got a potential business partner to start a micro brewery

[BigAnth]

My uncle is keen to partner me in a micro brewery venture. ive been researching online for kit and can get a brand new 8bbl kit fully installed with training for £24,000. we need to find premises and a wagon and buy the kegs and source ingredients. i believe set up could be achieved for around £40-£50,000. has anyone here got experience of running a micro brewery and can an 8bbl set up support a two man operation financially with regards to running costs and a modest wage of £20-£25,000 pa each. i know further research is required before we take the plunge therefore any advise would be much appreciated.

cheers guys

biganth

 

[Aleman]

Talk to David Porter and get yourself Ted Bunnings book The Microbrewers Handbook. You are looking at an initial set up cost around 2 to 3 times your plant costs. Remember that for every nine full of beer you have in a pub you need at least 3 if not 4 or 5 extra (empty , 'in transit', conditioning) and stainless casks are 65 quid or so each.

What is your local area like for real ale pubs? How many free/tied pubs are there? Are there any local wholesalers? Remember that even 'free' houses often have loans to big brewing companies for refurbishments and are limited as to the foreign beers they can carry.

50K per annum wages :hmm: Beer bloke on here runs his own 20BBL plant and a pub Based in Mayland Essex (Wibblers Brewery and I know the amount of time and effort he has put into getting it off the ground . . . it might be worth contacting him (Unless you are local to him of course :lol:) to see how much he can take out of it after 3 years trading.

 

[graysalchemy]

I haven't run a micro brewery but I have run my own business for six years. Running your own business is very rewarding and beats working for someone else, but before you even go any further do you research big time.

Two things you will need to do is firstly see what the profit will be on a 8bbl (which you are obviously trying to ascertain) and see if it will support two directors secondly can two people operate this size of business or will you need to take on a member of staff. Any staff wages (which will also includes the tax and NI) comes of your bottom line.

The second thing is selling the stuff. It is all well and good having the production capabilities but you need to be able to sell the stuff on a regular basis and at a margin which will support you and your staff. I have been lucky in my business that i have one very good contract which is the main stay of my business, however with the downturn i have had to offer my services (I am a commercial picture framer) else where which is not easy, as a result I employ an agent who takes a commission.

When assessing your costs their are lots of hidden extras that you may not appreciate. Cost of premises will not only include the rent and rates but also may include a service charge. My premises cost me £10000 a year for the rent but this is inflated to over £16000 when you take into account rates, service charge and landlords buildings insurance ( this separate to your your contents insurance and liability insurance). Leases are usually on a three yearly basis in which you will be liable for the rent even if you go bust (most landlords ask for a personal guarantee even if your company is limited). Solicitors will charge £1-2000 and a survey will be needed on the building before you sign the lease as most leases are fully repairing which means you will be liable for the upkeep of the building whilst it is in your care.

I'm not trying to dampen your enthusiasm but running a business is hard. It means getting up everyday and fighting for you business and putting every last drop of energy into it.

To succeed you need to have a great product which will sell, common sense and an awful amount of luck of the good variety. I have seen to many business that have failed because they think that because they have got all the kit their business will be a success. Getting up and running is only the start of it, keeping it going is an art.

If you are serious then plan everything in the minutest detail research your market and do the maths. Take advice from the many government agencies http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073858805 and find a good accountant, 40-50K is a lot of money to be playing with, and finally become a limited company, it is the most tax efficient way to earn money.

Good luck

:

AG

 

[BigAnth]

cheers aleman.

i live in county durham and theres an abundent demand for real ale. not sure on the free hold status of the pubs so ill look into that. my only worry is wether or not the 40 to 50 grand estimate will be sufficient. maybe i need to start smaller thatn 8bbl but im not sure if enough ale can be produced on a smaller set up to make a living from. i love brewing but to put the hard work in doing it for a living may not be feasible with out maybe double the estimated set up cost to see a decent return.

 

[BigAnth]

absolute sound business advice graysalchemy. ill take it all on board, believe me i know for sure that endless hours of research are in front of me, however i am keen and as determined as ever, keep ur fingers crossed for me, i think im def going to need it.

biganth :

 

[Aleman]

David Porter says that a 4BBL plant is about the minimum you need to support 1 person full time brewing . . . You just add more fermenters to it . . . but if you are churning out 4 BBL per day (16 nine gallon casks) you need somewhere to be buying that on a regular basis.

Beerbloke started out (part time) at 2.5BBL, then went to 5BBL with a contract to supply one pub with 4 nines every week (one brew a fortnight) which covered his costs . . . that fell through after a few months after the pub changed hands . . . which meant more work looking for new outlets. . . It paid off as his beers are very popular and hence the upgrade to 20BBL (He bid on a bankrupt auction for the kit). Casks are the biggest investment though a lot of pubs/wholesalers treat them like non returnable bottles

 

[BigAnth]

thanks aleman, maybe i should think smaller to begin with to eliminate risks, i could manage part time and still do my day job as i only work 3 days a week. 12hrs mind you. maybe a 2.5 bbl is a more sensible start. i could always up grade with demand if it comes my way.

 

[graysalchemy]

absolute sound business advice graysalchemy. ill take it all on board, believe me i know for sure that endless hours of research are in front of me, however i am keen and as determined as ever, keep ur fingers crossed for me, i think im def going to need it.

biganth :

I hope i didn't sound to harsh but you do need to know the truth. If you have determination common sense and a bit of business acumen (mainly common sense) then don't be put off by me. But do the do the research before you commit to anything. A good saying I am always reminded is measure twice and cut only once.

David Porter says that a 4BBL plant is about the minimum you need to support 1 person full time brewing . . . You just add more fermenters to it . . . but if you are churning out 4 BBL per day (16 nine gallon casks) you need somewhere to be buying that on a regular basis.

Beerbloke started out (part time) at 2.5BBL, then went to 5BBL with a contract to supply one pub with 4 nines every week (one brew a fortnight) which covered his costs . . . that fell through after a few months after the pub changed hands . . . which meant more work looking for new outlets. . . It paid off as his beers are very popular and hence the upgrade to 20BBL (He bid on a bankrupt auction for the kit).

Aleman re iterates the importance of establishing your market and maintaining it. In any business cash is king, by that i mean cash flow without it a business cannot survive (woolworths MFI).

A good program to watch would be Gerrys Big Decision http://www.channel4.com/programmes/gerrys-big-decision/4od. The first episode in which he invested in a brewery which had run out of cash but had award winning beers. You can learn a lot from others mistakes.

Finally before I bore you to tears read these books

Gordon Ramsay Playing with fire
James Caan Real Deal
Duncan Bannatyne Anyone can do it

They won't tell you how to be a millionaire but they give a fascinating insight into the minds and sheer determination of these people. If I had just 10% of their drive then i would be a very happy and wealthy man.

If you want any general advice to get you pointed in the right direction send me a pm.

Cheers

AG

 

[jamesb]

but if you are churning out 4 BBL per day (8 nine gallon casks) you need somewhere to be buying that on a regular basis.

16 nines. [/pedant]

 

[Aleman]

but if you are churning out 4 BBL per day (16 nine gallon casks) you need somewhere to be buying that on a regular basis.

16 nines. [/pedant]

Sorted for the Pedants among us :lol:

 

[Dronfieldbrewer]

have a word with Graham Moss http://www.mossbrew.pwp.blueyonder.co.uk/