Opening a Microbrewery: From Brewmaster to Profitable Brewery Operations Management
Cracking Open A Fresh One?
When you’re taking those early steps towards opening a microbrewery, there’s a lot to consider. For instance, how do you track your purchases, sales, and production? How do you get your accounting in order? What legalities need to be covered? What permits do you need? All of these micro details add up to a macro picture.
And if you’ve not run a business before, or this is your first startup in the brewing industry, these details can be a distraction when you really want to focus on brewing great beer. So let’s take a closer look at what you need to know, and how to take care of your day-to-day operations.
How long will it take from home brewery To Microbrewery
So you’ve got down those beer brewing recipes at home and now you’re looking to make the leap into larger-scale production? The first thing you need to know is that the process tends to be long. You’re probably looking at a year to a year and a half of planning before you can open your commercial brewery and sell beer.
In that time, you’ll be making sure you’ve got the right product mix, a great location and all of the right permits.
While finding a great location and making great beers often seem intuitive for brewers, once you open a craft brewery there is a complex list of one-time and ongoing administrative permits, regulation, taxation and compliance that you must deal with.
Liquor control regulations vary in each country, state, province and locally at the municipal level when you look at the zoning of your location. You need to give these items attention before you can even start bringing in raw materials and figuring out how to get brewing.
Death to Spreadsheets: Brewery Masters need accessible data to build Profitable Craft Breweries
With the product, location, and permits in order, you’ll also need to have your vendors and operation workflow figured out. How will you track your inventory, accounting, and sales? Do you have a system for reporting and compliance?
At this point, many brewers are typically using recipe software such as BeerSmith 2 or Brewer’s Friend in combination with Excel spreadsheet based systems.
In order to run a brewery, experts believe that you will need 10 to 12 spreadsheets such as:
- Brewery Budget Spreadsheet
- Brewery Cost Spreadsheet
- Brewery Production Spreadsheet
- Brewery Inventory Spreadsheet
- Brewing Schedule
- Sales Forecasting
- BBL to CE Calculator to convert Brewer Barrels to Case Equivalents
- Taproom Sales Calculator
- Employee time sheets
- Vendor Order Forms
- Customer Keg Tracking
Keeping track of so many spreadsheets is an exhausting task compared to simply making great beer. This is the stage of your business where you should consider a brewery software solution to replace brewery financial spreadsheets. This type of software is called Brewery Management Software.
Brewery management software simplifies the number to different places and excel spreadsheets you need to access in order to run your brewery. They ensure that your data is always up to date and synchronized. As a technological, savvy head brewer, your time is better spent cultivating great recipes and not managing a data management system.
The biggest barrier for growth with a spreadsheet-based brewery management system is that it often exists in a silo and takes a lot of work to maintain. Creators and managers of the different spreadsheets are often protective, prohibiting access to new employees and adding manual, paper based information a requirement. In addition, spreadsheets need to be used on computer and most brew masters don’t like being chained to a desk.
Brewery production software is a tool you can use to engage every person in your business to accurately input data. Great brewery management software is accessible anywhere-anytime using mobile, computers and tablets so that you and your staff can access it and use it from anywhere.
We recommend getting your Brewery Management Software six months from opening as a good time to get your tracking and accounting in place. Why? So you can alleviate any potential issues and hit the ground running when you officially launch.
Beer Distribution Considerations - How breweries save $10,000 a year
Your distribution network is another key consideration. What kind of network will you have? Are you a tap room? Are you canning for online sales?
Every province or state has different regulations for distribution. For example, craft brewers in some areas, many have to distribute for themselves. That means they need direct partnerships with liquor stores – and they might have strict requirements for production levels. Another channel to consider is selling directly to individual government-owned liquor stores.
Perhaps one of the most significant losses that breweries incur is the loss of kegs and management of inventory. Many small breweries report losing around 100 kegs a year with a replacement value of around $10,000.
A good Brewery Management System (ahem - Brew Ninja) will have a keg management system that eliminates Keg loss when managing inventory.
Tax and Compliance Reporting Requirements for Breweries and Taprooms
Whichever avenue you decide to take, it’s vitally important to understand the reporting requirements in your province or state. This will ultimately shape the way you do business. For example, in British Columbia a license to produce beer doesn’t cover having a tap room.
Where you’re based determines how you’re taxed – and therefore how you report and when you report.
In British Columbia and Alberta, breweries pay tax on a keg before it’s sold via a taproom, whereas in Ontario that’s not the case.
So in British Columbia, if you move a keg from your production room to a tap room you are basically selling it to yourself, so at that point it’s taxed. On the other hand, in Alberta the same journey requires you to pay the full cost of the keg to the liquor board and then in five days they return your payment – minus the tax deducted(!).
In Texas, there’s a three-tier system in place – to regulate the distribution of alcohol through producers, distributors and retailers. This means not only defines the roles of ‘who can sell what to whom’ it also sets out rules and regulations for what each party must to obtain accreditation for their respective liquor license.
Weekly reporting to the liquor board is common to most provinces or states. That means you’ll need to account for how much product you’ve sold and to which licensee (using their licensee number). You also have to submit a monthly report which states how much is in your inventory at the start and end of the month.
Keeping An Eye On Your Inventory
With your accounting and reporting in order, your final consideration will be how to manage your inventory. And it’s important to consider scalability. You might have five people or 50 people who need access to real-time information such as batch updates. How much visibility do you have over your numbers? Can you easily access sales data?
Compliance also requires lot tracking and batch tracking. Is that data readily accessible? With an audit most likely within the first couple of years of business, do you have all you need in one place?
Staffing and Employees
For new business owners, staffing and employees can be the bane of your existence or the lifeblood of your growing business. Your attitude and the tools you use will make the difference.
Growing breweries led by brew masters need to view the operation of their business in a similar way to making great beer.
Making beer requires tools, recipes and ingredients - Operating a brewery requires staff (tools), instruction and leadership (recipes) and ingredients (data).
Show Them Your Brew Ninja Moves
From full traceability to regulatory lot tracking, Brew Ninja streamlines your entire microbrewery operation into one mobile-friendly piece of software.
Whether it’s knowing the value of your inventory at any time, or preparing weekly or monthly reports, Brew Ninja gives you everything you need in a few taps. That way, you can focus on what’s coming out of the most important taps.