Brewery as a Startup Idea: Pros & Cons of Starting a Beer Business
Between 2012-2017, the amount of craft breweries in the US climbed from 2420 to 6266, which comes out to a 159% increase in only 5 years. Thanks to the Internet, accessibility to brewing instruments, and knowledge pertaining to making beer, starting a brewery is as easy as it’s ever been.
However, like any business, opening up a brewery can come with a few challenges.
Pros of Starting a Brewery
When starting a business, there’s nothing wrong with wearing rose-colored glasses as long as your head doesn’t stay in the clouds. Let’s look at why you should start a brewery immediately.
Beer is always in demand, no matter the weather! This makes brewing infidelity scalable, as you’ll constantly need to create new products and services that meet customer demand.
Little Startup Cost
Breweries don’t need to be in large factories, open rooms, or even in the biggest room in your house. Many brewers start with $2,000, one brew kettle, and a dream, yet still make money.
Simple Business Model
While learning how to start a brewery, you probably noticed that the brewing industry offers a simple business model, which makes building one easy as long as you’re licensed.
The gross margin for a brewery is around 40%, which is much higher than other businesses. You’ll be able to manage costs easily when you start and make more money long-term.
Until you really get going, you can stop production whenever you want. If you like the work but you don’t have enough capital to do this full-time, you can brew part-time and transition slowly.
Sell Almost Anywhere
Beer can be sold in multiple markets, including festivals, convenience stores, grocery stores, beer stores, restaurants, and beer gardens, increasing your audience and revenue streams.
Through eCommerce and partnerships, you can sell beer while you sleep. Although this benefit may come later on, the ability to make money at any time is the dream of many entrepreneurs.
Cons of Starting a Brewery
Knowing the negatives ahead of time can save you from potential regret, so consider the following cons before jumping head-first into the craft beer and brewing industry.
While the increase in craft brewery popularity is great for both customers and suppliers, it can make differentiating yourself from the market difficult or fostering demand challenging.
Lack of Health Benefits
Unless you purchase your own benefits plan, you’ll be without health coverage, worker’s compensation, and multiple other retirement benefits because you’re self-employed.
Self-employment taxes are more expensive from the get-go, but you also don’t have an employer who covers a portion of your income tax to ensure you aren’t audited by the IRS.
You may find creating the same product over and over again very tedious, boring, and tiresome. However, diversifying your product stream can help keep things interesting as you scale.
Building customer trust in your product is challenging because you won’t have enough face-to-face interaction with your buyers. They may also feel loyal to a specific brand.
Harsh Learning Curve
A brewer can’t just start brewing an all-star batch of beer right from the start. There’s a lot of trial and error involved to find the perfect beer mixture, and even then, you still may not sell it.
Minimal Physical Activity
Brewers sit at their desks for extended periods of time, starting at the computer not making beer. If you struggle to stay seated all day, you may need to take more exercise breaks.
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