So, you’re ready for your next business idea and you think that brewing craft beer is your ticket out of your boring day job. Why not? You love beer and you might as well get paid making it. While the steps to start a brewery may be a bit complicated, your determination and patience would definitely help you make that dream come true. Some of the very successful brewery owners spent years jumping through legal hoops and fine-tuning recipes but in the end, their Nano-brewery expanded little by little.
If you’re curious about what it takes to be a pro and start a brewery, this guide will give you insights coming from those who have done it and some of the legal steps you need to take to get your business into operation.
Is Brewing for You?
According to Collin McDonnell of HenHouse Brewing, brewing involves a lot of cleaning. If you want to make beer and start a brewery, you need to be prepared for all the cleaning you would have to do which may not be a lot of fun.
Beer requires the appropriate number of sanitary vessels for brewing and the fermentation process along with the packaging leaves a trail of very dirty vessels and workstation. If you are serious about going into this kind of work, you need to be the kind of person who will be hands-on with this even just in the beginning. You need to clean the floors, the tanks, hoses, kegs, glasses, drains, and parts every day when you start a brewery when the day starts and ends.
You will also need to be patient, methodical, and not easily bored. The brewing process is very similar each time even if you’re brewing a new beer every day. It’s a repetitive process and record-keeping is of utmost importance. You should also expect a lot of handyman work when things break, sometimes at the most inconvenient times. Those who have knowledge of small motors and electrician training would find their skills useful when they start a brewery.
The truth is, the brewing itself is the easy part. It’s all the maintenance and routine work that makes it difficult. You would also need to spend a lot of time at work since fermentation is an ongoing activity. But if despite all these, you still want to start a brewery, you’d be glad to know that many find brewing magical and the labor is all worth it. Michael Kane who was a former investment banker at Wall Street launched the Kane Brewing Company and he has no regrets despite the grueling process.
Steps to Start a Brewery
Aside from purchasing the necessary equipment and supplies, you need to know the legal steps that you need to navigate since brewing is a heavily regulated industry.
You need to keep a capital cushion because you need ample working capital beyond the initial startup costs. It would take time to get the beer to the market and it’s best to have the cash to get you through the unprofitable times.
Craft brewing requires a lot of capital. Even when you are profitable, you need to put excess earnings back into the business. It’s a continuous investment, according to Kane.
Focus on Quality
Craft beer, which used to be small, independent and traditional beer has become popular. There is increased competition so you need to make beer that people would really want to drink. If you’re not committed to making quality beer, you are wasting your time. Just because you’re making beer doesn’t mean that people would automatically fly through the doors. Despite this, there is still a lot of room for growth for craft beer brewing. You just need to make quality beer.
Choose a Name
Before you fill out any legal document, you must first figure out a name to start a brewery and make sure that it’s available. You would be paying additional fees to change names if it conflicts an existing brewery. Then you’ll have to reprint your letterheads, business cards, or deal with another brewery’s lawyer.
You can easily Google your proposed name and check with your state secretary’s website for business listings with the similar name.
Form an Entity
You need to use a business entity for a couple of good reasons. It protects your personal assets from the liabilities of your new venture and it defines the rights of each owner if there are multiple owners when you start a brewery.
File a Trademark
Next, you have to file a trademark for your brewery name. This is what identifies you from others. It can be a word or combination of words, phrases, symbols, or designs. A trademark will protect the goodwill that you create to identify goods and services.
If you are careful with your trademark and service mark management, it can lead to a very successful brand development which will increase the value of your product and company. It may be a complicated process so it’s good to seek the help of an attorney.
You should also file a trademark for your beer names. This is important because there are new craft beer breweries launching each day and you don’t want your competition to steal your beer names.
Lease a Space
Location is of primary importance to your success when you start a brewery. Find a suitable place that could also be strategic for a possible expansion. You need to secure the space for the licensing process.
You need to have your brewer and other key employees sign an employee agreement. There should be a non-compete agreement to deter them from leaving to work for a competitor.
Finally, you must comply with federal laws as well as your state securities laws. Not complying could result in penalties. You would also have to apply for a license from the Alcohol and Tobacco Trade and Tax Bureau.