Author Topic: Brewery Financing for someone with no wealth/collateral  (Read 5895 times)

Offline beerstache

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Brewery Financing for someone with no wealth/collateral
« on: August 09, 2011, 02:16:07 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?

Offline bonjour

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #1 on: August 09, 2011, 02:23:07 PM »
You WILL need a solid business plan.
Fred Bonjour
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Offline EHall

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #2 on: August 09, 2011, 02:24:06 PM »
'angel investors'
Phoenix, AZ

Offline majorvices

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #3 on: August 09, 2011, 03:15:06 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.
« Last Edit: August 09, 2011, 03:17:02 PM by majorvices »
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Offline nateo

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #4 on: August 09, 2011, 06:34:28 PM »
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.
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Offline majorvices

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #5 on: August 09, 2011, 06:39:03 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.
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #6 on: August 09, 2011, 06:47:10 PM »
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.

Online hopfenundmalz

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #7 on: August 09, 2011, 06:48:30 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.

Jeff Rankert
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Home-brewing, not just a hobby, it is a lifestyle!

Offline majorvices

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #8 on: August 09, 2011, 07:03:31 PM »
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
« Last Edit: August 09, 2011, 08:15:21 PM by bonjour »
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Re: Brewery Financing for someone with no wealth/collateral
« Reply #9 on: August 10, 2011, 05:19:20 AM »
Thanks Fred - read the rules and forgot. Also up drinking late after a long day so started to rant again.  ::)
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Re: Brewery Financing for someone with no wealth/collateral
« Reply #10 on: August 10, 2011, 05:23:51 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.



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.)

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #11 on: August 10, 2011, 05:31:08 AM »
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.

Offline majorvices

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #12 on: August 10, 2011, 05:44:33 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.



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.
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #13 on: August 10, 2011, 06:20:52 AM »
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.

Offline majorvices

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #14 on: August 10, 2011, 06:29:19 AM »
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
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