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Nanobrewery - The Lessons I've Learned

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  • callmetim
    replied
    bmason: sure you can call me tim.

    I don't think we are that far apart. I believe you need to have business acumen and awareness to make this work. you need to make a living.
    but just as important to me is to make a living on my terms and be able to make decisions based on a balance of economic and ethical factors and choice.

    So your concept is if you produce more you'll be able to make more. My concept is if your profit per unit is higher that production threshold that you're trying to get to is more attainable at a lower production point.

    The trick is can you make a product like that and can you find a market?

    Leave a comment:


  • flatrockbrewing
    replied
    NW Ohio Nano

    We are in the process of opening a nano in NW Ohio just a 1bbl brewhouse. Our journey started a few years ago with loan applications, investor meetings and general capital raising. Most investors were interested but wanted to see actual brewery operations for at least 6 months before they would even talk about investment amounts. We started on the nano path to start on a shoestring and show local investors that our business model can work. We are lucky enough to find a restaurant that recently closed with all the nice SS health department equipment. Our rent is under $300 a month and the space is just big enough for our small brewhouse. There are investors out there that want to invest in something buzz worthy like a local microbrewery but its hard to sell a dream.

    Leave a comment:


  • WitsEnd
    replied
    Originally posted by bmason1623
    ... in manufacturing, if you can manufacture more for less than you will turn a profit. Brewing (or you could even say manufacturing) beer is really no different.
    I would disagree to some extent to this mentality. While there is certainly a manufacturing aspect to the craft beer movement, there is also a local farm aspect. True, large national and even international farms, can generate much more profit, people still love to stop by local farms and farmer's markets for produce.
    We're not necessarily talking about a commodity item here, it's more brand-focused.

    And, we need to keep in mind that everyone's cost of living and standard of living expenses are different. One person's definition of "barely making it" is another person's lifelong goal. Another thing to consider is what people would identify as "profit". I've heard of many business owners complain about not taking a paycheck from their business for years, yet the kids are fed, mortgage payments are made, and household bills are not past due. If you define "profit" as money left over at the end of the month after all is paid for, then I think most people live never turning a "profit".

    Check back with me in 6 months when this nano is up and running... I may have changed my tune by then.

    Leave a comment:


  • Chicago Brew Supply
    replied
    and when I say that you need to turn a profit I don't necessarily mean making money hand over fist. But if you can earn a living comparable to working for someone else then you are ahead of the "game" called life.

    Leave a comment:


  • Chicago Brew Supply
    replied
    Tim...can I call you Tim?

    I think what you're referring to is in regards to the love of the craft. But let's be realistic, passion for your craft doesn't pay the bills. Ultimately, you need to turn a profit to sustain your brewery and yourself. The bigger the profit the easier life and all of it's passions become. $0.02

    Leave a comment:


  • callmetim
    replied
    Bmason: your concept is correct from a business perspective, but what fuels us and probably other Nanos, is not simply business. there is a more altruistic motivation of wanting to be part of something that one "believes" in.

    We have been raised to beleive that if you can make more money that is better. so we all go and do what can to make the most money with little regard for any other factors. so we end up working for some shitty boss who we think is an idiot and hate the time we spend at work but justofy it by saying "hey we're making good money." Well I got sick of justifying taking it up the #@% just to ake someone else a bunch of money.

    I like having control and making decisions. I like being able to say, I don't like tha tplace so we aren't doing business with them. I like being able to make a product tath I think is th ebest and not have someone say th eprofit margin isn't great enough.

    Its hard work on the mind and body but it fuels my spirit. Its hard to measure that kind of satisfaction.

    Leave a comment:


  • johnnymax
    replied
    Just because you produce less, does not mean you have to miss out on price breaks. I purchased 10,000 labels, 4 pallets of bottles, etc.
    I purchase enough to get the price break. I will just be able to produce beer longer without ordering more stuff

    Leave a comment:


  • Chicago Brew Supply
    replied
    I suspect that when the inevitable shake out of nano breweries happens and the dust settles it would have been the suppliers of nano systems that would have come out ahead. I don't own a brewery but I do own a manufacturing company. And in manufacturing, if you can manufacture more for less than you will turn a profit. Brewing (or you could even say manufacturing) beer is really no different. Manufacturers are really on the business of selling their services and not making widgets. Same thing applies to breweries. The more beer (or widgets) you can "manufacture" at one time the easier running your business will be.

    Leave a comment:


  • callmetim
    replied
    No one else will brew or care for my beer like I do.

    Dude!!!!!!

    Leave a comment:


  • ParishBrewingCo
    replied
    Originally posted by Boardwalk
    I am curious if you (ANDREW GODLEY) ever looked at the option of Contract Brewing?

    Bret,

    Contract brewing is a very viable option for many startup operations. I can think of a couple that I respect greatly that started that way. I decided to steer Parish down a different path for many small reasons and one big one. Things like lack of contract brewing capacity, different state laws and %ABV restrictions, low margin or it loses money, and not learning anything about brewing operations and the complete business model (from grain to keg to distributor) were all factors. But I decided not to pursue contract brewing for one primary reason:

    No one else will brew or care for my beer like I do.

    Cheers,

    Leave a comment:


  • VeryNiceBrewer
    replied
    Testament from The Very Nice Brewing Company

    I can support this man's post. About to open a nano in Nederland, CO. We are starting in a small town with an unbelievably low rent, I highly suggest this. That monthly kitty is a gut wrenching stress ball. Reduce it as much as possible. As south park would say, "Thats why I moved to this redneck meshugannah quiet mountain town."

    We don't intend to get all our money back for a very long time, just exist in this glorious industry and own our lives again (we left corporate slavery for this). We are buying our freedom as slaves have done in the past.

    We want to exist and show income. Banks loved our idea and business plan. However, it's a joke to get money from them for a startup, just not going to happen. Show income over a few years, show that income going up year on year, then the banks will talk to you seriously about funding growth.

    Leave a comment:


  • beetje
    replied
    Well said

    I agree with the vast majority of what you summarized. I too receive a lot of mail asking for advice on starting a nano, and am careful to be honest and realistic while still be supportive.

    1, and 1b are dead on. I recite this to just about everyone who asks for advice. A nano is not a business model, but it is a great platform from which you can learn a lot about the industry, begin to build a brand and possibly launch a larger operation.

    Given that, do it as inexpensively as possible. Save your money for the inevitable larger operation. I was able to start my nano operation, Beetje Brewery, for a little over $5k. That carried me for nearly a year before I began the march toward a new space and a 7bbl system.

    Now The Commons Brewery, we (yes, I now have two employees) have been operating for about a year and are struggling to keep up with growing demand. After two years into this project, I see the real potential for me to quit my day job. Right. Remember the hard work and long hour part of the first post. Take it to heart, plan on it.

    I've been working a full time day job while trying to get this business rolling. That often means working 7 days a week, and 80 hour weeks are not uncommon.

    In short, be realistic, recognize that this is a business, and plan accordingly. It's an incredibly rewarding industry, but you will work hard to make it a success.

    Cheers,
    Mike
    www.commonsbrewery.com

    Leave a comment:


  • Boardwalk
    replied
    What about Contract Brewing?

    I am posting with the intention of receiving honest answers and hopefully clarity on a topic that I have not seen brought up in any posts on starting a Nano Brewery.

    What about Contract Brewing?

    I now know from reading hours of posts on nanos that you WILL have to keep your day job. What if, though, you were able to outsource your larger production(flagship beer(s)) to a contract brewer but keep the final kegged product on site until distributed or sold in house. At the same time be brewing smaller batches for on premise sales or for limited distribution. This is the route that I have been trying to look more into but have yet to see anyone mention on a Nano topic thread.

    Is it because of different state laws?
    Are the costs through the roof?
    Is there too much risk?
    Too small of profit margins?

    I am very curious to hear from anybody who has any insight for me (and I'm sure for others as well). I have been idolizing Parish Brewing Co. for a while now and appreciate the post since they are the real deal and know too well the pros and cons of starting small. I would be an idiot not to take any advice from the experts but I am curious if you (ANDREW GODLEY) ever looked at the option of Contract Brewing? Or anyone else for that matter.

    I live in Southern California, in between two beer meccas; San Diego and sort of Los Angeles. I am blessed to be able to self distribute (if I can start a brewery) and have a couple breweries that I could possibly contract to. I am looking to gain as much insight and thoughts about contracting your main product to a larger brewery but storing the product on site before distribution. I feel that this is the only way to make a Nano Brewery feasible and to grow in a timely manner, but I could very be wrong.

    So brewers out there I could use some advice and hopefully open this discussion up to possibly help alleviate some of the constructive criticism that might be holding any of us back from our crazy dreams of a Nano brewery.

    If you would like to contact me personally my email is bretburge@gmail.com

    Cheers to all of you,

    Bret Burge

    Leave a comment:


  • thedaytonbeerco
    replied
    Originally posted by goodnaturebrew
    Andrew,

    We completely agree, understand, and feel your pain. We set out two years ago to start a nano-brewery (2bbl) and opened in January of 2012. A lot of work, paperwork, and just straight manual labor. We too get phone calls and emails at least 5 times a week from aspiring Nano-Brewers and it is hard to keep up, so thank you for posting this.

    On another note we are some of the fortunate ones, who had a dream and sold out of beer and enough so to connivence a bank that giving us a loan for the 7 BBL brewery we just built was a good idea. This happened in three months!! Now don't go getting all excited there nano-dreamers we have been super super fortunate and there is probably no chance in hell you would be able to make it that quickly in to a bigger system, unless all your stars aligned like ours. Again we are fortunate and we thank our lucky stars every day.

    Like Andrew has said, "save your money for another year or two and go bigger!!! "

    Cheers and good luck to all of you
    I agree with everything everyone else has said, but you hit the nail on the head with our situation. We have been brewing on a 1.5 BBL system for three months now and are upgrading to a 5 BBL by august. Somehow the stars aligned and we have been selling out every weekend of our beer through the tap-room since our opening (however I like to think its the good beer!). This has directly led to us upgrading our equipment without much if any outside capital needed. However, our situation is not like most. Our expenses are as low as we can possibly get them. I negotiated a great rent to a building that needed virtually little improvements for me to get up and running. I am the only employee and I make less than $4 per hour working over 80 hours a week, and we rely heavily on family and friends volunteering to help with the tap room. Now I am 25 years old and don't have a family that relies on my income or time and I live with family members rent free, so I live virtually expense free (damn college loans!) and can afford to pay myself next to nothing to help the brewery grow. Thank god Ohio changed our laws to allow tap-rooms! I honestly couldn't image having a different situation and the brewery being able to survive none the less grow via 100% wholesale at this size. But if you put in the time and research (2 full years worth in my case before going ahead with it) and know how to operate a business extremely efficiently, and are allowed to have a tap-room, it is possible to some degree. But if you can go bigger by ALL MEANS you must start as big as your budget will allow! Anyway just figured I would throw out my 2 cents worth. I hope everyone's endeavor can work out for the best!

    Cheers,

    Pete

    Leave a comment:


  • goodnaturebrew
    replied
    Exactly!!

    Originally posted by ParishBrewingCo
    I've operated Parish Brewing Co. for over 2 years now, furiously brewing a nano-amount of beer. I get several emails every week from aspiring nano-brewers from all over the country and they all have the same questions about my experiences, my custom equipment, and other general info about starting a tiny commercial brewery. If the probrewer community would humor me, I'd like to use this as a place to get some FAQs documented since I cannot answer all of the emails I get with the full respect and well thought-out answers they deserve. Hopefully this can help some of you daydreaming out there get some answers. Some of these answers may not be what you want to hear, but they are based in fact and my actual experience. I know I would have appreciated some of this info before I embarked upon the nanobrewery path.

    1.) Nanobreweries are not profitable. Well, at least if you have to sell at wholesale. The only way a nano can be in the black is if you can sell most or all of your production at full retail price. Even then the return will not justify spending the capital required to get it going. A nano will never, ever make enough profit to pay for organic growth of the brewery. Period.
    1)(b) On the other hand, a nano is a great vehicle to get the investment needed to finance a viable craft brewery. In my opinion, that is the only rational reason to go through all of the trouble to build and operate a nano. If you do not have a plan to finance a viable larger operation, don't build a nano. The nano can be used to show real revenue and cost structure in your market, and can be extrapolated to any project size from there.

    2.) You can use cheap equipment, like plastic fermenters, and make great beer. They will not last very long, and you have to be seriously anal-retentive about taking care of them and sanitization, but they work. I used some stainless drums found on craigslist for the brewhouse, etc. There are some creative ways to make brewing equipment in the 50 to 150 gal size range and don't be afraid to try something new. I mean, some of the finest brews in the world are fermented in a wood container. Think about that the next time you drool over that cherry, stainless jacketed conical fermenter that probably costs more than my entire brewhouse and cellar combined. Also, most of the money you will spend getting the nano going will not be on brewing equipment. The cost of kegs, walk-in cooler, operating capital, etc will all be likely more than 50% of your total startup cost.

    3.) Save your money for another year or two and buy something bigger. Seriously, this is the best advice I can give. If your beer is halfway decent, you will sell way more than you can ever produce on a nano system. You will bust ass like you've never busted ass before and it will still not be anywhere close to being enough beer. Trust me. If your beer is good you will need more than a nano. If your beer isn't good, you probably wouldn't be reading this. Simply put a nano produces a painfully small amount of beer. Save your money for another year or two, get something at least bigger than 7 bbl brew length, and then send me a case of your finest when you realize I was right.

    4.) Permitting is a bitch. There are lots of government agencies, and they all want a piece. Get used to it. You get no special treatment because you are a tiny, low cost operation. If they want you to put covers on your fluorescent lights, you better be ready to shell out for that manlift rental. Start talking to your respective agencies as early as possible. There is no best way to start, there is no road map. Every professional brewer on this forum has had to figure it out on their own, unfortunately. Go forth. Be brave. Approach your various govt agencies, be polite, and you will eventually get all of your permits and licenses in hand.

    5.) Operating a nano every day isn't very fun. It makes a really fun hobby a painful job - a 2nd job that you work on the evenings and weekends. I know it seems like fun now. You need to have some serious stamina to keep up the pace required to work a day job and also the nanobrewery. I have a huge amount of respect for any of the other nano owners out there who have made it work. They will never get the credit they deserve from most of the craft brewing community for the pain and sacrifice it takes. Just because its a small brewery doesn't mean its any less work than a larger version. I only recently quit my day job to focus on our new large brewery, but until then I worked every weekend for over 2 years. Think about that for a minute. No more fishing. No Saints games. Countless hours of time lost with my toddler daughter and wonderful wife. Whatever you love to do beside brewing and drinking great craft beer, it will probably have to go on the back burner.

    6.) It is incredibly rewarding to brew for a living and to hear someone say they love your beer - and that's totally worth all of the bullshit noted above.

    Cheers!
    Andrew,

    We completely agree, understand, and feel your pain. We set out two years ago to start a nano-brewery (2bbl) and opened in January of 2012. A lot of work, paperwork, and just straight manual labor. We too get phone calls and emails at least 5 times a week from aspiring Nano-Brewers and it is hard to keep up, so thank you for posting this.

    On another note we are some of the fortunate ones, who had a dream and sold out of beer and enough so to connivence a bank that giving us a loan for the 7 BBL brewery we just built was a good idea. This happened in three months!! Now don't go getting all excited there nano-dreamers we have been super super fortunate and there is probably no chance in hell you would be able to make it that quickly in to a bigger system, unless all your stars aligned like ours. Again we are fortunate and we thank our lucky stars every day.

    Like Andrew has said, "save your money for another year or two and go bigger!!! "

    Cheers and good luck to all of you

    Leave a comment:

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