With the rise of the craft beer industry, aspiring brewers are preparing to open craft breweries, but opening a craft brewery still needs to face some realities to realize this dream. Brewing craft beer is fun, and opening a craft brewery will be even more fun. In general, a craft brewery is a small business, so you need to consider many business issues before opening a craft brewery.
Do you have the funds to open a craft brewery? This is the first step in planning to open a brewery. We have seen many craft breweries with insufficient funding, and they will eventually face the rupture of the funding chain. If you do not have enough financial support, we do not recommend that you open a craft brewery, because it is like using paper as steel plates to make brewery equipment.
You need to determine whether you have enough money to start the brewery. Normally, you need to prepare more than 30% of the start-up costs (costs of equipment, rent, decoration, etc.) for the brewery as the working capital of the brewery. This is a relatively safe starting number. If the expansion and equipment cost you $1 million, then you have to prepare more than $300,000 as working capital to help you through the first few months. Although this may seem like a large amount of working capital, marketing and raw materials alone will consume most of it in a short period of time.
Your source of funds can be friends, family, banks, investors, crowdsourcing, or even crowdfunding. Also, you must align with the appropriate legal and financial team to build a structure to receive funds from anyone. Any wrong decision here may cause big trouble in the future.
Do you have any plans for the brewery? I’m not talking about traditional commercial brewery plans, this is for brewers. When I say the plan, I mean the layout of the brewery, the strategic plan for the next five years, parking spaces, and expansion plans. Of course, marketing and staff benchmarks are also planned. Although we cannot predict the future, we can plan for the future. Now, you can feel your grand goal!
The initial goal planning can be simple plans such as production goals, tasting rooms, and wholesale revenue goals. Although these seem very simple, they will serve as the basis for more complex indicators in the future. With the passage of time, your goal planning should gradually change to an in-depth understanding of production, marketing, and financial processes, which will have a very large impact on you.
3. Sales model
You need to consider how to sell your craft beer. How is the distribution situation in your state? Is it self-produced and self-sellable? For states that can be allocated on their own, are your logistics and liability insurance complete? Self-produced and self-sold is a very good choice at the beginning, but as the scale expands, you may sell the beer to professional craft beer distributors. When the distributor signs the contract, you need to carefully check the nuances in the contract. Although this may drive you crazy, it will affect the future profits of the brewery.
You have to think that you are handing over the transportation and sale of the product you are proud of to a complete stranger. This process needs to be slowed down as much as possible. In this process, you need to carefully check every detail of the contract with the distributor. Also, don’t be ashamed of having a beverage lawyer take part in and review the contract, he will better help you understand all the terms in the contract.
I believe you know how to operate all the valves and storage tanks in the brewery equipment, but you may not be able to calculate your expenses and profits. Accountants can provide you with the ability to handle brewery expenditures and profits. You need to hire professionals who understand this industry. No one knows the financial situation of your craft brewery better than a professional accountant or bookkeeper.
Another reason why audits should be orderly is that the TTB needs it. If you conduct an on-site review of the selection, you need to provide data support for the information you provide. Of course, you can also find TTB agents, they are very professional. But, you need to provide them with relevant information and follow their requirements to ease them to serve you.
Finally, you also need to know whether your craft brewery is profitable. Most of the craft breweries we contacted have cash in the bank. Although cash in the bank can say profitability, it is not authoritative. A professional accountant will calculate the cost and profit for your brewery, and will correctly record and keep every transaction of the craft brewery. Properly recording and keeping bills will keep audits organized and allow confidence to grow. This is very important because proper record keeping will keep TTB away from your hair. You can also see if your craft brewery is profitable.
You need to develop a sound corporate culture for your craft brewery. Do you want to understand what kind of people you will serve? I understand that anyone likes bars and has money, but what does this person look like? Every good culture is the word that the business owner has worked hard to scrutinize, and it has a greater impact on the success of the brewery than most people think.
If a culture is clearly defined, it will attract more flocks. What is that old saying? Birds of a feather, flock together. A confident culture will only bring more loyal brewery followers, thereby increasing sales. Although more sales are good, it is better to have a well-defined culture—the members of the team will see the brewery as a second home. Also, they will become the most effective advertising, providing you with more customers and family members.
A well-defined culture also helps to staff. Culture will help you filter out people who don’t belong here. How to know if you have a good culture? Then start with the leader. Do you want the team and sponsors to show your stand and beliefs? If not, give it a try. It’s never too late to start building a brewery culture.