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10 Steps For Starting a Brewery From the Ground Up

Posted On: April 14, 2018 author Paul Kendall

Is there an easy way to start your own brewery?

Due to the increasing trend of beer as a choice for alcohol consumers, the brewery has become a great choice for business owners.

But whether you’re planning to start a large commercial brewery or a small microbrewery business, there are certain guidelines that need to be followed in order to ensure success.

It is not simply about acquiring business permit or approval, but about having the necessary equipment to produce your beer. Without the right equipment, you will not be able to create a great-tasting product that will keep the customers coming back for more.

This, however, does not come cheap. 

Fortunately, with brewery equipment leasing, starting your brewery business does not have to come at a cost of financial burden.

 

Starting A Brewery In 10 Steps And Through Brewery Equipment Leasing

 

Setting up a business that deals with alcohol is not easy, given the number of legal policies that need to be complied with. Failing to do so will result in a lot of legal consequences.

But before elaborating on these, what exactly is a brewery business?

 

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What Is A Brewery Business

 

Brewery is, in short, a business that makes and sells beers. Breweries are where beers are commercially made.

Each brewery company uses their own set of brewery equipment that suits the process of how they make their beer.

If you’re interested in starting your own brewery, then below are the necessary steps you need to follow in order to make this happen.

 

How To Legally Start A Brewery In 10 Steps

 

Potential business owners can always start a brewery business. But given the daunting task at hand in doing so means only a handful actually push through with it.

Given the sensitivity of the product being produced, there are challenges that need to be overcome before, during and even after starting the brewery business.

To avoid this, here are the key steps that you need to do before attempting to create your own beer brand.

 

1. Select A Brewery Name

 

First of all, you need to choose your desired name for your brewery.

When you finally picked a name for your business, you have to make sure that it’s available before you file any document in a government office.

You can check your state Secretary of State’s website to ensure that no similarly named business entities or assumed names. You should also check the United States Patent and Trademark Office’s trademark database for similar trademarks.

Keep in mind that having a name similar to an already established business can cost you lawsuits. And changing a name will just cost you additional fees. So be very careful on what name you’ll choose for your business.

 

2. Form An Entity

 

Forming an entity is important because it can be used for two primary purposes:

  1.       Your personal assets will be protected from the possible liabilities of your new venture.

Business owners tend to choose either the limited liability company and the Subchapter S corporation for their entity form. However, using LLCs or corporations can be considered as well.

Once you’ve finally decided to form an entity, contact an attorney and ask them to do it for you.

  1.       Create an agreement in order to minimize disputes between multiple partners.

If the company is owned by multiple individuals, an agreement will specify:

  • Who amongst the owners owns what,
  • What rights each of the owners have, and
  • What happens if an owner decides to leave.

 

3. File A Trademark For Your Brewery Name

 

A trademark is any single or combination of words, phrases, symbols or designs that identifies your brewery company from other companies.

Having a trademark and servicemark management can help you develop your brand quickly. It also helps in increasing the value of your company and its products.

You can register a trademark or service mark by filing an application with the USPTO. If you’re uncertain about the process, you may ask for assistance from an attorney to help you understand it better.

 

4. File Trademarks For Your Beer Names

 

Once you’ve ventured into this industry, you should expect that fighting for your beer name can become extremely competitive.

To ensure that you will not have to undergo this process, file trademark for your product’s name and logo as well.

 

5. Lease A Space For Your Brewery

 

If you’re planning to be the neighborhood brewery, then you need to rent or lease a space close to your home. The location of your company is an important aspect that will determine your success. That’s the main reason why you should plan this strategically. 

Leasing a location and brewery equipment leasing structured with a fair market value buyout will have the same tax benefits that will allow you to write off 100% of your lease payments off your taxable income. Take your monthly payments for the year and multiply that amount by your tax rate (typically 35%) could be lower this year. That amount will be what Uncle Sam will give you in a tax credit for the year. 

You’ll also need the secured space in order to complete your company’s licensing process. It’s common for brewery owners to lease a space during the starting months or years of their company.  

 

6. Have Your Brewer and Other Key Employees Sign Employment Agreements

 

Every business needs employees to make sure that all inputs and processes are taken care of. Employees also help to provide better outputs for the company.

Before you let your employees start working, make sure that you prepared a written employment agreement that provides details about their employment. This is important because there are certain aspects of the business that employees must protect.

To avoid the disclosure private formula to others outside of the company, include a clause in your agreement that employees are not allowed to speak of it to others who have not been made privy to it.

It's important to utilize brewery finance for equipment that depreciates and use your saved up cash for hiring the best employees. Recruiting and hiring the best employees up front is not cheap. 

 

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7. If You’re Raising Money, Comply with Federal and State Securities Laws

 

Finding a financing source for your startup brewery business can be difficult.

If you decided to use your personal money, then there are federal and state securities laws that you need to follow.

The definition of a “security” covers almost everything and it’s not limited to your shares of stock. It means that it also covers the partnership and LLC interests, promissory notes and other brewery finance instruments.

When registering your company’s securities, you have to prepare and comply with the requirements of state and federal laws. Failing to do so could result in severe administrative, civil and criminal penalties.

Raising money through equity or PPM could be very beneficial for starting a brewery and will give you the cash you need. It will still be wise to utilize brewery equipment leasing for the equipment you purchase for the brewery for tax benefits and saving your cash for unforeseen brewery start up costs. 

 

8. Apply for Your Brewer’s Notice with the TTB

 

Before your company could start brewing, you must first get a license from the Alcohol and Tobacco Trade and Tax Bureau (TTB). This process is the most important and time-consuming step in setting up a brewery company, often taking 6 months to a year to complete.

The process starts by sending in an application for a Brewer’s Notice and a Brewer’s Bond. The TTB must approve your operations, recipes, and beer labels before you could start making a beer. In addition to this, inspection of the brewery, as well as background checks on the individuals involved, will be done.

 

9. Apply for Applicable State and Local Licenses

 

Every new brewery has to apply for a state wholesaler’s license as well as any licenses required by its local municipality. An example of the latter is a taproom license.

 

10. Choose Distributors Carefully

 

Choosing distributors is one of the most important key aspects of the operation and success of a craft brewery. This is why this must be executed with due diligence.

Startup brewers often distribute their products on their own for the first few years to gain good product representation and placement.

Once sales and demand for their beer increases, the distribution is turned over to a beer wholesaler.

Before letting a distributor promote your beer, obtain price sheets first from each wholesaler so you know which distributors carry the various brands in the market.

Do not hesitate to talk to retailers as well to gain an insight into which distributor they prefer working with. Make sure to ask questions about service, product knowledge, enthusiasm and so on.

 

Types Of Brewery Equipment You Can Lease

 

When you’re all settled with your brewery business, you’ll need to make sure you’re competent.

To keep up or stay ahead of your competitors, producing the best beers is a must. This means adding ingredients or frequently replacing brewery equipment, as these may heavily influence the outcome of your product.

However, replacing equipment can be extremely costly, particularly if you are only starting out. This is where brewery equipment leasing comes in. Leasing is a cheaper and more beneficial option, as compared to purchasing an equipment.

Here are the common types of brewery equipment that you can lease:

  • Keg leasing,
  • Fermentation tanks
  • Grain handlers
  • Beer kettles
  • Mash tuns
  • Boilers
  • Industrial pumps
  • Fillers/filling lines
  • Bottle/can handlers
  • Filters
  • Beer labeling machines
  • used brewery tanks

 

 

Benefits Of Brewery Equipment Leasing

 

Whether you have a large commercial brewery or small microbrewery, brewing equipment for lease can help you manage your budget so your revenue will be impacted heavily, in addition to other benefits.

Below are some of the benefits of brewery equipment leasing:

 

1. Reduce Costs

If you opt to lease, you’ll only pay for half of the equipment’s original price. Leasing allows you to save money because it avoids you to pay significant upfront costs.

 

2. Opportunity To Upgrade

Every leasing company gives their client an option to upgrade to new or latest machinery, materials or accessories. This option helps business owners to prevent spending too much from using the latest technology.

 

3. Potential Tax Benefits

Your brewery will have tax benefits because leasing equipment is tax deductible. Properly structured, the whole lease payment will be deducted off your taxable income.

 

4. Repairs May Be Covered In The Lease

Unavoidable accidents may happen while you’re using leased equipment. Fortunately, lessors require insurance on your equipment. 

This will help your brewery company to resolve equipment issues quickly without problems happen unexpectedly. 

 

5. Overcomes Budget Limitations

 

Leasing doesn’t require you to pay upfront costs. The leasing company will provide you with low monthly payment options that can help you gain a faster return of investment and hold expenditures within your budget.

 

6. Minimizes Obsolescence

 

Leasing gives you an option to upgrade equipment until the end of the lease term. This will allow you to replace worn or obsolete equipment during the term of the lease.

 

7. Conserves Cash

 

Leasing doesn’t require a down payment, which means you may conserve the cash saved on other operating expenses.

 

Final Thoughts On Brewery Equipment Leasing

 

In this article, we’ve discussed the various steps that need to be executed in order to start your own brewery business.

The process starts with deciding on choosing a name for the company and the entity that it will take form in. Once this has been done, licensing procedures must be followed, finding a secure commercial space, securing an agreement with employees and choosing the right distributor.

When managing a brewery company, you need to produce the best beers to keep up or stay ahead with your competitors. To do this, you need to add more to your recipe and replace your equipment regularly.

However, frequently changing equipment can be an expensive task. This is where brewery equipment leasing comes into play. This type of leasing gives brewery business owners benefits such as:

  • Reduce costs
  • Opportunity to upgrade
  • Potential tax benefits
  • Quick repairs
  • Overcoming budget imitations
  • Minimizing obsolescence
  • Conserves cash

 

If you want to know more about brewery equipment leasing, you can reach Trust Capital at (866) 458-4777.

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