Posts Tagged ‘how to set up microbrewery’
Since we are done with the market study, feasibility study and we have a handy business plan ready, we can now be more focused and concerned about the costing related to different activities that we will follow while setting up a microbrewery.
Following are some points which should be addressed in course of doing the financial analysis:
- How to raise fund – shareholders, partners, cooperative, venture capital, equity drive etc.
- Debt analysis – mortgage, bank loan, lease financing, tax calculations etc.
- Operating cost – Daily costs involved in running the business like wages, rent, utilities, and interest payments on outstanding debt etc.
- Licensing cost and other basic amenities cost.
- Equipment cost- used or new one – (We shall discuss on this in detail in coming posts)
- Manpower requirements – How many human resource will be required like Brewmasters, Accountant, Engineer, Logistics, Admin, Legal, Marketing, Consultant etc. How many of them would be on payroll, contractual basis. What would be the total manpower cost.
I would suggest that one should try to be very detailed while doing the costing. Doing this activity also gives us a fair picture on the kind of costs that one has to incurr. This also helps us in identifying areas where we can save on costs like renting a property already available or aquiring land or for example raising funds from friends and family or mortgaging property to raise funds.
In next post we shall discuss on project planning to take thing forward.
Stay tuned and share your views/questions.
At this point, we will know if it is worth proceeding. The assumptions in the Feasibility Study can be tested and formalized to enable final investment decision to be made. Based on the outcomes of feasibility study we create a business plan.
The business plan builds on the information that was obtained through the feasibility study, but provides a more detailed and specific blueprint that map out the microbrewery strategy. A business plan is similar to operating a company on paper. It sets out the goals of the microbrewery and how we intend to reach those goals.
There are two basic purposes of a business plan:
External purpose – The business plan helps to obtain financing from potential investors/banks. A business plan generally an answer to the common question of the investors, “Why should I invest in this business?”. They analyze how well we have analyzed the business opportunity and planned accordingly. So the business plan becomes the primary fund raising tool also. That is why it should provide an honest and straightforward examination of the business opportunities.
Internal purpose – A business plan provides a blueprint for us to follow. It helps in listing down all the business activities which is useful to evaluate the all aspect of business. It also serves as parameter against which our performance can be measured as we go on gradually to setting up a successful microbrewery.
The other areas which need to address in business plan are industry knowledge gathering, market intelligence, operation management, financial plan, risk analysis, review and right implementation. Some of the points we have discussed already and rest of them will be discussed in my coming posts.
In my next post I’ll discuss in detail about the financing part.
Keep your views/questions coming along this journey of setting up a microbrewery!!
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.
In my previous post I discussed about the various functions/steps to go through before setting up a microbrewery. I also discussed the first step, ‘Conceptual examination’ in detail. In this post I shall discuss the importance of market examination and various questions need to be answered.
Before starting any business we have to do an extensive market examination. Market intelligence can help to understand where opportunities lie for the business, how big a challenge they represent, and what we need to do to succeed.
Some of the important factors which need to be considered while doing a market examination for your microbrewery, are mentioned below:
- Target market and the market segmentation based on your initial objectives.
- What is the structure and size of your target market and their purchasing power.
- What all kinds of Beer are available and popular in your target market
- How significant is size of target market to size of your microbrewery project.
- What are the localization of demand for specialty Beers and the level of competition
- What kind of Beer people prefer in your target area.
- Income groups and price range of your target market.
- What are the distributive trade practices, restrictions, preferences.
- Regulatory requirements, local approvals, product approvals etc.
- Estimates of sales revenue, costs of sales, distribution costs.
- Have I forgotten anything? Do write me a note
Some of the answers you may already have in your mind, and for some you would have to do your research. It would be good that you spend some time seeking these answers, because they will become the backbone to your operations. A good consultant/ market research firm can help you document these answers.
In next post I shall discuss the third step/function which is feasibility study.
In my last post I discussed and drafted nine key functions that we must address when we are setting up a microbrewery. Since the steps involved are many, this would become a very lengthy post. So I have broken down the content in small posts. In case you want any detailed information, you can always write to us.
As all good project start, the first step is to do an ‘conceptual examination’. Here we generally answer the questions which starts from how, why, where, etc. Answering these questions, gives you clarity and a sense of purpose to the entire thing.
Some of the factors (along with some pointers) that you should have answers to, are mentioned below:
- Why do you want to start a microbrewery?
- A microbrewery or a brewpub – Apart from size, the main difference is that a brewpub is an installation that brews its own Beer for the consumption at its premises like club, pub, hotel etc. While a microbrewery is a small independent brewing operation that sells to local market, club, pub with or without their own brand name.
- Will it be a partnership or own venture? – Who are your potential partners, their strengths/weakness in your business
- What will be the size, capacity of microbrewery? – 1000L or more per batch of brewing
- Where will the micobrewery located? – Land cost, aquisition etc.
- What are the kinds of Beer that will be produced – What flavours
- Where will you source the raw materials – Agencies, Distributors, locally/ internationally
- What kind of documentation will be required? – Licensing, paperwork etc.
- How will the packaging, brand naming etc.work? – Branding agencies,
- How will the logistics (distributions) work? – Through agents or wil you bee selling to a larger brewery.
- Where will the financing come from? – Though this is complete step in our process which only can be analysed once the market is defined, type of Beer to be produced, raw material, equipments have been selected and their cost. However a rough estimate about costs and form where the money is coming from, should be known to go ahead for the project.
- Malt extract or whole grain – Based on your objective, target audience, you can take your decision.
- What are your manpower requirements? – Brewmasters, Accountant, Engineer, Logistics, Admin etc.
- Where to find expert advice? – Hire a consultant, contact to some existing microbrewery owners.
In my next post I shall discuss about the Market examination/Intelligence required before setting up a microbrewery.
So you want to set up and operate a Microbrewery? Well this blog post is intented to provide a summary of all the steps to setting up a successful Microbrewery operation, from starting to serving. You must be having some unanswered questions on how to go about setting up a Microbrewery and brewing industry. I shall try to address all of them one by one.
Its not too long when the first microbrewery was established in Gurgaon, Haryana, India. Since then people have responed/appreciated this idea of Microbrewery very well and in no time has become a great potential in an exciting new industry that has all kinds of possibilities for growth, profit, and fun.
Setting up a Microbrewery from scratch is a capital project that can be broken down into nine basic functions. You can also call it a Microbrewery development life cycle. Each function is very critical and must be managed properly, from very first step of conceptualization to the end step serving. At every step/function there are whole lot of questions which you need to get answers for. You may already know the answers to some of the questions but others you will have to research/ask from experts as per your situation. Though I shall try to answer most of them here.
I shall assist you in organising your already found answers and to identify some important questions which you might not have considered yet. Following is a list of nine major function/steps that you must systematically and professionally proceed to do. Sometimes the answers may be quick to find, or may involve a lot of time and money to ensure getting the best answers.
Well, in this post I am listing the nine functions/steps. In my next post I shall discuss them one by one.
Microbrewery development life cycle/ 9 functions of a microbrewery set up project
- Conceptual examination
- Market examination/Intelligence
- Feasibility study
- Project justification
- Financial analysis
- Project planning
- Operational management
Keep looking this space to get most relevant/practical questions and answers for each function/step.