3 Useful Tips on Financing a Brewery

 

   We had a great plan and some awesome beer and figured money would be the least of our problems. I'm not saying we haven't had our share of miracles when it has came to generous people in our lives but, believe me, creativity is key when you are planning on opening a brewery with limited cash. I remember having the conversation with Mark as if it were yesterday. "We should be able to open with $50k no problem". Ahh, those were the days. Every brewery in planning must go through what I now refer to as wishful thinking. We had our budget and a couple stainless tanks that we had picked up on Craigslist. We were ready to take on the industry that we dreamed to be a part of someday. The plan was rolling in motion so the next logical thing to do was to reach out to local manufacturers of stainless equipment and do some price shopping. The first salesperson I met with worked for a company out of Napa, California. He was a really nice guy and had some super cool brochures. The equipment jumped out of the pages like the original Green Machine that I used to dream of inside the Sears catalog during Christmas (yep, I said it the original). The brew house had every trick option available. It had electronic temperature controls, an automated rake, and even lights to see inside the kettle. The glycol chilled fermentation and brite tanks were absolutely beautiful. I went over our plan with the sales guy but failed to mention our budget (looking back at an obvious mistake). After the meeting, he told me he would send a quote for the equipment in a couple days. Mark and I were not yet settled on the system size but we were going to let the quotes decide that. A few days later we received our first official quote, $370k plus tax and oh yeah, please don't forget the shipping. I thought umm, "Houston we have a problem". This was honestly the first time in my adult life that I had actual sticker shock. Needless to say, we had to pass on the system. We did learn a couple early lessons that week. First, we had no chance opening with decent equipment with only $50k and second, if we were going to open we would have to be extremely creative. You would be surprised how creative you can become when you launch into the oblivion of a dream.

Here are some tips on starting a brewery on a tight budget.

* Sell everything you own. Some people will disagree with me on this one but I believe when you mentally let go of material possessions in exchange for something that matters, you open your life up to more miracles. Hey and if your lucky, one day you will be able to tell people you sold your truck for beer money!

* Don't buy new. There are plenty of used options out there. You just can't be in a hurry and you almost have to be like a deal hunter. Have some cash available so when the deal of a lifetime comes up you're the first one there, ready and willing to purchase.

*Always ask for a discount. Let's face it, people love beer almost as much as they love money. Feel free to tell everyone you deal with that you're starting a brewery. They will surprise you. My favorite line to tell people has been, "we have a lot more beer than money" I have saved thousands of dollars by bartering with beer and negotiating for the best prices.

Cheers! J

Intro to Bootstrap Brewing: Please forgive my petty indulgence to write in blo...

Intro to bootstrap brewing: Please forgive my petty indulgence to write in blo...: Please forgive my petty indulgence to write in blog space. I'm what some people may label an entrepreneur and others a lunatic. I will l...

Intro to Bootstrap Financing for a Production Brewery

Please forgive my petty indulgence to write in blog space. I'm what some people may label an entrepreneur and others a lunatic. I will leave the decision to you. It was almost four years to the day my best friend Mark and I decided we were going to launch his delicious home brew recipes commercially. Mark had no formal training in brewing but had been an avid home brewer for a number of years. He had designed a cool half barrel home brew system that would even make Ken Grossman a little jealous. Let's just say it was a pretty high tech system for the garage to say the least. Anyways, Mark gave me a 12 pack of four different beers he had been working on and I decided to take them to work and give them out. I forgot to mention that although Mark was an expert at brewing his beer we didn't have the slightest idea how to bottle it. Filling that first 12 pack took us the better part of two hours to finish. The labor was well worth it though and about two or three days later the people I gave the beers to went bananas! Where can I get more? Who made these? And my favorite question was, these beers are remarkable, did you make them in a tub? It's funny how people hang onto stories like Sam Koch's beloved Boston Lager one. Anyways, it felt good to represent something that almost everyone could appreciate, a great hand crafted beer. My background for years had been sales, marketing, and business management but to that point, I never really believed in a product the same way as I did for Mark's beer. I coaxed him into bottling a few more beers for a huge party we were heading to on Saturday night. When we opened up the ice cold cooler we had brought full of his beers once again people went crazy over them. I asked myself, " who doesn't like free cold beer?" But the fact was they were offering us money to get their hands on more. Of course we politely told them that the beer was not for sale but if we ever decided to go commercial we would let them know. Mark and I were buzzed, happy and for about 5 minutes felt like superstars. Which is a common feeling when you get to share your passion with other people. The next day I met Mark at his house and convinced him to go into business with me. This blog will serve as a roadmap for any up and coming brewery who might be in the idea stage or ones that are already in operation. Since our initial idea to start a brewery in 2012 we have built two commercial systems (4 bbl and a 10 bbl) and we are just a couple months from opening a large facility in Sacramento California. I will share the business side of opening a full-scale production brewery with blood, sweat and lots of tears. This journey has been a learning experience, to say the least from starting with absolutely no capital to meeting people in Home Depot Parking lots to buy stainless pumps off of Craigslist at 4 in the morning.  I will end every post with one thing that I have learned on this crazy roller coaster ride.
     I met an owner of a Local brewery the year we decided to start our company. He and his company had seen some recent success and they were close to breaking out of our market. I asked him these words, " what advice would you give some up and comers trying to break into the industry?" He replied, "don't give up". Those words seemed simple at the time but I have to tell you right now; you will be tested over and over again. You will want to quit and to be honest, I have had to hang onto those words so many times over the years I have lost count. I promise if you hang on you will not only get to participate in the world's greatest business you will undoubtedly grow beyond any barriers you may have thought you had previously in your life. The skills you gain from the experience of opening a business in such a highly regulated arena will give you the confidence to do anything you put your mind to. Cheers!