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Old 06-22-2009, 02:32 AM   #1
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Default LHBS Startup

I'm wondering what the start-up costs for an LHBS might be. It's just a thought that's been stuck in the back of my head for a while. I work a seasonal job and have a lot of off time in the winter. Also, I live on an island (that you have to take a boat to get to) and pretty much everything operates through mail order around here. This is a VERY preliminary thought, but I figure there are a bunch of members here that are owners of shops of all sizes and I thought I might get some insight. Surprisingly, the cost of renting retail space in my area is quite modest. I'm not sure how big the demand is, but there is a fantastic brew pub in the area, 4 of the 6 towns on the island are dry towns and there is an organic hop farm about 3 miles from my house. So, I assume that there is a reasonable amount of local homebrewers who probably brew a ton in the winter when there's nothing much to do (I know I do). My next step would be making friends with the guys at the local brew pub (which I plan to do anyway)to get a real idea of the local demand. In the mean time, I'm wondering if I'm way off base in thinking that the start-up costs wouldn't be outrageous.

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Old 06-22-2009, 02:38 AM   #2
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Yeah there are several people on here who have opened them....IN fact, I SWEAR there was a thread on here yesterday...one of our members JUST opened one...I'm having a "senior" moment and their names are escaping me....the trouble is this is a SUnday, and they might nnot be around to see this thread and it will fall to the bottom of the heap...But if I can think of who they are I'll link you to their threads in the next couple of days.

It sux, 'casue I can actually picture one of the threads, with pics of his store....but I've been brewing (read drinking) in the sun all day, and I'm a little fuzzy right now...

Good luck.. We need more of you.

If something comes up I'll let you know.....

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Old 06-22-2009, 02:44 AM   #3
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I'd have to think that starting a LHBS would be really no different than starting any other retail store. In the end, all you're doing is buying stuff at wholesale, setting up shop in a commercial building, and then reselling the product at a markup.

Ultimately your startup costs will include leasing/buying the storefront and stocking your shelves while possibly hiring some part-time help. That being said I'd say your startup costs could be as low or as much as you desired. Starting out, what would you stock? Are you going to strive to carry at least one of virtually every home brew product out there or will you more or less carry the staples and special order things until the demand increases? And would you be putting together your own custom recipe kits or would you basically just repackage existing kits?

So there are a lot of variables, but I think the biggest factor would be what you intend on stocking up front. You could probably get the ball rolling for a couple grand on top of the building costs just to get some items on your shelf, but from there the sky is the limit and if you want to be a one-stop shop right out of the gate, buying all that initial inventory can add up quick.

You could probably ballpark some numbers with this calculator if you had some rough ideas as to what the specific costs for certain things would be Startup Cost Calculator - Calculating Costs to Start a Retail Business

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Old 06-22-2009, 02:53 AM   #4
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Jaybird just opened one this weekend.
As others may have posted, finding the balance point between on-hand stock and what actually gets sold is the bane of all retailers.

It is easy to over-order product that sits forever and is never sold.
Your first few months will be nothing more than Trial and Error.... that and long hours with no rest.

My suggestion to you.... any marketing you do..point towards young people 21-25 aka Hipsters.

They will be a strong force in purchasing in the next year or so.
Many are throwing off the mentalities of 'go to the store and buy the box' attitude of their parents and want to be crafty, self-sufficient and sustainable.

If you can get organic product DO IT.

:2cents

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Old 06-22-2009, 03:02 AM   #5
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Thanks 'chicken, I was going to have one of those sleepless nights until I remembred.

There's a couple more, I'll dig through the threads tomorrow and see if I can find them....

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Old 06-22-2009, 03:20 AM   #6
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Revvy,

Thanks, I didn't even think to search for new shop owners. duh. I'll take a look around for those threads.

Marubozo,

I agree that the costs would be quite variable. I guess I am wondering what the 'must have' inventory would cost. I hadn't really thought about kits (again, duh). The closest LHBS (about 1.5 hours with the boat ride) is at a small brewery and only stocks the bare essentials for extract brewing.

I figure you have to stock the basic ingredients for extract and AG with a decent selection of grains, hops and yeast, basic equipment kits (True Brew or the like), basic equipment (fermenters, hydro, thermometer, ferm locks, auto-siphon, caps, cappers, etc, etc, etc), some literature (Palmer, Papazian, etc). You know, the stuff that will move quickly. There's obviously a million more things that I would have to consider if I decide to move forward. Thanks for the link, it's bookmarked.

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Old 06-22-2009, 03:26 AM   #7
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Quote:
Originally Posted by thataintchicken View Post
Jaybird just opened one this weekend.
As others may have posted, finding the balance point between on-hand stock and what actually gets sold is the bane of all retailers.

It is easy to over-order product that sits forever and is never sold.
Your first few months will be nothing more than Trial and Error.... that and long hours with no rest.

My suggestion to you.... any marketing you do..point towards young people 21-25 aka Hipsters.

They will be a strong force in purchasing in the next year or so.
Many are throwing off the mentalities of 'go to the store and buy the box' attitude of their parents and want to be crafty, self-sufficient and sustainable.

If you can get organic product DO IT.

:2cents
Man, I type slow!

Great point about finding that balance. That's the scary part. Fortunately for me that 'hipster' factor crosses all age groups where I am (Martha's Vineyard). Organic, self-sufficient, 'green' and local are all solid gold concepts around here. Not to mention that a lot of people enough cash to support those types of things.
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Old 06-22-2009, 03:38 AM   #8
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The only other thing I will mention.. well, for now at least is invest in your people.

Do not be afraid to spend the extra $$$ to have the people you NEED in place.
What you will need is smart, quick and detail oriented people that smile and truly want to be there. Don't forget honest. If they are brewers, offer a generous discount program -- or your product will be leaving via the back door faster than it goes out the front.

inside baseball:
When choosing employees do criminal background checks. Let applicants know you are doing this UP FRONT.

It is amazing how many will not want to apply.

Just sayin.

Will take off the retail/restaurant manager hat now and drink a beer.

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Old 06-22-2009, 03:55 AM   #9
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Point VERY well taken. To start it would just be me, at least in the winter time. So, no worries about that to begin with. And I have a perfect part time employee in my MIL who lives with me and owned a health food store for 20 years. She doesn't know too much about beer, besides what I ramble on about when I've had a few, but at least I can trust her!

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Old 06-23-2009, 12:32 AM   #10
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You could have some luck calling up a LHBS a couple of towns over and ask them what they suggest (be sure to go far enough way to not affect their sales) since they do it, they can give you an idea of what you'd need as a minimum. Could help making sure you don't buy a ton of product x when it doesn't sell that quickly.

Also, you might want to start a collection of your favorite 10 recipes, put your twist on them and have your own 'kits' to sell. I know starting off all I wanted was kits, and getting stuff I can't find online was a bonus.

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