Advice on Establishing a LHBS

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EinGutesBier

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Recently, I've been toying around with the idea of starting a LHBS. The Bismarck-Mandan area has a fairly large population and there isn't even one brew club in the area, though plenty of people have signed on a signup sheet I put in the wine shop. It seems that people here are fairly receptive to the idea of brewing their own beer and learning more about it in general. Which leads me to my question...

Aside from the wine shop, which is definitely not a LHBS, there are zero stores of that type in this 77,000 population area. What I'm considering, if only lightly, is getting the area brew club started to get an idea of whether this idea would fly. Then, perhaps I'd start by doing an online store only, doing it out of my house. Depending on how that goes, I'd invest more into the possibility of getting an actual store front and so on.

Are there any vendors here who could offer me any pearls of wisdom in regard to this sort of venture? I can only imagine how many challenges are involved in this and I don't take it lightly. I have a good handle on some of the business/marketing side, though I'm not as sure of the legalities, etc. If all goes well, maybe I can help the North Dakotans here (re)discover the love of brewing at one point in the future. All of your input and advice is appreciated.
 

BeerSmith

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Hi,
I recommend you talk to Jay of Jays Brewing (google it). He started out of his home as you describe and he might be able to share some advice.

Say Hi for me if you talk to him - he and I are both old RPI grads.

Brad
 
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EinGutesBier

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BeerSmith, thanks for the tip. I made a contact to Jay - I'm curious and excited about what he'll say.
 
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EinGutesBier

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SuperiorBrew just opened a retail LHBS and his pictures look pretty damn cool.

Check it out.

I'm sure he'd be happy to give you some pointers...so long as you're not competing... :D
Yeah, I'll have to get in touch with SuperiorBrew...Hopefully we wouldn't be getting in each other's way seeing as how I'm in ND and he's in WI, heh. :D
 

zythos

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I'm not sure if you've looked into any wholesalers yet, but the few I am aware of will likely not sell to you unless you have a retail store front in a commercial location and also place a minimum order of at least $1000 or more. They will likely expect that you have a business license and retail certificate, as well as may ask you for a copy of your yellow pages listing or published ad. I did manage to find a couple that didn't require the retail location and had slightly less stringent requirements. I'm not a vendor but I have looked into getting things wholesale and starting a small business of my own.
 
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EinGutesBier

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I'm not sure if you've looked into any wholesalers yet, but the few I am aware of will likely not sell to you unless you have a retail store front in a commercial location and also place a minimum order of at least $1000 or more. They will likely expect that you have a business license and retail certificate, as well as may ask you for a copy of your yellow pages listing or published ad. I did manage to find a couple that didn't require the retail location and had slightly less stringent requirements. I'm not a vendor but I have looked into getting things wholesale and starting a small business of my own.
Very interesting. I didn't suspect that it would be too terribly easy. Would it be possible for you to PM me some leads on the less stringent wholesalers?
 

Bobby_M

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It's not that hard to get registered as a business in your state. You'll probably pay $100 for a tax ID and establish rights to a "DBA" or business name. They make sure it doesn't overlap or exactly copy another business in the state. They're mostly concerned that you'll be collecting and forwarding sales tax on what you sell.

The wholesale account will require that you purchase at least $2000 in stock up front and then there's a regular rebuy expectation but they are all a bit different. I started looking into selling goods to homebrewing class students. It was too much of a hassle at the time. I'd say it's totally doable if you are serious about it but it's not something to limp into.
 
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EinGutesBier

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Thanks for the input, Bobby. I think that I might want to build up a little more money before I do this since I want to do it right. Hopefully, I can get some more experience into how it works while I'm working part time at the other LHBS.

It kind of stinks, because the owner wants to get into the homebrew-beer market, but he's only doing it halfway since he doesn't know too awfully much about it besides kits. If I get this homebrew club established in the area, in good conscience, I'm going to have to suggest they try Midwest Supplies since this other guy doesn't have enough variety and quantity to sustain a club.
 

TexLaw

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It's a real chicken and egg deal with the store and the community or club. Many do not want to dive into opening a store or investing much in perishable ingredients when they are not sure there is a market. Likewise, many potential customers don't want to start brewing unless they can physically see the gear, and the ones that do often are reluctant to leave whatever trusted online HBS they have been using.

If you can get the club going well, though, that is the safer way to begin. I have not dealt with too many LHBSs, but the ones I have seen succeed had (or have) a club associated with them. The ones that did not eventually failed.


TL
 

JustDave

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I don't know much about anything, but here goes.

My LHBS doesn't have a fraction of the selection of the big guys, and the prices are higher. But what I like about it is that if I need certain ingredients during the week, I can drive to the store and get them.

If they were online only, I probably wouldn't shop there. If I have to wait for my stuff to be shipped anyway, I can wait a few days longer and get it from the big guys. Unless it were a friend of mine, I wouldn't have any loyalty to this online-only shop.

So I guess what I'm saying is, unless you have an actual storefront, what could you offer that the big online stores can't? I'm guessing you can't compete with them in prices, so what would entice someone to shop there? Or maybe you can beat their prices due to your lower overhead ...
 
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EinGutesBier

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I don't know much about anything, but here goes.

My LHBS doesn't have a fraction of the selection of the big guys, and the prices are higher. But what I like about it is that if I need certain ingredients during the week, I can drive to the store and get them.

If they were online only, I probably wouldn't shop there. If I have to wait for my stuff to be shipped anyway, I can wait a few days longer and get it from the big guys. Unless it were a friend of mine, I wouldn't have any loyalty to this online-only shop.

So I guess what I'm saying is, unless you have an actual storefront, what could you offer that the big online stores can't? I'm guessing you can't compete with them in prices, so what would entice someone to shop there? Or maybe you can beat their prices due to your lower overhead ...
I absolutely agree. The idea would be to cater mostly to this area, the south-central ND area that is. Not sure on the legality of it, but one bonus would be the ability to order online and pick up your order instead of doing shipping, or have cheaper shipping if it's shipped to you closer - that is, the advantage from buying and shipping from a local retailer.
 

zythos

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Just wanted to let EinGutesBier that I sent a PM. Check your inbox, I have sent as much information as I could.
 

Donasay

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Two words, market research. How many home brewers are there within the area, a population of 70,000 if one percent of the population brew that is only 700 brewers, if they each spend a couple hundred a year on ingredients and equipment, not everyone brews as crazily as us on here. Would that be enough to keep you operaiting, from what it sounds like, you would really have to have a good internet presence just to keep a float.
 

brew hoperator

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If you are close to a city or mid to large size university, there might be a small business development org. in the area. They will have a wealth of knowledge in getting started and also able to coach you on gaining small business loans.
 

BeerSmith

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Wow - Rensselaer, huh? I went there for a year - decided engineering wasn't for me, though.
Yes,
Lots of fun there - long winters, very tough school, but good hockey team and some great memories. I remember getting several tests where 60% was an A grade (thank god for sliding scales and partial credit).

VR
Brad
 
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