Starting Your Own Microbrewery? Read This First
The Microbrewery Industry
Microbrewing dates back to the 1970s in the United Kingdom, although artisanal brewing was already practiced in Europe and eventually spread to other countries.
The best markets for this business are areas in which restaurants and beer retailers are growing as well as markets near colleges and universities (a hint: They like to drink). This is because the average microbrew customer is more educated than a typical beer consumer. College and university surroundings have Millennials (and recently Generation Z) who prefer new experiences and hence would favor a developing microbrewery.
How to start
Every business needs capital to fund it and this one is no different. It costs anywhere between $100,000 to $1 million, and we found the figure of five hundred thousand dollars to start out to be the closest one to reality. This is because renting an entire space for a whole year costs close to fifty thousand dollars, equipment another 200K-300K, and on top you have marketing and administrative costs (and licences etc.). Be prepared for operational costs, beginning inventory, storage equipment costs as well as the legal costs. Due to the fact that not everyone can afford these costs at once, many opt to begin with a nanobrewery, which is a small scale of microbrewery.
What are the skills required to run this business?
Expertise is quite fundamental in this line of business so as to meet and surpass the needs of the clients. The ultimate experience one can have is to work as an assistant brewer as it gives you the required background. People go out of their way to even earn diploma certificates in institutions such as an American Brewers Guild. Also home brewing could get you some required experience which is good for starter.
The requirements for running a successful microbrewery
There are many steps that are required to keep any business afloat as well to ensure that it is doing well in its respective field.
- Having a business strategy
It is vital for every entrepreneur to have in mind a business strategy which generally steers the company. This entails the initial costs, target market and how long it will take them to make revenues equivalent to the costs.
- Establishing a legal presence
Forming a legal presence ensures security to the entrepreneur. This is because they prevent them from incurring personal losses when their microbrewery is sued. And don’t underestimate this point.
- Tax Registration
Every business needs to be registered before it is allowed to operate officially.
- Keeping business accounting records
A well followed up a business account enables the owner to easily manage the finances of the microbrewery as well ensure its stability. This way, the retailers are ensured of trustworthy deals.
- Investing in a business account
Investing in a business account lays a great foundation for the growth and development of any given business. This is because it helps people to keep track of their money and also comes out a strong sense of responsibility to the customers.
- Acquiring mandatory licenses
It is of great importance to ascertain that the microbrewery is registered legally in order to obtain a permit to run it. Failure to adhere to these rules can cause the business to be shut down and in the worst case scenario can lead to the imposition of a large fine.
- Ensuring the business
Insurance provides the business owners a place to fall back onto in case of any accident that might occur. This protects both the owner of the business and the employees.
- Distinguishing the brand
The clientele to any business grows depending on how the business in question brands itself. More often than not, clients tend to go for the well branded products. Therefore, it is essential for any business starting out to clearly define itself to the public. This gives it an advantage over its competitors because it enables them to stand out in their own way.
- Establishing a strong social media presence
Given the technological advances in the world currently, a strong social media presence is very relevant. Most millionaires are favorites of the diverse platforms that social media offers. It is therefore advisable for any brewing industry to make an impact and advertise themselves on social media. The organizations should be present in as many social networking sites as possible. These include: Facebook, Twitter, and instagram. The concerned breweries should also take the initiative to reach out to the older citizens and the middle-age citizens through different channels like television, radio and newspapers.
It is mandatory for all breweries to receive a Brewer’s notice from the Alcohol and Tobacco Trade and Tax Bureau. This firm only issues out the permit after verifying the packaging, labeling and impact of the brew to the surroundings. Nonetheless, the microbreweries have to obtain a permit from their respective states depending on their terms and conditions. Local licensing is also valid in the case where one decides to open a taproom.
Most brewing companies have a policy of employing people as from the age of eighteen. For the purpose of safety, most companies tend to hire people who age twenty one and over.
Breweries also have to register as a food facility with the FDA and registration is renewed after every two years.
Ongoing costs differ from one brewery to another, depending on region, business size, unstable markets. The basic expenses will be are incurred when purchasing malt, yeast and hops, paying for utilities as well as repairing and cleaning equipment. Paying the employees equally falls under this category as it is done monthly.
Every entrepreneur looks forward to the moment when their business begins to realize profits. It is, however, important to acknowledge the fact that microbreweries do not realize profits immediately! This is associated with the fact that the cost of grains fluctuates throughout the year. Nevertheless, different people feel the need to invest their profits in their growing businesses.
Ways of increasing profits
Most prolific breweries invest in distributors for their drinks. The most efficient way to increase profits in this industry is increasing the production of these drinks. This will go a long way to increase the amount of clients for the microbrewery.
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