23 May 2012 @ 11:39 AM 
 

How to Open a Brewery Using Kickstarter

 

I am writing this post because I get an e-mail or a phone call almost every single day from a person asking me how to do this and so this is partly to help people and partly to slow the deluge of e-mail and phone calls.

As anybody who has viewed this blog for any length of time is probably aware, I am the guy behind Mystery Brewing Company. I originally launched the brewery as a Kickstarter campaign. The original idea was to do alternating proprietorship – a form of contract brewing – but that idea fell through and we now operate a fully functioning brick-and-mortar brewery. I won’t go through that whole story right now, because I already have. Read it here. We’re not a nano, but we’re not huge. We are, however, having a blast.

I don’t think I was the first to try, but I’m pretty sure I was the first to get funded, the largest funded (so far), and I might be the first operational Kickstarter brewery. I make no promises that those claims are true, but I think they are.

So, because of this success, I am asked often for advice by other budding entrepreneurs about how to start a brewery using Kickstarter. Let me give you this bullet list:

1. It can’t be done

Okay. That’s kind of glib. But consider this: I raised ~$44,000 via Kickstarter, which seems like a lot of money, right? I mean.. it is. It’s like median yearly income for an American family right now or something silly like that.

For a 7bbl brewery that doesn’t even pay for kegs. It certainly doesn’t pay for a brewhouse. It’s 6 fermenters. It’s the cost of plumbing and glycol piping. You get the idea.

Okay, now remember: You owe taxes on that money. You’re a business now and you need to pay taxes on any income that you make. So that $44,000, after the cut that Amazon and Kickstarter take is closer to $40,000, and then closer to $35,000 after you pay even the most modest of income taxes on it. Then you have to pay for those prizes that you’re sending out to people plus postage (postage is expensive – one Priority Mail package to 250 people = $1,000 minimum), so now you’re down to $30,000 or so, maybe lower. That’s more like 4 fermenters.

The point is this: You need, need, NEED alternate sources of funding. Don’t count on the SBA. Regardless of what they tell you they are not interested in funding startups unless there is absolutely no risk involved (ie – you are putting in an enormous amount of capital already), same goes for banks. You need to have a lot of your own money in the bank, ready to go, or a few angel investors willing to put up at least $150,000, probably more. The total cost to starting up a 7bbl brewery, right now, with the prices of stainless and the dearth of decent used equipment, is just north of $500,000.

2. Go big or go home.

For a blog that gets more hits on an article about nanobreweries, than pretty much anything else, I am still not convinced that they are a completely viable business model. If you’re planning on starting a nanobrewery, you NEED a taproom if you want the business to be completely self-sustaining. There just aren’t enough hours in the day to brew enough beer, otherwise. If you don’t have a way to sell per pint, you need to find an alternate form of income.

If you’re still interested in going the Kickstarter route:

3. You need a pre-established community to support you.

I hate to say this, but if you don’t have a local community that’s ready to see you start a brewery, you’re going to have a difficult time finding that funding. When I started my Kickstarter campaign, I was the only brewery that had a “currently funding” project. Today there are 12 in funding and I know of at many MANY more who are looking at it, so you need some way to make yours stand out. It’s going to be YOU. That’s it. You and your local community. Use it. That community is your friends, your parents, their friends, their friends of friends, etc. I knew 50% of the people that backed me on Kickstarter personally. Of the rest, most of those knew one of my other backers. That network is even more important now that it used to be, because you’re not the only person trying to do this.

4. Have decent rewards.

People are going to back you for more reasons than just helping you start a brewery, and it’s not because they want another crappy shaker pint. It’s about the experience. They want something that’s going to make them feel special. They also want something that seems like it’s worth their while. $100 for a t-shirt is shitty. $100 for a t-shirt, a sticker, a pint glass, and a bottle opener is less shitty, but throw in a personalized beer recipe and you’re starting to talk business. Don’t skimp on prizes, people will skimp on contributing. They’re nice people, but they want a reward.

5. You need to work on it EVERY DAY.

That means you need to go bother people every day. You need to write press releases and contact every network you’ve ever been a part of. Go give a talk to your grandparents’ retirement home and contact your college alumni magazine. Call your hometown newspaper and get your mom to talk about it at her bridge club. Call people you used to work with and old friends from elementary school. If you aren’t pushing it as hard as you can and being excited about it, then why should anybody else? Making that campaign work is a full time job. It won’t come to you, you need to go get it.

6. Don’t forget where you came from.

After you’ve made it and you’re successful, make sure you don’t forget where you came from. I will be sending out Kickstarter prizes for years. No shit. Half of my donors probably think I’ve completely forgotten about them. I haven’t. These people are the reason I had the balls to start my brewery and I have so, so many plans for ways to thank them that go above and beyond what I originally planned in the Kickstarter campaign. And you might ask yourself – why? What do I owe them now? They are the original community around my business. Any and every small business is about people. It’s about the community, and these are your starter community. They are your early evangelists. Take care of them and they will continue to take care of you.

7. Stop asking me for help.

Okay, that’s a little glib, too. But I can’t tell you how to make you successful. It’s your business, make it your own and come up with your own cool ideas and tactics. I can give you all of the advice in the world, but ultimately you won’t be successful by using my model, because it’s mine and, like I said, small business is about the people. You’re not me (I hope), and so you need to go find what works for you.

Good luck! It’s a shitload of work, but the reward of having all of those people believe in your idea is worth every hour you spend on it, and worth far, FAR more than the amount of money that you might raise.

Tags Tags: ,
Categories: brewery, industry, marketing, op-ed, startup
Posted By: erik
Last Edit: 23 May 2012 @ 11 39 AM

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Responses to this post » (25 Total)

 
  1. Dieter Kuhn says:

    Erik,
    Well said, and 100% accurate as far as the community piece and supporters go. May be wannabee’s will think twice and save themselves alot of pain , frustration, and sleepless nights!
    Prosit,
    Dieter

  2. Chris says:

    “now get off my lawn!”

    But seriously – all very valid points that really extend beyond just raising money on kickstarter, and to raising funding and support for a start-up business in general.

  3. erik says:

    Yeah.. maybe it’s a little of a “get off my lawn.”

    I mean.. I’m happy to help people out. At the same time, I worked my ass off to get here and part of me feels a little bit of, “Well… go do your own work.”

    In the end, though, nothing that I say will make it easy for someone. Every business is so completely different.

  4. erik says:

    Oh, I also almost put a section in that was, “You’re not opening this year. No, not next year, either.”

    So… heed that warning. You’re not opening this year. Yes you, whoever might be reading this.

    No matter what you think. Something will come up, just you watch.

  5. […] In a fantastic blog post, Meyers details exactly what has to happen to successfully launch your nanobrewery, complete with a cold dose of realism for those who want to try.  Opening a brewery is expensive, and it's going to take more than the tens of thousands that realistically may be possible from your friends and family.   He says, in part: […]

  6. olllllo says:

    It should be called KickFinisher, because it should literally be the last thing you do.

  7. Tom says:

    I thought Pipeworks was the first operational brewery funded through Kickstarter.

  8. Frank says:

    Something that confuses me a little is the term bbl. My understanding (via wikipedia) of a brewers barrel is 43 gallons US. You say you are a 7bbl brewery, does that mean you brew 7×43=301 gallons per day/month/year?

    thanks,

    • erik says:

      Hi Frank,

      1 bbl = 31 gallons.

      I am a 7bbl brewery which means I make 7bbls per batch.

      We’re targeting 1000 bbls this year, but per day or per week is different. Some days we brew twice, some days we don’t brew at all.

  9. […] remiss if I didn’t mention perhaps the coolest fact about Mystery Brewing – it was the first Kickstarter-funded brewery. This just goes to show the passion people have (especially around here in North Carolina) for […]

  10. […] remiss if I didn’t mention perhaps the coolest fact about Mystery Brewing – it was the first Kickstarter-funded brewery. This just goes to show the passion people have (especially around here in North Carolina) for […]

  11. Becky Starr says:

    Very nicely done! We teach classes on “Starting Your Own Winery, Brewery or Meadery” and it does seem that some people want you to do it all for them. We always mention your successful Kickstarter campaign, but we also list all the ones who don’t make it. (The statistics for wineries are even sadder than for breweries!)

    As the person that wrote our business plan and did all our TTB paperwork, I feel kind of the same as you – go do your own homework!! And, no, you won’t open next year!!! 🙂 Thanks for saying it!

  12. […] 2010, Myers partially funded Mystery Brewing through Kickstarter, the first brewery to utilize the crowdfunding website to start a business. A lot of people got […]

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