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Posts Tagged ‘business plan’

As I said we would, Kell and I have been pumping away at the business plan in hopes of having a rough draft out this weekend. Granted, I don’t think we will. But, we’re working on it pretty hard!

Everything is coming along pretty smoothly. Suppliers and other brewers alike are very generous with information. The City of Denver has been responding to questions about tax and property issues, incentives etc. All is well.

One thing that has sort of stopped us, while we get ready to gear up for the issue, is what size we want to be. Our two options are small or big. Granted, our version of “big” is still tiny in the world of brewing, but that’s besides the point. We’re looking at either a 1/2 bbl (bbl = barrel = 31 gallons = 2 kegs) system or a 3-5 bbl (either 3 or 5, that decision comes later) system.

Both systems have a lot of inherit risk. Just by opening a brewery, we are taking a massive risk. But, the beer is amazing. So, there’s that.

The 1/2 bbl system has a lot of merits. It’s inexpensive, comes pretty much ready to use in a nice little package, and doesn’t come with nearly as much initial risk. The idea with this system would be to ferment the batches in kegs or small plastic conical fermenters. All beer would be sold on premise, with maybe, just maybe an account or two. The labor to beer ratio would be ridiculously high, but the cost would be super low.

On premise sales are enormously profitable in relation to off premise sales. The revenue from a keg of pints sold in the brewery at normal costs is a few hundred percent more than selling a keg outright to an off premise account.

Of course, if the beer is as good as it is, and demand picks up like we think it will, the risk in this plan comes from the inability to grow. Growth is easy on a batch to batch premise. We buy another keg, we can brew another batch. But, for every new fermenter – aka keg – it’s another batch someone has to brew. It’s a linear growth that’s not sustainable in the long run.

The thought here is that it would be easier to get the investment for this lowered capital, prove our worth, spread the word, and then ask for more money and more equipment when we feel we need to. The downside of that is when we’re trying to save up money to grow to that next level, we won’t be able to satisfy demand. Customers get pissed. We go out of business. Or fall apart from being overworked.

The larger system, a 3 to 5 bbl system, loads a lot more of the financial risk up front. The initial investment is much more. Though, at 6-10 times the volume, the investment is not 6-10 times as much. At this level we can calm down a little on the brewing, focussing more on customer service and sales. There is more equipment required, like keg washers and fillers, for example. And we’ll need to go out and sell the beer to accounts like Falling Rock and Rackhouse Pub, rather than market to get people to come inside the brewery. So it’s just as much work, just allocated in a different way.

If we are able to secure the investment for this bigger system, the growth potential is much better. With any system, we have the ability to “double brew”, or brew more than one batch into a double-sized fermenter. This saves on yeast and time and tank resources. At the 1/2 bbl level, a double batch fills a 1 bbl tank. At the 5 bbl level, a double batch fills a 10 bbl tank. While the ratios are the same, 5 extra barrels of beer is a lot of extra beer.

Just writing this post is helping to push me toward the larger system. I think Kell said it best. It’s better to ask for a larger investment now, when we have the time, than to it is to spend an initial investment so we can ask for the same larger investment in a year or two.

So, assuming we can find a rich uncle or some other form of investor, it looks like we’re going “big”. From pico to nano!

What do you think?

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May Day! May Day!

May 1, 2010.

This is an important date.

Last night, Kell and I, over glasses of Caol Ila, set a deadline for the business plan. It might not be perfect, and it might not be pretty, but we will have a first draft ready to rock on May 1, 2010.

Hold us to it.

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And how does that make you feel?

And how does that make you feel?

Have a seat. Let’s talk.

It’s been a great few days. Someone said that excitement and passion over a goal makes that goal happen faster (I think my mom said that last night). Well, I’m excited, and I’m passionate, and things are happening.

This is going to be a big post. I’ll start with the small stuff and grow from there. Side note: Anyone going to Beer Wars in Denver on Thursday? Andrew (you’ll find out who that is at the end) and I are going, and hopefully Kell will make it up as well. Let me know, we’ll grab a brew.

National Homebrew Competition

Beer judge. Better job than tan-line inspector.

Beer judge. Better job than tan-line inspector.

The NHC is under way! (http://www.beertown.org/events/nhc/) We brewed our IPA specifically for this competition. Timed it out, cleaned the bottles, made sure the caps were clean, and… rushed it. Ended up bottling it at 1.032 or so, meaning we bottled it with a lot of sugar still in the wort. What that means is rather than all the CO2 – yeast’s byproduct when converting sugar -> alcohol – escaping through the air lock, it was forced into solution in the closed container that is a beer bottle. What’s that mean? Something like this.

Ya.. it explodes unless you open it ridiculously slowly, and pour it into a few glasses to let the foam settle. We decided it wasn’t worth the almost 2 hour round trip drive to submit a beer that would drench the judges.

This weekend I received an email from our division’s coordinator, asking where the beer was. I explained, and she said she could add a special note saying “Open Slowly”, and meet her in Denver to drop off the brew. So I’m going to meet her tomorrow or Thursday, and submit the beer! I doubt we’ll win, but at least we’ll be in it still! It’s called “First Round Draft”. Good times.

Homebrew Shop

I couldnt find a picture of the shop... So here is my favorite grain: Dark Munich Malt

I couldn't find a picture of the shop... So here is my favorite grain: Dark Munich Malt

I mentioned this earlier, but I’ll recap anyway. Saturday, Dave and I went to Beer At Home in Englewood to pick up supplies for the Blonde Ale. We brought the new volcanic IPA with us, as well as a bomber (22 oz.) bottle of our previous batch. They. Loved. It. I can’t really say more than that. They were stunned at how tasty the beers were. Asked us all sorts of questions. Asked for more. They’ve always been respectful of us as customers, especially customers who appear to have some idea what we’re doing. But their attitude definitely shifted quite a bit. It was a really really good feeling, and one of the best receptions of the beer I’ve had to this point.

Speaking of the Blonde Ale, it ended up weighing in at 1.072 with 3-3.5 gallons. It’s gonna be a big bodied blonde.

Daniels College of Business

This is a fun one. Sunday, while brewing, I emailed a professor at the University of Denver’s (DU aka my college’s rivals) Daniels College of Business. I told him how I have these great ideas and drive to start a business, but no formal MBA-style business training. I asked if they ever lent students to small businesses to help with certain tasks, for class credit or whatever. I expected to hear back in 2-3 weeks, if at all. Three hours. Three hours, and I had an email back. He told me that they in fact have an entire program for just this scenario, and forwarded me on to the contact for that program. The next morning, this guy emailed me the application and some details.

The rules are simple. Four MBA students form a team, with the business owner / business contact joining occasionally, and help a new or growing business with three aspects of the business. An example would be the business plan, marketing plan, and sustainability plan. So, pretty much, I can get help in part of the planning that I’m not 100% confident in. Sold!

Twitter, the ultimate networking tool?

Its the Fail Whale!

It's the Fail Whale! (use twitter, it'll make sense)

I’ve been tweeting a lot. I’ve made some great connections with other like-minded individuals, in many different parts of the craft beer world. I helped out with some code at BeerNews.org, made some contacts in various industries, have some advice coming from experts in everything from branding to real estate, and am generally just spreading the word about the brewery. I micro-blogged the entire brewing process on Sunday, which you can see on my twitter page (http://twitter.com/hookedonwinter) and twitpic photo stream (http://twitpic.com/photos/hookedonwinter). This probably sounds like geek gibberish to a lot of you. That’s fine. Ask or explore or ignore it, you’ll learn about it eventually.

Mike

New Belgiums first system is behind the lady with the pretty gloves.

New Belgium's first system is behind the lady with the pretty gloves.

When I posted last week about looking for an engineer, my buddy Phill sent a note to some friends. Mike responded, and wants to help out. Mike is currently an engineering student who enjoys beer and long walks on the beach. Well, beer at least. Anyway, he’s going to help us figure out if designing and fabricating our own equipment will be cheaper than buying it used from various sources. I’m excited to work with him on this project.

[EDIT] Mike is no longer a student. The test he’s studying for is for work, not for school. Ooops! Also, he prefers long walks up steep rocks, though sunset walks along the surf are also appealing.

Andrew

Through another slightly random connection – Facebook message from a friend, Dan, from my high school years, who’s friend’s brother, Andrew, started a brewery in Brooklyn and now lives in Denver – I had the pleasure of meeting with Andrew last night at Great Divide. Andrew has a lot of experience with what I’m trying to do. He started a brewery from the ground up, worked on everything from cleaning the tanks to closing the sale, generally in the same day. We have a lot of talking and meeting and whatnot to do, but I’m very hopeful that our goals and Andrew’s goals are aligned. He’s interested in doing it all again, from the ground up, and I’m interested in having someone with that knowledge and experience be around all the time. Potentially a great partnership in the works. We’ll take it slow and make sure everything is in order, but keep an eye out for more about this.

That’s about it so far this week. It’s only Tuesday, so we’ll see what else is in store. Thanks for reading! Leave a comment if you have any questions or suggestions, or just want your name to appear in the comments.

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My handwriting is way worse than this..

My handwriting is way worse than this..

  • Brew! (http://twtpoll.com/fqcrrt to input)
  • Maybe bottle the stout, keg the wit
  • Email DU Business profs about having some MBA students help with the B. Plan
  • Talk so some engineers (Like Mike!)
  • Talk to my landlord about brewing in the garage
  • Find a new place to live if ^ goes poorly
  • Maybe call up the TTB about ^
  • Look into small commercial real estate properties if ^ goes really poorly
  • Talk to the guys at the homebrew shop about ordering in bulk
  • Join a homebrew club (I know, I know, why haven’t I done this yet)
  • Enjoy a beer.

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Just a quick update on the actual business stuff.

Um, Yeah... Im Gonna need you to come in on Saturday...

Um, Yeah... I'm Gonna need you to come in on Saturday...

  • Started working on the business plan. It’s scary. I’m going to seek help.
  • Lucas said he’d give me his books, software, and knowledge to help with aforementioned help seeking.
  • Meeting with the Director of Fun at New Belgium Brewery on Monday to talk shop. Pretty excited about that.
  • Talking with Taa Dixon at 720Media about startups and all that. She’s a Colorado College alum as well. CC Love.
  • Waiting for an email back from a realtor to go check out a possible location for the brewery. It’s a bit big (30,000 sqft), but it’s PERFECT. Perfect location, used to house a VERY successful brewery, etc.

That’s all next week. If you have any leads for me on business ops, locations, funding, suppliers, or just want to try a homebrew, let me know.

[edit] Also, we just made a quick partial-mash kit for a friend’s birthday in 2 weeks. Beer on tap for “public” consumption! Woo!

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Starting a brewery… Turns out, not an easy process. Who knew?

I think were doing better than Sisyphus...

I think we're doing better than Sisyphus...

Over the past few weeks and months, we’ve gotten the ball rolling, so to speak. Relative to where we were when the decision was made to do this, we’ve come a ways. Relative to where we’ll be opening day, we have yet to begin working.

The main things we’ve done:

  • Met with an officer about licenses
  • Met with a banker
  • Amassed a collection of ideas and plans to differentiate ourselves
  • Met with some SBA people
  • Spoke with some real estate agents
  • Told everyone we know we’re going to ask them for money (if we know you and we haven’t asked yet, consider yourselves warned)
  • Started a blog (very important step in the process)
  • Started the business plan (I have an outline…)
  • Lots of other little stuff

Things we still need to do. And mind you, this list is very, very, very incomplete:

  • Actually write the business plan
  • Write it again
  • Go over it a few times with various consultants, and then rewrite it again
  • Come up with the name
  • Research suppliers for the hardware and the supplies (like tanks, grains, hops, kegs, etc.)
  • Find the perfect location
  • Get the money
  • Buy all that stuff
  • Get licensed
  • Open
  • Find people to drink our delicious beer

It’s more complex than that, but that’s where I see us as of today. The immediate next step is the business plan. We need to do a lot more research, write it, rinse, and repeat. Part of that involves talking to suppliers, just to get an idea of what our costs will be. Things like overall overhead, cost per batch, pricing, gross per batch, etc.

Picture of a random IPA. Just because.

Picture of a random IPA. Just because.

The more I find out about this process, the bigger the challenge becomes. I don’t say that in a negative way, just an honest one. I had this date of August 2010 in my head. I’d love if we could open by then. When we first started talking about doing this, 8/10 seemed so far away! And now… It’s starting to seem like tomorrow. So August of next year might not work. We’ll see though. No hard deadlines to meet just yet, and a lot of work between now and then either way, but, that’s where we stand.

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