Rules for Starting a Nanobrewery

Thinking of starting a nano?  It seems like every homebrewer’s dream.  It was my dream.  If you’ve ever thought about it, let me just be honest about a couple of things.  First, it is some of the hardest work you will do for the least amount of money.  Second, it can be really, really fun.  Keeping that in mind, here are ten rules I wrote for starting a nano.

1. Nanos are just like any other business.  To be successful, you need to make money.  Enough money to cover costs, pay yourself and pay off any loans you have to take in a reasonable amount of time.  If you are fine with not making any money and just want to have a go at it as a hobby business, you can ignore the rest of what I have written here if you want.

2. Nanos won’t work in every area.  In many places on the west coast, there are nanos everywhere.  In other places, the laws aren’t friendly enough.  Having a high median income helps, too.  I can charge $4-7 per pint at my place, and still be cheaper than the two bars next door.

3.  You need to sell the majority of your beer for on-premise consumption.  Remember when I mentioned unfriendly laws?  If you aren’t allowed to sell your beer in pints at your bar, you will have a very hard time being successful.  There is no way around this.  If you are bottling or kegging and selling to a distributor or retailer, you will most likely not make very much money unless you go with a larger system.

4. Nanos are just like any other business.  I say this twice so hopefully it sticks.  If you don’t want to research zoning laws, obtain the proper permits and licenses, and practice diligent bookkeeping, I would advise you to stick to brewing as a hobby rather than a business.  If you are sinking thousands of dollars into a business venture, you should be willing to spend as long as it takes filling out the paperwork.

5. You need to be able to brew good beer.  Notice this is four spaces down from number one.  The other rules are more important because all the good beer in the world won’t save you from bad business practices.  However, if you can’t brew good beer you shouldn’t be in the business.  This means that you should consistently be able to score well at BJCP-sanctioned events.  It doesn’t mean that your friends or family like it, or you’ve had people tell you repeatedly that they’d buy your beer.  That isn’t good enough.  Your process should be close to flawless if you are considering doing it professionally.  I homebrewed for five years, but it was really the knowledge that I gained in the last year that meant the difference between success and utter failure.  Also, I probably brewed around 200 batches during that period.  Many people say they want to start a brewery after their first couple batches.  All I can say is, good luck.

6. Prepare to encounter problems, and brew some bad beer.  This goes hand-in-hand with number five.  Because even if you’re experienced, you are going to encounter problems.  I have gained tremendous respect for the brewing industry; brewing good beer consistently is way harder than people realize.  I have made friends in the industry and I have learned that even larger breweries with plenty of experience and the latest equipment still encounter problems pretty frequently.  You will brew some not-so-good batches from time to time.  You will need to identify off-flavors and correct your process.  This is very important, and where that experience really pays off.  A problem is one thing, but a problem you don’t know how to fix is something else entirely.  When you have a problem, dump your bad beer if you can.  You are doing yourself no favors by serving bad beer.  Occasionally you will have to serve some beer that isn’t great, because you have nothing else.  I have found honesty is the best policy; if someone comments on it, tell them what’s going on, and what you are doing to fix it.  Refusing to acknowledge flaws and getting defensive will make you look arrogant and ignorant.  Patiently explain and work to correct the problems.

7. You need a minimum of a one barrel system.  Time is money and brewing more often means less money.  You will find yourself in a living nightmare with a ten gallon system.  “But Sam Calagione started that way!”  Doesn’t matter.  My starting system was less money than a Sabco and brews over three times as much beer.  There is no reason to start smaller.

8. Research every single detail you can.  Listen to people with experience.  Entrepreneurs aren’t risk takers, they’re risk eliminators.  You want to leave no stone unturned so that when you take the plunge, you aren’t leaving anything to chance.  Furthermore, ignoring the advice of people with experience and success is the ultimate form of hubris.  Be like a sponge and take in all the info you can.

9. Be friendly and courteous. Many people will be coming in your doors not just to have a beer, but to talk to you.  You are the face of your business–embrace it.  Also, answer emails and voicemails promptly.  Strike up conversations with strangers.  You can make some great connections this way, too.  Sometimes I am not so great with this due to fatigue and stress; it helps if you can hire someone to pour who has a good personality.

10. If you have read through all these and still want to make a go of it, write a detailed business plan.  No smart person wouldn’t.

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About crookedrunbrewing

Brewmaster
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15 Responses to Rules for Starting a Nanobrewery

  1. Ray says:

    What size system would You say is minimum? I would likely be selling to local establishments.

    • If you’re distributing, I wouldn’t go under 5 BBLs if you cannot self-distribute. You are selling your beer for a fraction of what it retails for, so you need to make a lot of it.

  2. Ben says:

    I wanted to let you know that you have been somewhat of a muse for me. I am a little younger than you working the the medical laboratory field and beer and brewing beer is something I have love to do since i was 21 as well. I am entering competitions like you did to make sure that I brew great beer as defined by BJCP judges, and once I feel like I have some great beer behind me Ill have a very basic starting place. I really like hearing about what I need to be considering on the business end of things, and am always interested in learning from other peoples mistakes and hoping to improve on them. Thanks again for giving the rest of us aspiring pros out there a place to see it all happen. Congrats and I wish you all the success in your brewery!

  3. Nikhil says:

    What system do you use?

    • I use a control panel from theelectricbrewery.com along with vessels made from used 55 gallon stainless drums. It is a 1.5 BBL system. But if I could pick a new system I would get a 3 BBL from Stout.

  4. Justin Mitchell says:

    As I read this post the discouragement began to settle in my stomach more with each step nevertheless I am still not only going to continue to brew but create a business plan. I have no idea how to obtain the capital most bloggers post however, I know it’s not impossible. I am a recent college graduate from Detroit where the job market is terrible but I love brewing andit would mean a lot to me if you can email me so we can discuss matters more

  5. henry says:

    Hey, i´m about to start a brewpub and give a twist to my life, so once i dismissed the option of a microbrewery because of the big system $$$, i´m planing the brewpub. So, my questions are(if possible), which cooling method for the wort and fermentation + serving gear you use?
    Thanks in advance!

    • Henry, we use air to cool the beer during fermentation, which is just barely possible with a 3 BBL tank. We use direct draught boxes to serve. Neither is optimal, but it was what we could afford and fit in our space.

  6. loganhudak says:

    Great article. Is there any empirical data to show the amount of revenue/profit vs size of their system. For example: 1BBL = $40K / year profit. 2BBL = $60K / year profit. I know there are a lot of variables at play.

    • You can predict your gross income by multiplying on premise volume by average pour price, and distro by average keg price or break it down by beers you plan to brew. A good starting point is 3 barrels a week on premise at a very small place. A larger place can do 10 barrels.

  7. Chris Dargis says:

    “You need a minimum of a one barrel system. … There is no reason to start smaller.”

    I get what you are saying here. You need to brew larger batches to be able to make money. Otherwise you’ll have to brew way too often to make any money. But lets say for the time being I’m not quitting my day job and I have some cash to explore the beginnings of a brew pub. I have a system where I can brew .75bbl on a weekend. The idea here is to minimize risk while showing a (very) small amount of revenue to validate the local market which I could then take to an investor and say “We need to buy bigger equipment”, skipping a 1bbl system entirely and going to the 5bbl. Thoughts?

    • Yes, you could do this. I actually have some thoughts on how I would start a nano now for a minimum amount of money and show profit quickly. A set of 30 gallon kettles from SS Brewtech, Bayou classic double jet burners, chugger pumps, sanke kegs with the spears removed and airlocks for fermenters, and a Morebeer barrel transfer tool would get you a 25 gallon system for very little money and plenty of fermenters. Use the barrel transfer tool to transfer out. That’s our pilot system, and it costs under a grand.

      • Chris Dargis says:

        I really appreciate the reply and suggestions! I have to ask, do you have a thought on a mill? If I had a mill I use for homebrewing with a 7 lb hopper, think it would hold up? I’m thinking I can just rig up a larger hopper, attach a drill and walk away.

  8. Pingback: Rules for Starting a Brewery | Crooked Run Brewing

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