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The brewery world has attracted thousands of craft brewers since craft brewing became quite a thing in the 2000s.
The reason behind this is simple. Making your own beer is a lucrative venture and the process is not as complicated with the right ingredients; water, hops, malt and yeast, and brewing equipment from your local brewery equipment store.
While it may sound like an easy way to make money, it is not. Some of the costs involved can be quite significant if you plan to do it as a business. But with the right strategy, starting your brewery business can be very rewarding.
This post highlights the costs involved, financing options, and everything else in between.
Create a Business Plan
Planning is a big deal when starting a business. It helps you create a roadmap for your business from the costs, size, and expected outcomes. Also, a business plan can help potential lenders understand your ability to repay a loan when you are looking for financing for your business.
Creating an effective business plan involves researching the trade to understand its basics. The best approach would be following entrepreneurs that have been in the industry for some time for guidance and mentorship.
If you do not have any, you can get help from industry players through their websites or follow these tips to get an idea of what you need when writing your winning business plan.
Cost of Starting a Brewery
Beer-making equipment takes the most significant chunk of your investment money. If you intend to start small, the cost of brewing equipment can be anything between $100,000 to $160,000. You may also need some administrative equipment such as computers and other stationeries.
The other considerable expenditure will be your production and restaurant premises which can vary depending on whether you need to build one from the ground, renovate an existing property or lease one. Leasing premises may be the best option if you are starting on a budget.
You will also need to factor in the costs of federal and state license requirements. While the costs of licensing may not be as much, its cost in matters of time can be quite a lot.
It takes up to four months to get a response from the federal government and sometimes longer for state government regulators, meaning you will want to start quite early to avoid inconveniences and delays that could cost you money. Other costs include labor and utility costs.
What to Expect
Depending on the circumstances, the cost of setting up your business can vary widely, so it is impossible to give one figure. But a small-scale brewery should cost anything between $250,000 to $500,000.
However, the cost can reach up to $2 million if you intend to start big.
Other factors that come into play in determining the cost of your startup include location, preferences, location, and concept.
Financing Your Brewery
Planning and budgeting are critical parts of ensuring startup success. However, even the best business plan will remain a plan without financing. You could have enough money under your name to start your business.
But that kind of money may be out of reach for most people. If you fall under this category, you may want to consider some other options, including:
Loans. Taking a loan is the most obvious option there is. There are several loan options, including personal loans, small business loans, and equipment loans.
Crowdfunding. This involves selling your idea to a large group of people who chip in with no strings attached or expecting to get something like free drinks in return when the business is up and running. An excellent example of crowdfunding is GoFundMe.
Investors. A good business plan or proposal can attract high-value individuals that invest their money for equity in your business.
