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Home Brew Forums > Home Brewing Beer > General Beer Discussion > How to start a Brewery Idea...
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Old 07-27-2012, 06:00 PM   #1
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Default How to start a Brewery Idea...

So I have worked for myself but never started a complex business and I was wondering what you folks out there thought about this idea to open a 7-10 Barrel Brewery…

  • Find a location.
  • Find some people who want to play
  • Anybody who play buys equipment for the brewery and leases to the company
  • The brewery opens and we hope; makes money to pay for itself and a little profit.
  • Should the thing go “Tits-Up”, “down the tube”, “all to hell”… at least most of the original investment for the participants is protected…

I mean if everything is leased they cannot take it away…

Simple idea?

Practical idea?


I am short the money I need to do this alone so I was trying to figure out ways around the deficit and protect peoples hard earned money…

I would like to do this somewhere between Washington DC and Winchester VA and I would eventually like to work there… I have been doing this crap for 20 years and I am about done with it...

Hell,,, I am bored at work so I figured I'd ask the question...
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Old 07-27-2012, 06:17 PM   #2
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The higher the capacity you can get on the outset, the better your chances of turning a profit.

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Old 07-27-2012, 06:20 PM   #3
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Sounds like a recipe for disaster. Do some more research and talk to a lawyer. Brewing beer is the easy part....selling it is the hard part.

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Old 07-27-2012, 06:28 PM   #4
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This is sort of a version of a common business structure. The business operates the business and all the property is owned separately by the owners as an LLC and leases it to the operational business. Usually, at least at the small business level, the owners of the operating business also own the LLC so it's almost impossible to have a conflict. In your situation, you certainly get the benefit of leasing the equipment but you also run the risk that somebody wants to impose a sharp increase on the lease payments and could, no pun intended, hold you over a barrel. E.g. the lessor of the boil kettle might negotiate a higher lease payment on a lease renewal than you want to pay. What are you going to do? Not have a kettle? Lose production while you try to source another one? You're going to pay. You also run into all sorts of problems where you need to modify equipment, make repairs, etc. Who pays for that? Can the lessor stop you from making alterations to the equipment? What happens when equipment breaks, wears out or needs to be replaced for expanded production? Are you giving your friends back used fermentation tanks? If you go belly up, what are they going to do with the equipment? Sell at auction?

An alternate idea is to let your investors come together and form a brewery and operate it as a 100% contract brewery and lease all the production capacity to your separately owned brewery. At least then if you go belly up they could lease out to other brewers or sell off a whole functional brewery.

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Old 07-27-2012, 06:32 PM   #5
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Quote:
Originally Posted by Denny View Post
Sounds like a recipe for disaster. Do some more research and talk to a lawyer. Brewing beer is the easy part....selling it is the hard part.
Well then just opening a brewery with multiple or investors would also be a bad idea I guess?

I know a little about buying equipment and then selling it to a leasing company so you can lease it back from them... it gives you operating capital... I just figured that instead of a leasing company I could do the same thing with investors/partners and at least partially protect everyones investment...

...and well the goal is to sell it and have a successful business, that is why I put "Location" first.

Thanks,

DPB
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Old 07-27-2012, 06:35 PM   #6
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Quote:
Originally Posted by Denny View Post
Sounds like a recipe for disaster. Do some more research and talk to a lawyer. Brewing beer is the easy part....selling it is the hard part.
^^^^^^^WISE WORDS SPOKEN

To quote on of our own: I can make a darn fine cheeseburger, but I'm not about to take on McD's. Ain't about the beer.


Quote:
Originally Posted by DPBISME View Post
...selling it to a leasing company so you can lease it back from them... it gives you operating capital...
Pretty sure you'd still have to capitalize it.

And the thing about protection, as RAM said, if everyone is a separate entity, conflicts of interest compound. Gets real messy, real quick. Denny didn't say not to do it, he just said to do more research and talk to a lawyer.
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Old 07-27-2012, 06:38 PM   #7
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Quote:
Originally Posted by ReverseApacheMaster View Post
This is sort of a version of a common business structure. The business operates the business and all the property is owned separately by the owners as an LLC and leases it to the operational business. Usually, at least at the small business level, the owners of the operating business also own the LLC so it's almost impossible to have a conflict. In your situation, you certainly get the benefit of leasing the equipment but you also run the risk that somebody wants to impose a sharp increase on the lease payments and could, no pun intended, hold you over a barrel. E.g. the lessor of the boil kettle might negotiate a higher lease payment on a lease renewal than you want to pay. What are you going to do? Not have a kettle? Lose production while you try to source another one? You're going to pay. You also run into all sorts of problems where you need to modify equipment, make repairs, etc. Who pays for that? Can the lessor stop you from making alterations to the equipment? What happens when equipment breaks, wears out or needs to be replaced for expanded production? Are you giving your friends back used fermentation tanks? If you go belly up, what are they going to do with the equipment? Sell at auction?

An alternate idea is to let your investors come together and form a brewery and operate it as a 100% contract brewery and lease all the production capacity to your separately owned brewery. At least then if you go belly up they could lease out to other brewers or sell off a whole functional brewery.
I was looking for potential flaws in my design and was not seeing them…
Getting with a lawyer and tax man might not be a bad idea as things have probably changed in the 20 years since I ran manufacturing companies…
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Old 07-27-2012, 06:40 PM   #8
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Oh one mere note: If I ubnderstand the law in Virginia,,, like North Carolina.... you can basically have a Brewpub (a brewery) with out service food so you can have a "bar"...

The capital expense of a kitchen is gone.

DPB

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Old 07-27-2012, 06:42 PM   #9
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Quote:
Originally Posted by Denny View Post
Sounds like a recipe for disaster. Do some more research and talk to a lawyer. Brewing beer is the easy part....selling it is the hard part.
"recipe for disaster" I have that recipe... and we drank it anyway...
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Old 07-27-2012, 06:57 PM   #10
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"recipe for disaster" I have that recipe... and we drank it anyway...
Hahaha...but would you PAY to drink it? That's the question at hand.
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