Nanobrewery..Road to failure

[Mongrel]

http://www.newschoolbeer.com/2013/03/no-no-to-nanos.html

 

[morticus]

Blah blah blah! So many frikin experts on here, just because they read an article, or an out of date book that may not even apply to the region you're in. You can "what if" any business to death. It's all about risk. If it were easy everyone would be doing it! The only thing you can do is try to know your market the best you can, have a solid business plan, and hope for the best. But in reality you have no idea what will happen until you take that leap. So to the OP I would throw out all the advice from anyone who has never started anything, let alone a brewery in their life. Opinions are like ********, everyone has one; and most of them stink. Follow your dream.

 

[Big_Cat]

Blah blah blah! So many frikin experts on here, just because they read an article, or an out of date book that may not even apply to the region you're in. You can "what if" any business to death. It's all about risk. If it were easy everyone would be doing it! The only thing you can do is try to know your market the best you can, have a solid business plan, and hope for the best. But in reality you have no idea what will happen until you take that leap. So to the OP I would throw out all the advice from anyone who has never started anything, let alone a brewery in their life. Opinions are like ********, everyone has one; and most of them stink. Follow your dream.

Not to down play anyone but I'm pushing on...Ive owned several businesses since the age of 16 some successful and some not so.I'm not afraid of the risks and due to not being afraid is that I'm moving forward but i never thought so many wall would need me to climb it not every when i owned a pawn shop was it this crazy and everyone wanting a fee ...wow.

 

[HeavyKettleBrewing]

Not to down play anyone but I'm pushing on...Ive owned several businesses since the age of 16 some successful and some not so.I'm not afraid of the risks and due to not being afraid is that I'm moving forward but i never thought so many wall would need me to climb it not every when i owned a pawn shop was it this crazy and everyone wanting a fee ...wow.

I think there is some validity in many of the responses I've read. Anybody telling you to take a blind leap and wait to see where you land is not counting on you to pay their bills or help raise their family. I'm sure you have thought this through and good luck to you. After all, I would rather regret something I have done than to regret something I have not done.

 

[liquiditynerd]

Hey big cat. I'll admit I couldn't read through all the posts here with the tangents and all. As an entrepreneur I would like to commend you as this is most of our brewing dream. I would also like to make a couple reasonable recommendations. Someone mentioned CofCommerce, not bad also check with your Secretary of State for a "new biz packet", there should also be a small biz admin close to you for free consulting ( not great consulting but good) , for reading check out Michael Gerbers, " the E myth revisited" it really helped me grasp my vision and role as CEO, employee, and technician.

Like some have said, there is risk. It is risk v reward that drives entrepreneurs. otherwise we would would for someone else. also, there is a free course coming up on Coursera, Smart Growth for business 2. I took the first one but already learned that in the SofHK's. I'll admit, I just about lost a decade worth of savings in the 08 crash. Would I do it again, he'll I already started.

good luck Rollin this around your head. PM me if you want some PDF's, case studies, how to's etc... I have amassed a little arsenal. Edit.... The patriot act states I must call this a library.

 

[55chevydude]

I read a great, no nosense book that I think you will like: "A Brewer's Guide to Opening a Nano Brewery: Your $10,000 Brewery Consultant for $15, Vol. 1" by Dan Woodske. He's direct but leaves much room for dreaming. Again, his recommendation, tap room will produce most of your profits to start. You can do growler sales as well but you need to sell in the tap room. Overhead is nearly non-existent (couple hundred pint glasses) and there's no commute!

 

[tdhickey]

Like any home business, with the right money, product and overall sheer will, determination and some luck of course you can make it happen. But it sure as heck ain't easy. Just like opening a restaurant, so many fail.

 

[Phunhog]

I read a great, no nosense book that I think you will like: "A Brewer's Guide to Opening a Nano Brewery: Your $10,000 Brewery Consultant for $15, Vol. 1" by Dan Woodske. He's direct but leaves much room for dreaming. Again, his recommendation, tap room will produce most of your profits to start. You can do growler sales as well but you need to sell in the tap room. Overhead is nearly non-existent (couple hundred pint glasses) and there's no commute!

That's about the only way a nano can stay a nano and still be really profitable

 

[ghosthef]

I read a great, no nosense book that I think you will like: "A Brewer's Guide to Opening a Nano Brewery: Your $10,000 Brewery Consultant for $15, Vol. 1" by Dan Woodske. He's direct but leaves much room for dreaming. Again, his recommendation, tap room will produce most of your profits to start. You can do growler sales as well but you need to sell in the tap room. Overhead is nearly non-existent (couple hundred pint glasses) and there's no commute!

I agree with the tap room. Part of my analysis has been going to breweries and talking to owners and brewers...one thing I've consistently seen is their tap rooms full and all buying pints. Correct that the overhead is low.

As far as a system size...you can start with a smaller system...but you will face the eventuality of having o upgrade your system. I'd rather finance more up front and have the capacity for later on down the road. Originally I was thinking a 5 bbl system...but now I'm leaning more towards a 7 or 10.

 

[tdhickey]

Another thing with Nano's is a lot of people (in any small business) think they are making money, but don't factor in a lot of other things (like gas, electricity costs, water, wear and tear on your vehicle, and regular maintenance). One big expense can sink a small business, many hidden expenses. I knew a lady who would spend $250 to complete a $150 job and thought she was making money when she got paid. I get the feeling Nanobrewing is similar. If you drive to and from your Nano brew at $100 a week in gas...that is a $400 a month expense on a personal vehicle. If you eat out, same thing.

Nanobrewing is a great experiment to figure out how to run a real brewery, or to have one heck of a hobby on the side. It is more of a social thing if you have a taproom than a money maker. The low overhead thing is in comparison to a full restaurant, you still need a bar, seating, tables, napkins, coasters, mops, etc....this all adds up and all needs replacing!

Don't expect to really make money doing it, but I bet it sure can be a heck of a lot of fun and a great way to decide if it is for you. Be realistic about the goals of the nano and you will have a better chance of succeeding.

 

[ghosthef]

Part of any business startup should be a sound business plan with proforma financials. These should be inclusive of estimates of all costs associated with running that business. Your business plan should be a living document and be ready to change it as time passes.

 

[Piratwolf]

Don't expect to really make money doing it, but I bet it sure can be a heck of a lot of fun and a great way to decide if it is for you. Be realistic about the goals of the nano and you will have a better chance of succeeding.

I've read this whole thread but it's been a month or two. Do you run a nano? Or is this analysis built on theory?

 

[theveganbrewer]

To the OP, have you considered contract brewing? That sort of gets you to the point where you have a product to sell and need to find a distributor.

 

[tdhickey]

I've read this whole thread but it's been a month or two. Do you run a nano? Or is this analysis built on theory?

Nope, but talked to a lot of people who run breweries and/or work in them at tasting events, read some good stories about places that make award winning beer that shut down because it's not really a money maker. Even people who operate successful brew pubs tend to say the same thing.

 

[Big_Cat]

Ok sorry I haven't answered much lately but I have been knee deep in red tape.... I will say this that if you can't take rejection well then starting a nano brewery isn't for you. I still haven't gotten the TTB to approve me and the building permits are awaiting the TTB. also during this time i have been paying for a warehouse that I haven't made a penny on yet. But I won't give up..

 

[Big_Cat]

Ok sorry I haven't answered much lately but I have been knee deep in red tape.... I will say this that if you can't take rejection well then starting a nano brewery isn't for you. I still haven't gotten the TTB to approve me and the building permits are awaiting the TTB. also during this time i have been paying for a warehouse that I haven't made a penny on yet. But I won't give up..

 

[ghosthef]

Ok sorry I haven't answered much lately but I have been knee deep in red tape.... I will say this that if you can't take rejection well then starting a nano brewery isn't for you. I still haven't gotten the TTB to approve me and the building permits are awaiting the TTB. also during this time i have been paying for a warehouse that I haven't made a penny on yet. But I won't give up..

I've heard that from multiple places. The recommendation I received was to have at least 1.5 years worth of operation cash prior to signing anything. If you can get open in 6 to 7 months then happy days...but at least you're prepared.

 

[Big_Cat]

I've heard that from multiple places. The recommendation I received was to have at least 1.5 years worth of operation cash prior to signing anything. If you can get open in 6 to 7 months then happy days...but at least you're prepared.

The catch 22 is that if you don't have a place for business already (not thinking of a place but already signed contract ) the TTB won't even look at you.. You must have a place leased or owned and in the companies name for a minimum of 45 days

 

[ghosthef]

The catch 22 is that if you don't have a place for business already (not thinking of a place but already signed contract ) the TTB won't even look at you.. You must have a place leased or owned and in the companies name for a minimum of 45 days

Yup...and financing already set up. Pretty brutal. We have the LLC and trademark work already in the works. By the time those clear we will be ready to secure financing...then comes the TTB, then the state, then the health and building departments...just keeps going on and on. Not to mention the 4 month build time on the equipment.

 

[Big_Cat]

Yup...and financing already set up. Pretty brutal. We have the LLC and trademark work already in the works. By the time those clear we will be ready to secure financing...then comes the TTB, then the state, then the health and building departments...just keeps going on and on. Not to mention the 4 month build time on the equipment.

Our LLC EIC are complete also we've had to rent a smaller space due to the high rent in south florida so hopefully soon we can get the TTB to at least give an opinion so that the drainage and electrical can begin ... As a brew bud told me when he saw me upset " Get used to paying for signatures " I will confesse I've learned to be very patient and drink slower

 

[ghosthef]

Our LLC EIC are complete also we've had to rent a smaller space due to the high rent in south florida so hopefully soon we can get the TTB to at least give an opinion so that the drainage and electrical can begin ... As a brew bud told me when he saw me upset " Get used to paying for signatures " I will confesse I've learned to be very patient and drink slower

Just remember you are living the dream!

 

[Big_Cat]

Just remember you are living the dream!

Lol Yeap...I tell myself that all the time..

 

[daksin]

Drinking slower is crucial- you guys have a website or a facebook page or something? Kindred spirit over here, although I have to admit that I got lucky as far as location goes. The regulatory pressure is almost non-existent compared to other nanos I've seen get going. Going to submit TTB and ABC paperwork this week. Cheers mate!

 

[Big_Cat]

Drinking slower is crucial- you guys have a website or a facebook page or something? Kindred spirit over here, although I have to admit that I got lucky as far as location goes. The regulatory pressure is almost non-existent compared to other nanos I've seen get going. Going to submit TTB and ABC paperwork this week. Cheers mate!

My company is "Legacy Caribbean Craft Brewery" the web page is in the works since its a task to find reliable people that will do the page without disappointments. You can also find me on facebook at LegacyCaribbeanCraftBeer or Twitter Legacybeer

 

[55chevydude]

Nope, but talked to a lot of people who run breweries and/or work in them at tasting events, read some good stories about places that make award winning beer that shut down because it's not really a money maker. Even people who operate successful brew pubs tend to say the same thing.

That may be true, but there are a lot of people who make poor business choices that sink their businesses. I have known extremely profitable coffee houses and eating establishments to go under due to poor management, not because they didn't turn a profit. If you brew 25 gallons of beer and sell it for $3.50 - $5.00 per pint, after ALL expenses (including "hidden" ones) you should be making a profit. It may not be huge, but enough to keep going. Beer doesn't cost THAT much to make.

 

[tdhickey]

That may be true, but there are a lot of people who make poor business choices that sink their businesses. I have known extremely profitable coffee houses and eating establishments to go under due to poor management, not because they didn't turn a profit. If you brew 25 gallons of beer and sell it for $3.50 - $5.00 per pint, after ALL expenses (including "hidden" ones) you should be making a profit. It may not be huge, but enough to keep going. Beer doesn't cost THAT much to make.

Making the beer is the cheapest part of the endeavor, it's all the other crap that cost them $. Even the equipment has a decent resale value if well kept, so the risk is lower there. A nano is a perfect test run that may pay for your hobby if you are lucky, nothing more. It's a damn cool idea, would love to try it some day (maybe retirement plan), but would never expect to really make any money off of it. Even if you off the top profit is $1000 a month, once you throw tax, maintenance and other stuff in there you are not really making any cash. It's like Vegas though, you are happy to have fun and just break even! Not a bad thing, but set realistic goals like Cape Brewing.

 

[daksin]

Making the beer is the cheapest part of the endeavor, it's all the other crap that cost them $. Even the equipment has a decent resale value if well kept, so the risk is lower there. A nano is a perfect test run that may pay for your hobby if you are lucky, nothing more. It's a damn cool idea, would love to try it some day (maybe retirement plan), but would never expect to really make any money off of it. Even if you off the top profit is $1000 a month, once you throw tax, maintenance and other stuff in there you are not really making any cash. It's like Vegas though, you are happy to have fun and just break even! Not a bad thing, but set realistic goals like Cape Brewing.

Truth. Simply because of the low production volume, a nano just can't provide enough income to pay someone's salary. They're really good at paying for themselves, but not much more than that. It's a proof-of-concept hobby business.

 

[JKaranka]

To the OP, have you considered contract brewing? That sort of gets you to the point where you have a product to sell and need to find a distributor.

I'd consider this too. In the UK it's relatively simple to set up the company itself, and paying a production run from another brewery is relatively common and regulated. I know of one brewery that makes quite a business by brewing for several different companies, or when another brewery is closed for whatever reason.

 

[Phunhog]

To the OP, have you considered contract brewing? That sort of gets you to the point where you have a product to sell and need to find a distributor.

There was a guy in my town doing that. He closed down after less than a year AND he actually had decent beer. I just think he wasn't making any money between paying to have the beer brewed and having to sell it wholesale to bars. Not much profit margin.....

 

[daksin]

Depends on the location. There was a place here in town making good beer but it was all contracted. San Diego is a pretty beer snobby town and I think once folks figured out it wasn't being made here, and the only SD location was just an office, sales tanked. Otherwise, it's a pretty safe and inexpensive way to make beer. Thinner margins, but capital expenses are almost nil.