avoid the brand.  His recipes are interesting and I hope he will be successful.  But he's got to get the issues worked out or he'll fail no matter what the size of his system.  Maybe he's already cleaned things up but I wouldn't know because, like I said, I'm avoiding the brand.  I guess some people will keep going back for phenol-bombs, but not me.
If you want to open a brewery please know how to brew and package clean beers.
Do not do it for "COOL" effect.
For that you would open a T-Shirt printing shop. (I apologize to all T-Short printing shops)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 18, 2011, 05:12:43 PM
May be I am a fool but that is how I see it.

Nope, I don't think you are a fool at all. There are a few "breweries" that have been popping up that have T-Shirts, Glasses, Coasters, Stickers, even tap handles - but no beer! Seriously! Talk about putting your cart before the horse.

This is actually a good marketing idea.  By branding items and getting the word out well in advance, people are anticipating your product in the market place before it arrives.  This is why most companies pre-annouce products.  The inability to get a well-branded product actually increases demand.  It a strategy heavily employed by Apple Computer.  They announce something, it goes on sale, it sells out and you can't get one for weeks.  People line up outside the stores just to get one on opening days.  Regardless whether you like Apple's products or not, they get a massive amount of free publicity because of the demand they create prior to and during product launch.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 05:14:26 PM
Brew Monger - I guess you didn't see where I said I am an example of brewing on a 1bbl system. I'm still running a pro brewery on a system that is incredibly too small! I certainly know you can make it work, as long as you don't mind making it work without paying yourself anything. This is the only warning I have been trying to make through the entire thread - understand what you are getting into. You are talking about years of hard work, very little (if any) pay, and lots of over head capital and very litttle profit coming in. the only way to grow at a 1bbbl capacity is to either dig deeper into your savings, get a loan or find investors. because you will always only be making ends meet.
There is another way merry a loyer or a doctor.
Avoid teacher or fast food workers.

The point that a lot of small businesses would not survive without the second study family income.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 05:18:57 PM
May be I am a fool but that is how I see it.

Nope, I don't think you are a fool at all. There are a few "breweries" that have been popping up that have T-Shirts, Glasses, Coasters, Stickers, even tap handles - but no beer! Seriously! Talk about putting your cart before the horse.

This is actually a good marketing idea.  By branding items and getting the word out well in advance, people are anticipating your product in the market place before it arrives.  This is why most companies pre-annouce products.  The inability to get a well-branded product actually increases demand.  It a strategy heavily employed by Apple Computer.  They announce something, it goes on sale, it sells out and you can't get one for weeks.  People line up outside the stores just to get one on opening days.  Regardless whether you like Apple's products or not, they get a massive amount of free publicity because of the demand they create prior to and during product launch.

Well, it depends on your branding mode (see link I posted before) - it can work, assuming you know what you are doing. That said, we started with a "mystery" approach that built a LOT of suspense in the amrket place and didn't come out even with T-shirts until about 9 months into the business - and sold EVERY drop we made (no returns - knock on wood).

OTOH you better have VERY good beer if you take the above approach, because if you launch and your beers suck, your dead. And I also know of some breweries who are opening up where the idea to open a brewery started first, then they decided to learn how to brew. That is a very, very bad idea.

If you are going to open a brewery you better damn well sure you know how to brew beer. That is ultimately the very most important part. Flash, pomp and swag can coast you a couple years if your lucky. But without the beer you become a joke.

**BTW: Just wanna say - great discussion, folks!****
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 05:21:31 PM
There are two kind of people who open breweries.
1) with love of the beer
2) with love of the money.
May be I am a fool but that is how I see it.

I think that's a good way to look at it, but I also think you need both kinds of person to run a business.

I obviously don't have a brewery, but a widget is a widget, and a business is a business (more or less). In my business we have one partner who provided most of the capital, and is very cautious/fastidious with money matters, one partner who has the passion and love for the business but isn't very good at saving or keeping money, and me who mostly provides sweat equity and a different perspective and makes the whole thing run smoothly.

I guess what I'm saying is, to start a business without much capital, along with all the other things you need we've talked about already, you need some business partners you can trust and who have the skills/personality you lack.
I do not necessary agree with you that brewing is just another business. We all know that it takes the same amount of hours and man power to brew 10 Gal batch or 10 gallon batch.
I do agree that brewing beer is food manufacturing thou.

Well kegs are done washing time to do something else.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bo on August 18, 2011, 05:25:18 PM
May be I am a fool but that is how I see it.

Nope, I don't think you are a fool at all. There are a few "breweries" that have been popping up that have T-Shirts, Glasses, Coasters, Stickers, even tap handles - but no beer! Seriously! Talk about putting your cart before the horse.

This is actually a good marketing idea.  By branding items and getting the word out well in advance, people are anticipating your product in the market place before it arrives.  This is why most companies pre-annouce products.  The inability to get a well-branded product actually increases demand.  It a strategy heavily employed by Apple Computer.  They announce something, it goes on sale, it sells out and you can't get one for weeks.  People line up outside the stores just to get one on opening days.  Regardless whether you like Apple's products or not, they get a massive amount of free publicity because of the demand they create prior to and during product launch.

I agree. It's done all time these days and it works.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 05:28:46 PM
Certainly can work well. But be careful you don't spend all your 30K on swag or you won;t have anything left for a brewery.  ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 18, 2011, 05:30:56 PM
This is actually a good marketing idea.  By branding items and getting the word out well in advance, people are anticipating your product in the market place before it arrives.  This is why most companies pre-annouce products.  The inability to get a well-branded product actually increases demand.  It a strategy heavily employed by Apple Computer.  They announce something, it goes on sale, it sells out and you can't get one for weeks.  People line up outside the stores just to get one on opening days.  Regardless whether you like Apple's products or not, they get a massive amount of free publicity because of the demand they create prior to and during product launch.

I would think there's some baseline minimum of potential customers for that to work. Apple has hundreds of millions of potential customers, if not billions. So a scattershot marketing strategy that converts 1/10th of 1% into customers would get them a serious amount of money.

With the crazy alcohol regulations in this country, such as prohibitions on self-distribution and the problems in getting your product into consumer's hands, I don't think the same kind of marketing strategies would work for beer. You would probably start off with the only potential customers being people in your town, or within x miles of your town.

I think the only reason those "breweries" market everything BUT beer is because it's impossible to make terrible beer if you don't make any beer at all. I've seen one brewery marketing themselves as "the best beer you can't buy," and I laughed out loud.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 18, 2011, 05:39:36 PM
[I do not necessary agree with you that brewing is just another business. We all know that it takes the same amount of hours and man power to brew 10 Gal batch or 10 gallon batch.
I do agree that brewing beer is food manufacturing thou.

I just meant that if you can't run a business successfully, how are you going to run a brewery successfully? Regardless of your business, you have to deal with permits, licenses, inventory control, improvements, maintenance, labor, taxes, customers. Now add in the fact that food spoils and breweries are very labor intensive, and running a brewery ends up being a lot harder than running other kinds of business.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 18, 2011, 05:45:42 PM
With the crazy alcohol regulations in this country, such as prohibitions on self-distribution and the problems in getting your product into consumer's hands, I don't think the same kind of marketing strategies would work for beer. You would probably start off with the only potential customers being people in your town, or within x miles of your town.

Some other non-traditional ways of getting your brand out there is by creating a "Follow the birth of our brewery" blog.  Lots of guys are doing that now.  Also, Facebook can be used to reconnect with old friends who are out of town.  You can create a brewery page for your business there and those out-of-town old friends will probably be interested in it.  And due to the way social networking works, their friends will want to know.  Of course they now have a story about "that guy from high school I knew is new starting a brewery, how cool is that"?  From there you start a Twitter feed and connect all three of these non-traditional marketing tools together.  You'll be surprised how quickly it starts to pan out across the country (and possibly the world).

The best part:  All of this is free.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 18, 2011, 05:53:15 PM
Tim - I understand the concept. Since it's free, you don't lose anything but your time, so there's no reason not to do it, but how do you turn worldwide interest into cash in your pocket? Your long-lost out-of-town friends won't just send you money for nothing, will they? They still have to go to you establishment to buy your product.

Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 05:56:09 PM
Tim - I understand the concept. Since it's free, you don't lose anything but your time, so there's no reason not to do it, but how do you turn worldwide interest into cash in your pocket? Your long-lost out-of-town friends won't just send you money for nothing, will they? They still have to go to you establishment to buy your product.



Good point. A small local brewer doesn't benefit monetarily from a fan across the country that has never had his beer.

We actually decided NOT to have a facebook page as a "prestige and mystery" branding. It's worked well. I've had a lot of people show up at the brewery simply because they could not find out enough about us. Also, I hate facebook. So that worked well for me.  ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 06:41:57 PM
Quote from: Thirsty_Monk=topic=8666.msg109105#msg109105 date=1313687666
merry a loyer or a doctor.

Or an English teacher?  ;)  lol

The Coop I'm with is looking at starting with either a 10 or 15 barrel system.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 06:43:39 PM
Quote from: majorvices=topic=8666.msg109105#msg109105 date=1313687666
merry a loyer or a doctor.

Or an English teacher?  ;)  lol

The Coop I'm with is looking at starting with either a 10 or 15 barrel system.
Brewing Czech beers. I do not have to.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 06:47:40 PM
Tim - I understand the concept. Since it's free, you don't lose anything but your time, so there's no reason not to do it, but how do you turn worldwide interest into cash in your pocket? Your long-lost out-of-town friends won't just send you money for nothing, will they? They still have to go to you establishment to buy your product.



Good point. A small local brewer doesn't benefit monetarily from a fan across the country that has never had his beer.

We actually decided NOT to have a facebook page as a "prestige and mystery" branding. It's worked well. I've had a lot of people show up at the brewery simply because they could not find out enough about us. Also, I hate facebook. So that worked well for me.  ;)
We use Facebook as marketing tool. Instead of connecting lost friends we connect current customers. It Actually works. Twitter is a waste of time.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 06:48:58 PM
Twitter is a waste of time.
I disagree.  Twitter can be a great marketing tool - though too many out there just use it to point to their Facebook page.  

Czech mate!  ;) 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 18, 2011, 06:58:11 PM
Twitter is a waste of time.
I disagree.  Twitter can be a great marketing tool - though too many out there just use it to point to their Facebook page.  

Czech mate!  ;) 
8)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 18, 2011, 06:59:27 PM
Facebook sounds like something a 13 year old girl keeps her makeup in. I just can't get around that. I'm rooting for google plus. We also have not had to use facebook yet. There is nothing it would do for us now. We do piggyback on the facebook pages of a few pubs. but the fact that we don't have one has created an image I actually want.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Beer Monger on August 18, 2011, 07:01:03 PM
Facebook sounds like something a 13 year old girl keeps her makeup in. I just can't get around that. I'm rooting for google plus. We also have not had to use facebook yet. There is nothing it would do for us now. We do piggyback on the facebook pages of a few pubs. but the fact that we don't have one has created an image I actually want.
Well...  nobody HAS to use Facebook, but it's great for marketing.  Also, for me, it makes it much easier to stay in touch w/ family 1/2 way around the World on a daily basis. 

I'm on Google+ but haven't really used it yet.  I gotta start...
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 18, 2011, 08:06:15 PM
another cheap resource is various trade organizations, BA for one but also if there is a similar organization for your state it's a great idea to get involved with it. Or hell, organize one! I bet Charlie P could open a brewery and would have to beat the customers away! course we would all be penniless homebrewers but hey.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on August 18, 2011, 08:45:02 PM
Well...  nobody HAS to use Facebook, but it's great for marketing.
I think it just really depends.  I have an account, but I don't use facebook for anything.  You can't market to people with facebook if they aren't using it.  If your customers are not the facebook type, then there is no sense in going that route.  Also, in Keith's case, if you are already selling all of the beer you can make why bother doing much marketing?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on August 19, 2011, 08:07:24 AM
It's also a function of market saturation. Facebook is everywhere and used by everyone in terms of my market audience is concerned, but that market is pretty much all urban middle-to-upper income earners. If you go further into the countryside, it makes less sense.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phunhog on August 21, 2011, 06:14:13 AM
My homebrewery/ wannabe nanobrewery has a Facebook page. I treat it more like a blog but it gets people interested in my beers and brewing in general.  The amount of support and interest has actually been overwhelming seeing how most of these people don't know me, much less tasted my beer!!  As others have stated the amount of regulations on alcohol production on top of just running a business is beyond me right now.  I am lucky enough to have a dream career and pretty good salary.  I only wanted to be a "pro brewer" because I thought it would be "cool" to be able to sell my beer legally. It was NEVER going to be a career change. I think it is unfortunate that "professional " brewing is a this/that operation mainly due to regulations. How many of us would be "pros" if we could sell growlers at farmers markets'? I know that will never happen! Why can't a brewer be like a musician? I know lots of guys who play in bar bands on weekends and have a "normal" job during the week.  They get paid a few dollars but they certainly don't call themselves a "professional" musician.  They do it for the love of music AND they can make a few dollars. Sorry if I got off topic.... ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 21, 2011, 02:35:19 PM
On a 5 or 10 gallon system the beer was always worth way more to me to drink or share with friends than to sell. You put In hours and hours of hard work just to turn around and sell and barely break even and if you count the time and labor you'd actually lose money.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 21, 2011, 05:36:30 PM
My homebrewery/ wannabe nanobrewery has a Facebook page. I treat it more like a blog but it gets people interested in my beers and brewing in general.  The amount of support and interest has actually been overwhelming seeing how most of these people don't know me, much less tasted my beer!!  As others have stated the amount of regulations on alcohol production on top of just running a business is beyond me right now.  I am lucky enough to have a dream career and pretty good salary.  I only wanted to be a "pro brewer" because I thought it would be "cool" to be able to sell my beer legally. It was NEVER going to be a career change. I think it is unfortunate that "professional " brewing is a this/that operation mainly due to regulations. How many of us would be "pros" if we could sell growlers at farmers markets'? I know that will never happen! Why can't a brewer be like a musician? I know lots of guys who play in bar bands on weekends and have a "normal" job during the week.  They get paid a few dollars but they certainly don't call themselves a "professional" musician.  They do it for the love of music AND they can make a few dollars. Sorry if I got off topic.... ;)

depending on what state you are in it is not impossible to do this. It is true that you will probably not make any money from it but then most bar musicians don't actually make any money from what they do either. I have been a semi pro actor for years now and have yet to make a profit. Course, as soon as you sell your first bottle of legal beer all of those expenses associated with brewing become tax deductible!
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 21, 2011, 06:24:35 PM
Course, as soon as you sell your first bottle of legal beer all of those expenses associated with brewing become tax deductible!

Hobby loss rules are actually pretty strict. The IRS may decide your "business" is actually a "hobby" and therefore you can only deduct up to the amount of revenue generated by said hobby. The "hobby" losses couldn't be used to write off losses from your main source of income. "Craft businesses" run from the home frequently fall into the "hobby" category, regardless of business structure or licensing.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 21, 2011, 08:29:16 PM
On a 5 or 10 gallon system the beer was always worth way more to me to drink or share with friends than to sell. You put In hours and hours of hard work just to turn around and sell and barely break even and if you count the time and labor you'd actually lose money.
Majorvices,
Somehow people do not want to listen.
Let them learn hard way.

It is like talking about water for BoPils.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 21, 2011, 08:56:24 PM
Majorvices,
Somehow people do not want to listen.
Let them learn hard way.

It is like talking about water for BoPils.

It's a basic economic issue we learned in Micro 101. It's all about opportunity cost. Unless you're really hurting for money and working in a field or a sweatshop somewhere, there is a point where your free time is more valuable to you than any money you'd make by working more. Some people would rather work 100 hours a week as a nanobrewer than work 40 hours a week and make more money, and have more free time for homebrewing.

Also, what's the deal with bopils water?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: maxieboy on August 21, 2011, 11:54:22 PM
there is a point where your free time is more valuable to you than any money you'd make by working more.

You should see the blank look on a lot of people's faces when I say this.  ::)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 22, 2011, 12:20:14 AM
Also, what's the deal with bopils water?
People ask what kind of water they should use to brew BoPils.
All they want to hear back is that it should be very soft.
If you tell them, that it can be from soft to moderate they ignore you.

Truth is that Bo Pils is brewed in the whole Czech and Slovak republic.
This is pretty large geographical area and water do very.

The same thing goes with size of brew system.
This discussion shows that people want to hear that brew on 1 BBL system is enough.
Truth is that there is only so many 100 hour weeks till your body said enough.

I made that transition.
Now I brew on 5 BBL system to 10 BBL fermenters and I still do not make enough.
I wish to have weekend off.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bluesman on August 22, 2011, 01:54:07 AM
I think there's some credence to the professions that majorvices and thirsty monk are trying to instill  here. I wouldn't be willing to recreate wheel in this regard. I am learning and trying to understand the reality of professional brewing. It's becoming more and more apparent to me that this is not a labor for the meek minded or hearted. This is a labor of love. There is no denying that, and I am convinced that the efforts involved to establish a pro brewery are behemoth in nature.

When looking at the successes of some of the most successful proprietorships in the pro brewing world, it is apparent that there is an endless mountain of work involved in establishing, marketing, selling and maintaining a successful level of business. I am amazed by this, and I can't overlook this fact.

I have only dreamed of establishing a pro-brewery. This is a dream for many of us here. I am hoping to learn by standing on the shoulders of those who have already walked and stumbled only to stand up and continue successfully.

Good luck to majorvices and thirsty monk.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bo on August 22, 2011, 03:41:52 AM
This is my favorite thread. The opinions, while very enlightening, are also very amusing .
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phunhog on August 22, 2011, 05:57:28 AM
May be I am a fool but that is how I see it.

Nope, I don't think you are a fool at all. There are a few "breweries" that have been popping up that have T-Shirts, Glasses, Coasters, Stickers, even tap handles - but no beer! Seriously! Talk about putting your cart before the horse.

Hey that sounds like me!! ;D Seriously....I sell my "brewery" t-shirts and other merchandise and pour at beer festivals where they allow home brewers to pour next to the "pros".  I guess I am like a "semi pro" brewer. :D As others have stated, there is no money to be made in nanobrewing. Maybe as a steppingstone but in and of itself it is a deadend IMO. So why try and be a pro brewer when you can stay a homebrewer and sell your brewery's merch? Much easier to make money selling t-shirts than it is wholesale beer!! People still get to have my beer at beer festivals and private, invite only tasting parties. I get to brew a lot, have fun, make a little money, and not jump through a million hoops trying to run a professional brewery.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 22, 2011, 11:39:50 AM
We actually make a decent profit selling t-Shirts and bring in a good amount of petty cash that way. We can walk out of a brew fest with a $300-$500 profit in shirt sales.

Re: Opening a brewery and the hardships you face. Once you have jumped through the hurdles there is a great amount of pride that comes with that. Even though I eschew all the regulations and hurdles one must jump through we reminded ourselves all the time during construction or dropping big bucks for this license or that piece of equipment that if it was easy everyone would be doing it. In the end the hard work and hurdle jumping is what separates the dreamers from the doers.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: hopfenundmalz on August 22, 2011, 12:08:22 PM
Brewing on a small scale is a young man's game from what I can see.  The physical labor is demanding, it can be hot, the hours can be long, things can go wrong and you have to fix it quickly.  Did I mention that it can be a hot job?

The wife and I have done 2 batches on commercial systems.  One was easy, but that was at Sierra Nevada's Beer Camp, where even the pilot system is mostly automated (lifted sacks to dump in the auger bin, and shoveled hops out of the whirlpool).  The other was at Grizzly Peak in Ann Arbor, which has a 7 barrel Peter Ausin/Alan Pugsley 7 barrel system.  That was just a big homebrewing system as far as I experienced, 21 times bigger to be exact.  That was a long hard day, and we went outside to sit in the 95F temperature in direct sunlight to cool off.  I said it could be hot.

For those that brew on such systems, I have great respect for the labor involved.   Duncan and his crew (2 assistants) at the Griz turn out some tasty beer, and manage to make >1700 barrels/year on a system that is not automated. 

Keith and Leos have my respect for doing this and making a go of it.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on August 22, 2011, 01:51:12 PM
Thanks Jeff - I have been envious of your brewing on the Sierra Nevada pilot system. Was that beer camp?

As far as heat goes; it's been a hot as hell summer down here in the sunny (and humid) south. More than once when the heat index was 110 outside I stepped outside the brewery to cool off. OTOH I do have a cold room and Air COnditioned office.

Brewery work is about as blue collar work as you can get. If you don't picture yourself as a laborer don't take up brewery work. It's not ditch digging, but it is hard work and long days.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 22, 2011, 02:38:46 PM
On a 5 or 10 gallon system the beer was always worth way more to me to drink or share with friends than to sell. You put In hours and hours of hard work just to turn around and sell and barely break even and if you count the time and labor you'd actually lose money.

The more I think about this, the more sense it makes. Beer is a high volume, low value item. What's the most someone will pay for a bottle or glass? I don't think I've spent more than $x on a 12oz or $xx for a 22oz, ever, and very rarely at that. So even if you make the best beer in the world, there is a pretty low cap to the maximum price of your product, and a relatively small difference between the low end cost of "craft" beer (maybe $x/six pack) and the normal high end (maybe $xx/six pack), not counting the one-off or unusual or aged beers, which sell for more but cost a lot more to produce.

Hand crafted products seem to make more sense on low volume, high value items. A handmade bicycle frame usually costs between $2-4k, and may have 100 hours of work put into it. Material cost is about 1/4 of that price, so on a $2k frame you're making $1500 profit, or $15/hr. Even at that margin, no frame builders are getting rich. They may have $20k invested in machining and welding equipment, but that's a fraction of a brewing system.

I'd run the same numbers for a nanobrewer, but don't want to get in trouble with the mods. I might be wrong, but I'd be amazed if nanobrewers, or even most microbrewers, approached $15/hr, or even half that.

Mod edit:  We CANNOT mention beer prices in the ProThreads.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 22, 2011, 02:48:31 PM
This is not against anyone posting in the Going Pro threads.

We CANNOT post anything about beer prices in these threads.  This is because we are a part of the Brewers Association, and a National organization cannot come across as setting prices, (can you say price fixing).  For this reason we have been asked to not allow pricing information to be discussed on these threads.  

thank you for following the rules, and in particular, this rule on these boards.

the Mods
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: hopfenundmalz on August 22, 2011, 02:51:55 PM
Thanks Jeff - I have been envious of your brewing on the Sierra Nevada pilot system. Was that beer camp?

<snip>

Brewery work is about as blue collar work as you can get. If you don't picture yourself as a laborer don't take up brewery work. It's not ditch digging, but it is hard work and long days.

Keith - It was Beer Camp #13, the same one that Gordon Strong was at, and writes of in his book.  If you ever get a chance to go, drop everything and go.

There is not much difference in Victorian era brewing technology in the smaller systems, and not much difference in the backbreaking labor involved.

Larger production breweries are automated to the point where the brewers weigh out the hops and dump them in.  Everything else is just about done (with some exceptions) from a computer terminal with a mouse click.  How else could a shift brewer knock out 200 barrels (or two 200 barrel batches on some systems) in 8 hours?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 22, 2011, 02:52:52 PM
On a 5 or 10 gallon system the beer was always worth way more to me to drink or share with friends than to sell. You put In hours and hours of hard work just to turn around and sell and barely break even and if you count the time and labor you'd actually lose money.

The more I think about this, the more sense it makes. Beer is a high volume, low value item. What's the most someone will pay for a bottle or glass? I don't think I've spent more than $x on a 12oz or $xx for a 22oz, ever, and very rarely at that. So even if you make the best beer in the world, there is a pretty low cap to the maximum price of your product, and a relatively small difference between the low end cost of "craft" beer (maybe $x/six pack) and the normal high end (maybe $xx/six pack), not counting the one-off or unusual or aged beers, which sell for more but cost a lot more to produce.

Hand crafted products seem to make more sense on low volume, high value items. A handmade bicycle frame usually costs between $2-4k, and may have 100 hours of work put into it. Material cost is about 1/4 of that price, so on a $2k frame you're making $1500 profit, or $15/hr. Even at that margin, no frame builders are getting rich. They may have $20k invested in machining and welding equipment, but that's a fraction of a brewing system.

I'd run the same numbers for a nanobrewer, but don't want to get in trouble with the mods. I might be wrong, but I'd be amazed if nanobrewers, or even most microbrewers, approached $15/hr, or even half that.

Mod edit:  We CANNOT mention beer prices in the ProThreads.

I hope I am not breaking the rules here and if I am please remove this comment but I can't help but think about the prices charged for fine wines and how they are orders of magnitude greater than that for beer. Is this not to some extent an issue of consumer education and market development? you mention the higher prices paid for aged and some specialty beers and it seems to me that is the begining of a trend.

(To the Mods, I again apologize if this is crossing a line I am not trying to cause trouble for the AHA or the BA, both laudible organizations as far as I can tell!)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 22, 2011, 03:06:14 PM
I hope I am not breaking the rules here and if I am please remove this comment but I can't help but think about the prices charged for fine wines and how they are orders of magnitude greater than that for beer. Is this not to some extent an issue of consumer education and market development? you mention the higher prices paid for aged and some specialty beers and it seems to me that is the beginning of a trend.

(To the Mods, I again apologize if this is crossing a line I am not trying to cause trouble for the AHA or the BA, both laudible organizations as far as I can tell!)
There is no dispute of the fact the price point of the beer that you produce is a critical, or it should be, portion of your business plan.  You can say that You know the price of beer in your area, and you know the cost of your materials, facility, labor, etc., do the math.  Different beers have different price points, and as you indicated, frequently (not always) those that require extra handling, care, time, and ingredients often have a higher price point. 

The forming of this topic was discussed, and we determined there was a need.  We asked for an opinion on any needed restrictions, and the only one that really came out was from the legal staff and was to not discuss pricing, as stated in the Going Pro Rules.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: nateo on August 22, 2011, 03:47:21 PM
I read the rules, but not well enough apparently. I thought the concern was discussing secret wholesale pricing in a public forum, not discussing street prices, which are advertised on many sites and readily available to anyone who would care to look.

Without posting any numbers, the issue I was getting at is price elasticity. Something like Coke and Pepsi are relatively elastic. If Coke started charging double, everyone would buy Pepsi. Marketing can help change the elasticity situation. Good marketing can convince people to pay more for what is essentially the same product. Coke's elasticity in 2003 was -3.8, Mtn Dew's was -4.4.

If a good is relatively inelastic, you can raise the price by more than the demand drops. So increasing the price may reduce per-unit sales, but increase total sale income. A perfectly inelastic item would have a score of 0. If it's perfectly elastic, you could increase the price by any amount and not have any drop in demand.

The info I've found on alcohol elasticity gives beer a range of -0.7-0.9, wine at -1.0, and spirits at -1.5. So average beer is actually more elastic than average wine, by the numbers I found. I couldn't find any info on elasticity of super high-end wine, but I would guess at that end the marketing could further reduce elasticity.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Tim McManus on August 22, 2011, 04:04:23 PM
The forming of this topic was discussed, and we determined there was a need.  We asked for an opinion on any needed restrictions, and the only one that really came out was from the legal staff and was to not discuss pricing, as stated in the Going Pro Rules.

I'm not going to question the legality of discussing pricing and it's unfortunate that this restriction is unique because of the organizations hosting these forums.  However, it does significantly impair the discussion.

One of the most nebulous parts of writing a business plan is figuring out the financial aspect of it.  Determining the cost of goods sold and margins all while maintaining competitive pricing is daunting to anyone with financial experience and to those without it seems like an insurmountable task.

I am interested to understand how the BA can publish Ray Daniels, "The Brewers Association's Guide to Starting Your Own Brewery" which contains sections specifically outlining pricing and pricing methodologies, and it contains a complete brewery business plan, yet discussing it on these forums is an issue?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on August 22, 2011, 04:37:53 PM
I hope I am not breaking the rules here and if I am please remove this comment but I can't help but think about the prices charged for fine wines and how they are orders of magnitude greater than that for beer. Is this not to some extent an issue of consumer education and market development? you mention the higher prices paid for aged and some specialty beers and it seems to me that is the beginning of a trend.

(To the Mods, I again apologize if this is crossing a line I am not trying to cause trouble for the AHA or the BA, both laudible organizations as far as I can tell!)
There is no dispute of the fact the price point of the beer that you produce is a critical, or it should be, portion of your business plan.  You can say that You know the price of beer in your area, and you know the cost of your materials, facility, labor, etc., do the math.  Different beers have different price points, and as you indicated, frequently (not always) those that require extra handling, care, time, and ingredients often have a higher price point. 

The forming of this topic was discussed, and we determined there was a need.  We asked for an opinion on any needed restrictions, and the only one that really came out was from the legal staff and was to not discuss pricing, as stated in the Going Pro Rules.

I also read the rules and apparently misconstrued them. I was under the imression that the restriction was in discussing specific real world pricing of goods. i.e. for majorvices to discuss how much he charges for his product. I would not think that generalized discussion of price points and margins would be of any legal concern. However I am not a lawyer.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bluesman on August 22, 2011, 04:44:18 PM
Just for clarification. Here are the rules posted as a "sticky" at the top of the "Going Pro" section.

1.   The “Going Pro” Board is dedicated to discussion related to starting a new commercial brewery and/or becoming a professional brewer.
2.   The “Going Pro”  Board is not intended for discussion of existing brewery operations, such topics are more appropriate for the Brewers Association Forum http://www.brewersassociation.org.
3.   Any discussion of pricing of supplies, product, etc. on the “Going Pro” Board are strictly banned to avoid infraction of anti-competitive laws. Posts violating this ban will be removed immediately.
4.   Solicitation of funds is NOT allowed.  Asking how to get funds is acceptable.
5.   All rules applying to the general AHA Forum also apply to the "Going Pro" Board.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on August 22, 2011, 05:04:47 PM
That fine of detail is better discussed on the "Pro" forums.
Quote
Any discussion of pricing of supplies, product, etc.

What was altered was the specific reference of the price of beer.  Pricing of bikes, Coke and Pepsi were left untouched.  

This is still a homebrewers forum.  But many of us have had people tell us your beer is good, why don't you open your own brewery.  We want to bridge a gap a bit.  This is not where you want to be getting the the nitty gritty of doing it.  High level, look at this, think about that, etc. and so on.


Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: denny on August 22, 2011, 05:30:22 PM
Also, what's the deal with bopils water?
People ask what kind of water they should use to brew BoPils.
All they want to hear back is that it should be very soft.
If you tell them, that it can be from soft to moderate they ignore you.

Truth is that Bo Pils is brewed in the whole Czech and Slovak republic.
This is pretty large geographical area and water do very.

The same thing goes with size of brew system.
This discussion shows that people want to hear that brew on 1 BBL system is enough.
Truth is that there is only so many 100 hour weeks till your body said enough.

I made that transition.
Now I brew on 5 BBL system to 10 BBL fermenters and I still do not make enough.
I wish to have weekend off.

Wise words based on real life experience.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: denny on August 22, 2011, 05:34:51 PM
Keith - It was Beer Camp #13, the same one that Gordon Strong was at, and writes of in his book.  If you ever get a chance to go, drop everything and go.

That's great to hear!  I'm going in Nov.!
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: hopfenundmalz on August 22, 2011, 05:42:29 PM
Keith - It was Beer Camp #13, the same one that Gordon Strong was at, and writes of in his book.  If you ever get a chance to go, drop everything and go.

That's great to hear!  I'm going in Nov.!

You are in for a treat Denny.  Say hello to Steve, Terence and Scott for me.  Good folks at beer camp.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on August 23, 2011, 07:54:02 PM
Keith and Leos have my respect for doing this and making a go of it.
Thank you Jeff.
It has been interesting ride so far.
I work much more then what I wished for.
People like our beers and each month I am brewing more.
Now the double brews are name of the game.

I/we have chosen a different route then Keith. We started this as a family business.
We are also in the state that we can self distribute our product.
Self distribution is a major cornerstone of our business plan.
Without it I would not open a brewery.
Another piece is that we took price of packaging out of the price of beer.
We bottle in non traditional format and ask deposit for the bottle.

A few (rough) statistics for brewery with distributor.
1,000 BBL a year = break even point.
3,000 BBL a year = doing O.K.
there is one employee for 1,000 BBL
If you self distribute cut the number of BBL in half.

Now make that on 1 BBL system.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: wiley on October 29, 2011, 07:08:58 AM
Well...  nobody HAS to use Facebook, but it's great for marketing.
I think it just really depends.  I have an account, but I don't use facebook for anything.  You can't market to people with facebook if they aren't using it.  If your customers are not the facebook type, then there is no sense in going that route.  Also, in Keith's case, if you are already selling all of the beer you can make why bother doing much marketing?

Keith -- I'm surprised to read that you elected not to use Facebook, despite your marketing experience. Here's a couple of reasons that you might want to reconsider (and some thoughts for the other current / prospective brewery owners in forum-land):

1) If you don't create a Facebook page, Twitter account, etc. for your brewery, someone else CAN and likely WILL. At that point, your brand, as it relates to the various mediums of social media, is in the hands of someone else and the value of the brand in those mediums can be diminished at that person's will. Think of it as brand identity theft -- and there's little to nothing you can do about it. While you can change your bank account, credit cards, even social security number (if need be), you'll probably be up a certain brown creek without a paddle if you have to re-brand your entire brewery / business. The investment in creating a Facebook page for no other reason than to protect your brand in the marketplace pales in comparison to the investment you've already made in stainless. The craft world and social media are both exploding. The last thing you want in the future is to have no control over your participation in either.

2) This may come off as offensive (which I mean no ill will), but if you're actively electing to limit the mediums through which your customers gain exposure to your brand, you're being short-sided. I get the "prestige" and "mysteriousness" of projecting limited visibility AT FIRST and if you're in a secluded area without much competition. But once you're open and your distribution area expands, so does the level of competition and that marketing strategy can only take you so far. Word of mouth marketing is great and you should certainly strive to maximize it, but I think you're selling yourself and your brewery short if that's all you're using (caveat: I'm certain that it's not all you're using). Social media as a marketing tool is cheap, effective and only serves as one additional outlet through which your customers can connect with your brand when they're not drinking your beer. I would encourage you to strike up a conversation with your customers and ask them if they're on Facebook. I don't know your brewery or your customers, but of the over 800 million people on FB, I'm pretty certain that a few of your current and future customers are checking out the FB pages of other breweries. Of the numerous breweries that have opened in the last six months in the beautiful state of Colorado, I'm 99% certain that all of them had a FB page before opening. Not saying that we should all be lemmings, but there's a reason that there are FB pages for so many other breweries.


Sorry for the rant -- that's just the sound of my two pennies getting rubbed together. Maybe a touch of Left Hand's Nitro Milk Stout, too... ;D
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: dirk_mclargehuge on November 07, 2011, 12:39:47 AM
first person who shows me on paper how to make a living on a 1-2 bbl system get's a free beer.  ;) Once you run the numbers it becomes pretty clear. I can understand someone starting at 1-2 bbl (though, having gone through that I wouldn't recommend it necessarily) - can't ever understand staying at that level. The one exception I have been overlooking is a pub or tasting room. I'm considering production facility only.
One of the problems with a small production run is that you either distribute shallow or deep. Do you distribute all your five gallon kegs to 15 bars where they will blow almost instantly, or do you sell to five bars so the kegs will last a bit longer. How often will you have to brew to keep up with demand?  If you only plan to brew once a week, how many times do you have to brew to satisfy your customers.  If more people want to buy your stuff, how much are you willing to sacrifice you time to brew several times a week?  If you can't satisfy my demand for your beer week in and week out, I'll find someone who can. 

Ranger Creek, I'm talking to you about OPA.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on November 09, 2011, 12:14:08 PM
I love the MST3K reference, Dirk McLargeHuge.

This has been a GREAT thread.

I'm on the verge of having the money ready for my first round of self-financing, and already have two customers waiting on deliveries. I have a million unanswered questions swimming around in my head right now, about distribution, supply chain stuff, how much Alieve I should buy, etc... But it's becoming a reality.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 05:08:03 PM
I've read with great interest all of the information in this thread, particularly from those with real life experience opening small scale breweries. I'm in the much-much-closer-to-a-pipe-dream-than-a-reality stage of considering opening a nano scale brewery, and the information in this thread has been a real eye opener for me.

While my home state appears to be very nano-friendly based on recent legislative changes, the economics of profitably operating a system in the 1 to 3.5 barrel range still appear to be grim. At first glance, it seems that one could operate on a nano scale under only a few select circumstances:

1) Operating at break-even or a loss in the hopes to establish name recognition/demand, and with the financial resources readily available to quickly expand to 7-barrels or larger

2) Life circumstance such that you can operate a break-even business and/or have some kind of advantage such as already owning a suitable property with minimal capital investment required and practically zero overhead


Unfortunately, my current personal situation doesn't place me within one of those circumstances. However, there is a small glimmer of hope in that the folks who lobbied for the new nano legislation are now lobbying to make further changes in the law which would allow for the on-premise serving and consumption of beer without the requirement to operate a full-service restaurant.


Here are the basics of the current nano laws as I understand them:

* $240 annual license fee
* $0.30/gallon state tax
* Self-distribution is allowed
* Maximum 2000 barrel annual production to qualify as nano
* Can sell growlers and cases on-premise for off-premise consumption
* Can sell/give away one 4-ounce serving per label for on-premise consumption (tasting room)


What I'm wondering is, if that last requirement is in fact changed to allow on-premise sale and consumption of beer without the 4oz limitation, how much does it change all of the assumptions within this forum (and elsewhere) regarding minimum system requirements for profitability? Is it worth the effort of further fleshing out a very detailed business plan with the hopes the law does get changed, or at a quick glance would this model still be doomed to likely failure?


My very rough model would be as follows:

* Start with something like a 2 to 3.5 barrel system primarily for on-site sale by the pint.
* Would not maintain cooperage with the exception of the fleet of kegs required to operate my own draft system.
* The only distribution would be self-distributed bombers of bottle-conditioned Belgian style ales (these sell for a premium in my area) which would occasionally be brewed on a 10-gallon system, which will otherwise be used for pilot batches for the main brewery. Would also sell growlers from the taps.
* Would need to lease and outfit a suitable building.
* Have no idea at the moment how many seats would be allowed in the serving room under the proposed regulations. I'm assuming this is a huge part of the equation.
* A have a friend who is a lawyer/cpa who would help draft the business plan, and another who is an engineer in bio who would help plan the system requirements, but would still need to hire some folks to plumb, wire, and buildout the facility.
* Finances are an issue. I could come up with maybe $60,000 cash, and believe I could get roughly the same amount in investments on an "equity only" basis from friends and family. (Meaning no dividends and their investment would grow only with the value of the business growing - at least for the first few years.)


Thanks for your time reading such a long post! Hopefully there is enough information to make a reasonably educated guess.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: a10t2 on January 04, 2012, 05:59:23 PM
What I'm wondering is, if that last requirement is in fact changed to allow on-premise sale and consumption of beer without the 4oz limitation, how much does it change all of the assumptions within this forum (and elsewhere) regarding minimum system requirements for profitability?

What kind of liquor license do you need? How much would it cost? What would your insurance premiums be? Bars tend to be high-volume, low-margin operations.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 06:33:24 PM
What I'm wondering is, if that last requirement is in fact changed to allow on-premise sale and consumption of beer without the 4oz limitation, how much does it change all of the assumptions within this forum (and elsewhere) regarding minimum system requirements for profitability?

What kind of liquor license do you need? How much would it cost? What would your insurance premiums be? Bars tend to be high-volume, low-margin operations.

I believe if the law gets changed per how they are lobbying, you could sell on-site under the nano license for $240 annually.

I have no clue about insurance premiums, and would have to work that out if I decide to develop a detailed business plan. I guess someone operating a brewpub in my state could ballpark estimate that figure for me?

Edit: I just realized you probably meant do I need a local liquor license in addition to the nano license... Hmmm, not sure but probably. I suspect the cost probably varies by city. I'll ask the owner of the bar near me if he minds sharing what his local license cost annually.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on January 04, 2012, 06:49:11 PM
I think it's important to realize that given the current micro brewery/ brew pub paradigm it may not be possible to make a living with this as your only gig. Like farming on a small scale it has to be a labor of love cause you ain't getting rich. That being said I think you are headed in the right direction with the bottled belgian idea.

My hypothesis (still totally untested) is that there is enough flexibility in the craft beer pricing market to move towards a super premium pricing framework. Think small boutique wineries. you may be able to make a living selling only a small amount of product if your margin in very high. If people will pay x (where x is an arbitrarily high price point) for a premium product at least some of them will pay 2x or maybe even 3x if you can manufacture enough cache around your product. Read Sam C's book about starting DFH. He talks alot about the importance of 'educating' the consumer. i.e. convincing an important trend setter crowd that your product is superior to the competition and provides 'good value' (read 'good perceived value')

earlier in this thread (I think) someone mentioned the idea of price elasticity as a measure of how much a given industry pricing framework is based on market forces and how much on perceived value. The premium alcaholic beverage buyer is highly motivated by perceived value. that is why a bottle of absolute vodka can demand a premium price even though the base booze was very likely manufactured by the same huge distillery that makes the captain toms budget vodka. (I don't know this to be true of Absolute but I do know that lots of name brand booze labels are handled this way, only the filtering, ageing and blending occur at the labeling company)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 04, 2012, 06:52:32 PM
My personal feeling is I think you could make it work with a tasting room, off premise sales (growlers to go) and low volume local distribution on a 3 bbl scale. Maybe even a 2 bbl scale. Especially if you could sell growlers for sale at grocery stores/beer vendors. You may even be able to make a living at it, as long as you don't mind eating ramen.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: mtnandy on January 04, 2012, 07:46:21 PM
My personal feeling is I think you could make it work with a tasting room, off premise sales (growlers to go) and low volume local distribution on a 3 bbl scale. Maybe even a 2 bbl scale. Especially if you could sell growlers for sale at grocery stores/beer vendors. You may even be able to make a living at it, as long as you don't mind eating ramen.

Along these lines, is it even possible to make it work in a state where you can't sell and distribute from the same location? I am looking at a brew pub as a "pipe dream", but I could only serve my beer on-site, and people could only take it home in growlers due to our archaic laws. i am in Houston, and in this "town" of 6 million in the metro area, there are a grand total of 0 brewpubs, so the market is definitely there. I am guessing that any brew pub here would pretty much make all of its money on food, and lose some on the brewing? I have seen the beer culture explode here, so I am not sure how much longer these laws will be on the books...
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 07:49:41 PM
My personal feeling is I think you could make it work with a tasting room, off premise sales (growlers to go) and low volume local distribution on a 3 bbl scale. Maybe even a 2 bbl scale. Especially if you could sell growlers for sale at grocery stores/beer vendors. You may even be able to make a living at it, as long as you don't mind eating ramen.


Hey I've survived off Ramen before! My wife and kid might not appreciate it though.

Seriously, I wouldn't be doing it to get rich - but I would need to pay the mortgage (luckily a small one!) and feed my family. I guess I'll keep me eyes on the legislation and start drafting the business plan and see if the numbers start to make any sense at all.

I'm also trying to get a part time unpaid apprenticeship at a local brewery that started on the nano scale and recently expanded to 7 bbl - but they haven't replied to my emails yet. Unless I get accepted into their apprenticeship program and gain that valuable experience on bigger systems, it would probably be a foolish endeavor for me anyway.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: a10t2 on January 04, 2012, 08:03:14 PM
My personal feeling is I think you could make it work with a tasting room, off premise sales (growlers to go) and low volume local distribution on a 3 bbl scale. Maybe even a 2 bbl scale. Especially if you could sell growlers for sale at grocery stores/beer vendors. You may even be able to make a living at it, as long as you don't mind eating ramen.

I just finished the outline of a businesss plan for a 1.5 bbl nano (in CO) and concluded that I could pay myself minimum wage as long as the capital costs didn't need to be amortized (i.e. I paid cash for the equipment, buildout, and initial licensing).

As has been mentioned (possibly even in this thread), much of the startup costs for a brewery are in construction, and much of that will be dictated by local health codes. If you have to put floor drains, or stainless steel work surfaces, into an existing facility, then you'll probably never break even on a nano-scale system.

Seriously, I wouldn't be doing it to get rich - but I would need to pay the mortgage (luckily a small one!) and feed my family.

Obviously I'm just guessing here, but I doubt you'd be able to do that.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 08:20:54 PM
My personal feeling is I think you could make it work with a tasting room, off premise sales (growlers to go) and low volume local distribution on a 3 bbl scale. Maybe even a 2 bbl scale. Especially if you could sell growlers for sale at grocery stores/beer vendors. You may even be able to make a living at it, as long as you don't mind eating ramen.

Along these lines, is it even possible to make it work in a state where you can't sell and distribute from the same location? I am looking at a brew pub as a "pipe dream", but I could only serve my beer on-site, and people could only take it home in growlers due to our archaic laws. i am in Houston, and in this "town" of 6 million in the metro area, there are a grand total of 0 brewpubs, so the market is definitely there. I am guessing that any brew pub here would pretty much make all of its money on food, and lose some on the brewing? I have seen the beer culture explode here, so I am not sure how much longer these laws will be on the books...

The problem with a brewpub is you need a lot more money to get it started. And you need to understand the restaurant business, which is another whole enchilada all to itself.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 04, 2012, 08:26:33 PM
Brew pubs are great money making opportunities but they are also multi-million dollar projects. The beer is also usually secondary to the food and is just as often rendered a a novelty. There is also a TON of more regulations involved with restaurant. If you are on a strict budget a brewery with a tasting room and local distribution is the only way to go.

Also, the longer I am involved with this business the more I realize that it really ain't that much more expensive to build a 3 bbl brewery than it is to build a 10 or 15 bbl. I basically set myself a year behind by building the size brewery I did. Would do it different today if I could.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 08:38:35 PM
Could you quantify that in percentages? Something like a 10bbl brewery would be roughly 1.50 times more costly to build than a 3 bbl brewery...

Also, what do you think would be the "sweet spot" between being big enough to gain some gains in efficiency, yet stay small enough to qualify as a nano brewery under New Hampshire law? (2000 bbl per year - over that you fall under different and more costly regulations.) 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on January 04, 2012, 08:40:50 PM
On a 10 bbl system you'd need to brew 200 times a year to hit 2000 bbls.  It would probably take a while before you needed to brew that often, at which point you should be able to afford the added costs.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on January 04, 2012, 08:41:48 PM
Brew pubs are great money making opportunities but they are also multi-million dollar projects. The beer is also usually secondary to the food and is just as often rendered a a novelty. There is also a TON of more regulations involved with restaurant. If you are on a strict budget a brewery with a tasting room and local distribution is the only way to go.

Also, the longer I am involved with this business the more I realize that it really ain't that much more expensive to build a 3 bbl brewery than it is to build a 10 or 15 bbl. I basically set myself a year behind by building the size brewery I did. Would do it different today if I could.

This! I think that nano brewing is great and I hope one day to do this. But it is not a way to even pay the mortgage and feed the family I don't think. If you want your brewery to actually be your one and only income stream you need to look to larger systems. But if you want to sell your beer and maybe put a little cash in the pocket it's a great idea.

Could you quantify that in percentages? Something like a 10bbl brewery would be roughly 1.50 times more costly to build than a 3 bbl brewery...

Also, what do you think would be the "sweet spot" between being big enough to gain some gains in efficiency, yet stay small enough to qualify as a nano brewery under New Hampshire law? (2000 bbl per year - over that you fall under different and more costly regulations.)  

2000 bblon a 10bbl system works out to 200 batches. That will keep you busy! even if you double batch that's still 100 days just brewing per year. may not seem like a lot but there will be other demands on your time.

In terms of additional costs involved with the larger size I would think that the space it self would not have to be too much bigger as you can gain alot of the additional fermenter/storage space by going vertical.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 08:54:17 PM
Thanks for all the great answers guys - it's been very helpful even if not quite what I was hoping to hear.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on January 04, 2012, 09:01:59 PM
don't get me wrong I think you should go for it! what's the worst that could happen? Check out Hess brewing, they seem to be making a go of it! and healdsburg beer company for the other end of the spectrum. He has been doing this for a few years now. He hasn't quit his day job yet though.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 09:18:25 PM
don't get me wrong I think you should go for it! what's the worst that could happen?

Personal bankruptcy and losing all my investor's capitol?   :o

I mean I'm certainly willing to bust my butt and take some major risks, particularly with my own money, but only if the rewards potentially offer a viable business venture moving forward.

If my property was zoned for multi-use and I had a suitable detached building to site the nanobrewery, I would consider starting on a really small scale. But as it stands now I would need to lease commercial space and also meet whatever demands the local municipality makes of me as far as outfitting the facility, which basically means a money losing proposition with almost 100% certainty as far as I can tell so far.
 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on January 04, 2012, 09:51:24 PM
don't get me wrong I think you should go for it! what's the worst that could happen?

Personal bankruptcy and losing all my investor's capitol?   :o
Whenever people tell me I should open a brewery and they'd invest, I tell them to consider it a gift, not an investment.  They might get their money back some day, but they shouldn't expect to.  Most don't offer again :)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 04, 2012, 10:00:04 PM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on January 04, 2012, 10:47:20 PM
There is one more thing to consider.
Health Insurance.

On site sales have higher margin but you have to have someone who is there to serve it.
Consider non traditional / returnable packaging.
Take deposit for your packaging.

Self distribution.
Consider that you will spend fair amount of time distributing.
This goes nicely to brand building.
You are in charge and control your growth.

Bottled beer has higher margin then draught beer (at least for me).
Draught market is tough.

Good Luck.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: a10t2 on January 04, 2012, 10:55:34 PM
They might get their money back some day, but they shouldn't expect to.

Isn't that the definition of an investment?
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 04, 2012, 11:03:26 PM
There is one more thing to consider.
Health Insurance.

On site sales have higher margin but you have to have someone who is there to serve it.
Consider non traditional / returnable packaging.
Take deposit for your packaging.

Self distribution.
Consider that you will spend fair amount of time distributing.
This goes nicely to brand building.
You are in charge and control your growth.

Bottled beer has higher margin then draught beer (at least for me).
Draught market is tough.

Good Luck.

I would like the option to be able to self distribute but having a distributor is well worth it. We are able to have our beer from Huntsville to Auburn and soon even further. I could never do this myself or pay someone.

As far as bottles, the profit margin is higher but so is the amount of labor.

Not disagreeing with my fellow cohort, just adding some side points.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on January 05, 2012, 12:23:09 AM
They might get their money back some day, but they shouldn't expect to.

Isn't that the definition of an investment?
Most people don't ever consider that they might lose everything they invest.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on January 05, 2012, 12:27:01 AM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Sometimes.  The key is to only serve the good stuff ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 05, 2012, 02:53:37 AM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Sometimes.  The key is to only serve the good stuff ;)

Bhahaha!  ;D
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 05, 2012, 03:16:21 AM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Sometimes.  The key is to only serve the good stuff ;)

Well if I ever do meet you, no need to waste your good stuff on me. I don't have any money to invest in your brewery as evidenced by my involvement in this thread!  :P
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: tschmidlin on January 05, 2012, 03:27:09 AM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Sometimes.  The key is to only serve the good stuff ;)

Bhahaha!  ;D
Same holds even after you go pro, right Keith? ;D
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 05, 2012, 12:41:38 PM
You mean some of them actually do offer again? I would really like to try your beer some time - you must brew some really good stuff!  :)
Sometimes.  The key is to only serve the good stuff ;)

Bhahaha!  ;D
Same holds even after you go pro, right Keith? ;D

Both home and pro brewing.  ;)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 05, 2012, 03:16:36 PM
I'll add to this: As a homebrewer you have so much more control over your beer. You can pull it if it starts to develop flaws. As a pro I have dumped beer without hesitation, hurts as much or more than at home. But it is really difficult when you go to a pub or restaurant and your beer is not serving properly due to under-carbonation or signs of other flaws. I can honestly say we have done a pretty good job of quality control - unlike other local breweries we have gone well over a year without a returned keg. That is a real accomplishment IMO and one that I am proud of. Unfortunately there have been a few beers out there that developed stability problems that I am not too proud of. It's a tough gig to sit down with a pint of your own beer to discover that it is not what you had hoped it would be. Sacks the ego pretty hard. When it is homebrew you can just pull the tap. But once the beer leaves your brewery it is not yours anymore.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: morticaixavier on January 05, 2012, 03:52:30 PM
I'll add to this: As a homebrewer you have so much more control over your beer. You can pull it if it starts to develop flaws. As a pro I have dumped beer without hesitation, hurts as much or more than at home. But it is really difficult when you go to a pub or restaurant and your beer is not serving properly due to under-carbonation or signs of other flaws. I can honestly say we have done a pretty good job of quality control - unlike other local breweries we have gone well over a year without a returned keg. That is a real accomplishment IMO and one that I am proud of. Unfortunately there have been a few beers out there that developed stability problems that I am not too proud of. It's a tough gig to sit down with a pint of your own beer to discover that it is not what you had hoped it would be. Sacks the ego pretty hard. When it is homebrew you can just pull the tap. But once the beer leaves your brewery it is not yours anymore.

This is really insightful! I can imagine what that feels like. gotsta suck
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 05, 2012, 04:20:13 PM
Big highs and big lows. Recently I had a guy come up to me and tell me he liked all our specialty/seasonal beers. He didn't care at all for our flagship beers, but really loved our specialty beers.  ::)
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: a10t2 on January 05, 2012, 04:53:27 PM
Big highs and big lows. Recently I had a guy come up to me and tell me he liked all our specialty/seasonal beers. He didn't care at all for our flagship beers, but really loved our specialty beers.  ::)

I get that all the time. Some people just like novelty, plain and simple.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on January 06, 2012, 12:35:48 AM
Big highs and big lows. Recently I had a guy come up to me and tell me he liked all our specialty/seasonal beers. He didn't care at all for our flagship beers, but really loved our specialty beers.  ::)

I get that all the time. Some people just like novelty, plain and simple.
I do agree. Novelty.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on January 06, 2012, 11:34:28 AM
Are we allowed to discuss equipment cost ranges? If so, I'm interested in what you mean by "a 3 bbl brewery costs nearly the same as a 10-20 bbl." Because for me, I can get started with 1.5BBL, everything paid in cash in advance and ready to go, for ~6.5k eur. Moving up to a 10-20 BBL requires a ton more space, plus much (much) more expensive equipment. The dairy industry here isn't nearly as big as it is in the US, and the price on used SS stuff is, frm my research, about 5 times more expensive than in the states. Sounds like my situation is way, way different than what most of you guys are facing, though... Is between 5.5 and 7k a reasonable cost, or am I paying too much? These are 55gal blichmanns with custom electricals, plus a couple or three blichmann ferminators, 47gal. Were I to buy fermenters here, minimum cost is two to three times what I'd pay for the blichmanns, and they have nothing near the build quality.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 06, 2012, 01:24:50 PM
Well, we had built our facility to house a 15bbl brew house with 30 bbl tanks so I guess if you build a tiny space and don't expect to grow then it can be done for a lot cheaper. In terms of actual equipment we spent a good deal more on our jacketed conicals than we did on our little 40 gallon blichmanns. But 3bbl tanks are not much less than 7 bbl tanks which are not much less than 10 bbl tanks which are not much less than 15 bbl tanks.

Also, we probably spent 2Xs as much as Thirsty Monk on our initial build and he was putting out more beer in a month that we were our first quarter I highly encourage you to look at what he has done. I have stolen lots of ideas from him.). There are some really cheap methods of doing things if you look to frankenbuilding your equipment. And plastic conicals are extremely affordable and easy to rig. We bought 4 plastic 3 bbl conicals for as much as we paid for two 42 gallon blichmann conicals.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: phillamb168 on January 06, 2012, 01:30:00 PM
Well, we had built our facility to house a 15bbl brew house with 30 bbl tanks so I guess if you build a tiny space and don't expect to grow then it can be done for a lot cheaper. In terms of actual equipment we spent a good deal more on our jacketed conicals than we did on our little 40 gallon blichmanns. But 3bbl tanks are not much less than 7 bbl tanks which are not much less than 10 bbl tanks which are not much less than 15 bbl tanks.

Also, we probably spent 2Xs as much as Thirsty Monk on our initial build and he was putting out more beer in a month that we were our first quarter I highly encourage you to look at what he has done. I have stolen lots of ideas from him.). There are some really cheap methods of doing things if you look to frankenbuilding your equipment. And plastic conicals are extremely affordable and easy to rig. We bought 4 plastic 3 bbl conicals for as much as we paid for two 42 gallon blichmann conicals.

Maybe Thirsty has some ideas, but I have noooo idea where to source plastic conicals from around here. I would LOVE to find some, but so far, no dice, or they're not food-grade.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bonjour on January 06, 2012, 02:15:28 PM
Very rarely do I here people talking about Flagship or house beers, one exception is if they are consistent award winners.

Specialty beers are what people talk about.  Specialty may be a big beer in a classic style, or Strawberry Shortcake (Shorts in MI)
The complete novelty of it captures attention.  These are what IMHO will get your brewery noticed.  IF you don't have the quality in your house beers to back these up, your patrons will pick up on it.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: bluesman on January 06, 2012, 02:51:56 PM
Big highs and big lows. Recently I had a guy come up to me and tell me he liked all our specialty/seasonal beers. He didn't care at all for our flagship beers, but really loved our specialty beers.  ::)

Has your business stood up to your initial expectations (sales/operation)?

I'm sure there have been some adjustments, but has your business been relatively successful thus far?



Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 06, 2012, 03:56:56 PM
I was just bringing up a "for-instance" of highs and lows. Our flagship beers are our bread and butter and we can not keep up with demand and we have pubs waiting in line to take our beer on. I love our flagship beers. Mostly the business is "high" for me but you always have your detractors. It's awesome to have people tell you how much they love your beer but you are always going to have those who don't. It's part of the risk we run by not having a "gateway" beer in our line up. IPA, Belgian White and German Alt.

I guess if you are looking for a Porter or English ESB you are going to be disappointed.  ;) Our focus is on German and Belgian Ales and American IPAs.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on January 07, 2012, 01:04:15 AM
Major I am happy to be an inspiration. 
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: majorvices on January 07, 2012, 11:39:24 AM
Major I am happy to be an inspiration. 

And a model buddy! I wish I would have copied your set up when I first started! I think I started before you though so that would have been difficult. Still, really like what you did on your budget. Impressive set up and a good model for anyone trying to open a brewery on a shoe string budget.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on January 07, 2012, 02:01:59 PM
Major I am happy to be an inspiration. 

And a model buddy! I wish I would have copied your set up when I first started! I think I started before you though so that would have been difficult. Still, really like what you did on your budget. Impressive set up and a good model for anyone trying to open a brewery on a shoe string budget.

Thank you for kind words.
You started your brewery before me so I was watching you  ;)

Just as a general note:
Different states have different rules and that will dictate how your brewery operate.
We are VERY successful in non traditional package.
We are operating in in plus territory for two reasons. 
Returnable packaging and self distribution.

As a small brewery you have to do something different then big boys.
Do not try to compete with them because you will never make it.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: johnnyb on January 08, 2012, 06:04:57 PM
I just heard back from the local brewery and am on the list to be considered for the next unpaid part-time apprenticeship opportunity. This might well be my only realistic chance to get a crack at brewing on a 7 barrel system (short of quitting my job and putting my family on the Ramon noodle diet) and might be helpful in the future to find investors if I do end up trying to start something myself. Now I need to convince them I'm the guy for this.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: Thirsty_Monk on January 08, 2012, 09:36:15 PM
Good job.
Enjoy.
Title: Re: Brewery Financing for someone with no wealth/collateral
Post by: toddster on January 09, 2012, 07:43:26 PM
As I always tell my new apprentices.... you have two ears and one mouth. Which means you need to listen twice as much as you talk. Work hard, don't complain and Thank them for the opportunity. This will allow you to decide if blue collar work is for you.
good luck.