An Opportunity Is Brewing
How can Michael start a home brewery and build up the business without debt?
QUESTION: Michael in Tennessee wants to start a home brewery. He is concerned about the regulations to sell the product. He wants Dave's advice on starting the company on a small level. Dave thinks it would be beneficial to investigate other companies that can make him the product.
Dave's ANSWER: The problem with the solution of going $500,000 into debt is that it's an all-or-nothing bid. If it doesn't work, you’re bankrupt. You will bankrupt your family and lose everything. That has the potential of turning a dream into a nightmare. I don't know how to baby-step into that business, so to speak.
When you go from a home brewery, which is for personal use, most of the time there is little-to-no regulation. But if you start selling it to the public, you step into a whole other realm.
Are there not breweries that will brew for you a certain recipe for a cost? You would have to spend some time there, but you wouldn't have to live there to produce a batch. If you go there and spend three days, you've spent more than enough to get the thing going. Then go back and spend a day, then they ship you the bottled brew. It doesn't matter where that is.
There are a lot of microbreweries around that could take you from a hobby crafter to your first batch into the market. Then go get that into the market and figure out a way to get it sold. Then you get some of your marketing troubles solved, and you may also learn something about your recipe in that batch.
Then you start developing a following and get a few restaurants to carry some of your stuff. Once you get enough batches going, you have enough of a profit to do your own deal. But use other people’s equipment and outsource the batch.
That's the only way I know how to do it, and that's what I did with this radio show. I didn't have the money to build a radio studio. That's an expensive process. I used the local radio station when we kicked off. For years I drove back and forth until I got the radio show to where it was making enough money. It actually had to make a profit. That took a while, and then we had to scrape together enough money to build our studio.
Your first actual brewery may be pretty primitive but it meets all the regulations and guidelines. Then you move up into better and better stuff as you go along. But I would think with as many microbreweries as there are around the country now, that you can get someone who almost specializes in it and use their equipment to let a hobby crafter become a micro-guy. I think that’s very possible.