Financing Your Own Distillery

The spirits industry can raise another glass to a successful year. 2017 saw a lot of growth in the market rising 4.5% at $25.2 billion in sales. With all the potential growth, finding room for yourself in the market sounds incredibly appealing. For many start-ups the biggest hurdle they face is financing. Every company needs capital to get their ideas off the ground, but not everyone knows where to look. Fortunately, there are different ways to find the money you need to start your distillery. 

Develop a Strong Business Plan 

Before you can begin to think about financing your brand, you need to develop a business strategy for your alcoholic beverage. There are many reasons why this is beneficial, but ironing out details is crucial when you start to talk about money. Your business plan should include market research, your unique manufacturing process, and how you will position yourself in the market. Clarity is essential when you start approaching investors with what you're offering and how they can expect to see a return. 

Take Advantage of Various Local Programs 

There are several options available to start-ups regarding financing at a local and state level. Many organizations throughout the state have programs set in place to help new businesses find funding. These projects help with marketing, networking, altering buildings, and more to get your distillery off the ground. In some areas, the Department of Agriculture might guarantee up to 95% of a loan if the business agrees to utilize farmland and resources from the state.  While these avenues might take time to research, they could potentially save you thousands of dollars in costs. Additionally, to save money up-front, deciding to lease rather than buy might become helpful when it comes to smaller machinery that you will need to use. It's not recommended to lease an entire distillery. Purchasing this outright will save you money down the road. 

Local and State Guilds 

Participating in your local guild is strongly advised for new businesses. They can provide advice and play a part in changing laws that could benefit your company. Each state has regulations on the buying, selling, and making of alcohol. Your business plan might be a winner in one state but fail in another. The ability to sell to retailers across the country makes a big difference in your annual revenue. Keep your options open. There have been instances where start-ups have decided to move their business to another state as it provided them more chances to succeed. 

Understand Your Equity

Breaking down the percentages of your initial investments helps visualize how to finance the company. These numbers are in part mostly guesswork, but you can find a starting point. Every good business should start with a business plan, and in this document, there should be language articulating where you project your company going in one, five, and ten years time. Start from the ten-year mark and work out how much it would cost to operate your business. This dollar amount can put perspective on whether or not you want to choose debt, equity, or personal loans, which will have a huge impact on how you structure your business. 

Crowdfunding Can Raise Capital and Awareness 

With the rising popularity of social engagement online, many businesses have profited from the use of crowdfunding. Last year, almost 15% of individuals online purchased an alcoholic beverage based on the content they came across on social platforms. The benefits to your business are two-fold. One, you get the money you need without worrying about interest or overbearing investors, and two it gives you an opportunity to build brand awareness. There have been some successful campaigns in the past, and the individuals who contributed became lifelong ambassadors. If there are any reservations about accepting money regarding tied-house laws, there is an option to open a separate LLC that will receive the funds, or you could only crowdsource aspects of your business like marketing.  

Securing the right financing can be a challenge, but with the right due diligence, you can find what you need to get your business off the ground. Over the years, the Brindiamo Group has helped numerous companies obtain the capital they need to develop a profitable business. To find the next level of success, contact us today.