I want to start a nano-brewery...

Anything to do with the traditional world of get a degree, get a job as well as its alternatives
Salathor
Posts: 394
Joined: Fri Dec 18, 2015 11:49 am
Location: California, USA

Re: I want to start a nano-brewery...

Post by Salathor »

Failing would be extremely significant.
My brother in law runs a small brewery in southern California and it is hyper-competitive, working 60+ hours a week just on that (probably more that 60, but that might be what he 'cuts' down to when we visit), and extremely expensive in terms of equipment, permitting, etc., to break into. He was an MBA who had been brewing semi-professionally (barrels for catered parties, etc.) for about eight years before he opened his brewery.

I think opening a brewery is the ultra-high-risk, moonshot mainstreet entrepreneurship fad of the day. Running a successful brewery would be awesome. Running a struggling/normal brewery is probably a lot of heartbreak, long loooong nights, and no money. Running a failing brewery would be a nightmare.

Not to say don't do it. But it's not the risk/reward ratio I'd be looking for if I was going to start a capital- and labor-intensive business. Make sure it's what you want to do before you do it.

Campitor
Posts: 1227
Joined: Thu Aug 20, 2015 11:49 am

Re: I want to start a nano-brewery...

Post by Campitor »

Don't underestimate the bottle design and label for your brew. The marketing science emphatically shows that your beer and how it's presented affect your sales and the perceived taste. A bottle design can make or break a product.

A starter link: Measuring the impact of labels on craft beer purchase decisions

BlueNote
Posts: 501
Joined: Sat Jun 08, 2013 6:26 pm
Location: Toronto, Canada

Re: I want to start a nano-brewery...

Post by BlueNote »

distracted_at_work wrote:
Tue May 23, 2017 8:11 pm


@BlueNote. Thanks. :) Total aside, you took what I wanted to take in University but was directed into engineering instead. "You can be an engineer in business but you can't be a businessman in engineering." Follow your dreams kids :roll: Any practical book recommendations? Talking strategies for doing my cash flow projections, taxes... those types of things.

My full b plan is nearly complete (is it ever?) and I'm having the financials looked at by an industry professional tomorrow morning. I've been warned that under-capitalization sinks the majority of these start-ups and I do not want that to be my primary concern. To your questions about my entry wedge, let me try to answer with my plan, at least, the plan right now. If I linked you to a map of micro-breweries in large oil city ;) you would see that they are all in the eastern (undesirable, industrial) side of town due to cheap rent. I believe I can get into one of the nicer inner city neighborhoods due to using the smaller set-up. I'd go for targeted advertising to the immediate neighborhood as well as to the celiac population to get into the market. Be the local beer guy for the rich kids and an important destination for those physically needing my product. As for the movers and shakers in the marketing side.. I hadn't considered that yet nor have I met any of them. I will ask about this during my meeting tomorrow.
That's sort of funny because when I started university I wanted to do "Computer science" and essentially become a software engineer or something like that. However I got rerouted into the business stream for various reasons.

Starting a business like this is probably a better business education than what is offered in University. You'll learn things that are impossible to teach in that sort of environment. The things you won't learn you can fill in with free online university courses.

In my experience any sort of pro forma financial statement(Cash flow, income statement, balance sheet etc.) Is going to be very inaccurate because you have no history. It's still a very good idea to do the pro-formas because it forces you to think about the whole business financially which makes you a better business person. In order to keep your Business plan useful for its audience I'd suggest you use whatever method ,for pro-forma estimates , that is recommended by the bank or the potential financer if they provide input on that sort of thing. Barring that I'd follow a method where you estimate sales based on market share (potential market share is an estimate which is often wildly optimistic). You can estimate COGS based on the sales volumes that you estimated first and then add your fixed costs. From there you can build a sales growth plan and a balance sheet based on retained earnings and financing. Cash flow can be derived from there. Try to avoid any situation where you have credit sales and if you must have them make sure you know how it impacts cash flow (paying suppliers COD and selling on credit is a recipe for illiquidity). There's lots of excel templates out there that will help with this. Use a wide range of worst and best case scenarios (I imagine your real worst case is a total write off and you fold, but don't tell that to investors!).It's a good thinking exercise to plan on how to handle the worst ,medium, and best case scenarios. So you'll need to think about a graceful exit , executing the "expected" scenario, and high growth (best case).

Your business sounds fairly simple from a taxation point-of-view and you should be able to do the taxes yourself with the guidance of a bookeeper/tax professional. Ask your micro brew buddies who they use for taxes and check out their referrals.

I'd spend most of my time (~80%) on marketing and thus be reading books on those topics : marketing 7 p's. See if you can find anything online that covers your business specifically, there's often a lot of niche informational products out there that are quite good. The guerrilla marketing series of books occasionally had an interesting idea in them (cheap effective marketing ploys).



Here's some more hole shooting:

- Most small businesses (especially first timers) fail therefore almost everyone will expect you too fail too!
- You business sounds like a me-too idealistic fantasy (however almost all small business ideas are like this!) and I think you'll get to a point where you'll deeply regret doing this, the hours will get long and the money may get short. However you'll probably see it as a great learning experience later in life.
- Canada is legalizing pot in about a year. It is a substitute product for beer, wine and spirits. It could put a dent in your industry, how big that dent will be is yet to be seen. I don't see pot, on a net basis, as a complementary product as some would argue.
- If you get too sick to work or have some other life issue that effects your ability to work your business will suffer greatly and could fail incredibly fast. Hopefully your ERE lifestyle will provide a greater margin of safety against this. A Family or partner run business is so much more robust in these scenarios.
- If your business takes off people will copy your ideas to replicate success , if their marketing is better they'll likely beat you at your own game too.

distracted_at_work
Posts: 202
Joined: Fri Jan 13, 2017 11:51 am

Re: I want to start a nano-brewery...

Post by distracted_at_work »

@Salathor. I'm anticipating the 60+ hours and have no doubts it will be expensive. I'm selling all the batches I don't want to drink right now. Of course, I can't put that on a financial statement as it is bootlegging ;) It's definitely a moonshot. The goal would be to FI off of selling most of my stake or passively managing.

@Campitor. Thanks for the link. I'm not planning on bottling or canning but it still provided me valuable insight on the amount of work going into marketing and I can apply that to my logo design.

Thanks Bluenote. I want to address a few shots :D
BlueNote wrote:
Sun May 28, 2017 10:41 am
Here's some more hole shooting:

- ...you'll get to a point where you'll deeply regret doing this, the hours will get long and the money may get short. However you'll probably see it as a great learning experience later in life. .
I 100% expect this to happen (the deep regret).
BlueNote wrote:
Sun May 28, 2017 10:41 am
Canada is legalizing pot in about a year.
Here's an idea that I'll give away free :lol: Opening a sister company that is a cannabis grow op? THC in beer?
BlueNote wrote:
Sun May 28, 2017 10:41 am
Hopefully your ERE lifestyle will provide a greater margin of safety against this. A Family or partner run business is so much more robust in these scenarios.
I now think I need a partner. At least one, maybe two, to do this.

My meetings while I was briefly unemployed last week were extremely extremely helpful. I'll give some highlights.
-I was under costing (surprise surprise).
-Updating my costs, I don't think I can afford fancy neighborhoods unless I get lucky on a lease...
-But! It might not matter. I got a glimpse at what % these industrial-area brewers move through a taproom and I was astounded. If I am even half as convenient to get to I do not need to have ritzy street front retail.
-One of the local guys wants me to work evenings or weekends to give me some first-hand experience. Will even pay me :)

bryan
Posts: 1061
Joined: Sat Nov 29, 2014 2:01 am
Location: mostly Bay Area

Re: I want to start a nano-brewery...

Post by bryan »

Campitor wrote:
Fri May 26, 2017 11:32 am
Don't underestimate the bottle design and label for your brew. The marketing science emphatically shows that your beer and how it's presented affect your sales and the perceived taste. A bottle design can make or break a product.
For beer and liquor I couldn't stress this enough. A good design will sell product. Plenty of examples jump to mind (liquor is mostly a commodity, see MGP), but one that holds a special place in my heart is Rogue Ales who have some nice design but consistently mediocre product. Starting a "nano-distillery" (a bottling company, actually) is on my list of retirement projects so long as I am still with my designer SO.

BlueNote
Posts: 501
Joined: Sat Jun 08, 2013 6:26 pm
Location: Toronto, Canada

Re: I want to start a nano-brewery...

Post by BlueNote »

distracted_at_work wrote:
Mon May 29, 2017 7:26 pm

-One of the local guys wants me to work evenings or weekends to give me some first-hand experience. Will even pay me :)
Personally I think this is the best opportunity you have right now. You'll get paid by a potential competitor to get first hand experience working in the exact type of business you want to start from the ground up (That's killing two or three birds with one stone). If I were you I I would take the job and see if it's still a good fit after doing it for a while.

distracted_at_work
Posts: 202
Joined: Fri Jan 13, 2017 11:51 am

Re: I want to start a nano-brewery...

Post by distracted_at_work »

bryan wrote:
Tue May 30, 2017 1:39 pm
one that holds a special place in my heart is Rogue Ales who have some nice design but consistently mediocre product.
Funny you mention Rogue, they are the closest out there in what I envision for my brand. Aesthetically and thematically anyhow.
BlueNote wrote:
Tue May 30, 2017 4:26 pm
If I were you I I would take the job and see if it's still a good fit after doing it for a while.
Talking with the owner who's passed me on to the manager. I think I'll be able to slide in a few shifts as an assistant brewer when people are away on holiday or something.

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