Starting a LHBS? I want to spread the disease...

There is only one LHBS in my area.. and they suck, IMO (see here). That one experience got me thinking: Maybe I can do it, but could I be successful? Would this area support me? This area has a high bar per capita ratio so it's definately a beer lovin area... but I'm thinkin' it's a BMC lovin area...maybe I could change that... maybe I could spread the disease of this awesome hobby. I have already connected with many brewers whom I already was acquanted to, but had no idea they brewed.

The city just south does have a few places that sell hundreds of craft brews and is successful. I believe the aforementioned LHBS is successful because the have grown and I'm now hearing ads on the radio for them. They are primarly wine and are a licensed winery.

I would focus on beer, primarily, and I'd be friendly to anyone willing enough to walk through my door. My girlfriend and I have a ton of ideas flowing.

I am still a noob. I don't know everything, but I can research the hell out something and find out. Plus I am growing as a brewer too, so maybe by the time this would happen I would be much more experienced and knowledgable. I am good in customer service (worked retail for 7 years; GF for 6 years), and I want to help. I want to help noobs start out, I want to help the pros' keep it going(pros as in experienced homebrewers.. I can't imagine Leinenkugel is going to stop by for some wyeast ..maybe for some fruit though).

Has anyone on here started a LHBS? What do you all think? Is it just a dream that will stay that way, or should I make it a goal?

As small businesses go it would be a fairly cheap one to start. Probably a few hundred thousand and as always you'll need about 20% equity capital and to be able to convince a bank to loan you the rest.

The big problem is distribution. There are a few places that exclusively distribute most of the supplies you'll need. They will tend to only allow a certain number of stores in an area (this is what the store owners get on their end of the contract). That tends to cause more problems than anything for people wanting to open stores.

IMO there is more money on internet business than walk-in. You should do both but I would focus on being a competitive internet vendor out of the gate.

I was thinking of doing the same thing, since there aren't any in my area that are convenient for me. But, the initial capitol expense, the licensing (it's considered a "food" store here in MA, and requires approval from the local government), and the prospect of loosing everything if it didn't work out has kept me from doing the Nike slogan - "Just Do It". Now, if I was independently wealthy, I wouldn't have a problem with it, but that's not the case.

If you decide to go for it, I wish you all the luck there is.

This is something I used to think about a lot. Our lil' town has a LHBS that drives me crazy. The fella that owns it isn't a very motivated businessman. The store is more of a toy than anything else. He doesn't market the store, his prices are ridiculous, the store is nearly impossible to find, he has NO online presence, he does not partner with the local homebrew clubs/breweries/craft beer stores, he does not host brewing classes or events....YET, he breaks even on his bills.

If someone with an entrepreneurial spirit ran that business, he would do a lot more than break even.

So, yeah, I think a LHBS can be successful. In order to do so I think you need to consider some of the things listed above.

Being a newb (your words, not mine), I recommend you spend more time in the hobby as you assess your local market and local craft beer community.

remilard said:

IMO there is more money on internet business than walk-in. You should do both but I would focus on being a competitive internet vendor out of the gate.

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Most of the big wholesalers require that you have a brick and mortar retail location before they open an account with you.

You can't really store stuff in your garage and open an online store. The big distributors won't do business with you.

remilard said:

As small businesses go it would be a fairly cheap one to start. Probably a few hundred thousand and as always you'll need about 20% equity capital and to be able to convince a bank to loan you the rest.

The big problem is distribution. There are a few places that exclusively distribute most of the supplies you'll need. They will tend to only allow a certain number of stores in an area (this is what the store owners get on their end of the contract). That tends to cause more problems than anything for people wanting to open stores.

IMO there is more money on internet business than walk-in. You should do both but I would focus on being a competitive internet vendor out of the gate.

Click to expand...

Wow, really? a few 100k? I seriously have never looked into actual cost. It's
just a dream now. I never would've imagined it would cost that much. That right there probably puts it in the "always a dream" catagory.

When you say "equity capital," are you talking about putting personal property and money against the loan, like collateral(sp)? Things like vehicles, house, etc?

homebeerbrewer said:

I was thinking of doing the same thing, since there aren't any in my area that are convenient for me. But, the initial capitol expense, the licensing (it's considered a "food" store here in MA, and requires approval from the local government), and the prospect of loosing everything if it didn't work out has kept me from doing the Nike slogan - "Just Do It". Now, if I was independently wealthy, I wouldn't have a problem with it, but that's not the case.

If you decide to go for it, I wish you all the luck there is.

Click to expand...

I wish I was independently wealthy. lol. I'm 23 years old with a college degree I'm not using and am still deciding what the hell I'm going to do.

HickoryMike said:

This is something I used to think about a lot. Our lil' town has a LHBS that drives me crazy. The fella that owns it isn't a very motivated businessman. The store is more of a toy than anything else. He doesn't market the store, his prices are ridiculous, the store is nearly impossible to find, he has NO online presence, he does not partner with the local homebrew clubs/breweries/craft beer stores, he does not host brewing classes or events....YET, he breaks even on his bills.

If someone with an entrepreneurial spirit ran that business, he would do a lot more than break even.

So, yeah, I think a LHBS can be successful. In order to do so I think you need to consider some of the things listed above.

Being a newb (your words, not mine), I recommend you spend more time in the hobby as you assess your local market and local craft beer community.

Click to expand...

Yeah I'm sure I could have the spirit in doing something I want to do. Everyone wants to do the thing they love. Also, I believe that if you are doing this to make a living on, you start putting more effort into it.


Thanks for all the tips and opinions!

MetallHed said:

..


I wish I was independently wealthy. lol. I'm 23 years old with a college degree I'm not using and am still deciding what the hell I'm going to do.

...
Thanks for all the tips and opinions!

Click to expand...

Hey, don't feel bad, I'm 20 something years older than you, and I still don't know what I want to do when I grow up.

MetallHed said:

Wow, really? a few 100k? I seriously have never looked into actual cost. It's
just a dream now. I never would've imagined it would cost that much. That right there probably puts it in the "always a dream" catagory.

When you say "equity capital," are you talking about putting personal property and money against the loan, like collateral(sp)? Things like vehicles, house, etc?



I wish I was independently wealthy. lol. I'm 23 years old with a college degree I'm not using and am still deciding what the hell I'm going to do.



Yeah I'm sure I could have the spirit in doing something I want to do. Everyone wants to do the thing they love. Also, I believe that if you are doing this to make a living on, you start putting more effort into it.


Thanks for all the tips and opinions!

Click to expand...

Equity capital is a cash investment you make in the business. In general in order to finance the banks will require 20 equity, 80 percent debt (or less debt is obviously fine). Basically you need skin in the game. Property unrelated to the venture won't work but people have borrowed against their houses to start small businesses.

HickoryMike said:

Most of the big wholesalers require that you have a brick and mortar retail location before they open an account with you.

You can't really store stuff in your garage and open an online store. The big distributors won't do business with you.

Click to expand...

Well I did say both, didn't I?

There are several online only shops though, so that is possible, even though that isn't what I recommended.

Regardless of which way you go (online or local retail) you have to do it different to stand out and survive. Better pricing & unique products that you can't get at many other places, but that will be diffucult. You'll need to be creative or the business will fail in a short time.

I've started two businesses in the past 6 years; one is still going and the other I sold to the competition before I moved because I decided not to move the business with me. You have to find a niche or just do it better than the competition.

I think the cost estimate on here is WAAYYY to high to get started. I have a nifty business plan that I developed to open a shop here locally. The total cost is just under $25k. However, it was a "start small and build" kind of plan. I was going to do it while keeping the day job, with SWMBO helping keep the doors open while I work.

While I was actively looking at real-estate, and filing for my EIN, another guy opened one out of nowhere. I'm glad to have one here now, and I don't have to work it! Even though this guy is gung-ho, he is not making money in spades. He lives in a tiny apartment near the shop, and I'm not sure how he keeps the bills paid selling only locally (no online at all).

I think this falls into similar area as nano-brewing (my current work-in-progress). You do if for the passion. It could grow, but maybe not. Don't expect to support yourself with it for a several years (if ever). If you're passionate, however, it'd be your dream every day.

I grew up in Eau Claire so I know quite a bit about the area. I'm sure you do too so I apologize if I'm preaching to the choir. Like you said, it is definately a BMC crowd up their with hunters, ice fisherman, and lots of hick bars which isn't great for people who like the other types of beer. But, EC is a pretty big hub for people coming in from smalll towns looking for somewhere to shop so it might work but I would definitely do it in Eau Claire. No one goes to Chippewa. Northern Brewer and midwest are still far enough away in the Cities to not interfere with your business. I'd say put it near the mall near where 53 and I94 cross. Lots of traffic.

edit: I guess if you kinda leveraged the whole Leine's thing in Chippewa it could work there too.

Like you said you do with HB questions...research the hell out of it. In order to get an idea of how much it'll cost it would be a good idea to create a business plan, which could also be used to help you raise start up capital.

Don't forget to put some research into how much it would cost to lease retail space. It's probably a lot more expensive than you think. I work for a company that owns a bunch of strip malls, and always amazed at how much people have to pay per sq ft.
This varies greatly from place to place, so hopefully space in your area is affordable.

Also, when leasing equipment or retail space, make sure you read the fine print, and avoid personal guarentees like the plague. If your business doesn't work, and you need to close up before your lease is done, the evil landlord will take you to the cleaners for the remaining value in the lease. If you personal guarentee something, you have to find the cash to pay for it. If you can't they can take your house.

As always, before you enter into anything binding, consult a lawyer. Brewshop could be fun, but starting a business can be tricky. The lower your initial overhead, the better you'll do.

Good luck!