Writing Research Paper -- Need Help From Distilleries

[80 Proof]

Greetings,

My name is Andy (forum handle is 80 Proof) and I am writing a research paper for my MBA program on the financial risks associated with the microdistilling industry. I would greatly appreciate the help from those entering the industry and those who are established. If you would like to help but don't want your information visible to the world, please email me at amartsolf@bresnan.net.

I am interested in hearing your thoughts on the following:

1. Were entry costs a barrier for you to enter the microdistilling industry and how did you overcome the entry cost barrier?

2. Is your product mix a result of needing to generate revenue or more a desire to produce a variety of spirits? It has been my observation that microdistilleries tend to produce vodka and gin in order to get product to market and generate revenue, yet there is a great interest in producing spirits, such as whiskey, that age in barrels for years.

3. Do excise taxes pose a financial risk to your operation?

4. Was financing for your business start-up difficult to obtain?

5. Have you calculated a break-even point? If so, how long?

6. Have you calculated any financial ratios for your distillery such as return on assets (ROA), gross profit margin, and operating profit? If so, will you share and if not will you use calculators at www.bankrate.com/brm/news/biz/bizcalcs/ratiocalcs.asp ?

7. What is the greatest financial risk that you face in the microdistilling industry?

Thanks,

Andy

[80 Proof]

I have been asked if I plan to publish my paper in this forum. I am willing to post my paper in this topic if there is interest. I hope to hear from some of you.

Andy

[Wilder]

My big problem is finding funding. I had a truly award winning business plan for a business I now own, but I could not get a dime from a bank for this business. The distillery is no different. I'm hear watching and learning, the day will come when I have the funds to start this business.

[80 Proof]

My big problem is finding funding. I had a truly award winning business plan for a business I now own, but I could not get a dime from a bank for this business. The distillery is no different. I'm hear watching and learning, the day will come when I have the funds to start this business.

Thanks, Wilder. One of the reasons I went back to school is because I am having trouble figuring out how to start a distillery. Do you know why you couldn't receive funding? Was it due to high entry costs, financial analysis ratios, etc.?

[Guest Liberty Bar - Seattle]

If I may say - it's going to be very, very difficult to get any kind of conventional loan for opening a distillery, even if you want to put your house up on the blocks as collateral. Banks do not like this industry.

Really, the only manner that I have seen people get funded is through personal investments, not institutional. I'm sure that it happens and I am sure that it happened, but I'm not aware of any and I must know...oh, 20 distillers/distilleries?

THAT SAID - the SBA is really looking to spread some money out there these days, and I wonder what they will say at this point to a well-written plan with solid backing and someone attached with great credit... One issue that I'm not sure if it'd be more or less easy was if someone went the contract direction - it's good because it's less expensive, but bad because there are no hard items to seize if things go badly...

I'm going to ask my local SBA reps and see what they have to say about this.

[80 Proof]

If I may say - it's going to be very, very difficult to get any kind of conventional loan for opening a distillery, even if you want to put your house up on the blocks as collateral. Banks do not like this industry.

Really, the only manner that I have seen people get funded is through personal investments, not institutional. I'm sure that it happens and I am sure that it happened, but I'm not aware of any and I must know...oh, 20 distillers/distilleries?

THAT SAID - the SBA is really looking to spread some money out there these days, and I wonder what they will say at this point to a well-written plan with solid backing and someone attached with great credit... One issue that I'm not sure if it'd be more or less easy was if someone went the contract direction - it's good because it's less expensive, but bad because there are no hard items to seize if things go badly...

I'm going to ask my local SBA reps and see what they have to say about this.

Thank you for sharing your knowledge and information.

[80 Proof]

I have had a couple of inquiries on the research paper that I wrote for a university course regarding the financial risks associated with starting a microdistillery. I have attached it for anyone interested in reading it.Microdistillery Financial Risks.pdf

[Jedd Haas]

"A distilled spirits permit obtained from the Alcohol & Tobacco Tax & Trade Bureau will cost a

start-up distiller $2000." (p. 6)

Really?

[coop]

$2,000.00 for what, ours cost nothing? I wonder what else is off. Coop

[Palmetto Coast]

Having a bit of research under my belt, I would suggest using more industry standards as references. Quoting a Modern Marvels show on distilleries is like quoting Wikipedia. You could probably have gotten data from either DISCUS or the TTB website.

Please don't take anyone's comments here on a personal level. I am sure that most of the good folks here welcome not only the research, but press that it may likely bring to this industry.

There is no federal charge, but state fees do vary, and to some degree. Florida, I believe, has an $800 biennial fee. SC has a $5000 biennial fee.

Thanks for sharing it with us and please do pay attention to the comments.

Todd

[Jedd Haas]

In fairness, the $2,000 may have referred to the cost of having an attorney do it, or something of that nature. But the way it's written, the $2,000 fee is described as a TTB cost, which of course is obviously incorrect.

[Jonathan Forester]

Not to tear you down, but to give some solid feedback. I really think that this 'paper' needs to be re-researched, using more professional quality sources. DISCUS, TTB, some of the major texts on the subject, and more than some quotes based on a few phone calls, and the ADI forum. if I had turned in a paper like this in college or grad school I would have been ripped to shreds by the professor, and if I tried to sell this as an article to one of the publications I used to write for I would have been laughed at. Please go and do some real research on this topic, and check your facts with multiple, valid, sources, before putting it out before professionals or the public.

On a side note: We have had no problems getting financing, loans, investors, grants, etc. for our distillery. We haven't used loans, but have them available. Partly I think it is our extremely detailed, over 100 page business plan, covering every possible situation. Partly a great team of partners. And part a really knowledgeable start-up staff.

[Rum]

Florida, I believe, has an $800 biennial fee.

Fyi, Florida is actually $4000 annually.