Hi,
Sorry for the long post, but I wanted to provide background information.
I’ve been approached by an investment group of 4-5 people to be brewer of a startup. The model is slow growth nano. Their initial goal is 100, 000 pints/year or 400-450bbl/year. I’m a pilot system brewer without any professional experience, and I’ve won a number of BJCP style contests for what’s that’s worth. I’ve got a degree in biology and worked as a chemist for over a decade, so I’m familiar with GLP. I’m also a university professor at a very small university, which is my “day job,” and it gives me lots of flexibility in my schedule [summers free], benefits for my family of four, and job satisfaction. I make in the mid 60s and live in a suburb of Philly. My much-needed side hustle is teaching as much as I can online and during summers, but brewing sounds better.
The group wants to start a brewery with a tap room to begin cash flow and keep expenses low. They are initially interested in retail sales only—no keg distribution because the margins are very low. They have money to invest. The group is all business people: bar owner, scrap metal owner, printing/graphic design company, accountant and former bar owner, and [maybe] marketing executive. Their model is to get the tasting room going and open 1-2 satellite brewpubs long term and provide product exclusively to these satellites.
They’ve been drinking my beer and going out to the area’s “Ale trail,” only to say my beer is better. Only one is a friend. The group is looking currently at 3-8k foot spaces to launch the brewery/tasting room. No formal documents have been issued for the business. PA is relatively liberal in their tasting room protocol.
Besides a million questions, a few seem to come first.
1. My compensation. Informal talk has been that I would be an equal equity partner—if 5 owners, I would be one of 20%; if 6 owners, I would be 16.6%.—without capital investment on my behalf. In other words, if each owner puts in 20K, I do not have to do the same for an equal percentage of the equity. If I am an equity partner, am I responsibly financially if the business fails and owes money? Can I structure my equity to eliminate that risk? The group plans to reinvest capital to grow the business “for a few years,” so I assume that I would not see dividends from that equity, but I do not want to be responsible for any debt acquired. Has anyone benefited from equity sharing?
2. My compensation II. Also, informally, I would get compensated for my time to brew, design, and build inventory. What is an adequate hourly or monthly compensation for someone of my background? I would be growing with the business, and the learning curve would be intense. If the goal is 450bbl/year, initially then the size of the system would be relative to the time to brew for me. Should I tie my compensation to production, as ABA standards suggest? I have the advantage of university connections for student internships to help save costs for brewery assistants, so I do have cost-saving to bring to this operation.
3. Brew capacity. Some owners want to start with a 7bbl system and some want to start with a 3bbl system. My plan is to have 8 beers on tap. 4 regulars and 4 seasonal/exclusive. The mathematical solution is 5bbl, but I wonder, cost wise, what is the best choice? Most threads have noted the desire to start bigger.
4. Learning curve. Is the learning curve similar of 3, 5, and 7bbl systems? This is a question that the investment group should be looking to me to answer—they know I don’t have the commercial experience—but they will assume I’ve researched it. Probrewer.com research suggests the learning curve is similar.
I appreciate your input!
Cheers,
Robert
Sorry for the long post, but I wanted to provide background information.
I’ve been approached by an investment group of 4-5 people to be brewer of a startup. The model is slow growth nano. Their initial goal is 100, 000 pints/year or 400-450bbl/year. I’m a pilot system brewer without any professional experience, and I’ve won a number of BJCP style contests for what’s that’s worth. I’ve got a degree in biology and worked as a chemist for over a decade, so I’m familiar with GLP. I’m also a university professor at a very small university, which is my “day job,” and it gives me lots of flexibility in my schedule [summers free], benefits for my family of four, and job satisfaction. I make in the mid 60s and live in a suburb of Philly. My much-needed side hustle is teaching as much as I can online and during summers, but brewing sounds better.
The group wants to start a brewery with a tap room to begin cash flow and keep expenses low. They are initially interested in retail sales only—no keg distribution because the margins are very low. They have money to invest. The group is all business people: bar owner, scrap metal owner, printing/graphic design company, accountant and former bar owner, and [maybe] marketing executive. Their model is to get the tasting room going and open 1-2 satellite brewpubs long term and provide product exclusively to these satellites.
They’ve been drinking my beer and going out to the area’s “Ale trail,” only to say my beer is better. Only one is a friend. The group is looking currently at 3-8k foot spaces to launch the brewery/tasting room. No formal documents have been issued for the business. PA is relatively liberal in their tasting room protocol.
Besides a million questions, a few seem to come first.
1. My compensation. Informal talk has been that I would be an equal equity partner—if 5 owners, I would be one of 20%; if 6 owners, I would be 16.6%.—without capital investment on my behalf. In other words, if each owner puts in 20K, I do not have to do the same for an equal percentage of the equity. If I am an equity partner, am I responsibly financially if the business fails and owes money? Can I structure my equity to eliminate that risk? The group plans to reinvest capital to grow the business “for a few years,” so I assume that I would not see dividends from that equity, but I do not want to be responsible for any debt acquired. Has anyone benefited from equity sharing?
2. My compensation II. Also, informally, I would get compensated for my time to brew, design, and build inventory. What is an adequate hourly or monthly compensation for someone of my background? I would be growing with the business, and the learning curve would be intense. If the goal is 450bbl/year, initially then the size of the system would be relative to the time to brew for me. Should I tie my compensation to production, as ABA standards suggest? I have the advantage of university connections for student internships to help save costs for brewery assistants, so I do have cost-saving to bring to this operation.
3. Brew capacity. Some owners want to start with a 7bbl system and some want to start with a 3bbl system. My plan is to have 8 beers on tap. 4 regulars and 4 seasonal/exclusive. The mathematical solution is 5bbl, but I wonder, cost wise, what is the best choice? Most threads have noted the desire to start bigger.
4. Learning curve. Is the learning curve similar of 3, 5, and 7bbl systems? This is a question that the investment group should be looking to me to answer—they know I don’t have the commercial experience—but they will assume I’ve researched it. Probrewer.com research suggests the learning curve is similar.
I appreciate your input!
Cheers,
Robert
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