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Starting a Brewery

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Starting a Brewery

So you have taken your skills from home brewer and now you want to start a brewery.  A lot of people have the dream of taking their favorite hobby and turning it into a career.  What could be more enjoyable than making beer and getting paid for it?  While many people have gone through that phase and were successful, many more failed.  Starting a brewery is just like any business.  It is a risk, requires a lot of work, significant experience, and tons of money.

Here are some things to think about before starting a brewery.

Mixing Hobbies with Business

If you really like to make beer be sure to remember that turning a hobby into a career usually is a bad idea in any industry.  It can kill the enjoyment of your hobby. There are a lot of hours and the labor involved is more intense than doing it in your basement.   Things are much heavier and more difficult to manage when you go to commercial scale.

Another thing to consider if you really like making beer, it the success of a brewery isn’t all about the beer.  The day to day realities are more similar to working at a fast food chain – Repeating the same tasks over and over and making sure the product comes out the same every time while planning, cleaning, troubleshooting, lugging, cleaning and then more cleaning and fixing broken equipment. There will be long days and even all nights while getting started.  It’s not as glamorous as you are probably dreaming.

Start Small

Make sure you can brew good beer in small batches long before you gear up for production. With the cost of raw material you can’t really afford to several batches down the drain while you learn to brew. You also need to be consist if you intend to have customers come back, and that’s not something you can develop overnight.

While experimenting with methods and ingredients for smaller batches on your own is fine, once you move to the commercial scale and selling to the public there are a lot of details that you must be able to control.

Location

Your brewery location is a very important factor when establishing your business if you are going to sell out the front door.  While it is tempting to minimize your real estate costs, that may mean you are far away from traffic and population.  Having a remote location will probably come at the expense of customer recognition, in brewery traffic, and price expectation. Also as a microbrewery,  direct selling is going to be the primary source of revenue as distribution for small breweries is expensive and you will get very little marketing assistance from the distributors.

Another consideration to be aware when choosing a brewery location is the zoning.  Schools and churches can sometimes be a problem, especially if tax abatements are available. Make sure before buying property, you get permission from local governments. Make sure the city and county buy off on your plans before you sign any lease. If you can’t get some kind of assurance from the local authorities, then negotiate an out in the lease agreement in case you can’t get approved.

If you are leasing a property, try to get the first several months of your lease forgiven or reduced for a few months. Plan for at least four months to just get licensed. SEE LICENSING Another option is to find some inexpensive commercial space that you do not have to alter too much for the brewery. That way, if you start with a small 3bbl system, you can get brewing and worry about a better space later. Also a lot of new brewers underestimate the time it takes to find a rental location, negotiate the lease and it’s even longer if you purchase the property. This is unpaid time that is taking you away from getting your business off the ground.

Be sure to have an assessment done to ensure there is sufficient water and waste disposal options.  Additionally be sure you are granted permission to use the these systems so your brewery can operate.

Another tip for your brewery location is to be sure there is sufficient space for space for parking, bathrooms and room for people to relax.

The bottom line is to be sure and do your homework before investing a large sum of money for your location.  Proper planning upfront will save many headaches down the road to having a great brewery business.

Don’t Forget This Is A Business

Typically when someone is really good at making beer that is what they focus on in a business, making them short on business skills. The technical part of the business is a small part of what makes a business successful.  Operating a brewery is tough, but when you add governing regulations, inspections, licensing, permits, revenue office and the IRS, the ability to mess things up is easy to do.

If you really want to open a brewery and want to be successful, start with this.  For the next six months brew the same two beers at least three times a week. Do a blind taste test with some friends and see if they notice any differences in taste.  Until you can get them to come out exactly the same (or very close), try again.  Consistency in the product is a large factor when a customer decides what to purchase.  You have to have your production nailed down and perfect.  While doing that memorize and study the details of your local, state, and national alcohol regulations. During this time, you will have the time to develop a business plan.  Figure out all of your costs and figure out how much you have to sell and still make a profit.

Also remember a brewery is like any other business.  If you don’t have bookkeeping, marketing and financial experience you should get educated. Sure, you’ll probably eventually hire someone to do these jobs for you, but it’s a good idea to have a clue as to what they are doing so you know when you are getting good work and understanding the nuts and bolts of the business.

When you do hire someone be sure they have some brewery experience with other clients if possible. Don’t be the one paying for someone’s learning curve as the liquor industry is one of the highest regulated and complex industries to be involved with.

How Do You Get Experience In a Brewery?

If you have no clue about what working in a brewery is like, try getting a job or volunteering in a brewpub or small brewery and learn everything about the process and the business of brewing.  The brewing business is more complicated than most people realize as there is huge difference from brewing in your basement for friends to brewing in a commercial scale.  By finding out what you like and what you don’t, you will see mistakes and processes to incorporate in your brewery that you would never have thought about by researching online.  Experience is the best teacher.  You will have a better understanding about what goes into running a brewery and the equipment you will need.  Plus you will have a first hand account about things like drainage, water venting, grain storage and disposal, cleaning techniques, etc.

Another option if you have the resources is to or hire an experienced brewer and listen.

Why do You Want to start a brewery?

There are thousands of brands already on the shelves and likely countless bars and maybe even brewpubs in close distance from you.  What exactly are you going to do different to set yourself apart from the crowd?  The beer is a very small part of what will make your brewery successful.  How are you going to market your brewery SEE BREWERY MARKETING and give customers a reason to spend money with you?  If you don’t have a compelling story or doing something different you are going to have a hard time succeeding.

 

Is Your Beer Really Any Good?
Its just like many people who say they are a great cook and want to open a restaurant.  Everybody like my food and you probably have many friends who like your beer.  There aren’t many people who don’t like things for free as I’m sure you aren’t selling to your friends, so the real test here is will your friends give you money for your beer?  If not you may have issues.

Starting a Brewery is a very risky business compared to many other businesses as there are a lot of local and state licensing requirements, Federal and State taxes and distribution laws.  To be a successful brewery you need to be an entrepreneur first and a brewer second. If you think making great beer is all you need to make a business, you will struggle and if you are lucky won’t lose all that you invest in your business.  At the very least consider taking some courses at the Siebel Institute as they help brewers in the making and selling of beer.  A little education will go a long way and their favorite saying is “A great recipe is NOT enough!”