One afternoon, you’re sipping an ice-cold craft beer, and it hits you — the only thing better than drinking good beer is making good beer (and then drinking it, of course). Perhaps you’ve experimented with some home-brewing equipment and have perfected an original recipe or two, but what you really want is to turn your hobby into a lucrative business. Starting a successful microbrewery takes passion and talent, but it also requires a great deal of business savvy. If you’re serious about starting a craft beer company, here is what you’ll need to know.
Understanding the Science
Image via Flickr by Matt From London
Aspiring microbrewers often leap into the business without understanding the science that goes into making beer. Fermentation is a complex chemical process involving the microorganism that we know as yeast. Understanding how each ingredient affects the process and taste of the final product is essential. That means that you should have at least some home-brewing experience under your belt.
Raising Capital
Ideally, you’ve served a few of your prize formulas to friends with deep pockets because starting a brewery is not cheap. Figure out what it would cost to buy all the equipment you need and how much your rent would be for a commercial space. On top of that figure, add 30 percent to give you enough working capital for the first few months. Potential sources of funding include banks, family, friends, investors, or even crowdfunding.
Drafting a Business Plan
You won’t be able to attract investors without a sound business plan. The plan should include your initial expenses, revenue predictions, marketing strategy, distribution systems, and staff. You can either write your own plan or hire a professional, but the latter can get costly. This is where some business training can take you a long way. If you earn an MBA online, for example, you can boost your business acumen without having to take time away from brewing.
Setting Up Shop
To reduce your initial capital needs, try to find high-quality, used brewing equipment. You’ll need fermenting machines, kettles, hot and cold storage tanks, kegs, a bottling machine, and a walk-in cooler, just to name a few items. Depending on the size and quality, the requisite equipment for a brewery can cost anywhere from a few hundred thousand dollars to several million.
Managing the Business
This is another area where business know-how is a must. You’ve probably thought extensively about making and selling your beer, but what about accounting, marketing plans, financial reports, and the other less-sexy aspects of running a business? No matter how delicious your beer is, your brewery doesn’t stand a chance if you drop the ball on the business end of things. If you’re not equipped to handle the business affairs, think about hiring an accountant or business manager.
The cool factor of running your own microbrewery is off the charts, but you’ll need to hang on to your inner nerd to make it happen. If you put as much time and passion into the business side of brewing as you do your beer, your brewery stands an excellent chance of long-term success.
