19 Veteran Tips for Starting & Running a Microbrewery

Whether you are just getting started with your microbrewery or are looking for ways to make it run better, these 19 tips will get you where you need to be.

#1. Think Bigger than Your Comfort Zone
Many microbreweries try to start small as a way to limit their costs. There’s a big difference between a 40-gallon kettle and one that can hold 220 gallons. If you’re thinking too small, then a run on your product could cause your company to close until you can make some more beer. If you’re going to get involved with this industry, then throw the right amount of capital into it so that you can meet the demand of your community.

#2. Get to Know the Small Stuff
Can you start a microbrewery from your home? Sure – and there’s an excellent chance that you could be successful with that venture. When you decide to start expanding, then it is up to you to ensure that the small stuff gets done correctly. Your taproom will be one of the critical components of your success. If you know how to pour concrete, manage a construction agency, and develop customer relationships, then your business will be more successful. Good beer can only take you so far.

#3. Be Prepared for Competition
If you decide to start or run a microbrewery in the United States, then you’re going to have over 5,000 competitors trying to get customer dollars. The industry is experiencing massive growth because there is a lot of interest in craft beer today. Even if there aren’t any other microbreweries in your community, your potential customers could be preferring an IPA purchased from the local store instead of what you make. That’s why you’ve got to be at your best at all times from a brewing and marketing standpoint.

#4. Develop Your Budget
Start your microbrewery with a responsible budget. Know where it makes spends to be spending your cash, and then look for ways where you can save some. When you purchase product to make your beer, ensure that your overhead and ingredients are of the correct quality for the price you pay. If you’re purchasing substandard items while expecting a premium result, then it may be a challenge to establish a loyal customer base.

#5. Have Realistic Goals
Keep your goals obtainable as you operate your microbrewery. Everyone starts a business with high hopes, and no one ever gets into this industry with an expectation of failure. Instead of trying to be the largest microbrewery in your region, aim for a smaller success story at first. Strive for specific outcomes so that you have a short-term direction to follow. Every forward step you take will bring you closer to the long-term vision you eventually want to achieve.

Don’t forget that a federal brewing permit in the U.S. from the Alcohol, Tobacco, Tax, and Trade Bureau can take up to 12 months to receive approval.

#6. Develop Contingency Plans
You must remain flexible in the microbrewery industry if you want to be consistently successful. There are inevitable hiccups that occur in your supply chains that will throw some curveballs your way. You’ll want to have a backup plan in place in case your equipment breaks down unexpectedly. Injuries that happen at home (or even at work) can pull you away from what you’re doing. Customers might change a large order, so you need some protective structures in place to prevent losses. Make sure that these plans include a security budget that can help you to deal with unexpected expenses.

#7. Do Your Homework Early
Talk to your peers within the microbrewing industry, even if some of these people will be direct competition in your community. These conversations, along with vendor vetting, will help you to determine if it is feasible to obtain the supplies and ingredients necessary for a successful outcome. Taking this step will help you to get a strong sense of what will work, what could be improved, and the actions that you’ll need to take so that you have a successful experience.

#8. Find One Versatile Supplier
Most brewers prefer to work with a single supplier that provides them with a wide range of services and products. Although it isn’t always wise to put all of your hops into a single basket, taking this step can help you to reduce costs by operating on a greater purchasing scale. Look for a vendor who can provide you with the food-grade C02 and argon you’ll need, along with the gas equipment, dispensing systems, and safety products you’ll need. By streamlining your relationships in this area, you’ll gain a negotiation advantage.

#9. Choose Vendors Wisely
Most microbreweries benefit from the experience of their chosen vendors, especially when they are first getting started. When you can work with organizations that already have structures in place, then that means you have less work that needs to get done. You might even gain access to some of the ingredients or equipment you need at a discounted price.

Good suppliers will also encourage a schedule for your new business that encourages high levels of productivity while reducing unexpected downtime. The best ones will propose structures and schedules that they’ve seen work at similar firms.

#10. Order More than You Need
One of the general rules to follow as a microbrewery is to order a little more gas than you think you’ll need for your first year. Think about the number of barrels you expect to produce during the first 12 months of operation, then look at what your potential numbers will be in Year 2. When placing your initial order with a vendor, you’ll want to make purchases based on what you think your second year of operations will be to ensure a stable supply is available. If you have a run on product, not having head pressure and carbon dioxide for your tanks means you don’t have what is necessary to make more.

#11. Get to Know the Rules
Microbreweries must follow specific rules that involve permits, licensing, and regulation compliance. One of the most overlooked aspects of starting a business in this area is the topic of wastewater regulation. Every community has different rules about what you can send down the drain and what needs to stay out. You’ll want to have a conversation with local officials before you begin the brewing process to understand what is necessary to be in compliance.

There is a need for state and federal licensing in the United States for a microbrewery. If you want to export the beer to another state, there are some issues to consider there as well. You might even want to ask about what your responsibilities would be if someone buys your product, and then ships it themselves internationally.

#12. Include Time for Slippage
You will need to factor in some extra time for delays throughout the existence of your microbrewery. This step is essential during your startup face. Planning permissions can go through delays, and local officials might not process your licensing as quickly as they promised. Shipping problems might stop your barrels from arriving. If you need to have a consent to discharge into the environment, then it could take several months before you receive this permission. Have a plan in place so that you can manage these issues without losing money.

#13. Bigger is Always Better
You can create a microbrewery for as little as $10,000 today. A small brewpub that can produce about 3 barrels can help you to get the business going, but it won’t be enough to really start the profits flowing. You should aim to start with a capacity of at least 10 barrels if you want to be economically viable in this industry. In the scope of brewery economics, bigger is almost always better. It may take a little extra capital to reach that stage, but a successful customer run on your product will help to pay for it in no time at all.

#14. Invest in Security
Brewing equipment is expensive. You’re also operating in an industry with a high level of competition. Most people work ethically, but there are always a handful of troublemakers who want a free ride. Once you invest in your initial setup, then make sure you have everything in place to protect it from theft or damage. That means a solid security system needs to be installed.

Unless your goal is to be a hobbyist, you’ll need to protect your beer stocks with a specialist policy that covers your microbrewery.

#15. Get a Refractometer
Measuring the specific gravity of your beer is one of those tasks that microbrewers tend to overlook because of the extra work it requires. It’s easier to use a hydrometer because you don’t need to have the conversion tables present to understand your measurement. Whether you decide to start brewing at home or commercially, a reliable refractometer will go for less than $100 in most markets.

#16. Consider Packaging Formats
You must consider the entire range of routes that your beer will take to reach the local market. Then it is up to you to decide which ones are the most appropriate for your microbrewery. Most companies in this space today are using cans, bottles, casks, and kegs. Each one offers potential strengths for you to think about, but there are also weaknesses to look at with each system. You’ll want to choose the option that enhances the flavor and quality of your beer without pushing the cost too far out of the reach of your average customer.

#17. Find Your Niche
If you have an excellent market for a local microbrewery, then it is time to find a niche where your business can settle. If you produce a pilsner that’s similar to what is already on the market, then your beer needs to be of a vastly superior quality to generate strong sales. That’s why you see so many products with a “twist,” like a dark ale with fruit flavors or something Belgian that’s not available otherwise. When you can capture a specific level of demand, then it becomes possible to expand your reach by introducing additional options.

#18. Incorporate Your Business
Liquor laws can sometimes hold you responsible for another person’s actions if they leave your business inebriated. That means all of your personal assets could be exposed to litigation if something happens and your business is structured as a partnership or a sole proprietorship. When you take your microbrewery products to the market, you’ll want to incorporate them as an LLC at a minimum.

This process will let you take advantage of the tax rate on beer, which currently stands at $18 per barrel in the United States. Registered craft brewers only pay $7 on their first 60,000 barrels produced.

#19. Know Your Barrels
One barrel of beer produces about 600 pints or 31 gallons of product. Most microbreweries make less than 15,000 barrels per year, and the smallest businesses in this category are making less than a thousand. Since your equipment costs are based on how much brewing you intend to do, you’ll want to have an idea of your numbers right away. The capital investment to produce 30 barrels can be upwards of $1 million in some markets.

Vital Craft Beer Industry Statistics that You Need to Know

• The dollar sales growth of craft beer products in the United States was 8% in 2017. (Brewers Association)
• Adults in the United States consume an average of 26.9 gallons of beer each year. (National Beer Wholesalers Association)
• About 40% of the sales that occur each year for the craft beer industry happen during the months of June, July, or August. (Nielsen)
• There are more than 700 different craft breweries operating in California right now, making it the largest source of products for the industry today. (Statista)
• 6% of adults over the age of 21 say that they consume at least one beer every day. (Statista)
  

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