Do you want to start microbrewery business?
Are you planning how to start a microbrewery business? There is no doubt, this is a great business venture with a lot of potential. Nowadays, a lot of people appreciate great tasting beer and for this reason, there is an increase in the number of people who need to enjoy a wide variety of quality beers. As a result, many entrepreneurs have decided to venture into the brewing industry. The eye for tasty beer has opened up new opportunities for private brewers to develop their own brands. Starting a microbrewery is the foundation to launch your own brewery business. With a great business plan and strategy, it’s definitely a rewarding venture that promises good profits.
2.1 The Business
The microbrewery will be registered under the name Starvic Brewery and will be located in Oakland, California. The microbrewery will be owned by Thomas Anderson who is a Brewing Specialist with vast experience on microbrewery start up cost and what will be involved.
2.2 Management Team
Thomas Anderson is who is the owner of Starvic Brewery is a professional brewing specialist with sufficient experience spanning over two decades in the brewing industry. Before starting the microbrewery, Anderson worked for various high profile brewery brands across the United States. After completing business-setup, Thomas has plans to employ professionals to assist in managing the microbrewery.
2.3 Customer Focus
Starvic Brewery has plans to set up the brewery in a strategic location to ensure the business effectively reaches out to the target market. The brewery intends to serve different kinds of customers.
2.4 Business Target
Starvic Brewery will offer various types of products in line with maintaining high brewing standards. The brewery intends to target various customer segments in Oakland.
3.1 Company Owner
Thomas Anderson is an experienced brewing specialist who has had a successful career journey. He has achieved numerous career accomplishments and played a key role in helping to startup various brewery plants in various cities across the United States.
3.2 Aim of Starting the Business
Everyone loves tasty beer and nowadays, there are numerous brands of beer which have been introduced in the market. In the recent days, customers prefer having a wide variety of beers to choose from. Aside from the traditional brands, there was a need to be creative and introduce other exciting brands and flavors in the market.
3.3 How the Business will be Started
With over twenty years of experience, Mr. Thomas enjoys extensive experience in the brewing industry. Therefore, he understands how to start microbrewery business using the latest technologies and business practices. Additionally, he has sought the services of financial experts to help him come up with a detailed financial analysis.
|Research and Development||$10,000|
|TOTAL START-UP EXPENSES||$62,500|
|Other Current Assets||$25,000|
|Start-up Expenses to Fund||$37,000|
|Start-up Assets to Fund||$20,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$12,000|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$45,000|
|Cash Balance on Starting Date||$20,000|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$120,000|
|Loss at Start-up (Start-up Expenses)||$50,000|
|TOTAL CAPITAL AND LIABILITIES||$30,000|
Services for Customers
Starvic Brewery intends to provide its customers with diversified products in order to attract more customers and boost revenue for the microbrewery. When planning how to start your own microbrewery, there should be a defined approach that emphasizes upholding the highest standards of beer quality. In this regard, Starvic Brewery intends to offer the following products.
- Starvic Super is a special beer brand made using traditional ingredients with a fine taste
- Starvic Pilsner is a combination of the finest imported and domestic malts
- Starvic Lager is an incredible traditional brewed malt which contains European yeast and roasted specialty malts
- Starvic Light is a crisp and crystal clear beer known for its white foamy head.
Marketing Analysis of Microbrewery Business
In the recent times, many people are beginning to appreciate the value of locally brewed beers. In this microbrewery business plan, Starvic Brewery intends to capitalize on the increasing consumption of local brewed beers to attain higher revenue streams. There is no doubt, microbrewery business is flourishing thanks to steady growth in locally brewed beers. In this regard, a comprehensive market analysis was done to better understand the market and how to advertise to potential customers.
5.1 Market Segmentation
In order to ensure Starvic Brewery meets its market obligations, the business will sell four unique beer varieties that have never been sold on the market before. Even though microbreweries cannot exceed a specified amount of barrels produced, they are well placed to meet the demands of the market. With great opportunities to expand revenue such as forming partnerships with beer distribution, the future of microbreweries looks great. This microbrewery start up business plan has identified the following customer segments. Locally brewed beers are consumed by a wide range of customers.
5.1.1 Corporate Executives
Oakland is a large city with a huge working class population. Statistics have shown that a majority of beer consumers are career professionals who earn a regular income. A good number of patrons who go to entertainment spots where locally brewed brands are sold happen to be employees drawn from different careers. For this reason, Starvic Brewery has come up with a beer product line that will meet the needs of corporate executives. In this case, strategic pricing and quality assurance is critical to tap revenue from working class customers.
Entrepreneurs are a key customer target for Starvic Brewery because some of them are expected to purchase locally brewed beers in large quantities. In this case entrepreneurs such as those who own bars and restaurants as well as beer retailers are expected to get their supplies from Starvic Brewery. This microbrewery business plan sample has outlined the techniques to be used to market the microbrewery to entrepreneurs around Oakland.
5.1.3 Sports Professionals
Starvic Brewery has a wide range of beers crafted with special ingredients to provide energy. Together with other beer varieties, the business intends to target sportsmen and women who according to statistics, are an excellent market segment for any microbrewery. Oakland is a hub for various sports activities thus providing ready market for locally brewed beers from Starvic Brewery.
5.1.4 Visitors and Tourists
As any other large city, Oakland receives numerous visitors who travel to the city both for business and leisure activities. Because of the numerous entertainment facilities built around the city, having special locally brewed beer with a unique taste will help to market Starvic Brewery across the city and its environs. In addition, many tourists come to Oakland to see the numerous points of interest.
5.1.5 College Students
Starvic Brewery products are not sold to underage consumers but college students who are above 18 years love unique blends of locally manufactured beers. Given the high number of colleges in Oakland the surrounding areas, there is a great market for local beer brands. This business plan microbrewery outlines how the microbrewery will reach out to various customers.
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5|
|Visitors and Tourists||17%||13,000||16,000||19,000||22,000||25,000|
5.2 Business Target
Starvic Brewery has acquired the required machinery and facilities that will support the infrastructure of running the microbrewery. Oakland is a large city and this microbrewery business model intends to target the residents, entrepreneurs and special groups. The microbrewery plans to adopt modern brewing infrastructure and technologies to help to seamlessly coordinate business activities. With a good microbrewery business plan template in place, the microbrewery hopes to increase its annual sales margins by 15% – 20%.
5.3 Product Pricing
Starvic Brewery plans to come up with well-researched product pricing guidelines after carefully surveying the market. In order to survive industry competition, good microbrewery business plans place a lot of emphasis on accurately determining product prices.
In order Stanvic Brewery to meet its objectives, Thomas Anderson has worked closely with experts devise a marketing strategy that will help the microbrewery to effectively serve its customers. When planning to start a microbrewery business, a good sales strategy should be put in place for the enterprise meet its objectives.
6.1 Competitive Analysis
Starvic Brewery intends to come up with a well-structured business model that will ensure provision of quality products. Even though there are other microbreweries in the region, the microbrewery has identified its strengths and the available opportunities to leverage on.
6.2 Sales Strategy
For the microbrewery to realize its sales targets, the following strategies have been identified to help market the business. While you plan how much to start a microbrewery, the following marketing action points will be of great help. Starvic Brewery intends to adopt the following plan.
- Introduce the microbrewery in a grand style by organizing a party and giving attendants free gifts such as offering them free cups of locally brewed brands for customers to have a feel of the tastes and flavors.
- Ensure the microbrewery always has various types of products at all times to offer customers the variety they need
- Place signage at strategic places within the neighboring areas to market the microbrewery
- Come up with a loyalty plan that allows rewarding of potential customers with goodies from the microbrewery
- Advertise the business on local media channels such as television, radio and newspapers
- Advertise the business on local directories such as yellow pages
- Use word of mouth marketing and referrals to reach out to potential customers
- Hire a professional marketing company to help the microbrewery effectively penetrate the market
- Organize roadshows and events in the target customer areas with a view to market the microbrewery.
6.3 Sales Forecast
In order to meet business goals, Starvic Brewery has come up with a sales forecast that will show how the microbrewery is expected to perform when it begins operations.
|Unit Sales||Year 1||Year 2||Year 3|
|TOTAL UNIT SALES||1,000,000||1,120,000||1,240,000|
|Unit Prices||Year 1||Year 2||Year 3|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Direct Cost of Sales|
|Subtotal Direct Cost of Sales||$460,000||$540,000||$620,000|
Starvic Brewery hopes to recruit well trained and experienced staff to run its operations on a day-to-day basis. This microbrewery start up business plan explains the kind of staff the business will need to hire in order to meet its objectives.
7.1 Personnel Plan
Starvic Brewery is owned by Thomas Anderson who is also the owner and manager of the microbrewery. As plans are put in place to start the business, the following staff will be employed in the business.
Bottling and Shipping Manager
2 Marketing Executives
4 Bottling Staff
3 Shipping staff
2 Security Guards
Successful applicants will be thoroughly trained in various areas of microbrewery operations in order to ensure a seamless flow of operations.
7.2 Average Salaries
Stanvic Brewery intends to pay its members of staff the following salaries within the first three years of operation.
|Year 1||Year 2||Year 3|
|Bottling and Shipping Manager||$36,000||$39,000||$41,000|
|2 Sales and Marketing Executive||$60,000||$62,000||$64,000|
|4 Bottling Staff||$100,000||$105,000||$110,000|
|3 Shiping Staff||$60,000||$63,000||$65,000|
|2 Security Guards||$50,000||$52,000||$54,000|
Starvic Brewery has come up with a comprehensive financial plan that will guide the operations of the microbrewery. In order to streamline business operations and forecast microbrewery profit margin, initial capital must be determined alongside other business expenses. In this case, Thomas Anderson will finance the microbrewery using his personal savings and will be helped by two investors. In addition, a bank loan shall be secured to provide additional capital.
Below is the key financial data for Starvic Brewery.
8.1 Important Assumptions
Financial forecast for Starvic Brewery shall be based on the assumptions below.
|Year 1||Year 2||Year 3|
|Current Interest Rate||15.00%||18.00%||21.00%|
|Long-term Interest Rate||6.00%||6.00%||6.00%|
8.2 Brake-even Analysis
The Brake-even Analysis for Starvic Brewery is illustrated in the graph below.
|Monthly Units Break-even||8000|
|Monthly Revenue Break-even||$320,000|
|Average Per-Unit Revenue||$200.00|
|Average Per-Unit Variable Cost||$1.60|
|Estimated Monthly Fixed Cost||$420,000|
8.3 Projected Profit and Loss
Profit and Loss information for the microbrewery is calculated on an annual and monthly basis as shown below.
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$50,000||$70,000||$90,000|
|TOTAL COST OF SALES||$50,000||$70,000||$90,000|
|Gross Margin %||72.00%||80.00%||88.00%|
|Sales and Marketing and Other Expenses||$5,000||$7,000||$9,000|
|Total Operating Expenses||$320,000||$350,000||$380,000|
|Profit Before Interest and Taxes||$30,000||$50,000||$70,000|
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
8.4 Projected Cash Flow
Below is a summary of pro forma cash flow, subtotal cash spent, subtotal cash spent on operations, subtotal cash received and subtotal cash from operations.
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$10,000||$12,000||$14,000|
|SUBTOTAL CASH FROM OPERATIONS||$110,000||$132,000||$154,000|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$158,000||$165,000||$172,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$47,000||$54,000||$61,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$40,000||$45,000||$50,000|
|Net Cash Flow||$15,000||$25,000||$35,000|
8.5 Projected Balance Sheet
Below is a Projected Balance Sheet for Starvic Brewery that shows capital, assets, liabilities, current liabilities and long term assets.
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$4,000||$4,000||$4,000|
|TOTAL CURRENT ASSETS||$303,000||$347,000||$391,000|
|TOTAL LONG-TERM ASSETS||$4,000||$3,000||$2,000|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$12,000||$15,000||$18,000|
|TOTAL LIABILITIES AND CAPITAL||$280,000||$310,000||$340,000|
8.6 Business Ratios
The following is the Ratio Analysis, Business Net Worth and Business Ratios for the microbrewery.
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||4.00%||2.20%||3.00%||35.00%|
|Total Current Assets||120.00%||150.00%||155.00%||60.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||70.00%||77.00%||65.00%||67.00%|
|Profit Before Interest and Taxes||25.00%||30.00%||35.40%||2.50%|
|Total Debt to Total Assets||4.00%||3.00%||2.00%||60.00%|
|Pre-tax Return on Net Worth||85.00%||95.00%||100.00%||4.00%|
|Pre-tax Return on Assets||66.00%||60.00%||70.00%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||20.00%||23.00%||26.00%||N.A.|
|Return on Equity||52.00%||56.00%||60.00%||N.A.|
|Accounts Receivable Turnover||7||9||11||N.A.|
|Accounts Payable Turnover||12||16||20||N.A.|
|Total Asset Turnover||2.8||2.6||2.4||N.A.|
|Debt to Net Worth||0||-0.06||-0.03||N.A.|
|Current Liab. to Liab.||0||0||0||N.A.|
|Net Working Capital||$250,000||$270,000||$290,000||N.A.|
|Assets to Sales||0.55||0.5||0.4||N.A.|
|Current Debt/Total Assets||8%||4%||3%||N.A.|
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