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Thread: New Nano/Micro Brewery in Virginia - Business Plan In Development

  1. #1
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    New Nano/Micro Brewery in Virginia - Business Plan In Development

    First of all, thank you to the admins/mods for activating my account even though I'm not technically employed by a brewery (yet).

    I'll try to keep this short and sweet. My friend and I are partnering up to develop a business plan for opening our own gig. He's a professional brewer, I work in the creative and advertising field. In theory, we'd save a lot of money on outside marketing and creative costs behind the brand by doing that all in house. We have a name and logo picked out, we have a theme picked out and have started working on 3D tap room concepts to show potential investors in the future. We're pretty hell bent and determined to pitch to investors and not a bank. We both believe it's just not a very safe to go the way of a business loan from a bank at this point in our lives.

    He wants to start with a 3BBL system with the concept in mind of keeping a continuous rotation tap list on hand, perhaps a few repeats in the beginning.

    Our next step we're working on is meeting with a financial advisor. Neither one of us are "math" people. I've seen example business models from a friend of mine who was a professional brewer. It was quite detailed, down to how much the hoses would cost for your dishwasher to be replaced a year later.

    ----- With all that ^^^ said ----
    I'm sure a few of you reading have been in these shoes before. What are some additional things for us to think about, or even resources?

    The math is going to be biggest obstacle to get nail down and the most time consuming. The second most consuming I'd have imagine would be working with contractors to take concepts and execute them. Anything else dealing with the beer and brand itself, I'm not worried about... piece of cake.


    Any and all comments and suggestions are welcome, I may not respond immediately; but I will be monitoring the thread.

  2. #2
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    Quote Originally Posted by DevilHornsHB View Post
    First of all, thank you to the admins/mods for activating my account even though I'm not technically employed by a brewery (yet).

    I'll try to keep this short and sweet. My friend and I are partnering up to develop a business plan for opening our own gig. He's a professional brewer, I work in the creative and advertising field. In theory, we'd save a lot of money on outside marketing and creative costs behind the brand by doing that all in house. We have a name and logo picked out, we have a theme picked out and have started working on 3D tap room concepts to show potential investors in the future. We're pretty hell bent and determined to pitch to investors and not a bank. We both believe it's just not a very safe to go the way of a business loan from a bank at this point in our lives.

    He wants to start with a 3BBL system with the concept in mind of keeping a continuous rotation tap list on hand, perhaps a few repeats in the beginning.

    Our next step we're working on is meeting with a financial advisor. Neither one of us are "math" people. I've seen example business models from a friend of mine who was a professional brewer. It was quite detailed, down to how much the hoses would cost for your dishwasher to be replaced a year later.

    ----- With all that ^^^ said ----
    I'm sure a few of you reading have been in these shoes before. What are some additional things for us to think about, or even resources?

    The math is going to be biggest obstacle to get nail down and the most time consuming. The second most consuming I'd have imagine would be working with contractors to take concepts and execute them. Anything else dealing with the beer and brand itself, I'm not worried about... piece of cake.


    Any and all comments and suggestions are welcome, I may not respond immediately; but I will be monitoring the thread.
    A big hole in your plan that I see is you are not taking the majority of risk. Investors will want nothing to do with you unless you have a substantial amount of your own money in the deal.

    Also, remember investors are going to cut into your paycheck down the road.

    A SBA loan at 10% APR might seem like a lot now, but when you have to pay your investors you might be rethinking that decision. SBA will also help you build a business plan.

    I would say that since this is your first venture in the industry, keep it self funded and simple.
    Last edited by AmbrosiaOrchard; 01-09-2019 at 06:18 AM.

  3. #3
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    Thanks for the feedback, while we're aware of the challenges involved with skipping a bank entirely.. we feel it's worth a shot. If we're told by X amount of potential investors that the business plan looks solid, but they can't move forward with out some risk on our end then we'll take it from there and analyze where we're at. I say this with the utmost confidence that if we were to get involved with a bank and for some unfortunate reason the business fails... both of our wives will kill us in cold blooded murder and hide the evidence after losing our homes to the bank.

    I spoke to the president of the agency I work for a short while back about starting a small businesses and talking points to investors. He made a really great point about one strategy. In theory, if you pitch to an investor in stages, they're more likely to come around to the idea. Will we go shut down a lot? Most likely, and we're anticipating that to happen. This is all in hopes of finding the right investor that will not only back our project but believe in it as well. So for example, we'd ask $X for stage 1 followed by $X for stage 2 once we've gotten there and so forth.

    We were also informed that "49, you're fine". Meaning you're okay if the investor get's no more than 49%. Hopefully a financial advisor/mentor could further confirm that theory.

  4. #4
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    Quote Originally Posted by DevilHornsHB View Post
    Thanks for the feedback, while we're aware of the challenges involved with skipping a bank entirely.. we feel it's worth a shot. If we're told by X amount of potential investors that the business plan looks solid, but they can't move forward with out some risk on our end then we'll take it from there and analyze where we're at. I say this with the utmost confidence that if we were to get involved with a bank and for some unfortunate reason the business fails... both of our wives will kill us in cold blooded murder and hide the evidence after losing our homes to the bank.

    I spoke to the president of the agency I work for a short while back about starting a small businesses and talking points to investors. He made a really great point about one strategy. In theory, if you pitch to an investor in stages, they're more likely to come around to the idea. Will we go shut down a lot? Most likely, and we're anticipating that to happen. This is all in hopes of finding the right investor that will not only back our project but believe in it as well. So for example, we'd ask $X for stage 1 followed by $X for stage 2 once we've gotten there and so forth.

    We were also informed that "49, you're fine". Meaning you're okay if the investor get's no more than 49%. Hopefully a financial advisor/mentor could further confirm that theory.
    You should definitely connect with the SBA. They were a big help when we were planning. https://www.sba.gov/

    We ended up getting financing through the FSA, we are classified as a farm and purchased our building and farm land, can't beat 1.5% APR.

  5. #5
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    Forgive me if this is a stupid question, but... do you have to put up collateral for an SBA loan? Or can you get approved off credit scores?

    I'll def check out the site though.

  6. #6
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    Quote Originally Posted by DevilHornsHB View Post
    Forgive me if this is a stupid question, but... do you have to put up collateral for an SBA loan? Or can you get approved off credit scores?

    I'll def check out the site though.
    Typically ~20% but that collateral can come from investors.

    SBA is normally used for equipment. You might get better rates if you finance through the manufacture of equipment.

  7. #7
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    Quote Originally Posted by AmbrosiaOrchard View Post
    A big hole in your plan that I see is you are not taking the majority of risk. Investors will want nothing to do with you unless you have a substantial amount of your own money in the deal.

    Also, remember investors are going to cut into your paycheck down the road.

    A SBA loan at 10% APR might seem like a lot now, but when you have to pay your investors you might be rethinking that decision. SBA will also help you build a business plan.

    I would say that since this is your first venture in the industry, keep it self funded and simple.
    Don't you mean an SBA at 10% might NOT seem like a lot now... And how are you arriving at 10%? SBA is generally prime plus 2.

  8. #8
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    Quote Originally Posted by BeerBred View Post
    Don't you mean an SBA at 10% might NOT seem like a lot now... And how are you arriving at 10%? SBA is generally prime plus 2.
    Loan payments on a SBA loan are going to be pretty high given that is a shorter term loan. As far as interest rates go, they were around 8% when I was looking into it last year, so I would rather throw out something conservative. I recommended he talks to the SBA.

  9. #9
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    A couple of things to think about, based on my experience:

    1. I'd definitely echo the SBA loan suggestion. Giving up a large percentage of your company to investors before you even start is a good way to insure you demotivate yourself in a big way down the road. Said differently, if investors are taking 25% of every dollar you make (as an example), it's going to make those late nights cleaning kegs in the brewery seem so much more miserable.

    2. Private funding for startups is expensive. I have no idea what SBA rates are, but any savvy investor is going to want a minimum of a 10% compounded return on their cash. And, to again echo what's been said, you're going to need to put some skin in the game. How much is going to depend on two things: the investor and your financial situation. Any investor is going to want to know what your net worth is, and based on that is going to make sure you put up enough cash that it's going to hurt if the business fails.

    3. If math is your biggest obstacle, you've got a problem. Excel needs to become your best friend when you're preparing your business plan (and going forward). There are plenty of youtube tutorials available, and you're going to need to become super-friendly with Excel.

    All just my .02, grain of salt, etc.

  10. #10
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    I've seen lot of pointing toward SBA in these forums. But outside of ProBrewer, I've been told SBA is really hard to get, requires near perfect credit score, and requires over 50% personal equity (cash).

    My New Year resolution was to drop all the "dead weight" that has been holding me back (family and friends that claim to want to invest time and/or money) and take the risk myself. I'm risking my entire savings to self fund a 1BBL brewery in a commercial lease property, and I'm always worried that I'm going to run short on the final lap. I'm leery of investors for all of the reasons fore mentioned.

    Comments, advice, warnings?

    Not trying to go off-topic, sorry OP.
    Last edited by Ogie; 02-15-2019 at 09:08 AM.

  11. #11
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    Quote Originally Posted by Ogie View Post
    I've seen lot of pointing toward SBA in these forums. But outside of ProBrewer, I've been told SBA is really hard to get, requires near perfect credit score, and requires over 50% personal equity (cash).

    My New Year resolution was to drop all the "dead weight" that has been holding me back (family and friends that claim to want to invest time and/or money) and take the risk myself. I'm risking my entire savings to self fund a 1BBL brewery in a commercial lease property, and I'm always worried that I'm going to run short on the final lap. I'm leery of investors for all of the reasons fore mentioned.

    Comments, advice, warnings?

    Not trying to go off-topic, sorry OP.
    Self investing will be your best route. You can find money if you run out when you look hard enough. Some lenders want a lien on your house if you own one. Its a risk you take because you DON'T plan to fail.

  12. #12
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    I'm not sure what the real question is here, but most of you guys got it all wrong. SBA is generally prime plus 2. So figure 7%. You don't need 50% down with SBA. Their website says 10, but figure 20-30% in equity or down payment. Manufacturers generally do not finance their equipment. Brewers finance does, but you aren't going to get much as a startup. SBA finances all you will need except startup cash. For investors, forget that. You probably won't find anyone outside of friends and family by netwroking or anything like that. Venture capitalists aren't doing beer projects. You want to turn to equity crowdfunding. Wefunder.com.

    You left out specifics like the building you intend to lease or build. Why do a 3 barrel when a 5 or 7 is similar cost. If the beer is any good and so is the location, you will need a bigger system. There isn't any money left to pay anyone on those small systems. Don't forget to read up on trench drains and sloped brewery floors. Don't forget you need approval from the sewer authority. Read every thread on this site. Then ask questions. Good luck!

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