Breweries can be incredibly lucrative.
The gross profit margin is high—between 74% and 92%. No wonder many people want to get into the business of brewing beer!
But although there’s a lot of money to be made, it’s a tough field to break into. You need time, determination, and a lot of initial capital investment. The competition is also tough—so you need to equip yourself with plenty of industry knowledge to succeed.
If you’re thinking of starting a brewery, you’ll need these seven insider tips to help get it off the ground. Let’s get started!
1. Build Your Capital Investment
Like any other business, starting a brewery requires a big investment. The initial capital for a larger brewery with all the equipment needed to produce a variety of craft beer is about $2 million. On average, however, the starting capital for a smaller business is between $500,000 to $1.5 million.
|Breakdown of Startup Expenses|
|Building cost / rental fees|
|Permits and licenses|
|At least six months operating costs|
|Branding and marketing|
|Technology and point-of-sale|
To reduce costs, you could start with a microbrewery, which needs an investment of about $250,000. If you find that more funds are necessary for starting a brewery, here are some things you can do to build your capital:
You might not be aware of it, but you probably have valuables sitting at home that you don’t really need anymore. Larger items such as an extra car, motorcycle, guitar, and even smaller things like clothes and kitchen appliances can all be turned into cash. You’d be surprised at how much you can make when you add them all up.
If you have friends who are lawyers, accountants, electricians, contractors, etc., you could ask for a discount or work out a special deal with them.
There are other means of securing funding for your brewery. You may want to consider:
- Microloans for small businesses;
- Startup business grants;
- Merchant cash advance;
- Brewery equipment lease and financing; and
- Business line credit.
2. Give Your Brand a Unique Face
How do you want people to perceive your brand? Think of the overall aesthetic and theme of your beer and keep this in mind when choosing a name for your brewery, designing your logo, picking a font and color scheme, and when conceptualizing your brewery’s website.
But more than branding, you need to create a strong concept and vision for your brewery. Here’s a simple guide on how to develop your brewery’s brand:
- Think about the kind of brewery you want to create and write a vision and mission statement.
- Check out your competition and define a niche (e.g. fresh and local, authentic, organic).
- Develop your own voice and tone and use them when developing a backstory or building an emotional investment.
3. Be Committed to the Craft
The foundation of a successful brewery is in the quality of the beer you’re selling. If the idea of starting a brewery was born out of your frustration with watery, mass-produced beer, then be committed to brewing great beer.
Whether it’s a specialized beer, unique quality control process, fresh ingredients, or your cold chain logistics solutions, make sure that every batch of beer that goes out of your brewery has consistent quality.
4. Prepare for Regulation and Licensing Hurdles
Many prospective brewery owners are unaware that beer is a heavily regulated industry. You have to familiarize yourself with local and federal regulatory requirements before you can apply for a liquor license. You’ll also need to decide if you want to apply for a full or a limited license.
Aside from that, there are other agencies you have to check (such as the wastewater treatment folks) before you can start operations. Contact these agencies to get a full list of compliance regulations.
Set aside time to work on regulatory research and compliance. Remember: owning a brewery is about running a business just as much as it is about brewing great beer.
5. Build Relationships in the Industry
Building relationships is important in any business. You’ll be spending a lot of time speaking with regulators and public servants. And since some of the requirements you need to fulfill aren’t one-time hurdles but routine reporting and inspections, the process would be much less of a hassle if you maintain a good relationship with them.
Aside from regulators and inspectors, it’s crucial that you build a relationship with your landlord, retailers, distributors, suppliers, your team, and the local community. Often, that’s how doors to various opportunities open up.
6. Don’t Rush to Make a Profit
When starting a brewery as a business, you naturally want to make a profit. However, the goal of a brewery’s early years is to grow and become sustainable. Most breweries only start earning money within the first three years of operation.
So if you find yourself applying for a bridge loan, that’s normal. Take note, though, that cash flow should be stable. Also, make sure your brewery is making a profit before spending your contingency funds.
7. Team Up With the Right Logistics Partner: Brew Movers
With over two decades worth of logistics experience, Brew Movers is your go-to partner when starting a brewery. Experience white-glove shipping services specializing in beer, ingredients, and equipment logistics.
As a trusted carrier across North America, you can count on us to have the knowledge, connections, and passion for propelling your brand forward.
Contact us today to get a quote!