Considering opening a homebrew store

[reeberom]

I am wondering if there is anyone out there that has opened a LHBS. I am looking for any tips, suggestions, threads on this subject, etc. I figured I didn't want to ask any of the LHBS owners (that are around 45 miles East and West from me) considering I could potentially be their competition.

Questions I have:

Where to source grain, hops etc. and typical prices and markups.

Has anyone used a VA small business loan?

How much typically must be sold to actually make a profit?

I know I have many more but can't really think of any right now.

Please feel free to PM me if you don't want to talk openly.

All the help I can get would be awesome!!!

Brew on!

 

[hunter_le five]

So..... you haven't really done any research yet, have you?

Where to source grain, hops etc. and typical prices and markups.

You're going to need to set up and negotiate contracts with malting companies and a hop supplier, such as hop union. The price you pay will probably depend largely on what kind of volume you are intending to purchase. As far as your markup, you can easily look at what other HBSs are selling for to figure out roughly where you need to be to be competitive, but obviously you also need to take your own cost and projected sales volume into consideration as well.

Sorry, but this is too vague of a question to really give you any kind of simple answer.

How much typically must be sold to actually make a profit?

What's your rent? Typical utility cost for the storefront you will be occupying? How many employees do you plan on hiring? What kind of hours will they be working? What are you paying them? Are you offering them benefits? How much does your insurance cost? What kind of product mix do you plan on offering? ........

This is an utterly unanswerable question until you get the rest of your business plan at least *somewhat* figured out.

I don't think you will be able to ask any kind of meaningful/answerable questions until you put in a little more effort into research on your own. What your asking here essentially boils down to "write my business plan for me".

 

[markstache]

The October 24, 2013 episode of Basic Brewing Radio has an interview with a couple that started an HBS. They discuss how they put together their business plan:

http://www.basicbrewing.com/index.php?page=basic-brewing-radio-2013

 

[reeberom]

So..... you haven't really done any research yet, have you?



"write my business plan for me".

As for the research part, I have been looking into storefronts and found one for 900 a month. As for utilities and insurance, etc.thats why I decided to ask the question. I live in a major college town and know of a few homebrewers. But I will definitely take the info that you suggested and move forward.

I am definitely not looking for anyone to write a business plan for me, just trying to find a little information on what potential upfront and startup costs would be associated with a HBS.

 

[reeberom]

The October 24, 2013 episode of Basic Brewing Radio has an interview with a couple that started an HBS. They discuss how they put together their business plan:

http://www.basicbrewing.com/index.php?page=basic-brewing-radio-2013

Exactly the type of stuff I'm looking for!!! Thanks!

 

[Hello]

In addition to the above (hunter_la5's post), you need to identify an absolute need. Although the closest LHBS are within a 45 mile radius, does that mean that there is a need within your immediate area? Homebrewing has obviously gained much popularity over the years. But what you really need to do is figure out how you will compete with online vendors. Why LHBS absolutely can compete with online vendors and that is giving consideration to sales tax. So in addition to what you pay each vendor for your product, you need to consider what you have to pay to state and local taxing authorities.

Unfortunately, I seriously doubt you will be able to run this all on your own. So you will have to dial-in employees within your business plan; at least one.

As far as using a VA loan, I suppose that would be answered within the confines of their regulations for type of loan that you receive through them. I am very familiar with people who have received VA loans for businesses though. It does not seem like an outlandish prospect.

I can definitely see the possibility of having meaningful and answerable questions (to take words from the above member) once you have a business plan in place. Even if the business plan is not quite complete.

 

[reeberom]

In addition to the above (hunter_la5's post), you need to identify an absolute need. Although the closest LHBS are within a 45 mile radius, does that mean that there is a need within your immediate area? Homebrewing has obviously gained much popularity over the years. But what you really need to do is figure out how you will compete with online vendors. Why LHBS absolutely can compete with online vendors and that is giving consideration to sales tax. So in addition to what you pay each vendor for your product, you need to consider what you have to pay to state and local taxing authorities.

Unfortunately, I seriously doubt you will be able to run this all on your own. So you will have to dial-in employees within your business plan; at least one.

As far as using a VA loan, I suppose that would be answered within the confines of their regulations for type of loan that you receive through them. I am very familiar with people who have received VA loans for businesses though. It does not seem like an outlandish prospect.

I can definitely see the possibility of having meaningful and answerable questions (to take words from the above member) once you have a business plan in place. Even if the business plan is not quite complete.

Thanks alot!

 

[Teromous]

Where do you plan to open up shop?

 

[hunter_le five]

As for the research part, I have been looking into storefronts and found one for 900 a month. As for utilities and insurance, etc.thats why I decided to ask the question. I live in a major college town and know of a few homebrewers. But I will definitely take the info that you suggested and move forward.



I am definitely not looking for anyone to write a business plan for me, just trying to find a little information on what potential upfront and startup costs would be associated with a HBS.

Good to know. I promise I'm not trying to be a jerk, it just sounded like you might be getting a bit ahead of yourself by the nature of your questions.

Research research research. Visit nearby home brew shops, check out all the e-stores you can find. Visit wholesaler websites (LD Carlson, et al). Visit the websites for local relevant governing bodies to learn what you can about licensing, taxation, etc. Read a good business-plan writing book. Write up a rough vague plan, and then start working on fine tuning it piece by piece.

Then ask questions as you go.

After you've done some research and run into some dead ends or confusing bits, it's easier to get a grasp on what you don't know and what you need to find out.

A wise man once said, "you don't know what you don't know." Once you start to get a better grasp of "what you don't know", it's easier to come up with specific, relevant questions that will yield meaningful, useful answers.


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[Hoppity]

Oversimplification:

1. Calculate your monthly fixed costs
2. Generate a Marketing/Advertising budget/plan
3. Project your sales and profit margins to see if you have a viable business.
4. Estimate your start-up costs, then add 80 to 100%
5. Perform a projected cash-flow analysis to determine your "Deep Water" mark
6. Do it again presuming 50% of projected revenues
7. Pull the trigger

 

[beekeeperman]

The internet home brew suppliers will probably be your biggest competitors, not the brew shops 45 miles away.
My LHB stores can't come close to internet prices on most supplies.
As much as I'd like to support them more can't see it happening much.
Been getting free shipping on supplies totaling $59 or more at one of the larger
internet
HB suppliers
Not hard to spend $59 on home brew supplies every month or two.
Yup, the bottom line counts and thats how most people buy .
But good luck with it fellow veteran if that is what you choose to do.

 

[Hello]

The internet home brew suppliers will probably be your biggest competitors, not the brew shops 45 miles away.
My LHB stores can't come close to internet prices on most supplies.
As much as I'd like to support them more can't see it happening much.
Been getting free shipping on supplies totaling $59 or more at one of the larger
internet
HB suppliers
Not hard to spend $59 on home brew supplies every month or two.
Yup, the bottom line counts and thats how most people buy .
But good luck with it fellow veteran if that is what you choose to do.

How far off are they from online vendors? Mine is basically competing but there are items they cannot compete on (ICs, kettles, other chillers, etc). Grain, small supplies, chemicals, bottles etc, all are definitely competing enough. Some items are lower (PBW 4# is less in store than online) and some are spot on, others are a dollar higher. I'll give my business to them even if overall I come out even or spending another couple of bucks because without them I would not have face to face interaction, assistance (and there has been a lot), and it is a local business. I value those three things more than anything, others may not.

Add the fact that we're talking about a Vet opening a shop and it makes it doubly more important to see a local business thrive.

 

[poptarts]

I brew a lot, and I have never been inside a home brew store, like ever.

 

[Zbay]

Just spit balling here but one possible way to keep your overhead low while attempting to get this up in running is to set up a website and run it out of your garage for a while. This should start a little cash flow, and ease the transition to a brick and motor store. I think with competitive pricing, free shipping on orders over 50 or 60 bucks, and some marketing this could be a good start. I for one would help support a veteran owned business but in the end it comes down to the pricing of items. Like previously stated paying a few extra bucks is no big deal but tagging an extra 20% onto a 500 dollar kettle probably wont fly with many people.

 

[govner1]

As for the research part, I have been looking into storefronts and found one for 900 a month. As for utilities and insurance, etc.thats why I decided to ask the question. I live in a major college town and know of a few homebrewers. But I will definitely take the info that you suggested and move forward.



I am definitely not looking for anyone to write a business plan for me, just trying to find a little information on what potential upfront and startup costs would be associated with a HBS.

Not to be "that" guy but I've learned from 25+ years of owning a small retail business + a decade of bar ownership that you cannot plan too much!
Check w/ the SBA. They can give you guidance on not only how to plan but where to look for business basics such as the minimum net you'll need to average to be profitable.
Don't forget to pay yourself first! Also, budget for being able to operate for at least 24 months with no profit.
Don't forget all the potential licensing & regulatory costs,for example, business license(s), renovations, fixtures, signage, utility deposits, etc.
expect all these to cause delays!


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[hunter_le five]

I brew a lot, and I have never been inside a home brew store, like ever.

Meh, to each his own. I buy the vast majority of my supplies from a strictly brick-and-mortar shop nearby (~20 minute drive). I like the face-to-face interaction, talking to the employees, getting advice, etc. I also like to support local business when I can. I only buy from the online shops when I can't get something from the LHBS.

Not saying there's anything wrong with buying from AHS, NB, Midwest, etc; they're all great stores. Just saying some people out there prefer brick and mortar stores, and while the competition with e-stores has increased substantially, there is still at least *some* demand for the LHBS.

 

[Kungpaodog]

Depending on where you are on the business plan, you may want to consider taking a community college class. I've heard from several small business owners that said they took a business class and used it to write their business plan.

If you want general tips on what you don't know, you could try to call some out of state HBSs and ask them for what caught them of guard when they were opening; the worst they can say is no.

 

[j1n]

How far off are they from online vendors? Mine is basically competing but there are items they cannot compete on (ICs, kettles, other chillers, etc). Grain, small supplies, chemicals, bottles etc, all are definitely competing enough. Some items are lower (PBW 4# is less in store than online) and some are spot on, others are a dollar higher. I'll give my business to them even if overall I come out even or spending another couple of bucks because without them I would not have face to face interaction, assistance (and there has been a lot), and it is a local business. I value those three things more than anything, others may not.

Add the fact that we're talking about a Vet opening a shop and it makes it doubly more important to see a local business thrive.

Its not just the price, its also the convenience.

Example. I was going to go to the LHBS and get a few things. Well driving in Northern VA, you are gonna hit traffic somewhere. I got lazy and just ordered what i needed online. It was slightly cheaper and i got the stuff with free shipping and it came the next day since the warehouse its shipped from is 1 state away. So even if you didnt consider the money, it saved me time from driving an hour (round trip) to the LHBS.

 

[LandoLincoln]

I don't think you will be able to ask any kind of meaningful/answerable questions until you put in a little more effort into research on your own. What your asking here essentially boils down to "write my business plan for me".

Don't they have some kind of LHBS kit that you can buy? I think I saw them at my LHBS.

 

[LandoLincoln]

I brew a lot, and I have never been inside a home brew store, like ever.

That's because you live in the middle of nowhere.

 

[govner1]

The primary distributors will not supply you unless/until you have a brick & mortar space.
However, you should consider including the ability to take advantage of online orders. Your biggest challenge will be shipping costs. UPS in particular has gotten very expensive.

 

[poptarts]

That's because you live in the middle of nowhere.

 

[govner1]

If you want to get a "feel" for the retail business you might consider working part-time at one or both of the HBS that are in your area. It could be time well spent & give you some insights into the behind-the-scenes activities required to operate & LHBS plus you'll be exposed to what you can expect from customers. Good & bad!


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[Phunhog]

Just to add my two cents.....If you are going to open a brick and mortar LHBS you better be a very experienced brewer with a lot of "answers" for brewers both new and experienced. Nothing upsets me more than poor service. As an example.....a LHBS was out of a hop variety so I asked for a possible substitution. They just pointed at a chart. If you work/own a LHBS you had better know that type of stuff off the top of your head as well as know all about every single item you carry. Otherwise why wouldn't I just order online??

 

[brewcephus]

I buy a good bit of my HB supplies online, but there are still a few things that I go to my closest(2 hour round trip) LHBS for, ie bulk grains, specialty grains(I may as well pick those up while I'm getting the Base grains). Mostly because I don't like paying shipping on 100lbs of grain.

I had thought of opening a HBS in my area, but I'm nowhere near ready to start the business plan for that. It would be awesome however to make a 15 minute drive to the LHBS, rather than the 2 hour trip that I currently make. I usually hang out in the shop and talk to the shop owner for a good half hour about different things, but as it is I only make that trip about one every 2-3 months since I'm only driving over there for base grains and a few specialty grains while I'm there.

Good luck, OP. I hope you get it all up and running.

 

[dobe12]

I can't tell you how to open a business, but can tell you why I prefer to use one of my LHBS's. The main reason, I like to support local business (doesn't really help you), but also because both business owners are members of my home brew club. I'd suggest finding any home brew clubs in your area and joining them all.

I also prefer local because they both have fresh supplies. I don't have to wait or pay for shipping or worry about issues when shipping liquid yeast in either too hot or too cold weather.

I like being able to stop in for a $1-2/lb of grain and nothing else if need be.

But I also like the ability to get advice and questions answered. It's also a place I can bring a beer in and get feedback. Both shops encourage it. They also both have their own beers on tap and always offer up a pint or two.

One shop has brew days and will invite club members down to brew in their parking lot, collectively.

So, the social aspect, for knowledge, fresh ingredients, one stop shop for anything from a lb of grain to a $100 order, and helping support another brew club member and local privately owned business. These are my reasons that I rarely buy online.

 

[benco]

I hope you have some retail experience! You will be dealing with employees, customers, phone calls, vendors,book keeping, payroll, taxes, etc. also I hope your willing to work at least 70 hours a week.

 

[kh54s10]

Other financial things to consider: A loan is not going to cover all the costs. I would be surprised if you didn't have to come up with at least 20% on your own, most likely more. Or have collateral.

I haven't really looked into costs of a business, but, I would look to $50,000 minimum to open, if you start with a well stocked store. So do you have $12,500 to $25,000 available. To get good stock at a reasonable cost you will have to buy a lot of things in bulk.

Business licenses. Phone, credit card, Internet, and many others are going to require a start up fee/deposit.

Also as already stated you need to plan on a long period of no profit. An example of hidden costs is the ~3% of each sale made on a credit card. And you will have to accept credit cards.
I had a LHBS open near me and they were there for 4 months before I found out about them.

 

[dobe12]

I hope you have some retail experience! You will be dealing with employees, customers, phone calls, vendors,book keeping, payroll, taxes, etc. also I hope your willing to work at least 70 hours a week.

Not necessarily. He may not have employees. My LHBS owner runs it by himself. No employees, no payroll, and he does not work 70hrs a week. More like 48-50 in the winter and 40 in the summer (closed 2 days a week in the summer). ****, factor in travel time and I work more than that at my 9-5 desk job. And I guarantee my LHBS owner is much happier doing what he does. The guy brews like 3-4 times a week.

So many negative comments whenever anyone posts questions like this. If you don't have anything constructive or supportive to say, then why post at all? People just love knocking others down. How about trying to build up and support a fellow homebrewer!

Good luck to the OP! Take the constructive advice and do lots of research. Get in touch with as many homebrewers in your area as you can then go for it. Forget all the negativity. The negative comments come from those who would be too scared to try something like this themselves. Good luck!

 

[catdaddy66]

I know that I pick which of the 3 LHBS's to shop at for a couple of reasons. The first is customer service! A knowledgable and polite staff is a huge upside for me, especially after experiencing bad service. The second reason is proximity. It just so happens that the best service I've found is at the store closest to me.

Good luck and much success in the new adventure!


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[govner1]

He has one employee - himself. Not that that is bad but you still need to pay yourself and deal w/ the various taxes,insurance, etc. Not a negative comment, just reality based on experience.

 

[dobe12]

He has one employee - himself. Not that that is bad but you still need to pay yourself and deal w/ the various taxes,insurance, etc. Not a negative comment, just reality based on experience.

Well yeah... I think that goes without saying, but he won't have to deal with many of the issues listed before, like a payroll with multiple employees. It's much easier to pay yourself from a private business than worry about paying employees, taxes, etc.

 

[benco]

Not necessarily. He may not have employees. My LHBS owner runs it by himself. No employees, no payroll, and he does not work 70hrs a week. More like 48-50 in the winter and 40 in the summer (closed 2 days a week in the summer). ****, factor in travel time and I work more than that at my 9-5 desk job. And I guarantee my LHBS owner is much happier doing what he does. The guy brews like 3-4 times a week.



So many negative comments whenever anyone posts questions like this. If you don't have anything constructive or supportive to say, then why post at all? People just love knocking others down. How about trying to build up and support a fellow homebrewer!



Good luck to the OP! Take the constructive advice and do lots of research. Get in touch with as many homebrewers in your area as you can then go for it. Forget all the negativity. The negative comments come from those who would be too scared to try something like this themselves. Good luck!

Obviously you don't know anything about running or owning a business. I don't know anything about the op, so I was explaining things that I know from experience. To be successful you don't just half ass it. It's all or nothing to succeed and make money. You put your life into it.

 

[dobe12]

Obviously you don't know anything about running or owning a business. I don't know anything about the op, so I was explaining things that I know from experience. To be successful you don't just half ass it. It's all or nothing to succeed and make money. You put your life into it.

I just love the random comments. No elaboration, just spewing hate and insults. You didn't explain anything. All you said was

I hope you have some retail experience! You will be dealing with employees, customers, phone calls, vendors,book keeping, payroll, taxes, etc. also I hope your willing to work at least 70 hours a week.

Great explaining. Very constructive. He can now take all of this extremely useful info and start up his business. Great work!

 

[kh54s10]

I just love the random comments. No elaboration, just spewing hate and insults. You didn't explain anything. All you said was


Great explaining. Very constructive. He can now take all of this extremely useful info and start up his business. Great work!

Or people could not point out difficulties and the OP might start another of the large percentage of business that fail within a year......

I am sure the negative posts, as well as the positive ones, will give the OP things to look into when he gets started building a business plan.

 

[benco]

I just love the random comments. No elaboration, just spewing hate and insults. You didn't explain anything. All you said was





Great explaining. Very constructive. He can now take all of this extremely useful info and start up his business. Great work!

Hey, it's just some of the few thousand tips he can use to be successful.

 

[dobe12]

Hey, it's just some of the few thousand tips he can use to be successful.

So you're calling these tips for being successful?

dealing with employees, customers, phone calls, vendors,book keeping, payroll, taxes, etc. also I hope your willing to work at least 70 hours a week.

 

[dobe12]

Hey OP, you'll have to deal with vendors, phone calls, customers, etc... you may want to think about another business plan

 

[JimEb]

My LHBS is for sale. They are selling everything as a turn-key operation. That would be the ticket if one was so inclined.

I can only imagine it's not very profitable due to online competition and # of actual homebrewers. They are also a regular liquor store so I'm sure that helps pay for some overhead.

Found their prices on are on par with online stores. Some stuff was surprisingly cheaper. Still seems I like the ease of ordering online but they are handy for picking up consumables if in a bind - like santizer or bottle caps.

 

[bwible]

Old thread from about 9 years ago. Interesting to see how the landscape has changed.

I briefly owned a store in the Philadelphia area from 2000-2004. I did not do well almost from the beginning and just ran out of money and owed too much by the end. I had no employees and couldn’t even pay my bills most months let alone pay myself anything. Struggled for too long before I gave up. Pretty much only got by because my wife at the time had a good job.

The average sale is not a big number. You get a couple people buying their entry kit or package and those are your biggest sales. An average batch back then was $25 or $30, today it might be more as the price of everything is up. Your credit card processor will beat you up because your average sale is not a big number and your monthly volume is also small unless you own morebeer.

Its a niche hobby, not like owning a pizza place. Everybody eats pizza. Only a small fraction of a percent homebrew. There were many days I sat in my store and sold very little for the day. A bag of bottlecaps was sometimes a whole days sale. Like all retail you do your best business around Christmas but that wasn’t enough to get through.

In my area, today almost every store has closed, changed hands, or both. Long standing stores are now gone. We have one guy who closed his store but is still operating on an on call basis because hes getting free space to work out of at a local micro. And thats the only reason he’s still going. Online competition is fierce and its now the only way some of us can get our supplies.

Hombrew clubs organize batch purchases and pallet purchases among themselves and cut you out. Others come in your store, ask questions about everything, pull stuff put of boxes, then go buy online because its free shipping and the big guys buy in bigger volumes so they get better price breaks and can sometimes sell stuff for what you are buying it for.

From my experience, I would not advise anybody to open a homebrew shop unless you’ve got lots of money to throw away and don’t care how much you lose. The money just isn’t there. Again, unless you are morebeer or one of the real big guys.