MicroBrewr 076: Carrying the torch of authentic beer styles with Bull City Burger And Brewery.

MicroBrewr 076: Carrying the torch of authentic beer styles

After a microbiology degree and studies at the world’s premier culinary college, Seth Gross was working at a restaurant and hanging out at the nearby Goose Island Brewpub. Pretty soon they offered him a job. Today Seth owns his own brewpub, Bull City Burger and Brewery in Durham, North Carolina.

“I have people who will bleed for what we do. And I don’t know how I got so lucky.” [Tweet This]

 

“The day we opened, the line was out the door and around the corner,” says Seth. The restaurant ran out of food on the first day. “It was a disaster.”

Seth’s ideas for promoting the brewpub before it opened:

  • Work with other newly opened, local businesses
  • Hold a scavenger hunt for really good discounts.
  • Raise awareness and hype on Facebook

RELATED: Do Your Fans Love You Enough To Get a Tattoo of Your Brewery? Creative Ways To Promote Your Brewery For Free!

In the brewery, “the most important thing is cleanliness. You can have the best ingredients in the world, but if you’re not clean, the beer is just not going to be good,” says Seth. “But you can have average ingredients, and if your brewery is squeaky clean, you can have a very good product at the end.”

On of Seth’s proudest moments is when Julia Herz, from the Brewers Association visited his brewery and said, “This doesn’t smell like a brewery.”

“We work really hard keeping those drains clean and all of that.”

Brewery specs:

Kettle size: 7 BBL.

Size and quantity of fermentation tanks: 4, 7-BBL fermenters; 1, 15-BBL fermenter.

Size and quantity of bright tanks: 5, 7-BBL bright tanks.

Annual brewing capacity/last year’s production: 600 BBL.

Square footage: 300 sq. ft.

Years in operation: 4.5 years (opened March 2011).

Listener question:

From Malin Norman: Why don’t you experiment more?

Can’t-go-without tool:

Mash hoe, custom stainless steel.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Session beer

Other resources:

You can reach Seth Gross and Bull City Burger & Brewery at:

Sponsors:

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MicroBrewr 075: Recruit the right people for the right job with Aviator Brewing.

MicroBrewr 075: Recruit the right people for the right job

Mark Doble opened Aviator Brewing Company, Fuquay Varina, North Carolina, in November 2008. In less than 7 years he has started a brewery, a trucking company, a restaurant, two bars, and soon a new brewery with a distillery. All of these business are still operating.

“Not having to work at a corporate job anymore, that’s one of my favorite things about the brewery.” [Tweet This]

 

With over 100 employees total, Mark says hiring the wrong person is one of the biggest mistakes he has made in the past. He recommends spending time to recruit the right person for the right job.

“Sometimes we get the wrong people in the wrong job,” says Mark, “and that ends up costing us in the long term.”

Hear another brewer’s perspective on this: MicroBrewr 037: A forty-year career at the epicenter of craft beer, MicroBrewr, November 25, 2014.

Mark’s tips for hiring the right person:

  • Get people to talk about themselves.
  • Get to know them and their work ethic, to decide whether the job is a good fit for them.
  • If you have an employee in the wrong position, move her right away to a better-suited position.

Click the player above to listen to the full interview podcast for more tips and advice.

Brewery specs:

Kettle size: 30-BBL.

Size and quantity of fermentation tanks: 10, 100-BBL and 3, 60-BBL fermenters. 2, 30-BBL foeders.

Size and quantity of bright tanks: 2, 100-BBL brite tanks.

Annual brewing capacity/last year’s production: Brewed 10,000 BBL last year. Probably will brew 14,000 BBL this year.

Square footage: 23,000 sq. ft.

Years in operation: 6.5 years (opened November 2008).

Listener question:

From Adam Shay: When did you know that starting a real brewery, as a business was the right move? Do you wish you would’ve done it sooner/later?

Can’t-go-without tool:

Keg cleaner, Premier Stainless.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sour beer

Other resources:

You can reach Mark Doble and Aviator Brewing at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 074: Contract brewing for homebrew craft beer club with Noble Brewer.

MicroBrewr 074: Contract brewing for homebrew craft beer club

Noble Brewer is an online craft beer club featuring homebrewers’ best beers. It’s not exactly legal to sell homebrew by mail, so Claude Burns at Noble Brewer connects the homebrewer with a commercial brewery. Then they ship great homebrew from their base in Oakland, California.

If you want your homebrew to be featured in one of Noble Brewer’s quarterly shipments, here’s how Noble Brewer picks the homebrewers:

  • Homebrewing competitions and BJCP results
  • Willingness of the brewer to share her story
  • Whether the recipe will scale
  • Style variety in relation to the past picks

Read: Homebrew craft beer club. And then I never left the house.

I think it’s pretty aweome, but the main reason we talked with Claude is to find out for to start a contract brewery.

“There are a lot of great brands and great beers out there that are made by people who don’t own their own brewery,” says Claude. “There is also a lot of great beer companies that do own their own brewery, but [production of their own beer] is very small. The vast majority of their beer is contract brewed.”

Other contract breweries—or breweries that got their start as a contract brewery—on MicroBrewr Podcast:

Alamo Beer Company

HenHouse Brewing

21st Amendment Brewery

Backshore Brewing Co.

Two Birds Brewing

Craft Artisan Ales

Of course, to sell alcohol, you need to have some kind of license. The process and licensing is different in every state. So Claude advises that you check with a lawyer. Usually a contract brewery is set up like a distributor.

In California, Claude says, most contract breweries would use a Type 17 license from California Department of Alcoholic Beverage Control. This allows you to have beer made for you by another brewery, then you can sell it to retailers.

“The ABC is very willing to work with you,” says Claude. “You go to them, and tell them what you want to do, they’ll be very willing to work with you to make sure you do things the right way.”

Be very detailed in telling your state licensing agency what you want to do. They’ll suggest the license that you need. Then ask a lot of questions to make sure you’ll be able to do the things you intend to with a given license.

Check this page for a list of state alcoholic beverage control boards.

Next you’ll nee to find a contract brewery to manufacture your product:

  • Ask breweries whether they have excess capacity for your beer.
  • Network with other brewers to find a brewery that makes contract beer.

Choosing the brewery to work with:

  • Look for a company that shares your same goals.
  • View the arrangement as a long term, mutually beneficial relationship.
  • Check references of the brewery, and trust recommendations of others.

Depending on your agreement, the different responsibilities will lie with one party of the other. Sometimes the brewery will do more, sometimes you’ll need to do it. So check with your brewery to see whether they’re expecting you to provide your own ingredients and packaging, whether you’ll need to get TTB approval on your labels, or other tasks.

“If you’re a contract brewer, and that’s going to be more of your long-term strategy,” advises Claude, “you’re going to do things like [contract directly with a hop supplier] so you’re going to have your own source of hops for your beers.”

“If you want to put a ton of really restrictive terms in an agreement, as a [small startup] contract brewer you may be less likely to enter that agreement. It’s really about developing that working relationship with each other and making sure that you have the same goals in mind and you’re working toward something long-term.”

“Everybody I have met has been more than happy to share their knowledge.” [Tweet This]

 

Listener question:

From Dan: How hard/easy was the licensing from the state? What local regulations did you have trouble with? Were the locals helpful in setting up the business?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Saison

Other resources:

You can reach Claude Burns and Noble Brewer at:

Sponsors:

Beer

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 073: Contract brewing: quality product with low barrier to entry with Craft Artisan Ales.

MicroBrewr 073: Contract brewing: quality product with low barrier to entry

David Olsen dives into things all the way. He decided that he wanted to homebrew, so he read about 15 books and took some short classes at UC Davis. Within 6 months he was winning awards at homebrewing competitions. He started Craft Artisan Ales, in Pacific Grove, California, with contract brewing because it was an easier barrier to entry.

“Even to get like a 7-BBL system going, you’re going to need at least a half-million dollars,” estimates David. “Then you have the labor, the insurance, the overhead, the space, the lease, all those other factors that go into it.

“So to be able to go to a facility that can take your recipes and create a quality end product [in exchange] for part of the margin, is definitely an appealing way to get into the craft beer industry.”

Other contract breweries—or breweries that got their start as a contract brewery—on MicroBrewr Podcast:

Alamo Beer Company

HenHouse Brewing

21st Amendment Brewery

Backshore Brewing Co.

Two Birds Brewing

David has some recommendations to nail down your beer styles and recipes:

  • Spend a lot of time working on one single beer, then develop other recipes from there.
  • Take some brewing classes, even weekend classes or 2-week classes.
  • Be super careful about sanitation and temperature control.

You’ll need to have accounts confirmed to buy your beer when it’s ready from the brewer. Here’s what David did:

  • He pushed the local angle in his products by using local names and themes.
  • Friends who owned restaurants agreed to carry his beer on tap.
  • The owner of the homebrew store helped make other connections.
  • He put samples in a cooler pack and walked into stores to talk to the manager.
  • He provided a sample, sales sheet, and business card everywhere he went.

Contract brewing is a much easier way to enter the craft beer market. The cost is a tiny fraction of what it costs to open your brewery. The time that you would have spent brewing can be spent marketing, delivering product, nurturing relationships, and all the other things required when you own your own brewery.

Brewery specs:

Kettle size: 25-BBL contract facility.

Size and quantity of fermentation tanks: 25-, 50-, and 100-BBL tanks available.

Size and quantity of bright tanks: Same.

Annual brewing capacity/last year’s production: Capacity is 15-20K BBL for the contract facility. Last year Craft Artisan Ales produced about 1,000 BBL.

Square footage: 80,000 sq. ft. at the contract facility.

Years in operation: 18 months (opened February 2014).

“I don’t have an exit plan because I want it to be a career. All I have are expansion plans.” [Tweet This]

 

Listener question:

From The Beer Sommelier: What is your exit plan?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sour beers

Other resources:

You can reach David Olsen and Craft Artisan Ales at:

Sponsors:

Beer

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 072: Batch 4,000 and brewery law reform in Minnesota with Fitger's Brewhouse Brewery & Grille.

MicroBrewr 072: Batch 4,000 and brewery law reform in Minnesota

Dave Hoops has been brewing for decades. He brought what he learned in California to Minnesota and helped change the brewery laws there. Now his West Coast style beers have been working well for Fitger’s Brewhouse Brewery & Grille, in Duluth Minnesota.

Minnesota does not allow breweries to self-distribute to outside accounts. So Fitger’s has “tied houses,” restaurant/bars that are “tied” to their brewery. That is, their production brewery makes beer for the restaurants that they also own.

If they wanted to package beer for outside distribution, state law would require them to sell the restaurants and just be a package brewery.

To make matters trickier, each brewery under this scenario must have a restaurant (a “production brewpub”), which can make no more than 3,500 BBL per year. So if they were already maxed out at 3,500 BBL per year and they wanted to add another restaurant, the new one would have to be another production brewpub with the limits on annual capacity.

“The only reason that these laws haven’t been challenged,” says Dave, “is because nobody has gotten to this level yet. I’m sure they’ll change it when it happens.”

It’s peculiar because Duluth is right on the border with Wisconsin, which as less stringent laws. So they move their company just 5 miles to the south, they would be allowed to sell their beer to a wider audience.

Still, Dave says the Minnesota brewery market is expanding rapidly. The state recently passed a law that allows productions breweries to have a tap to serve food and their own beer.

Dave was on the board of the state brewers guild and, like Jeff Mease from Bloomington Brewing Co., he helped change laws to make it easier for breweries—like the ability to sell growlers.

“I’m a veteran now, I’m a little more patient,” says Dave. “It’s in [the state’s] best interest to help us sell more beer. So eventually they come around.”

Dave’s advice for reforming brewery laws in your state:

  • Visit your state capital and find the legislators who are sympathetic to your cause.
  • Find enough legislators for a caucus.
  • Be persistent, be positive, and talk to a lot of people.
  • Research to show the stats and facts of how breweries can help the economy and the community.

Brewery specs:

Kettle size: 10 BBL.

Size and quantity of fermentation tanks: 4, 10-BBL fermenters; 12, 15-BBL fermenters.

Size and quantity of bright tanks: 20 tanks, most 15-BBL bright tanks.

Annual brewing capacity/last year’s production: Annual capacity is 3,200 BBLs. Last year’s production was 3,000 BBL.

Square footage: 3,600 sq. ft. over two floors.

Years in operation: 20 years (opened 1995).

“I feel really lucky to be a part of this artisan trade that’s been around for centuries.” [Tweet This]

 

Listener question:

From Lisa Boban: Can you make something other than beer?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Session IPA

Other resources:

You can reach Dave Hoops and Fitgers Brewhouse Brewery & Grille at:

Dave’s social media:

Sponsors:

InMotion Hosting

“Fast, reliable, affordable, web hosting.”

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Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 071: Four years from brewing school to brewmaster with Capital Brewery.

MicroBrewr 071: Four years from brewing school to brewmaster

Ashley Kinart began homebrewing to learn about the brew process so she could better answer customer questions at the craft beer bar where she worked. She eventually realized that it really interested her, so she enrolled in the World Brewing Academy at Siebel Institute of Technology. Four years later she became the brewmaster at Capital Brewery, in Middleton, Wisconsin.

Although Ashley is happy about her “quick rise to the top,” she says she would have liked to get more experience in every part of the brewery operations.

“I definitely would have liked to spend a little more time in cellaring, a little more time in packaging,” says Ashley, “to just have that full-scale overall understanding on every single little level.”

Prior to brewing school, Ashley attained a bachelor’s degree in biology. She says the science helped her better understand the material from brewing school.

“My science background definitely gets me a little excited about the small things like the microscopic happenings that are going on behind every step of the brewing process.”

Other suggestions from Ashley:

  • Start volunteering to get experience at a commercial brewery.
  • Do the best you can and work as hard as you can.
  • Don’t be afraid to ask questions of other people in the industry.

Most of all, actively seek knowledge.

“Being called a brewmaster was something that I not only didn’t see myself as, but also I don’t ever see myself knowing everything there is to know about brewing, which is why it really interests me.”

Brewery specs:

Kettle size: 35 BBL.

Size and quantity of fermentation tanks: 30 tanks ranging from 32-BBL to 161-BBL. Six are dedicated to lagering/aging.

Size and quantity of bright tanks: Three tanks ranging from 100-BBL to 129-BBL.

Annual brewing capacity/last year’s production: About 30,000.

Square footage:

Years in operation: 29 years.

“How much of your brewing knowledge are you actively seeking?” [Tweet This]

 

Listener question:

From Harold Giménez: What are your favorite beers? Who are your brewing influences?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Lagers

Other resources:

  • World Brewing Academy, Siebel Institute of Technology (Chicago, U.S.A.) and Doemens Academy (Munich, Germany)
  • Females Enjoying Microbrews.
  • Pink Boots Society to empower women beer professionals to advance their careers in the beer industry through education.
  • Brew Masters, Discovery Channel.

You can reach Ashley Kinart and Capital Brewery at:

Ashley’s social media:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 070: Brewery law reform and scaling up in Indiana with Bloomington Brewing Co.

MicroBrewr 070: Brewery law reform and scaling up in Indiana

Jeff Mease worked in his parents’ grocery store when he was a kid. “I had grown up in a family business,” he recounts. “By the time I was legal, I didn’t have any fear of business.” Indeed, when Jeff was just 19 years old, he started a pizza business that is still Bloomington’s favorite pizza delivery service.

Twelve years later, Jeff started Bloomington Brewing Co., in Bloomington, Indiana. It was the 4th brewery in Indiana and the laws were not conducive to brewpubs.

If your state has archaic brewery laws, Jeff has some advice for brewery law reform:

  • Talk to state legislators for your area.
  • Study brewery legislation from other states.
  • Recruit the help of the Brewers Association or the brewers’ alliance in your state.
  • Educate your legislators about how brewery law reform will help the economy and the community.

Ever since they helped change brewery laws in Indiana, Bloomington Brewing Co. has been going strong. Five years ago, they expanded operations beyond the brewpub into a production facility. Last year, they started packaging into 22-ounce bottles.

Jeff spent a lot of time researching and studying the numbers for packaging their beer into bottles. He learned, “If we go into a 12-ounce package, we’re going to have to make 4 times as much beer just to be in the same place [financially] that we are now.”

“Smaller package means high volume, if you’re going to survive,” says Jeff. “Brewers never ever wish they’d had a smaller system.”

“A lot of people get so busy with the work that they don’t bother to really look at the numbers,” says Jeff. “It seems like, ‘How could you not make money putting this beer into a bottle?’ But you know what? You can, I promise,” cautions Jeff.

With 20 years of experience with the brewpub, plus more years with other businesses, Jeff has a lot of wisdom to draw. Luckily, he is generous with his knowledge.

“Nobody should be impatient to jump into this business right now. It’s already late to the party, I’d say. So if you’re going to come into this business now and be successful at it, you sure as shit gotta know what you’re doing,” Jeff advises. “So don’t rush into it.”

“A lot of times people who are considering getting into business are afraid to talk to people who are already in that business. Because there’s all sorts of fears that they’ll steal your idea, or they just won’t tell you anything, or they’ll look at you as competition, but I’ve found… that the people who are successful in an industry are more than happy to help counsel people. Go out and ask the questions.”

“You’re only going to be successful if you don’t make the stupid mistakes. And it’s easy to make the stupid mistakes no matter how smart you are.”

Other tips from Jeff:

  • Start as large as you can.
  • Be as state-of-the-art as you can.
  • Invest in training your brewers.
  • Choose the right yeast.

Brewery specs:

Kettle size: 15-BBL and 20-BBL.

Size and quantity of fermentation tanks: 2, 15-BBL and 4, 40-BBL fermenters.

Size and quantity of bright tanks: 1, 15-BBL and 2, 40-BBL bright tanks.

Annual brewing capacity/last year’s production: 1,850 BBL.

Square footage: 700 sq. ft. in a 120-seat brewpub, 3,000 sq. ft production facility for draft and 22-oz glass bottles.

Years in operation: 21 years (opened 1994).

“I had grown up in a family business. I didn’t have any fear of business.” [Tweet This]

 

Listener question:

From MyMateMike on Twitter: How long before the brewery became profitable and paid off the loan, other setup costs and debts?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sweeter beers

Other resources:

You can reach Jeff Mease and Bloomington Brewing Co. at:

Sponsors:

Beer

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 069: Arrrgh! What to do when yer job gets boring with Pensacola Bay Brewery.

MicroBrewr 069: Arrrgh! What to do when yer job gets boring

Mark Robertson got bored of his job, so he opened a brewery. Pensacola Bay Brewery, in Pensacola Bay, Florida follows their local heritage with a fun pirate motif. But they’re not all scurvy. After 5 years, Pensacola Bay Brewery is going strong, expanding operations, and willing to share what they’ve learned.

Mark hesitates to disclose how much money they spent to start their brewery. “I will not divulge numbers,” he says, “for the simple reason that you can’t do it for what we did it at, today.”

Nonetheless, he estimates that it would cost $1.5 million to $2 million to start a brewery like theirs. This includes 6 months of working capital. “You can’t get anywhere without [working capital].”

He prefers to let another company distribute Pensacola Bay’s product. “They have a sales force, they have a refer warehouse, they’ve got distribution networks. Those things I couldn’t afford.”

“You’d have to add another half million onto the cost of the brewery,” says Mark, “in order to come up with refer trucks and drivers and a sales force.”

To gain visibility for new customers Mark says:

  • Go to beer festivals
  • Do tap takeovers
  • Give out a lot of freebees
  • Send the brew staff to the events, not sales people

“You gotta go out and work the market,” Mark advises. “You gotta go out and visit.”

Mark homebrewed even before he learned it was illegal in his state. To other homebrewers wanting to follow his path, Mark recommends investing in yourself:

  • Enroll in courses
  • Attend seminars
  • Read books
  • Ask commercial brewers to criticize your beer

Brewery specs:

Kettle size: 15 BBL.

Size and quantity of fermentation tanks: 5, 30-BBL fermenters, 2, 15-BBL fermenters.

Size and quantity of bright tanks: 2, 30-BBL bright tanks, 3, 15-BBL bright tanks.

Annual brewing capacity/last year’s production: Brewed 2,800 BBL last year.

Square footage: 3,500 sq. ft.

Years in operation: 5 years (opened October 2010).

“If I had a new brewery, I would avoid packaging as much as I can.” [Tweet This]

 

Listener question:

From Alan Gorney: How long did it take before your brewery became profitable?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sour beers

Other resources:

You can reach Mark Robertson and Pensacola Bay Brewery at:

Sponsors:

InMotion Hosting

“Fast, reliable, affordable, web hosting.”

advert-inmotion-hosting_250x250

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

 

MicroBrewr 068: An SBA loan can help open or grow your brewery with Hi-Wire Brewing.

MicroBrewr 068: An SBA loan can help open or grow your brewery

Two years ago, Adam Charnack and his partners got a $254,000 SBA-backed loan to start Hi-Wire Brewing in Asheville, North Carolina. Today, they’re expanding to a second brewery with another SBA loan.

“The SBA involvement in craft beer,” says Adam, “has been a part of the success of craft breweries being able to open and grow.”

“The way that banks are willing to look at breweries is totally different under and SBA lens. We’re all just young guys that wanted to start a brewery. So we’re not rolling in [money] or have some big financing. Without SBA involved it definitely would make getting financing a whole lot more difficult.”

Adam advises to focus on your business plan. “If you show up with a notebook paper, or a page-and-a-half typed, with a bunch of typos on it, that’s not going to cut it.”

The financials are the most important things that banks look for when you apply for funding:

  • Financial projections
    • How much it’s going to cost to make things
    • When you’re going to get paid
    • What the prices are
  • Sources and uses of funds
  • Projected and net operating income (12 months, and next few years)
  • Cash flow

“A lot of that is a shot in that dark,” admits Adam, “but at least you’re making intelligent assumptions.”

With so many breweries in and around Asheville, there is an abundance of qualified workers. Even still, employee retention is important.

“We’ve never had anybody leave our company that started with us in the last 2 years in our brewery operations,” says Adam.

His tips on how to keep quality workers:

  • Throw parties throughout the year.
  • Organize fun company outings.
  • Have a lot of fun.
  • Respect people.
  • Provide opportunity.

“If you treat people right and you respect people,” says Adam, “we’ve had no problem retaining talent here.”

Other tips:

  • Bring on a partner with an understanding of, or background in, finance.
  • Assets or an alternative means to payback a loan helps to secure funding.

Advice for someone who wants to do what he has done:

Brewery specs:

Kettle size: 30 BBL + 30 BBL (two breweries).

Size and quantity of fermentation tanks: 90-BBL and 30-BBL.

Size and quantity of bright tanks: 90-BBL and 30-BBL.

Annual brewing capacity/last year’s production: In September 2015, capacity will be approx.. 17,000 BBL/year. By year’s end, on pace of 10,000 BBL/year.

Square footage: 27,000 sq. ft. and 4,000 sq. ft.

Years in operation: 2 years (opened July 2013).

“I would definitely advise having a business partner.” [Tweet This]

 

Listener question:

From Daniel: What’s your biggest regret?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Lager

Other resources:

You can reach Adam Charnack and Hi-Wire Brewing at:

Sponsors:

Beer

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 067: How to find investors for a brewery with Jenny Kassan.

MicroBrewr 067: How to find investors for a brewery

UPDATE: Mistakes and clarifications have been corrected, per Jenny Kassan.

You planned the brewery of your dreams. You researched the market and you know it will be profitable. But you don’t have a million dollars under your pillow to start it. Now how to find investors for a brewery?

Jenny Kassan, an attorney and consultant in Oakland, California, graduated from Yale law and worked for 11 years helping to build really small businesses. For the last 9 years she worked in securities law, “the very highly regulated world of raising money for a business.” Now she does consulting and teaches classes on how to raise funds for businesses.

As soon as you ask someone to invest in your brewery, you’re conducting a “security offering,” which is regulated by the U.S. Securities and Exchange Commission (SEC), as well as the securities regulators in each state where you offer the investment.

“Even if the regulators don’t catch you and fine you, you have created this liability for your company,” cautions Jenny. “If, for example, one of your investors was unhappy later and wanted their money back because you couldn’t afford to pay them or something, they could complain. And then it would be uncovered that you never did comply with those laws. And they would have a pretty good case against you.”

First, some background info.

There are generally 2 kinds of investments:

  1. Equity – ownership in the company
  2. Debt (loan) – must be paid back

There are 2 kinds of investors:

  1. Accredited investor – A person with a net worth of $1 million (excluding his or her primary residence) or annual income of $200,000, or an entity with $5 million in assets.
  2. Unaccredited investor

If you offer a security only to accredited investors, the legal compliance hurdles are generally fewer. However, there are legal ways to include both kinds of investors in your offering.

 

Until you have ensured that your offering is legally compliant, don’t solicit investors directly. Also don’t advertise your offering publicly unless you have done the legal compliance that allows advertising. At this point, don’t solicit investors directly, just ask general questions.

Anything other than one-on-one communication is considered advertising, which is regulated by the SEC.

“Have some informal conversations with potential investors,” Jenny instructs, “and say, ‘I’m thinking about raising some money—I’m not doing it now, but I’m thinking about.’”

Then ask general “if scenarios.” For example, “If I were to offer an investment opportunity in my brewery:”

  • Would you be more interested in equity or debt?
  • How would you expect to get paid back?
  • How long would you be willing to have your money tied up?
  • What kind of perks would you want?

The laws are flexible enough that you can design your investment agreement in lots of different ways.

“There’s a lot of kinds of equity that can look a lot like debt,” says Jenny. “There’s also debt that can look more like equity, where the payment that you make to your investor can vary based on the success of the company.”

After both parties come to agreement, they each need to talk with an attorney to make sure their desired agreement is legally compliant.

Most investments require some kinds of securities filing at the state or federal level or both.

After you figure what you’re willing to offer, you might be ready to conduct an offering. Talk to an attorney to help you do the necessary filings.

Direct Public Offerings

If you want to do a Direct Public Offering which allows you to do public advertising and include unlimited number of both accredited and unaccredited investors, you may need to file a Form D with the SEC and register with your state regulators. The filing requires attachments such as:

  • “Prospectus”
    • Risks
    • Business Plan
    • Description of management team and qualifications
    • Anything investors would need to help them make a decision
  • Sample security to be offered
  • Organizational documents for the company
  • etc.

The filing fee can range from a few hundred to a couple thousand dollars. Legal fees usually range from $15,000 – $30,000. It sounds like a lot, but if you’re opening a million dollar brewery, it’s a worthy 3% of the overall budget.

“I think it’s possible to do without an attorney,” speculates Jenny. “It’s certainly not the best strategy. It may take you twice as long and it may be a nightmare, but you should be able to get through the process.”

If you go at it without an attorney, remember that the regulators are there to help. So work with them, respond to all of their questions, and make their requested changes.

Once you get approval from the regulators for your Direct Public Offering, now find money!

Advertise your offering:

  • Talk to media
  • Get in the newspaper
  • Put it on your website
  • Send mass emails
  • Host parties and events
  • “Set up a million meetings”

Have your investor packet ready for when people want to know more.

“The best thing to think about,” says Jenny, “is to put yourself in their shoes and ask yourself, ‘What is everything I would want to know if I were them, before making a decision?’”

Include anything to help them make a decision, even the risks.

“If they find out later that you didn’t disclose something that was material to their decision,” cautions Jenny, “they could sue you and say you misrepresented what the opportunity was.”

Vet your investors

Another important thing is to make sure each investor is a good fit.

“You don’t want to accept the first investor that says ‘yes,’” cautions Jenny.

Find investors with whom you get along, and with whom your values and vision for the business align.

“When you are bringing in a fairly large investor,” says Jenny, “they may have a pretty big role that they are playing in your life for the next 10 years.”

And maybe we should saying something like… Of course this is lot legal advice. The laws are highly complex and vary from state to state. You need to speak to an attorney about your specific situation.

“You really have to vet your investors in the same way that they’re vetting you.” [Tweet This]

 

Listener question:

If you could ask one question to every brewer or brewery owner, what would you ask? Let me know.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Cider

Other resources:

You can reach Jenny Kassan and her legal work at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 066: How to get an SBA loan for a startup brewery with First Community Bank.

MicroBrewr 066: How to get an SBA loan for a startup brewery

Kris Kennedy works in the Small Business Lending Group with First Community Bank in Roseville, California. They were the first financial institution listed as an allied trade member of California Craft Brewers Association.

The U.S. Small Business Administration’s loan program makes it easier for small businesses to get funding from traditional lending institutions. Kris teaches us how to get an SBA loan for a brewery.

All participating banks must go by the SBA guidelines. There are typically 5 criteria to judge worthiness for a loan:

  1. Cash flow – This could be historical or projected. Can you repay the debt?
  2. Economic environment of the industry – Also includes changes to the industry such a new regulations or supply issues.
  3. Collateral – Can include business assets and personal real estate.
  4. How much the borrower is investing – They typically require 20-25% for startups.
  5. Character – They check your credit score including public records such as judgments and liens. Credit score must be at least 680.

Loan funds can be used for a variety of things. Eligible expenditures include:

  • Operating equipment
  • Real estate
  • Tenant improvement to real estate
  • Construction of a new building
  • Refinancing for business debt
  • Purchase of an existing business
  • Working capital

Loan amounts can range from $350,000 to $5 million dollars. Loans are offered in 10-year and 25-year terms. They’re fully amortized, meaning that the monthly payment will be the same through the life of the loan. There’s usually no pre-payment penalty after the first 3 years.

Kris says the ideal candidate should have experience working in a commercial brewery. Planning on opening a brewpub, have restaurant or hospitality experience. Basically, show that your past experience applies to running a brewery.

If you’re a homebrewer wanting to get an SBA loan, it could help to have awards for your beer. So start entering in contests!

Lastly, Kris says, it’s good to work with a lender that has experience in the industry. If you’re in California, Arizona, Nevada, Washington, or Oregon, and you need funds to start or expand a brewery, get in touch with Kris.

“Not every startup is something that a lender is going to be able to finance.” [Tweet This]

 

Listener question:

From Josh Button: How much business experience should I have? What kind of experience or education would you ecommend?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Pale ale

Other resources:

You can reach Kris Kennedy and First Community Bank at:

Sponsor:

Beer

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 065: Finding the right small business insurance for a brewery with Moores Insurance Management.

MicroBrewr 065: Finding the right small business insurance for a brewery

Moores Insurance Management, in St Paul, Minnesota is an independent insurance agency. They’re not an insurance company; instead they act as an advocate for small businesses, to assess risk and help pick the best insurance plan for your situation.

Jack Moores has been working in the industry for 5 years. He’s the risk advisor for the agency that his father heads. They specialize in finding the right insurance for craft breweries.

Insurance categories that a brewery likely needs:

  • Property insurance – For the building and the brewing equipment.
  • General liability – For third-party claims against your brewery such as “slips, trips, and falls” or other “allegations of negligence.”
  • Workers compensation – If an employee becomes injured or ill while working on the job.
  • Liquor liability – For claims concerning “over-served patrons.” Also covers your defense costs, which could come in handy in the event of frivolous lawsuits.

So how much will insurance cost for your brewery? Plan on budgeting about $5,000 to $10,000 annually for all insurance needs.

Keep in mind that cost of premiums can vary widely based many factors including:

  • Location
  • Property value
  • Amount of equipment
  • Square footage of the building
  • Projected revenue
  • Percent of beer sold on-site
  • Amount and type of live music

Additionally, businesses are rated based on “loss experience” and judged against other businesses in the same industry. Basically, if you have more claims than other breweries, you rates can go up. This is especially important in terms of workers compensation insurance.

“Haste leads to accidents…” says Jack. “Safety and prevention of claims really pays off because workers compensation constitutes close to half of a brewery’s total insurance program.”

Craft breweries experience twice as many claims for workers compensation than their macro brewery counterparts. And many of the risks present in the brewing environment are unique to the industry.

“The brewing business is a unique enough exposure that it warrants specialized coverages,” explains Jack. “A standard commercial insurance policy slapped onto a brewery is really going to leave some pretty significant gaps [in coverage.]”

Other insurance coverage that a brewery should consider:

  • Product recall
  • Employment practices
  • Beer spillage
  • Tank leakage
  • Refrigeration coverage

“The cost isn’t necessarily more, it’s just coverages that are tailored toward breweries,” explains jack

The main thing is to be proactive in managing your risk. Don’t think of insurance as a chore that just needs to be done, so find the least expensive plan.

“You have a product that you love, it’s dream job. I really don’t think it makes sense to jeopardize all of that just to save a few dollars on insurance.”

“Haste leads to accidents… Safety and prevention of claims really pays off.” [Tweet This]

 

Listener question:

If you could ask one question to every brewer or brewery owner, what would you ask? Let me know.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sour beer

Other resources:

You can reach Jack Moores and Moores Insurance Management at:

Sponsors:

InMotion Hosting

“Fast, reliable, affordable, web hosting.”

advert-inmotion-hosting_250x250

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 064: How to write a business plan for a brewery with Growthink.

MicroBrewr 064: How to write a business plan for a brewery

Dave Lavinsky went to business school at University of California at Los Angeles. After he won a business plan writing competition, he wrote a few for other businesses. Then he started Growthink, in Los Angeles, to help entrepreneurs and business owners develop their business plans so they can raise capital and grow their business.

3 reasons why people don’t do a business plan:

  1. No time
  2. Don’t know what to write
  3. Don’t know how to do the financials

Dave is steadfast that you shouldn’t take too long to write a business plan. “To spend more than 2 to 3 months to create your business plan is foolish,” he says, “because there is diminishing returns. After 3 months it’s not going to get all that much better, it just means that you’re probably procrastinating.”

Here are the essential parts of a business plan that you must have:

  1. Executive Summary
  2. Company Overview
  3. Industry Analysis/Market Analysis
  4. Customer Analysis
  5. Competitor Analysis
  6. Marketing Plan
  7. Operations Plan
  8. Management Team
  9. Financial Plan
  10. Appendix

To help explain how to write a business plan for your brewery, here are some notes on the outline above.

Think of the Executive Summary as the sales piece to convince investors that you can execute this plan. It should be 1- to 3-pages in length. Do this last to summarize the whole thing. Write it in very approachable language.

“It doesn’t need to be beautiful Shakespearian prose,” says Dave, “It needs to be something that’s accessible.”

Be sure to include what Dave calls the “success factor line.” Write, “We are uniquely qualified to succeed because…” Explain any of your unique skills, expertise, or resources that will guarantee your success. This might be background or expertise, products or services, location, systems, intellectual property, or a built in customer base.

The Company Overview is where you note the organizational structure and type of business entity.

The Competitor Analysis should describe both direct competitors and indirect competitors. Your direct competitors are nearby breweries. Indirect competitors might even be supermarkets, taverns, or liquor stores that carry a good selection of craft beer.

The Marketing Plan is where you talk about product and pricing, and how you will promote your product.

In Management Team, of course describe who will be running the company. But also explain the gaps in management and how you will fill those gaps. Maybe you will find another partner, hire a manager, or outsource some roles.

The Financial Plan has 3 spreadsheets:

  • Income Statement (Profit/Loss)
  • Balance Sheet
  • Cash Flow Statement

The Appendix has your supporting documentation. Include anything additional to help make your case that you can successfully execute on this plan. Some examples might include: lease agreement for the location, interior design plans, letters of commitment from buyers, customer surveys or other market data.

Lastly, be sure to have somebody edit the entire business plan. You could pay a professional to give it a once over. At the minimum, ask a friend to check it for readability, grammar, and typos.

Now you know how to write a business plan for your brewery. Let’s both take Dave’s advice and commit to finishing our business plans within 3 months!

“Running a business is not doing everything yourself.” [Tweet This]

 

 

Listener question:

If you could ask one question to every brewer or brewery owner, what would you ask? Let me know.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Double IPA

Other resources:

You can reach Dave Lavinsky and Growthink at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher

MicroBrewr 063: A hundred-page business plan and barely enough money, with Crazy Mountain Brewing Company.

MicroBrewr 063: A hundred-page business plan and barely enough money

At the height of the great recession, Kevin Selvy had a hundred-page business plan and started Crazy Mountain Brewing Company in Edwards, Colorado with $500,000. He calls it an irresponsible amount of money and estimates that nobody should do it with less than $1.5 million.

Nonetheless, he met his 3-year sales estimates within 3 months. After 5 years, their beer is distributed to 18 states and Europe, and they just entered the California markets.

“The best advice I could give,” says Kevin, “is give up your day job and go work for a brewery. When it comes to finding investors, if you can say, ‘I’ve got several years of experience in the industry, I know what I’m doing,’ that goes a lot farther than somebody saying, ‘I just like making beer in my kitchen.’”

Kevin sent his business plan to more people than he could count. He drove 10 hours and slept in the back seat of his car to meet with a potential investor.

“Raising money is a very difficult aspect of starting a brewery,” warns Kevin. “You’re going to get 900 ‘no’s before you get one ‘maybe.’”

Here’s some of his advice:

  • Research your business plan
  • Have a packet ready for when investors ask
  • Don’t give up

Although Kevin’s business plan was about 100 pages, lots of it was graphs and financial tables.

“Make sure it’s very thorough and points a really good picture of what you’re trying to accomplish.”

Brewery specs:

Kettle size: 20 BBL.

Size and quantity of fermentation tanks: 23 tanks, 20-BBL, 40-BBL, and 60-BBL.

Size and quantity of bright tanks: 1, 40-BBL; 1, 20-BBL; and 1, 60-BBL bright tank.

Annual brewing capacity/last year’s production: 17,000 BBL brewed in 2013. 20,000-BBL capacity.

Square footage: 10,314 sq. ft.

Years in operation: 5 years (opened 2010).

“The best advice I could give is: Give up your day job and go work for a brewery.” [Tweet This]

 

Listener question:

From Kevin Scott: Can you talk about the pros and cons of contracting for raw materials for your beers (i.e, hops, malts, etc.)?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Session IPA

Other resources:

You can reach Kevin Selvy and Crazy Mountain Brewing Company at:

Sponsors:

InMotion Hosting

“Fast, reliable, affordable, web hosting.”

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Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

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MicroBrewr 062: Cohesive brand development for your brewery, with Measured Methods.

MicroBrewr 062: Cohesive brand development for your brewery

Measured Methods is a multi-purpose agency focusing on craft breweries and other artisanal crafts. They’re based in Burlington, Vermont, but they can provide a variety of services for breweries anywhere. They focus both on the front end, such as branding and anything a customer would see, and also back end, such as processes and supply chain issues.

In this episode, Eric Lussier and Bethany Baker, talk with us about branding, how to develop a look and feel to your company image.

“Behind your product quality,” says Bethany, “the single most important thing about your brand is to have a cohesive look and feel.”

A lot goes into a cohesive brand, such as:

  • Shelf-appeal
  • Color palate
  • Style
  • Event selection

When picking names, whether it’s your brewery, or your beers, think of something that sounds great.

“I often like to tell people that naming conventions are like tattoos,” says Bethany. “Everyone loves a good back story & meaning behind it, but sometimes it’s just because you enjoy the sound of it.

A name should also have a story behind it. And this long-term about the themes that you convey. You don’t want to alienate your audience by mixing it up too much, but you also don’t want to pigeonhole your brand by sticking to strictly to one theme.

“Before you brew your first batch, start promoting your brand.” [Tweet This]

 

Listener question:

From MoonFace on Twitter: What’s your go to beer or brewery?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Sour beers

Coffee-infused beers

Other resources:

You can reach Eric Lussier, Bethany Baker, and Measured Methods at:

Eric Lussier on Twitter:

Bethany Baker on Twitter:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. http://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher