The Beer Chronicles

All about beer

Setting up a microbrewery – Step-3 – Feasibility study

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microbrewery feasbility studyAfter doing conceptual examination and market intelligence for setting up a microbrewery, now is the time to do feasibility study.

The main goal of feasibility study is to assess the economic viability of any startup project. The feasibility study needs to answer the question: “Does the idea make economic sense?”  The study should provide a thorough analysis of the business opportunity, including a look at all the possible roadblocks that may stand in the way of a successful microbrewery set up.  The outcome of the feasibility study will indicate whether or not to proceed with the proposed microbrewery project. If yes, then we can proceed to develop a business plan.(Which will be discussed in next post).

Following are some points which should be addressed in course of doing the feasibility study:

  • Defining company, resources, skill, level of expertise, deficiencies, challenges
  • Pros and cons of selected marketing strategy
  • Reasons of selected technology and equipments
  • Potential of targeted market and production capacity, location (Where will the facility be located relative to the potential customers), logistics
  • Initial or preliminary design
  • Site plan, building layout, different processes to be followed,
  • Capital cost estimate
  • Construction/equipment set up cost estimate
  • Operating cost estimate (This includes the daily costs involved in running the business, such as wages, rent, utilities, and interest payments on outstanding debt etc.)
  • Financials analysis, profit & loss, balance sheets, alternative/variable cost analysis
  • Based on the estimated revenues and costs, what is ROI (return on investment), tax considerations.
  • Who are “Qualified” suppliers – There are many manufacturers, suppliers (raw material like barley, hops, yeast etc. and equipments), even consultants. We need to ensure to get a quality product, whether equipment or service.

In essence the feasibility study should answer all the questions related to market, technical and organizational requirement and also about financial review.

I hope this information will be useful to analyse the various factors, which are important and vital, while doing the feasibility study to setting up a microbrewery.

Stay tuned to get a complete analysis on further steps/functions involved in  setting up a microbrewery.

Share your views/feedback/questions.


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