Author Topic: Biggest barrier?  (Read 2216 times)

Offline wayne1

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Re: Biggest barrier?
« Reply #15 on: April 13, 2014, 07:13:33 AM »
For me the biggest barrier, in fact the reason I won't even consider it, is the idea of shoveling 3 hundred pounds of grain out of a mash tun. I may be a Gymrat, but I am an old broken down Gymrat, and I am just plain too old to be taking up that sort of thing.

Depending on the layout of the brewhouse, the amount of physical effort does not have to be all that great. I am 60 years old and I am the sole brewer on a 15 bbl system. The malt bill can range between 900-1600 lbs, dry weight, depending on style brewed. I run a very manual system where grain out is all done by hand. It is not THAT hard. You are pulling the grain straight out the manway with a hoe. It takes me about 15 minutes to empty the tun into containers supplied by the farmers who take away the grain.

All the other work is done by pumps.

The biggest barrier is that most people in a start-up can't quite understand that you get what you pay for. Too many are trying to get into pro brewing on the cheap. Looking at inexpensive brew houses that do not have local support or readily available replacement parts.

We spent about $300,000.00 on our stainless. Then comes the glycol system, Steam generator, walk-in, refrigeration, bulk CO2 system, draft system, kegs, keg washer, malt mill and malt handling. Not to mention sloped floors, REAL drains, floor treatment, water filter, correct sizing or water and gas lines and electrical service. Then comes the cost of hiring professionals to install all of this.

Lot of people feel they can save money by DIY. Unless you also do this in "real life" hire pros to run the HVAC and electrical. It costs more up front but it will save time and money in the long run.

After all that is done, you have to sell the beer. That is the hardest part.

Offline denny

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Re: Biggest barrier?
« Reply #16 on: April 13, 2014, 08:53:43 AM »
After all that is done, you have to sell the beer. That is the hardest part.

Yep!
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Offline majorvices

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Re: Biggest barrier?
« Reply #17 on: April 13, 2014, 09:24:33 AM »
After careful concideration here are my thoughts.

Money is probably the biggest barrier. As Wayne has said, if you have the proper brewhouse labor is minimal. But that takes money. And unless you have $500,000+ sitting around you are going to do like we did and skimp on lost of time and labor saving equipment. People forget to budget for wet are/floor drains, solid waste interceptors, glycol plumbing, etc. To do it properly it adds up, big time.

So if you don't have the money you are going to have to do a fund raise and then you have share holders and/or partners to deal with.

As a close second to money, partners can be the biggest barrier (assuming you go that route). I get along well with my partners but I have seen restaurants and breweries implode because partnerships dissolve. I have seen very close friendships collapse as well. One local brewery I know of in particular was started by 3 friends and they pretty much all hate each other now.
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Offline nateo

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Re: Biggest barrier?
« Reply #18 on: April 24, 2014, 11:19:14 AM »
How many folks here have tried and failed?

Funny thing about the Internet, people love to talk about how awesome they are, but they get real quiet when they fail. It's really too bad, because I think there's a lot to be learned from failure, and better still when it's others' failure.
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Offline phunhog

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Re: Biggest barrier?
« Reply #19 on: April 24, 2014, 07:19:54 PM »
How many folks here have tried and failed?

Funny thing about the Internet, people love to talk about how awesome they are, but they get real quiet when they fail. It's really too bad, because I think there's a lot to be learned from failure, and better still when it's others' failure.

That's a great point!!  The other thing we never hear about is how much are breweries making?  I have heard/read countless times that it takes almost 1 million to establish a 15-30bbl production brewery.  I am sure it varies quite a bit but what is a ballpark ROI in the first couple of years? 

Offline Thirsty_Monk

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Re: Biggest barrier?
« Reply #20 on: April 24, 2014, 07:52:36 PM »

How many folks here have tried and failed?

Funny thing about the Internet, people love to talk about how awesome they are, but they get real quiet when they fail. It's really too bad, because I think there's a lot to be learned from failure, and better still when it's others' failure.

That's a great point!!  The other thing we never hear about is how much are breweries making?  I have heard/read countless times that it takes almost 1 million to establish a 15-30bbl production brewery.  I am sure it varies quite a bit but what is a ballpark ROI in the first couple of years?
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Offline phunhog

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Re: Biggest barrier?
« Reply #21 on: April 24, 2014, 09:57:04 PM »

How many folks here have tried and failed?

Funny thing about the Internet, people love to talk about how awesome they are, but they get real quiet when they fail. It's really too bad, because I think there's a lot to be learned from failure, and better still when it's others' failure.

That's a great point!!  The other thing we never hear about is how much are breweries making?  I have heard/read countless times that it takes almost 1 million to establish a 15-30bbl production brewery.  I am sure it varies quite a bit but what is a ballpark ROI in the first couple of years?
I am going to buy me a second vacation house in Florida this summer. Doing quite good. Join the party bro.
Now that's funny!!  Honestly though.....someone spends hundreds of thousands of dollars and the reality is that they have "bought themselves a job".  Unless of course there is some sort of financial reward that I am missing.  It seems like unless you are a major player (Stone, Dogfish, Deschutes, etc....) the chances of are somewhat slim that any significant money will be made? 

Offline nateo

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Re: Biggest barrier?
« Reply #22 on: April 24, 2014, 11:54:27 PM »
ROI's for most small businesses are negative for something like 5 years, at least. Beer is a low-margin, capital-intensive industry, so I suspect it's worse than that, on average.

However, I know of a few breweries that got crazy successful accidentally, so I guess it's kind of a toss-up between spending $1m on a brewery vs $1m on lottery tickets.
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Offline majorvices

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Re: Biggest barrier?
« Reply #23 on: April 25, 2014, 06:37:15 AM »
How many folks here have tried and failed?

Funny thing about the Internet, people love to talk about how awesome they are, but they get real quiet when they fail. It's really too bad, because I think there's a lot to be learned from failure, and better still when it's others' failure.

That's a great point!!  The other thing we never hear about is how much are breweries making?  I have heard/read countless times that it takes almost 1 million to establish a 15-30bbl production brewery.  I am sure it varies quite a bit but what is a ballpark ROI in the first couple of years?

I have a 10 bbl brewhouse with 30 bbl tanks and we are a production brewery unring a small profit. I can assure you, we didn't spend anywhere near 1 million. I could certainly use 1 million for expansions though!
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Offline boulderbrewer

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Re: Biggest barrier?
« Reply #24 on: April 25, 2014, 07:05:42 AM »
ROI's for most small businesses are negative for something like 5 years, at least. Beer is a low-margin, capital-intensive industry, so I suspect it's worse than that, on average.

However, I know of a few breweries that got crazy successful accidentally, so I guess it's kind of a toss-up between spending $1m on a brewery vs $1m on lottery tickets.

I don't think you get successful by accident. If you are smart you can be successful and you don't need a ton of money but you need to make good beer. If you don't make it I don't think you lose the total value of your equipment, like lottery tickets.

One other thing a would be brewery owner should ask themselves is what is my goal with this business. You have to be realistic and honest with yourself. What do you consider successful ? Don't worry what others think. If you want to be a millionaire, yes by all means buy them tickets. 
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Offline nateo

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Re: Biggest barrier?
« Reply #25 on: April 25, 2014, 12:44:12 PM »
I don't think you get successful by accident. If you are smart you can be successful and you don't need a ton of money but you need to make good beer. If you don't make it I don't think you lose the total value of your equipment, like lottery tickets.

One other thing a would be brewery owner should ask themselves is what is my goal with this business. You have to be realistic and honest with yourself. What do you consider successful ? Don't worry what others think. If you want to be a millionaire, yes by all means buy them tickets.

I disagree.  plenty of smart people have made great beer and gone out of business. plenty of dumb people make bad beer and make a killing.  I wish the world was fair, but it's not.
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Offline boulderbrewer

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Re: Biggest barrier?
« Reply #26 on: April 25, 2014, 02:37:23 PM »
I disagree.  plenty of smart people have made great beer and gone out of business. plenty of dumb people make bad beer and make a killing.  I wish the world was fair, but it's not.

I agree but they may be the exception to the rule.
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Offline majorvices

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Re: Biggest barrier?
« Reply #27 on: April 26, 2014, 05:49:32 AM »
I don't think you get successful by accident. If you are smart you can be successful and you don't need a ton of money but you need to make good beer. If you don't make it I don't think you lose the total value of your equipment, like lottery tickets.

One other thing a would be brewery owner should ask themselves is what is my goal with this business. You have to be realistic and honest with yourself. What do you consider successful ? Don't worry what others think. If you want to be a millionaire, yes by all means buy them tickets.

I disagree.  plenty of smart people have made great beer and gone out of business. plenty of dumb people make bad beer and make a killing.  I wish the world was fair, but it's not.

Obviously there are no absolutes but there are some people whose marketing is a lot better than their beer making and others whose beer making is great but their marketing is lack luster (or worse). Those who nail both usually succeed. There are also pockets that will support bad beer when nothing else is available or where people simply don't know any better.

Speaking of marketing, that goes back to my suggestion that money is the biggest barrier. It costs a hell of a lot of money to market yourself successfully and effectively. Too many start ups are underfunded when it comes to marketing. Most draught accounts will not serve your beer if you don't have tap handles, tin tackers, glasses and other swag. They want your help to promote your product. Same goes with off premise sales. A lot of times it will cost you for that grocery store shelf. If you are underfunded you are going to get beat by those that have financial prowess no matter how flippin' good your beer is. The beer needs to be good,l but the label needs to be even better.
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Offline denny

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Re: Biggest barrier?
« Reply #28 on: April 26, 2014, 08:37:00 AM »
I disagree.  plenty of smart people have made great beer and gone out of business. plenty of dumb people make bad beer and make a killing.  I wish the world was fair, but it's not.

I agree but they may be the exception to the rule.

I wish they were....
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Offline nateo

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Re: Biggest barrier?
« Reply #29 on: April 26, 2014, 09:52:15 AM »
I agree with Keith. Money is the biggest barrier to entry. The biggest barrier to success is your own ignorance, followed closely by money again.

I've read a lot of business plans over the years. My sample size is pretty limited, since if you know what you're doing, you wouldn't ask me for advice. But of the plans I've seen, none of them followed accounting practice. (Protip: If you think you found a way to have a 75% margin on your beer, you forgot about labor and overhead. D'oh! Also, depreciation is a thing that exists, so maybe it should exist in your business plan too.)

None of them knew how to make a detailed cash budget. In the real world, your cash flows aren't matched perfectly with your expenses, and you need to plan for that. I think that's partly where the "take your costs and double them, that's how much cash you need" rule of thumb came from.

I'm sure I sound like a broken record, but something like 65% of bankrupt businesses have positive annual net profits, but they can't match their in-flows with their out-flows. So even making and selling a lot of good beer may not be enough to keep your business running.

Some of those breweries have actually gotten off the ground, and haven't exploded yet, so maybe I'm wrong, but I doubt they'll last more than 5 years or so.
In der Kürze liegt die Würze.