Author Topic: Starting a brewery  (Read 8195 times)

Offline newrocset

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Re: Starting a brewery
« Reply #105 on: April 08, 2013, 08:33:15 PM »
You're right that brew pubs in OK have an uphill battle because they can only serve 3.2. You mentioned college town, so it's either Sooners or Cowboys! How well do you know your market?

I'm a STW import, and if that's where youre looking, I'd be cautious about bringing in a brewpub, simply because the market is not very deep. Its limited beyond students and they're perfectly happy with cheap domestic long necks. Add in a handle of established bars with good craft selections for good prices, and you'll struggle to shift a bunch of 3.2 at brew pub prices. Especially if I can get a double IPA for the same price or less next door. I just don't see brew pubs in OK being successful until laws change.
That's a really good point.  I thought about it briefly, then left it on the backburner.  It gives me reason to make the case to open this restaurant in Tulsa rather than Stillwater.  I think a 3.2 brew pub would do fine in Tulsa as long as the beers tasted good.  There really are a variety of low point styles to choose from that are still good.  I think the problem with brew pubs in OK is that they are all trying to make high point beers into 3.2 beers, which is just plain stupid and makes brew pubs looks bad.
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Offline newrocset

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Re: Starting a brewery
« Reply #106 on: April 08, 2013, 08:38:40 PM »
The other side of the question, how often does a 7 barrel brewhouse need to be used to pay for itself. Brewing on it twice a month might be convenient for you, but that is really expensive equipment sitting idle for 28 days per month.

- Sent by my R2 unit

And it is certainly something that I want to avoid.  The best choice in this scenario would be to hire a full time brewer that could make this happen.  It would be stupid for me to let equipment stand idle and lose money on account of my ego.
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Offline tschmidlin

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Re: Starting a brewery
« Reply #107 on: April 08, 2013, 10:26:29 PM »
Something else to keep in mind . . . for my "part time" brewing job, I worked Mon, Tue, Thu, Fri, and Sat last week.  That was a maintenance day, two beer brew days, a rootbeer brew day, and Sat I went briefly to check on everything.  It's only a 30 minute drive for me.
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Offline nateo

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Re: Starting a brewery
« Reply #108 on: April 09, 2013, 05:23:26 AM »
The other side of the question, how often does a 7 barrel brewhouse need to be used to pay for itself.

The payback period isn't really relevant for a project that large. It won't pay for itself very quickly, and just figuring out the payback period ignores the time value of money. The payback rule works best for making quick decisions about small amounts of money.

Computing the NPV of the projected cash flows is a much better way to make that decision. Picking an appropriate discount rate is tricky, but some companies just use their weighted-average cost of capital. Projecting future cash flows is even trickier, but the nice thing about the NPV approach is that the most uncertain cash flows (those in the far future) are worth the least in the calculation.

You should use the NPV approach because it's possible for projects to appear to "break even" on paper, but when you factor in the time-value of money, the project actually lost money.
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Offline reverseapachemaster

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Re: Starting a brewery
« Reply #109 on: April 09, 2013, 09:03:02 AM »
There's no actual ruling that one is judgment proof, the facts of life make somebody judgment proof. You could still get judgment against the partner but there's nothing to execute judgment against to sell or lien to satisfy judgment. If the partner has personal assets out there he will most likely declare bankruptcy to limit your ability to recover.

Yeah, thanks for clearing that up. I'd trust RAM on that one. You're in law school, right?

Graduated and halfway through the two month wait to see if I passed the bar. I don't know which is worse, the three day bar exam or the two month wait to find the results.
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Offline reverseapachemaster

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Re: Starting a brewery
« Reply #110 on: April 09, 2013, 09:15:04 AM »
I would be concerned that not only does he not know anything about beer but that he knows nothing about running a restaurant and nothing about running a business in general.

That was my first thought.

Mine too!  There are certainly a lot of things that can go wrong with this....very wrong!  Actually, when he told me that he would allow me 50% ownership, that raised a red flag.  If it were my business, I would want to own 100% and simply hire the people to handle the areas I don't know (i.e. food prep, management, brewing, etc...), so I'm kinda curious as to why he would want me to own 50%.  Maybe he just wants to make sure I stay - again, kinda weird since he doesn't know me.  I'm sure I'll find out in due time...but I'm not making any commitments until I'm sure of it.
On the liability front, I have been under the impression that an LLC will offer at least some protection to your personal assets?  At any rate, I'm not going to borrow any money for this venture, so I'll be sure to think twice before taking any offers of ownership.

Definitely strange to give up half ownership unless he plans on you contributing a substantial portion of start up costs. It's too much equity to give up to retain an employee, even if you were the greatest brewer on earth. I think it's even too much equity to give up to make you take on management of the brewing side of the business without pay if he's financing the start up (although that is probably not an advantageous position for you, anyway).

An LLC will limit your liability to the extent of your equity in the company for claims against the LLC on contracts and tort liability (personal injury) of other members of the LLC. It provides no liability for your own tort liability. It's easy to get yourself outside of the protections of the LLC in a start up. If you sign on to any contracts, such as contracts for brewing ingredients, as an individual or before the LLC is legally formed you will likely be personally liable on that contract. If he goes to get financing for the LLC many banks will want the members to personally guarantee the loans which eliminates the liability protections and puts your personal assets on the line for those debts.
Heck yeah I blog about homebrewing: Brain Sparging on Brewing but I'm also a lawyer: The Kielich Law Firm

Online mtnrockhopper

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Re: Starting a brewery
« Reply #111 on: April 09, 2013, 08:05:33 PM »

Definitely strange to give up half ownership unless he plans on you contributing a substantial portion of start up costs. It's too much equity to give up to retain an employee, even if you were the greatest brewer on earth. I think it's even too much equity to give up to make you take on management of the brewing side of the business without pay if he's financing the start up (although that is probably not an advantageous position for you, anyway).
I was surprized too. I've heard people fret over giving up 10% ownership. 50% is substantial, so either he's looking for a real business partner/investor or he doesn't know what he's doing. I don't mean to be picky, but it's not like he's using equity to buy extensive commercial brewing experience - since it doesn't sound like you have that. Just be careful.
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Offline newrocset

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Re: Starting a brewery
« Reply #112 on: April 10, 2013, 06:02:26 AM »
I think he just wants to be sure I stick with it when it gets tough.  He has an investor so the funds are there and I'm not planning on borrowing anything to make this happen.
Have a Kolsch and a smile!

Offline nateo

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Re: Starting a brewery
« Reply #113 on: April 10, 2013, 06:09:14 AM »
I think he just wants to be sure I stick with it when it gets tough.  He has an investor so the funds are there and I'm not planning on borrowing anything to make this happen.

So you'd own 50%, and the investor and him split the other 50%? Really? Is the investor OK with him giving away half the equity?

It's entirely possible all of the people in this situation are acting in good faith, but it's also entirely possible no one in this situation knows what they're doing. It's also possible someone in this situation is scamming someone else, whether they know it or not.
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Offline klickitat jim

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Re: Starting a brewery
« Reply #114 on: April 10, 2013, 06:19:28 AM »
My first thought was that the guy already had a couple pints when he said it.

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Offline newrocset

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Re: Starting a brewery
« Reply #115 on: April 10, 2013, 09:57:01 AM »
I think he just wants to be sure I stick with it when it gets tough.  He has an investor so the funds are there and I'm not planning on borrowing anything to make this happen.

So you'd own 50%, and the investor and him split the other 50%? Really? Is the investor OK with him giving away half the equity?

It's entirely possible all of the people in this situation are acting in good faith, but it's also entirely possible no one in this situation knows what they're doing. It's also possible someone in this situation is scamming someone else, whether they know it or not.

He initially said 25% if I wanted, then he mentioned 50...I think he just got excited that he may have found a good lead, that is all.  Nothing is in writing and it's all speculation at this point.  I have been talking to him briefly through email and he seems pretty solid.  I'm opting to do 25%, if anything at all.  I will be meeting with him next week and get things more sorted out then.
« Last Edit: April 12, 2013, 10:57:41 AM by newrocset »
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Offline mpietropaoli

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Re: Starting a brewery
« Reply #116 on: April 10, 2013, 07:41:38 PM »
This sounds like it could be a great opportunity, but I don't see any way to be successful without quitting your day job.

or without getting one of those college kids who is an aspiring craft beer nerd to be your apprentice/on-site, on-call help/"hand of the brewer" if you want to get all Game of Thrones. 
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