Experts say that you’d be content with your life if you choose to do something you’re passionate about. But since you still need cash, would passion also help you earn? With running a brewery, you can!
Note only that it requires patience, dedication, and lots of money before you could brew your first beer. The business, after all, is downright capital-intensive. To prepare yourself, here’s a guide on the cost to start a brewery.
Average Cost to Start a Brewery
The average cost to start a brewery depends on your desired business scale. Generally, first-time brewers would prefer starting small.
The cost to start a microbrewery could reach up to $750,000 according to Profitable Venture. A medium scale brewery, on the other hand, costs about $1.5 million at start-up.
The cost to start a microbrewery is made up of four major expenses. These include:
- Location and construction
- Permits and licenses
Let’s take a closer look at the above factors to better understand how they affect the cost.
Costs of Equipment for Microbrewery
The brewing equipment, essential as it is, also commands hefty prices. According to a brewery company founder, Leonard Kolada (as quoted by Nerd Wallet), a one-barrel system would cost $100,000. This system would yield 31 gallons of beer (320 12-ounce beers).
The price would be lower if you’d purchase a used one. However, take note that it would cause problems if the second-hand equipment turns out to be inefficient.
If you plan to produce more gallons, a 30-barrel system costs about $1 million and up. With the said equipment, you would make 9,600 12-ounce beers.
For starters, purchase a seven-barrel system that prices $130,000 to $175,000.
Your microbrewery would also need other equipment. Here are sample prices:
- Other microbrewery equipment (dishwasher, refrigerator, blender): $18,000
- Serving area equipment (such as glasses): $3,000
- Store equipment (such as cash register): $13,750
- Counter area equipment (such as countertops and sinks): $9,500
- Storage hardware (such as bins and utensil rack): $3,720
- Office equipment and furniture: $3,600
- Store furnishings (tables, chairs): $4,000
You might also need to allocate a budget for computers, printers, and telephones for your office. Add TVs, sound equipment, and stage lights to set up a microbrewery that is customer-friendly.
Note that these costs are only samples. Thus, it does not necessarily mean you should aim for the same figures. The total price would always depend on your business plan.
Loans are inevitable when you’re putting up a business. In fact, it’s a necessity if you are venturing into a brewery. The brewing equipment alone, after all, costs thousands of dollars.
Small-business financing is widely available. Choose a long-term funding so you’re sure you could pay the high cost. Some loan companies include Smart Biz, Funding Circle, and Bond Street.
Location and Construction of Microbrewery
First-time brewers, ditching their day jobs, often find the garage or an old gym as prospect locations. Indeed, leasing or buying used spaces are more affordable than constructing a new building.
That said, you still need to renovate the area to get it fit for the microbrewery. For instance, you have to check the plumbing, electricity, and ceiling of the property.
The exact cost would depend on your company. A sample business plan by High Five, for example, sets the renovation cost at $66,000, with $60,000 as the initial amount for construction and another $6,000 for contingencies.
Permits and Licenses
The brewery is one of the most regulated industries in the US. Due to this fact, it would take a considerable amount of paperwork to secure a permit. And the longer the process, the higher the costs.
One of the legal requirements before you could start your brewery is a federal brewing permit. The application does not cost anything. However, the legal expenses you would possibly shoulder to obtain permission could reach $2,500 and more.
Make your brewery the talk of the town by marketing. There are a lot of strategies to invite in customers, hence, the wide variations of advertising costs.
For example, promoting your brewery through simple flyers or pamphlets is a good start. Furthermore, it does not cost much. One business plan allocated a $3,000-budget for 2,000 flyers, enough to advertise around the neighborhood.
If you want to expand your customer reach, set up a website. The cost of developing one with the aid of a professional would reach up to $5,000.
Additional Start-up Costs
Aside from the brewing machines, office equipment, and store furnishings, the cost to start a microbrewery should also include:
- You should protect your business (and your employees if you have them) from unexpected catastrophes.
- Point-of-sale system. Set up a POS software for easier financial processing and tracking of sales.
- If you’re going to employ people, make sure you have the funds you could use to pay their services.
- Hiring a consultant. If you’re not sure about your business plan, seek advice from a professional. It would cost over $2,000, but it’s better than venturing into something you’re uncertain of.
- Working capital. You would need funds to support your business until it breaks even. Most breweries would not generate a small profit until six or twelve months after their launch.
Financing for a Microbrewery
With the start-up costs reaching $700,000 and up, where would you find the money to finance your microbrewery?
Most first-time brewers turn to family and friends for their funding. Just be careful not to get slack on paying just because you’re in good terms. Otherwise, both your business and your relationship would suffer.
Other options for financing include:
- Home equity loan
- Retirement accounts
- Reward crowdfunding
- Equity crowdfunding
Business Plan for a Microbrewery
You would more likely acquire financing if you have a decent business plan. Lenders, after all, would want to know if you could really pay them. Be confident in your pitch and include every expense necessary for the microbrewery.
Ultimately, the success of your brewery would depend on the taste of your beer. If you’re selling a promising product, you’d have done half of the job.