Purchasing a LHBS

Any thoughts on purchasing a homebrew supply shop as a business?

All of the ones around my area seem to be a second job. Open only half the week and for only a few hours a day in the afternoon/early evening.

Don't look for it to be a cash cow.

My thoughts are how large is the market area (population), are there any other HBS's? Are you willing to work long hours, week ends, and go the extra mile doing the marketing, and demonstrations, or seminars on the hobby. Are you passionate about the hobby, are you good at sourcing, budgeting, keeping records, are you good with people? Yeah a lot of questions, but with the online market, your going to have to offer more than just supplies to compete. I was in business for myself for about 3 years, long hours, low pay, and except for the love of the market (motorcycles) and the customers, I found it easier, and more lucrative to work for some one else. My 2 cents.

Contact Gail at The Brew Shop in Oklahoma City. She took over several years ago, and can probably give you some first-hand insights.

A lot depends on where it is located. One opened up near me a couple of years ago and he is doing a great business. The shop is clean, well organized and always well stocked. Dependable hours. The reason that he is doing well is there is a good craft brew presence in our area, and there is not another brew shop very close by. I but most of my stuff there because I want him to stay in business. Having a good shop close by has saved a couple of brew days when I needed something at the last minute and was able to go get it.

If you're purchasing because you love homebrewing and want to spend more time (a lot more time) involved in it, go for it.

If you're purchasing because you want to make money, I'd suspect it's a lousy ROI, especially if you add in your labor. If you have cash to invest, there are far better, less-work-required options out there.

Personally, the idea of having any capital tied up in small retail scares me. Too risky.

Ask to see the books and decide if you can live off it.

TyTanium said:

If you're purchasing because you love homebrewing and want to spend more time (a lot more time) involved in it, go for it.

If you're purchasing because you want to make money, I'd suspect it's a lousy ROI, especially if you add in your labor. If you have cash to invest, there are far better, less-work-required options out there.

Personally, the idea of having any capital tied up in small retail scares me. Too risky.

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Care to share your thoughts?

Haha, nothing in particular...just thinking equities (buying a stock or equity index). A broad-based equity index is about the best risk-adjusted return out there, like an S&P index or ETF. Buying a VC/PE or small cap index gets you some of the returns of a small business with less idiosyncratic risk (i.e., better diversification). And, buying equity involves no work and less risk than an individual business. Not saying small business returns are bad...I love small business...but there are less work, less risky options out there.

If you think craft brewing is where it's at then buy Sam Adams and short MillerCoors or something. But I think there's a reason VC/PE money isn't chasing small breweries...capital intensive and not much in the way of returns.

DISCLAIMER: Investing involves risk. I do not represent any of the above.

The local brew shop in my area is called brew and grow. half brewing supplies and half hydroponics.

Don't have a LHBS, but then again with only 3000 people in my town I don't expect to. But there is one in the next city over, which went bankrupt a while back - suprised it took so long. They hardly stocked anything, and everything was over priced. Only thing worth buying there was dry yeast - but only if you already were in town. There's another one, in another city (I live in the middle of these cities) which is a bit better, but he's only running it as a hobby (and to buy stuff for himself cheaper I suspect) - I think it's only open three days a week, and I never remember which days.

Been wondering, though, how well I could've run a store in place of the one that went bankrupt. I got the brewing know how and passion, got some contacts I could use and a few ideas on how to bring in new customers - but the rest scares me ****less. Way too risky.

Glynn said:

The local brew shop in my area is called brew and grow. half brewing supplies and half hydroponics.

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There's a hippy joke in there somewhere :fro:

Smithman said:

There's a hippy joke in there somewhere :fro:

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Stoned Pale Ale?
Miller "High Life"
Potted Porter
Maui Wowhi Wheat
Some one stop me!:cross:

Mary Jane IPA?

Is there one available in CT?

it does seem like a lot of risk, and there is potential to have the business end of it suck the fun out.
I'm just curious about buying/ opening one. Seems like CT needs all the help it can get in regards to better beer and more breweries.
Thought it would be good to get some feedback before investigating this any further

My local HBS is 45 miles away .

They run decent hours....Tue - Sat noon to 7pm (I think if you are catering to hobbyists you need to be open when they are off work) I'd be open sundays and maybe a bit later at night

They host the local Brewing club and offer 10% discount to paid members paying cash.

Once a month they hold an open brew day onsite on a saturday. You can brew AG on their equipment and there are always knowledgeable folks to help out.

The other HBS in my area is 60 miles in a completely different direction that I rarely frequent. But it is a nicer store with more selection. I just rarely go to that town for other shopping.

This store has a very complete offering of wine making, brewing, kegging, bottling etc supplies. They also have a very extensive selection of craft beers, wine, and the most commercial meads I have ever seen. They also have an extensive cigar selection. They also sell exotic coffee beans and loose tea. And they also sell cheese and bread making supplies.........pretty much something for everybody.

Natethebrewer said:

Any thoughts on purchasing a homebrew supply shop as a business?

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My thoughts = Hell yes!

There are a lot of things to consider though... Do you have any formal business training/education. I know it sounds fun to buy something and run with it but a little education will go very far. Check with your city hall to see if they have SBA (Small Business Association) resources. I know mine has classes on how to realistically achieve business ownership. They have a lot of completely free and useful resources like helping your model be more attractive to banks if you're planning on financing a portion of the purchase/inventory. They're also not afraid to tell you that you're in over your head and layout a plan of how to get where you want to be without taking a crapshoot with a major move like that. That said I have a freind who has owned a skateboarding shop for over 10 years and his only education was reading business books.

I would think a small home brew shop wouldn't require a MBA, but I could be wrong.
I've taken a few business courses and think that part would be the toughest. selling brewing supplies sounds easy.

Natethebrewer said:

I would think a small home brew shop wouldn't require a MBA, but I could be wrong.
I've taken a few business courses and think that part would be the toughest. selling brewing supplies sounds easy.

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You hit the nail on the head. Far too many people are knowledgeable about the X side (in your case homebrew) of their business and not at all knowledgeable about the business side of their business.

How many homebrewers are there in your area?
Where is your competition located?
Are you going to sell online?
What are your fixed and overhead costs going to be?
Do you have the means to loose money for a year or more?

These are things to think about.

There are a lot of great ideas on this board, and in this thread even that other LHBS are doing. How do you incorporate them, and can you incorporate them yourself or will you need other knowledgeable people to incorporate them.

The LHBS that I have been in all seem to be a part of or at least co-located with another business. 3 of the closest (within 75 Miles) to me are all within a supermarket sized liquor store. I was in another that was in the back of a higher end gift/good cheese etc shop. So there are other ways to do it than just stand alone.

That's interesting I've never been to one located in or near a liquor store, seems self-defeating

Natethebrewer said:

That's interesting I've never been to one located in or near a liquor store, seems self-defeating

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The two where I went to college were both in liquor stores as well.

Unless prohibited by law, its like selling beer, but no hard liquor or wine. You might as well be in all aspects of beverage sales. Mine also have a fine cigar section as well.

And just because I homebrew doesn't mean I don't buy beer at the liquor store

Of course I still buy beer, I need new bottles!
Tell me more about this beer store/ homebrew supply/ cigar shop.. I need one of those in CT!

This isnt the one I normally shop at but here you go

http://12ozofheaven.blogspot.com/2010/07/friar-tuck-beverage.html

They sell Good Cheese, Cigars, and they advertise 1000+ kinds of beer. They probably have at least that much Wine, and 3X Liquor. Also Homebrew/Wine supplies. generally at Midwest Catalog price. Any wine kits they order in on their truck and so I pay no shipping charge. Last time I was in there was a 50# sack of Marris Otter sitting there priced at $58

CBXBob said:

Stoned Pale Ale?
Miller "High Life"
Potted Porter
Maui Wowhi Wheat
Some one stop me!:cross:

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Hempeweizen