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  • Microbrewery Startup Questions

    My name is Ryan (first post) I'm 32 from NJ and have been looking into starting a microbrewery in warehouse (industrial) space in my area with a partner . The space we have picked out currently is 1500q ft warehouse @ $1000/ month not including propane, water, sewerage. My business partner / fellow brewer would like a 5bbl MT/HLT/BK (basic equipment zero automation) setup. With 2 jacketed fermenters, and 3 bright tanks stored in a cold room. We are going to build our own cold room and use 2 window AC units hooked to cool bots(http://storeitcold.com/). The tasting room would be a part of the brewery as the space is small with high ceilings (industrial). The bar/tasting area would basically be the back side of the cold room so we could serve from our bright tanks. We have quoted all equipment from china and we feel, though its going to be rough, it may be doable.. I know there are plenty of "going pro" articles listed on here and other forums, but the questions I'm asking are for the little breweries.

    My partner and I currently both have good full time jobs (40 hours weeks) with staggered schedules. Our current funds for startup is approx. 40 - 45K.. I know this will all probably be going towards brewing equipment.. So we are going to need to look into a small business loan to handle the extras. (permits, tables, chairs, glassware, growlers, shirts, etc). I have several friends in trades that have offered to assist with electrical, propane piping, plumbing etc.

    Questions:

    1- Based on not needing a whole lot of electrical and plumbing/hvac changes, and given the fact I will we will be doing the work ourselves. (then having licensed contractor friends inspect and sign off). Are we going to be looking at substantial permit costs for the above basic work? (adding 4 or 5 outlets, installing piping to burners)

    2 - Based on our budget, and very small size of our proposed space / tasting room. Is our budget insanely low and are we flat out dreaming.

    3 - If we can purchase the majority of our equipment with our initial budget, what loan amount should we try to obtain to be in a relative safe zone to get up and running with 3 beers on tap (to start)? We were thinking another 20k?

    4 - Are we nuts for trying this based on all the info above? Based on both working 40 hour weeks (soon to be 60-80 if we commit to this) In the opinion of those brewer who may have pulled the trigger and are currently in the trenches..IS it worth it and would you do it over again given the opportunity?

    5- If any small brewery owners are reading this.. Do you still work another full time job? If not how long (roughly) before you became profitable enough to make it a full time venture..


    Thanks in advance for any info. It would be much appreciated!
    Last edited by NFryan; 10-21-2015, 05:30 PM.

  • #2
    we are in a very similar situation and a couple months from opening (hopefully). I put my responses in red, completely relative to our situation, there is definitely nothing set in stone here

    Originally posted by NFryan View Post
    My name is Ryan (first post) I'm 32 from NJ and have been looking into starting a microbrewery in warehouse (industrial) space in my area with a partner . The space we have picked out currently is 1500q ft warehouse @ $1000/ month not including propane, water, sewerage. My business partner / fellow brewer would like a 5bbl MT/HLT/BK (basic equipment zero automation) setup. With 2 jacketed fermenters, and 3 bright tanks stored in a cold room. We are going to build our own cold room and use 2 window AC units hooked to cool bots(http://storeitcold.com/). The tasting room would be a part of the brewery as the space is small with high ceilings (industrial). The bar/tasting area would basically be the back side of the cold room so we could serve from our bright tanks. We have quoted all equipment from china and we feel, though its going to be rough, it may be doable.. I know there are plenty of "going pro" articles listed on here and other forums, but the questions I'm asking are for the little breweries.

    My partner and I currently both have good full time jobs (40 hours weeks) with staggered schedules. Our current funds for startup is approx. 40 - 45K.. I know this will all probably be going towards brewing equipment.. So we are going to need to look into a small business loan to handle the extras. (permits, tables, chairs, glassware, growlers, shirts, etc). I have several friends in trades that have offered to assist with electrical, propane piping, plumbing etc.

    Questions:
    1- Based on not needing a whole lot of electrical and plumbing/hvac changes, and given the fact I will we will be doing the work ourselves. (then having licensed contractor friends inspect and sign off). Are we going to be looking at substantial permit costs for the above basic work? (adding 4 or 5 outlets, installing piping to burners)
    [COLOR="#FF0000"][/COLOR]we have around 3k in local permitting/plans/testing that was necessary for any demolition
    2 - Based on our budget, and very small size of our proposed space / tasting room. Is our budget insanely low and are we flat out dreaming. Unfortunately I think so, we are starting very much along the same lines (5bbl brewhouse with 3-10bbl fermenters. Brewhouse (retrofit 250 gallon tanks), conicals, kegs, glycol, etc is around 85k ballpark

    3 - If we can purchase the majority of our equipment with our initial budget, what loan amount should we try to obtain to be in a relative safe zone to get up and running with 3 beers on tap (to start)? We were thinking another 20k? Just based on our scenario I'd say 100k loan, you need working capital for the first 2-3 months of operations built in (just a suggestion). FYI our SBA loan would only pay for equipment, nothing else, keep that in mind before purchasing any equipment out of pocket

    4 - Are we nuts for trying this based on all the info above? Based on both working 40 hour weeks (soon to be 60-80 if we commit to this) In the opinion of those brewer who may have pulled the trigger and are currently in the trenches..IS it worth it and would you do it over again given the opportunity? I hope so, we are in the same boat.

    5- If any small brewery owners are reading this.. Do you still work another full time job? If not how long (roughly) before you became profitable enough to make it a full time venture..

    If you would like any recommendations on sourcing equipment just send a PM, we did A LOT of shopping around. You can save a lot of money not going jacketed/stainless conicals, but fermentation control wasn't something we considered trying to save on, too important in our eyes. We also are spending extra money on our barrel aging and cask programs, something maybe not necessary in your situation. My numbers above are rough estimates, but everything is based off of a business plan our local university offers for free through their small business development center. We started our budget at 120 and they convinced us to increase that to 170, I'm glad we did. Good luck man, so far it's been a fun and busy ride!


    Thanks in advance for any info. It would be much appreciated!

    Comment


    • #3
      Originally posted by Woodlandbeer View Post
      we are in a very similar situation and a couple months from opening (hopefully). I put my responses in red, completely relative to our situation, there is definitely nothing set in stone here
      Thank you very much for the response. I really appreciate your perspective and taking the time to give me a reality check.. I do have more questions I will take offline and PM you with later tonight..
      Last edited by NFryan; 10-22-2015, 08:41 AM.

      Comment


      • #4
        Be careful with the stuff from China a start up in our state cannot get it passed as its not UL listed so they might have to get it all tested prior to opening or just scrap it all. I have not heard good comments about that countries products
        Mike Eme
        Brewmaster

        Comment


        • #5
          Originally posted by NFryan View Post
          My name is Ryan (first post) I'm 32 from NJ and have been looking into starting a microbrewery in warehouse (industrial) space in my area with a partner . The space we have picked out currently is 1500q ft warehouse @ $1000/ month not including propane, water, sewerage. My business partner / fellow brewer would like a 5bbl MT/HLT/BK (basic equipment zero automation) setup. With 2 jacketed fermenters, and 3 bright tanks stored in a cold room. We are going to build our own cold room and use 2 window AC units hooked to cool bots(http://storeitcold.com/). The tasting room would be a part of the brewery as the space is small with high ceilings (industrial). The bar/tasting area would basically be the back side of the cold room so we could serve from our bright tanks. We have quoted all equipment from china and we feel, though its going to be rough, it may be doable.. I know there are plenty of "going pro" articles listed on here and other forums, but the questions I'm asking are for the little breweries.

          My partner and I currently both have good full time jobs (40 hours weeks) with staggered schedules. Our current funds for startup is approx. 40 - 45K.. I know this will all probably be going towards brewing equipment.. So we are going to need to look into a small business loan to handle the extras. (permits, tables, chairs, glassware, growlers, shirts, etc). I have several friends in trades that have offered to assist with electrical, propane piping, plumbing etc.

          Questions:

          1- Based on not needing a whole lot of electrical and plumbing/hvac changes, and given the fact I will we will be doing the work ourselves. (then having licensed contractor friends inspect and sign off). Are we going to be looking at substantial permit costs for the above basic work? (adding 4 or 5 outlets, installing piping to burners)

          2 - Based on our budget, and very small size of our proposed space / tasting room. Is our budget insanely low and are we flat out dreaming.

          3 - If we can purchase the majority of our equipment with our initial budget, what loan amount should we try to obtain to be in a relative safe zone to get up and running with 3 beers on tap (to start)? We were thinking another 20k?

          4 - Are we nuts for trying this based on all the info above? Based on both working 40 hour weeks (soon to be 60-80 if we commit to this) In the opinion of those brewer who may have pulled the trigger and are currently in the trenches..IS it worth it and would you do it over again given the opportunity?

          5- If any small brewery owners are reading this.. Do you still work another full time job? If not how long (roughly) before you became profitable enough to make it a full time venture..


          Thanks in advance for any info. It would be much appreciated!
          Similar situation here and we definitely needed a lot more budget than what you're allowing.

          My question is this, are you going for a brew pub or do you want to be a distribution brewery, or a little of both? We started out on a Sabco brew magic making 10 gallon batches just like Sam from Dogfish and we are really glad we did. We were able to open 8 months earlier than had we waited on our 7bbl production brewhouse arrived.

          While it is a ridiculous concept in general and required us to brew 10+ batches a week, we were able to open up and have cashflow coming in very early. The cashflow is an awesome way to show lenders your concept is working and justify a loan from them to get yourselves a real brewhouse. In addition we were able to refine our recipes and get them nailed by brewing them 40 or 50 times.

          There are many ways to go about this and each situation is different, but if you really want it don't discount starting super small at first, learning what your customers want, getting your name established and growing slowly but surely.

          If you have any other questions feel free to ask.

          Comment


          • #6
            You have to plan to not be open as fast as you think. There will be problems, you will find a delay somewhere. Plan to have at least 6 months of rent in working capital for after you think you'll be open. Permit fees are not just based on how much demo/new construction you do, it is the total value of the project, including equipment, you may event be assessed fees based on what the city engineers think you will do to traffic in the area. You may find it tough to get an SBA loan for what you need, but you will need it if you only have 40-45k. Our tennant improvements alone were $65k, and we went with the industrial look.

            Comment


            • #7
              Hey dude! I started myself a super cheap brewery, and we are about to have our 3rd anniversary. Hard as hell, hope I can give you some insight.

              1. Based on not needing a lot of electric and HVAC as far as you know. Things pop out of the woodworks more often than you think. We got lucky and had a personal friend as a GC who pulled our permits for us in Denver basically for beer. Permits arent crazy expensive, BUT the turn around time and paying rent while you wait is what can be frustrating.

              2. Super low, but your rent is low too. It cost us a little more than you are planning to open, and we had basically 50 bucks in our account when we started selling beer. Also remember that starting up a cheap brewery is very expensive down the road. You should plan to basically keep reinvesting all of your profit for at least three years. Probably more... like I said, we are only three years in!

              3. Depends on what you buy. I love that you are starting on a 5 barrel (we started on the crappiest one barrel ever), but mentally adding these things up really makes me think you are underbudgetted. You should plan on it taking at least 9 months to start selling beer, and have the money in the bank to cover that. Add 25% at least to your equipment and buildout costs.

              4. Yes. Everyone is nuts for trying it. Dudes starting on the cheap are crazy, and dudes opening with multi million dollar breweries are nuts too. I mentally accepted the fact that we could go out of business any day from the second we opened. It never gets easier either, BTW, but I would do it again a hundred times.

              5. I was full time from the day we signed our lease. I also got paid basically nothing for the first two years. Things have leveled out a bit, and I make more than I used to, but that is going to be different for everyone. Its a beautiful life if you enjoy simplicity. I found cheap to free hobbies... hiking, fishing, and stuff like that. I drink and eat at spots where I have friends that will hook me up, and I do the same for them. The profitablity thing is hard, because like I said earlier, plan to continue to reinvest for the forseeable future.

              I do think that with a 5 barrel system that this could be a fairly rad hobby for you. Have three beers on, sell enough to pay your bills, brew on the weekends for the love of it. If you want to make any money, its going to take a full time, balls out commitment. I think if you just stay small, focus on brewing rad beer, dont do any festivals or the extra BS that comes with running a brewery, that you could have a good time. Hire a bartender, make the beer, and maybe one day you will build enough rep to take it to the next level.

              Comment


              • #8
                Originally posted by jebzter View Post
                You have to plan to not be open as fast as you think. There will be problems, you will find a delay somewhere. Plan to have at least 6 months of rent in working capital for after you think you'll be open. Permit fees are not just based on how much demo/new construction you do, it is the total value of the project, including equipment, you may event be assessed fees based on what the city engineers think you will do to traffic in the area. You may find it tough to get an SBA loan for what you need, but you will need it if you only have 40-45k. Our tennant improvements alone were $65k, and we went with the industrial look.
                I agree 100% with his comment. In addition to planning for delays which are inevitable and guaranteed, you should also figure out how much money you think you need, and then double it. Then figure out how long you think it will take to be open, and then double that as well. I'm not joking.

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