So You Want to Start A Brewery: Five Lessons Learned
You probably like beer – a lot. Perhaps you’ve made beer, maybe very good beer. You’ve been to dozens of awesome breweries. You love the brewery experience, the camaraderie, the cool vibe, the excitement. Perhaps you’ve come into a little money or free time. All of this has made you start thinking: Should I start a brewery??
The partners here at Front Royal Brewing Company were right there with you a few short years ago. In the ensuing years, we’ve run many gauntlets and are now the proud owners of a ten-barrel system churning out artisan beers, a full-service restaurant, and an awesome music venue on historic Main Street in Front Royal, Virginia. We would be presumptuous to say we’ve arrived, but we can say we’ve scaled a significant mountain. As a result, we have a few lessons we’d like to pass along.
Over the past five years, 4,256 craft breweries have opened in this country, which is one every 2.3 days. That may suggest opening a brewery is an easy thing to do. It’s anything but – over that same period of time 483 of those craft breweries went out of business. We encourage you to open your brewery – and to do it with vigor and with love. But at the end of the day, remember you’re opening a business first and a brewery second. You have to make the business end work, or the brewery part will remain the pipedream it has always been.
Lesson 1: Know Your Business
As the brewery space has become more crowded, the old model of a couple of beer dudes making beer in a garage, with food trucks outside, has changed considerably. Breweries today are as likely to be entertainment venues or foodie havens as old-style breweries. Your first and most important question is who are you? At Front Royal Brewing Co., we’re fortunate to be the only brewery in town. Our award-winning beer is amazing and beloved by our customers. But we’re also in a small town and it’s not a town full of bearded hipsters. We decided very quickly that, to be successful in this market, we needed a broader business model than simply wonderful craft beer. We brought in an acclaimed executive chef to run our restaurant.
We started booking music three days a week, not just local bands but nationally-known artists traveling the road from Nashville. We ran lunch specials and Monday night trivia. You need to figure out very clearly what you’re betting on with your business and then go all in on that bet.
Lesson 2: Form the Right Team
We have a diverse ownership team, which had the advantage of lots of business experiences and points of view. Our owners include a fabulous brewer, a restaurateur, former executives, management consultants, a professional marketer, an engineer, a farmer, angel investors, and others with leadership experience in Fortune 50 companies. But our diversity also created the significant challenge of defining a cohesive vision and plan. We sometimes spoke in many voices and struggled to move decisively in one direction. In the end, the size and diversity of our team helped us think outside the box and to look more objectively at the business we were in and wanted to be in. Whatever you do, make sure your leadership team has the skills and experiences needed to achieve the vision you’ve set out. But just as importantly, you need to come together around one common vision. Working at odds with one another will quickly sap your already limited resources.
Lesson 3: Data, Data, Data
In any business, but especially the brewing business, it’s easy to fall back on hunches, established industry trends or best practices, emotions, and urban myths. We fell into that trap more than once and quickly realized that real, meaningful data was critical. Should we distribute our beer? Our hunch was yes but once we built the financial model and looked at the data, the answer was: not for a while. Why was our business slowing down? One hunch was the weather, another was the month of the year, but once we looked at the data, the best answer was a gradual leveling off of our business following the initial surge and the answer wasn’t to wait for sunnier days but to focus hard on expanding our brand presence to a much greater population.
Data is like shining a bright light. It clarifies. Issues and questions that previously were shrouded in darkness suddenly start to make sense and solutions emerge. Also, running a multi-million-dollar business of any kind involves management of huge amounts of administrative data. We experienced far more issues and frustrations with our POS data and our accounting data than we did with our glycol brewing system. Two months after opening, it still wasn’t clear to us if we were making money or losing it at a rapid rate. We’re still struggling to manage all our business numbers well. Lesson three is use data to guide what you do, but also manage your data efficiently. Your data investments are just as important as your investments in brewing equipment.
Lesson 4: Deal with Mistakes
You will make a gazillion mistakes. How many times did we wish our building was two feet wider, that we had merely two more tanks, that we had more parking, that we had more storage space, that we had trench drains in the brewery. The list goes on and on. The point isn’t so much to avoid mistakes, which of course you should do, but, rather, to face up to them squarely when they happen, deal with them, and bite the necessary bullets to correct them. We opened with quite a bit of fanfare back in the spring only to realize the list of things that we had failed to do was so long it would take us another two months to get our operation anywhere close to where it needed to be. Expecting mistakes also brings another very important corollary: make sure you have the financial resources necessary to make a much bigger investment than you initially planned. If one or two mistakes will kill you financially, you have no business opening a brewery. You will need the resources to correct dozens of mistakes.
Lesson 5: Make Great Beer
Your business is and always will be about making great beer. You can get your customers to come back for many reasons but if they’re not coming back for the beer, you will eventually fail. We didn’t build the fanciest, most modern brewing facility possible, but we did bring in an amazing brewer. As a result, we have some of the best beers in the world, as our customers will attest. The critical skills for a brewer are temperamental: obsessive attention to detail, a passion for excellence, and an appreciation for the art and history of brewing. Throwing a cake into the fermentation tank sounds cool but monitoring the temperature obsessively and managing yeast strains as if they were life-saving organisms is much more important.
Perhaps these general lessons learned helped, but we also thought you might want some more detailed and concrete suggestions. So we put our heads together and came up with an additional list below.
Get your accounting system in place as soon as you have a penny in the bank and start building accurate books from the start. We waited months and had a huge mess to clean up. We now use Quickbooks, by the way, including their payroll services.
You can build your facility small and expand it over time as you grow, or you can build your facility big and grow your business over time to fill it out. Both approaches bring big problems that can break you. Instead, you want to be Goldilocks and build your facility just the right size for you. That’s another reason it’s so important to know from day one what business you’re really in.
You want to be an entertainment venue? You will need to pay thousands of dollars in licensing fees to at least three different licensing agencies. That cost goes up the more nights you have music and if you want cover charges.
You will be invisible for months if not years on Google, Facebook, and other listing sites unless you go all in to drive traffic to your website and build a following. You can jump start that process by investing time and energy into SEO (Search Engine Optimization). Here’s a hint: we’re writing this blog for a reason.
Careful what you buy. As you’re getting started, you will be inundated by sales people looking to sell you services, tools and products. You need some, many you don’t. The ones you need come in many different flavors from many different vendors. You absolutely MUST do your due diligence and research before you buy. Services especially come with contracts that can be very difficult to get out of. Take it from us.
Believe in your customers. Of course, they’re always right but too often that is and sounds like lip service. You need to sacrifice everything for them. Throw the beer out if it’s not good enough for them. Comp the food. Avoid those problems in the first place by building a team that worships your customers. You want 5s on all your ratings. Expect your customers to bring back ten times as many through their referrals and goodwill.
Good luck with your new brewery. We hope our experiences prove helpful. When you’re in Virginia’s Shenandoah Valley, please stop by and visit us. If you like beer, you won’t be disappointed. And if you like great food and great music as well, you’ll think you’ve found a new home. The mountains are beautiful here this time of year.