Author Topic: Brewery Financing for someone with no wealth/collateral  (Read 5222 times)

ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #15 on: August 10, 2011, 06:39:07 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

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.

Offline bluesman

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #16 on: August 10, 2011, 06:41:43 AM »
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.
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Re: Brewery Financing for someone with no wealth/collateral
« Reply #17 on: August 10, 2011, 07:02:06 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.

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.
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #18 on: August 10, 2011, 07:09:51 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.

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.

Offline nateo

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #19 on: August 10, 2011, 07:22:26 AM »
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.
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Offline gimmeales

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #20 on: August 10, 2011, 07:31:02 AM »
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.



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Re: Brewery Financing for someone with no wealth/collateral
« Reply #21 on: August 10, 2011, 08:01:34 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.

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.
« Last Edit: August 10, 2011, 08:03:05 AM by majorvices »
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #22 on: August 10, 2011, 08:58:53 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. 

Offline Tim McManus

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #23 on: August 10, 2011, 09:08:25 AM »
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.
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Offline Thirsty_Monk

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #24 on: August 10, 2011, 08:01:04 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. 
Did you open a brewery?
Do you know what are you talking about?
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #25 on: August 10, 2011, 08:04:55 PM »
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?
« Last Edit: August 10, 2011, 08:21:47 PM by ccarlson »

Offline akr71

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #26 on: August 10, 2011, 08:08:57 PM »
Andy

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #27 on: August 10, 2011, 08:34:36 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.
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ccarlson

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #28 on: August 10, 2011, 08:42:31 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.
« Last Edit: August 10, 2011, 09:06:01 PM by ccarlson »

Offline phillamb168

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Re: Brewery Financing for someone with no wealth/collateral
« Reply #29 on: August 11, 2011, 02:54:03 AM »
 ::) You kids play nice.

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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.
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