Do you have a passion for craft beers, a desire to bring your impeccable taste to the masses and a burning entrepreneurial spirit? Look no further! The craft beer industry is growing at an astonishing rate, and it's showing no signs of slowing down.
The Beer Industry: A Flourishing Landscape
The craft beer market has been growing tremendously in recent years. In fact, according to the Brewers Association, there were 7,480 craft breweries operating in the United States alone in 2019. This is up from 6,266 breweries in 2017, which represents a whopping 20% increase. And this trend shows no signs of slowing down! So if you're thinking about opening up a brewery, now is the perfect time to do so.
How to Start Your Own Brewery: A 10-Step Checklist
Starting a brewery requires more than just a passion for beer. There are a number of things you must do in order to set yourself up for success. From researching the market and understanding your competitors to obtaining legal permits and creating a solid business plan, there's a lot to consider. This 10-step checklist will help you navigate the process of starting your own brewery:
- Research the market & understand competitors
- Develop a business plan
- Create a financial model & secure funding
- Employ staff & purchase equipment
- Acquire legal & necessary permits/licences
- Arrange leases & negotiate contracts
- Develop marketing & brand strategy
- Finalize branding & start the Breweries
- Install tracking & communication systems
- Monitor constantly & adjust for success
Each of these steps is critical to building a successful brewery. In this blog post, we will dive deeper into each step to help ensure that your brewery startup has the best chance of success.
So, if you're passionate about beer, enjoy experimenting with new flavors, and are ready to take on the challenge of starting your own brewery, sit back, pour yourself a frothy IPA, and get ready to learn how you can turn your passion into a thriving business.
1. Research The Market & Understand Competitors
Before jumping into the brewery business, it is essential to research the market thoroughly and understand the competitors.
First, define your target market, identify your potential customers, and determine their preferences, such as taste, price, and brand culture.
Conduct market research by analyzing industry reports and gathering data about your target customers and their buying behavior. Based on your findings, decide on the type of beer you want to produce and the pricing strategy.
Next, study your competitors. Look for breweries that operate within your geographical area, produce similar beer, and target the same customer groups. Analyze their products and pricing, marketing strategies, and brand culture. Identify their strengths and weaknesses and use them to your advantage.
- Tip #1: Attend beer festivals and events to learn about emerging beer trends and connect with potential customers.
- Tip #2: Network with brewery owners and industry experts to gain insights into the business and potential growth opportunities.
- Tip #3: Leverage social media platforms to engage with your target audience, showcase your brand culture, and promote your products.
By conducting comprehensive market research and understanding your competitors, you can develop a unique selling proposition and differentiate your brewery from the competition. This will ensure that you stand out in the market and attract loyal customers.
Brewery Financial Model
2. Develop A Business Plan
Before you can begin the journey of opening a brewery, it is essential to have a solid business plan in place. A business plan acts as a roadmap for your brewery and lays out the groundwork necessary for your success. Below are the key chapters to include in your brewery business plan.
- Executive Summary: This section provides an overview of your brewery and its mission. It should be brief but impactful, highlighting your goals and how you plan to achieve them.
- Market Analysis: Here, research your target market, competitors, and industry trends. Identify gaps in the market, customer needs, and opportunities for growth.
- Marketing and Sales: Outline your marketing and sales strategy, including how you plan to promote your brewery and reach your target audience. Detail your pricing model and projected sales volume.
- Operations Plan: This chapter should cover everything from the legal requirements for running a brewery to your supply chain and production process. Include details on staffing, equipment, and logistics.
- Financial Projections: Project your startup costs, revenue, and profits for the first few years. It is important to be realistic and conservative in your estimates to ensure you have adequate funding.
Tips & Tricks for Building a Winning Business Plan
- Be detailed but concise. Your business plan should be thorough but not overwhelming.
- Get feedback and revise. Share your plan with trusted colleagues, friends, or family members and listen to their constructive criticism.
- Do your research! Making informed decisions is crucial to the success of your business.
A well-crafted business plan can make the difference between success and failure in the competitive world of craft beer. Take the time to create a thoughtful plan, and you will be on your way to opening a successful brewery.
3. Create A Financial Model & Secure Funding
One of the most crucial steps in opening a brewery business is creating a financial model and securing funding. You need to have a clear plan and budget for all your expenses as well as contingency plans for emergencies.
Create a Comprehensive Financial Model
Start by creating a financial model that details all your projected expenses and revenues. Your financial model should include the following:
- Startup expenses, such as permits and licenses
- Fixed costs, such as rent, utilities, salaries, and insurance
- Variable costs, such as raw materials and transportation
- Projected sales and revenue
- Break-even analysis
You should also create a cash flow statement and income statement to help you keep track of your finances.
Once you have created your financial model, the next step is to secure funding. There are several ways to get funding for your brewery business:
- Business loans: You can apply for a business loan from a bank or other financial institution. However, you need to have a good credit score and a solid business plan to get approved.
- Investors: You can also look for investors who are willing to invest in your business in exchange for equity or a share of profits.
- Crowdfunding: Crowdfunding platforms such as Kickstarter and Indiegogo can help you raise funding from a large number of people.
It's important to remember that securing funding can take time and requires a lot of effort, so be prepared to put in the work.
Tips & Tricks
- Consider starting small and expanding gradually as you grow your customer base.
- Find a mentor who can guide you through the process of starting and running a brewery business.
- Be prepared to make sacrifices and work hard to make your business successful.
4. Employ Staff & Purchase Equipment
As you move forward with your brewery business plan, it's important to lay out a strategy for staffing and equipment purchases. Your equipment needs will differ depending on the type of beer you plan to produce, so it's essential to have a clear understanding of that before making any purchases. Additionally, having the right staff in place will help to ensure that your brewery runs smoothly from day one.
When staffing your brewery, it's important to consider a number of different factors. Here are a few tips to keep in mind:
- Define roles and responsibilities: Clearly defining the roles and responsibilities of each staff member will help to ensure that everyone is on the same page and knows what's expected of them.
- Look for experience: While everyone has to start somewhere, having staff members with experience in the brewing industry can be highly beneficial. This experience can help to ensure that your brewery is producing high-quality beer from day one.
- Consider part-time staff: Depending on the size of your operation, it may make sense to start with part-time staff members rather than hiring full-time employees right off the bat.
4.2 Equipment Purchases
When it comes to purchasing equipment for your brewery, there are a number of different factors that you'll need to take into account. Here are a few tips to help guide your purchasing decisions:
- Do your research: Before making any purchases, be sure to do your research and read reviews from other brewery owners to ensure that you're selecting the right equipment for your needs.
- Consider both new and used equipment: Depending on your budget, it may make sense to purchase some equipment used rather than brand new.
- Think long-term: While it may be tempting to purchase the cheapest equipment available, it's important to consider the long-term costs associated with that equipment. Investing in higher-quality equipment upfront can save you money down the road.
- Plan for growth: As you grow your brewery business, your equipment needs will likely change. Be sure to plan for this growth and purchase equipment that can scale with your operation.
Additional Tips & Tricks:
- Consider leasing equipment: If you don't have the capital to purchase all of the equipment you need upfront, consider leasing equipment instead.
- Don't skimp on safety: When it comes to brewing, safety should always be your top priority. Be sure to invest in equipment that meets all safety standards and provides a safe working environment for your staff.
- Ask for help: If you're not sure where to start when it comes to staffing or equipment purchases, don't be afraid to ask for help. There are a number of resources available, including industry associations and business consultants, who can provide guidance and support.
5. Acquire Legal & Necessary Permits/Licences
One crucial step in starting a brewery business is acquiring the necessary permits and licenses required by local and state governments. Failure to comply with legal requirements can result in serious consequences that can negatively impact your business.
As a pro business consultant, I always advise my clients to take all necessary steps to ensure compliance with legal requirements in order to avoid costly mistakes in the future. Here are some of the permits and licenses you need to acquire before launching your brewery business:
- Brewery Permit: This permit is required by the Alcohol and Tobacco Tax and Trade Bureau (TTB) for those planning to brew beer for commercial purposes.
- Brewers Notice: You will need to fill out a Brewer's Notice with the TTB once you have obtained a brewery permit.
- State Licensing: Check with your state authorities for licensing requirements for breweries as they vary across states and jurisdictions.
- Zoning Permit: Breweries are often subject to zoning regulations enforced by local authorities determining the type of location and property requirements for a brewery business.
- Health Permits: Health permits are important if you plan to serve food and beverages on your brewery premises
- Sales Tax Permit: Apply for a Sales Tax Permit with your state tax agency to collect sales tax from your customers.
Tips & Tricks:
- Ensure to research local and state requirements carefully to avoid missing out on any specific required permits and licenses.
- Consult with experienced legal counsel to aid in the permit acquisition process and ensure compliance with all legal regulations.
- Keep track of expiration dates and renewal requirements for all the permits and licenses to avoid any penalties or legal problems.
By acquiring the necessary permits and licenses, you can ensure a legal and smooth operation of your brewery business and avoid possible legal troubles in the future. Keep in mind that regulations may change over time, stay updated on changes and maintain compliance with all regulatory requirements.
6. Arrange Leases & Negotiate Contracts
Once you have selected your brewery location, you need to arrange the lease and negotiate the contracts. This is a crucial step as it will determine the terms and conditions of your lease and impact your brewery's financial viability. Make sure you read and understand every detail of your lease agreement and negotiate with your landlord to get favorable terms.
- Understand the lease agreement: Review your lease agreement carefully. Make sure you understand and agree to the terms and conditions. If you have any concerns or questions, consult with a lawyer.
- Duration and Renewal: Determine the lease duration and renewal options. You can negotiate a shorter-term lease with an option to renew if everything goes well. It gives you more flexibility and reduces your risk in case things don't work out as planned.
- Rent: Negotiate your rent. Make sure you know what the market rent is for comparable properties in the area and what additional fees you may be required to pay. Get everything in writing and make sure your lease includes a clause that caps rent increases to avoid any unexpected surcharges.
- Security Deposit: Your landlord will ask you for a security deposit, usually equivalent to several months' rent. Negotiate to keep it as low as possible.
- Utilities: Find out what utilities you are responsible for and what your landlord will cover. You may be able to negotiate a shared responsibility arrangement.
- Personal Guarantees: Most landlords will require personal guarantees, which means you are personally responsible for the lease if your business fails. Negotiate to limit your personal exposure and protect your assets.
- Special Clauses: Negotiate any special clauses you may need, such as exclusive use provisions, modification rights, a renewal clause, or a conditional break clause.
Tips & Tricks:
- Make sure you understand all the terms and conditions of your lease.
- Get legal assistance when reviewing and negotiating your lease agreement.
- Don't be afraid to negotiate, but be professional and respectful.
By taking the time to review and negotiate your lease agreement, you can save considerable money and stress in the long run. Make sure you fully understand the terms and conditions and negotiate with your landlord to get a favorable agreement. It is an essential step in opening a brewery, and with the right approach, it sets you up for success.
7. Develop Marketing & Brand Strategy
A well-executed Marketing & Brand Strategy can be crucial for the success of your brewery business. It helps to generate awareness about your brand, attract customers, and build a loyal clientele base. The following are the steps to develop a Marketing & Brand Strategy for your brewery business:
- Identify your Target Audience: Determine who your ideal customers are, their preferences, demographics, and what motivates them to buy.
- Create a Unique Brand Identity: Develop a unique and memorable brand identity that reflects your brewery's personality, vision, and values. This includes designing a logo, creating a tagline, and choosing a color theme.
- Establish Your Online Presence: Build a user-friendly and easy-to-navigate website. Make sure it has updated information about your brewery, products, events, and contact details.
- Social Media Strategy: Select social media platforms that suit your business and target audience. Share appealing, high-quality content, including images, videos, promotions, and events. Interact and respond to online inquiries and feedback from customers.
- Utilize Email Marketing: Implement Email Marketing campaigns that include newsletters, promotions, and special events.
- Collaborate with Influencers: Partner with tastemakers in the industry—web publications, bloggers, and social media influencers—to promote your brewery business to their audience.
- Execute Onsite Marketing Initiatives: Host events, tours, and tastings at your brewery to encourage customers to visit your establishment. This way, they can learn more about your business and its products.
Tips & Tricks:
- Focus on creating original, high-quality content that stands out from competitors.
- Use minimalistic design, such as limited color selection and clear typography, to avoid overwhelming your customers.
- Do not hesitate to revisit and adjust your marketing & brand strategy periodically based on your business needs and evolving industry trends.
In conclusion, creating an effective Marketing & Brand Strategy is essential to succeed in the competitive brewery industry. A comprehensive strategy should integrate digital marketing, onsite marketing, and influencer marketing efforts while prioritizing the target audience's preferences and communication channels.
8. Finalize Branding & Start The Breweries
As you reach step 8, the finish line for launching your brewery business is in sight. Finalizing your branding and starting your breweries requires some essential decisions to be made. Be sure to take your time and carefully consider the following steps.
- Step 1: Choose a Unique and Memorable Name
- Your brewery name should be unique and memorable. Choose a name that reflects your brand identity and resonates with your target audience.
- Step 2: Design a Captivating Logo
- Your brewery logo should be eye-catching and memorable. Make sure it reflects your brand message and identity.
- Step 3: Develop Your Brand Identity
- Define the essence of your brand identity; it's crucial to distinguish your brewery business from competitors. Determine the colors, fonts, and tone that convey your brand identity.
Once you have designed your logo and developed your brand identity, it's time to build your brewery. We recommend the following three steps:
- Step 4: Secure Permits and Licenses
- Depending on your country and state, you will likely need to obtain a brewery license to operate legally. You may also need general business and environmental permits.
- Step 5: Choose Your Brewhouse
- Your brewhouse equipment is essential to the quality of your beer. Choose a reputable manufacturer, and purchase your equipment. Make sure you have all the necessary vessels to complete the brewing process from start to finish.
- Step 6: Hire Personnel and Set Up Your Brewery
- Hire personnel to help you set up your brewery and provide essential services, such as marketing and accounting. Set up the brewing equipment, install utilities, and develop your work processes.
Tips & Tricks
- Start with a clear vision of what you want your brewery business to achieve.
- Develop a comprehensive business plan that includes a budget, marketing strategy, and sales projections.
- Get feedback from potential customers about brewing equipment, tastes, and styles.
In conclusion, the above steps are essential in ensuring you launch a successful brewery business. Take your time and make sure you have everything in order before the grand opening.
9. Install Tracking & Communication Systems
Installing tracking and communication systems is crucial for any modern brewery business. These systems will enable you to monitor your brewery's production levels, track inventory, and improve communication between different departments. Here are some steps you should follow:
- Step 1: Determine your tracking and communication needs
- Step 2: Decide on the communication and tracking systems to install
- Step 3: Purchase and install the systems
- Step 4: Train your employees on how to use the systems
Step 1: Determine your tracking and communication needs
You need to assess the specific needs of your brewery to determine what tracking and communication systems to install. For example, you may need to track your inventory of raw materials, monitor your production levels, or communicate between different departments. Knowing your needs will enable you to choose the right systems.
Step 2: Decide on the communication and tracking systems to install
Once you know your needs, you can choose the right tracking and communication systems. Some popular options include barcode scanners, RFID systems, and tracking software. These systems can help you automate your tracking and communication processes, making your brewery more efficient.
Step 3: Purchase and Install the Systems
You should purchase and install the chosen systems. Make sure you get high-quality equipment that is durable and reliable. You may need to hire a professional to install the systems for you, especially if you are installing complex tracking software or communication systems.
Step 4: Train Your Employees on How to Use the Systems
Your employees should be trained on how to use the systems you have installed. Provide them with proper training, and make sure they understand how the system works and why it is essential. When your employees are comfortable using the systems, they will be more efficient in their work.
Tips & Tricks:
- Choose tracking and communication systems that are easy to use and intuitive. This will allow your employees to adopt the new systems quickly.
- Make sure you have a backup system in case of system failure or downtime. This will help you avoid production delays and keep your brewery running smoothly.
- Regularly update your systems to keep them up to date with the latest technology. This will help you stay ahead of the competition and improve your efficiency.
Installing tracking and communication systems is essential for any modern brewery business. By following these steps, you can ensure that you have the right systems in place to monitor your production, track inventory, and improve communication between different departments.
10. Monitor Constantly & Adjust For Success
Once your brewery is up and running, it's important to constantly monitor and adjust your operations to ensure success. This means keeping an eye on both your business and the market to identify any areas where improvements need to be made.
- Maintain Regular Financial Records - Keep track of all your financial records to ensure you're staying within budget, and to identify opportunities for growth. Stay on top of your books and make adjustments as necessary.
- Identify Market Trends - Monitor industry trends and consumer preferences to stay ahead of the game. If, for example, there's a sudden shift in taste trends from hoppy IPAs to lighter pale ales, you'll want to adjust your brews to accommodate market changes.
- Keep Up with Competitors - Check out what your competitors are doing, pay attention to their successes and failures, and learn from them. This can help you stay ahead of the competition and continue to grow your customer base.
- Utilize analytics tools to track your website and social media performance, as well as any online reviews or feedback your business receives. This will help you stay on top of customer sentiment and adjust your operations accordingly.
- Attend industry events and conferences to network with other brewery owners and gain insights into new industry trends and best practices.
- Encourage customer feedback and use it constructively to make improvements. This will keep you connected to your customer base and help you improve operations.
By consistently monitoring your operations and the market, you'll be able to make the necessary adjustments to ensure success for your brewery business.
Opening your own brewery can be a rewarding and profitable experience, but it requires careful planning, hard work, and dedication. This 10-step checklist serves as a guide to help you navigate through the process of starting your own brewery.
Remember, the craft beer market is booming. In 2019, there were 7,480 craft breweries operating in the United States alone - up from 6,266 breweries in 2017. This represents a 20% increase!
The success of your brewery will depend on the amount of time and effort you invest in each of the steps outlined in this blog post. From researching the market and developing a business plan, to securing funding and obtaining necessary permits and licenses, each step is critical to building a thriving brewery.
So, if you're ready to bring your passion for craft beer to the market and start your own brewery, follow this checklist closely, seek out experienced professionals for guidance, and always be willing to adapt and evolve to ensure the success and longevity of your business.
- 5-Year Financial Projection
- 40+ Charts & Metrics
- DCF & Multiple Valuation
- Free Email Support