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Hi all,

I'm working toward opening my distilling business in the Midwest and have been "interning" at the one operational distillery in my town to learn the ropes of production operations. I have an investor on board, properties in mind and have been in contact with my area alderperson as well as the city planner in charge of zoning. All are enthusiastic about the project and I'm optimistically shooting for a soft open in 6-12 months. In that time, I will be working closely with my SBDC contact and attending any business seminars that I can. I will also be fine tuning my business plans. 

The one part I'm somewhat hung up on is coming up with any sort of realistic sales numbers for the first two years so I can get my investor some halfway decent P&L figures. Seeing as there is only one other business like mine in the area and they are only 2 years old themselves, I don't really have anything to compare to. Would anyone be willing to reach out to discuss this with me? I realize there are a lot of variables, but at this point I feel like any input is good input.

Thanks in advance! Cheers!

-Jason

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Jason,

      As you mentioned a lot of variables and a lot of them are going to depend on your plan and your decision of where to invest time and money. If you’re here, I’d imagine you’re thinking of starting small and trying to build some support in your local market. What does that really mean? Like your town bars? A large urban metro near you? Your state? Do you have a sales rep? Do you have a sales team? Are you doing it your self? Is it all just tasting room focused? Or maybe you do wanna go big and you want to fill barrels big time, or sell booze to other people or go hyper micro and buy a farm and grow your own botanicals and make one type of gin once a year and that’s it. Maybe you source some barrels? Maybe you don’t? Oh yeah, how much money you got? (Gonna need a shit ton.) do you have an exit strategy? Do you have a unique following to market and sell to already or are you gonna swim with the fishes? 
 

Lots of questions lots of possibilities lots of potential outcomes. Some people struggle struggle struggle to get traction only to slowly not afford to really buy grain anymore. Others have super long lines for initial releases and tons of support and sellout everything they do. Some people are in between.

No matter what you do, people have already done it and they’re likely is someone doing it better who you can pay to teach you. Doubling yields cuts cogs in half. You can start your business from a place where doubling yields isn't really possible though and that’s a good spot to be in. My recommendation to everybody starting out is at some point in time bring in a great consultant to look at the project as a whole. Especially if you’re not 100% on FINANCES or PRODUCTION OF PHYSICAL INVENTORY. From a consultant, so take with a grain of salt, but I’ll refute even that with I have a consultant I love very much! 
 

good luck. Here to help, I won’t always be friendly but I will always be direct and extremely technical. 
 

cheers

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The one part I'm somewhat hung up on is coming up with any sort of realistic sales numbers for the first two years so I can get my investor some halfway decent P&L figures. Seeing as there is only one other business like mine in the area and they are only 2 years old themselves, I don't really have anything to compare to. 

I would imagine they are exactly what you want to compare to.

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3 hours ago, Silk City Distillers said:

I would imagine they are exactly what you want to compare to.

My thoughts exactly.  
 

If you don’t think they are who you should look at for numbers I’d ask yourself why?  Are they only producing less popular spirit types? Do they only sell from this location no distribution?  Things like that and why do you think you will be different 

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Jason,

 

Good Morning! I finance distilleries nationwide through SBA loan financing. If you need some assistance or want to have a call to discuss please reach out. Cheers!

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11 hours ago, Silk City Distillers said:

I would imagine they are exactly what you want to compare to.

Yeah, I suppose I worded that incorrectly. They are doing very well and business-wise, I strive to be like them. I guess I just meant that I want to find some ways to be original and set myself apart.

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19 hours ago, SlickFloss said:

Jason,

      As you mentioned a lot of variables and a lot of them are going to depend on your plan and your decision of where to invest time and money. If you’re here, I’d imagine you’re thinking of starting small and trying to build some support in your local market. What does that really mean? Like your town bars? A large urban metro near you? Your state? Do you have a sales rep? Do you have a sales team? Are you doing it your self? Is it all just tasting room focused? Or maybe you do wanna go big and you want to fill barrels big time, or sell booze to other people or go hyper micro and buy a farm and grow your own botanicals and make one type of gin once a year and that’s it. Maybe you source some barrels? Maybe you don’t? Oh yeah, how much money you got? (Gonna need a shit ton.) do you have an exit strategy? Do you have a unique following to market and sell to already or are you gonna swim with the fishes? 
 

Lots of questions lots of possibilities lots of potential outcomes. Some people struggle struggle struggle to get traction only to slowly not afford to really buy grain anymore. Others have super long lines for initial releases and tons of support and sellout everything they do. Some people are in between.

No matter what you do, people have already done it and they’re likely is someone doing it better who you can pay to teach you. Doubling yields cuts cogs in half. You can start your business from a place where doubling yields isn't really possible though and that’s a good spot to be in. My recommendation to everybody starting out is at some point in time bring in a great consultant to look at the project as a whole. Especially if you’re not 100% on FINANCES or PRODUCTION OF PHYSICAL INVENTORY. From a consultant, so take with a grain of salt, but I’ll refute even that with I have a consultant I love very much! 
 

good luck. Here to help, I won’t always be friendly but I will always be direct and extremely technical. 
 

cheers

  • I am planning to start small. From a volume standpoint, however, I don't have a number. I plan to keep my product line pretty basic for the first year or two as I perfect my skills. I will hopefully be able to afford someone to help me with sales and marketing, but I've lived in my town all my life so I have a lot of contacts in the industry. I will absolutely be beating the streets myself, doing tastings at bars, events, etc. as well as working on partnerships with local breweries for collaborations.
  • I will likely need to source my whiskey off the bat (which is going to be a whole other rabbit hole from what I'm seeing.)
  • 100% swimming with the fishes. No following yet, as I just ordered my first still this morning.
  • At this point, I just have no way to know what to expect from a traffic standpoint. Am I going to sell 10 bottles of rum per month or 100? Can I expect to pull down $10k a month in my tasting room? $20k?
  • I will absolutely be looking into a consultant. From what I've seen so far they're more reasonably priced than what I'd anticipated so that's a relief!

I appreciate the post and would only ever want someone to be direct and honest. Thanks!

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5 hours ago, Jason M said:
  • I am planning to start small. From a volume standpoint, however, I don't have a number. I plan to keep my product line pretty basic for the first year or two as I perfect my skills. I will hopefully be able to afford someone to help me with sales and marketing, but I've lived in my town all my life so I have a lot of contacts in the industry. I will absolutely be beating the streets myself, doing tastings at bars, events, etc. as well as working on partnerships with local breweries for collaborations.
  • I will likely need to source my whiskey off the bat (which is going to be a whole other rabbit hole from what I'm seeing.)
  • 100% swimming with the fishes. No following yet, as I just ordered my first still this morning.
  • At this point, I just have no way to know what to expect from a traffic standpoint. Am I going to sell 10 bottles of rum per month or 100? Can I expect to pull down $10k a month in my tasting room? $20k?
  • I will absolutely be looking into a consultant. From what I've seen so far they're more reasonably priced than what I'd anticipated so that's a relief!

I appreciate the post and would only ever want someone to be direct and honest. Thanks!

Congrats that’s a fun day! What size and how many fermenters? 

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40 minutes ago, SlickFloss said:

Congrats that’s a fun day! What size and how many fermenters? 

As of now, I'm shooting for a 175ish gal combination mash tun/column still and a separate alembic still (unknown size). For fermenters, I don't think I'd need more than 3 but I imagine everything I just typed will change in some way after I've met with a consultant. :)

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It's interesting that you are already engaged in buying your stills while still trying to work out projections. But, that will simplify your projections because now you know how much you can produce. There is no point in creating projections that exceed your production capacity. It is unlikely that your tasting room (unless you have very high traffic) will generate a huge volume of sales, but it will cost you between 10 and 20k$ just to keep it open and operating. If you are making sales and moving weight, expect your overhead to rise dramatically.

Stilling is easy. But, running a distillery requires more than a still and some will. You also need marketing, advertising, sales, logistics, supplier management, product development, audience development, etc, etc, etc, etc... All of which, cost endless dollars.

Hitting the streets and selling to restaurants, bars and retailers is great in theory, but shifting alcohol requires a tremendous amount of physical energy and it is very difficult to manage accounts, get new ones and keep the distillery producing good quality product all at the same time. It's takes at least three people to effectively run a small distillery - or so we've found out. In our case there is just the two of us, but we do bring in weekend help when required.

And my last two cents - one business plan isn't enough. You need a plan to get up and running, you need a plan for when you are actually up and running and you need a financial plan that will withstand all sorts of indignities. 4 years in, we are considered to be a successful distillery, but our bank accounts are low, the work is relentless, finding good, reliable labour is a bitch.

Also don't make the fatal mistake of writing your business plan for money people (bankers/partners). It will be useless to you and it won't generate the cash you are hoping for. Rather, write your plans for YOU - what is YOUR plan? What are you going to ACTUALLY do when you show up Monday morning to open. If you can't answer that question, not matter how much you made your projections look good you'll never get past the banker.

 

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11 hours ago, Jason M said:

As of now, I'm shooting for a 175ish gal combination mash tun/column still and a separate alembic still (unknown size). For fermenters, I don't think I'd need more than 3 but I imagine everything I just typed will change in some way after I've met with a consultant. :)

If you haven't worked in a production environment or in spirit sales the sooner you engage with a professional the better. I've been involved in a handful of projects where an inexperienced owner/founder bought the equipment & designed the layout and it always works out to be much more expensive and less functional than if they had spent $500 or whatever right out of the gate to get quality input rather than listening to equipment reps & engineers.  

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I should clarify - I'm not buying the still that will end up in my business, I just ordered an 8 gallon one to learn the process and get my reps in beyond what I've already done. I appreciate the great advice everyone has given so far and absolutely do not take lightly the amount of blood sweat and tears that will go into this. My wife owned a restaurant for 17 years and I watched her beat her head against the table when something as simple as her printer running out of ink on payroll day went wrong.

I have a lot of great resources from my local SBDC and have subscribed to distillery university's curriculum so I've been reading until my eyes dry out. It'll be a long road, but I'm optimistic that it'll be rewarding and fun in the end.

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On 11/8/2022 at 11:02 PM, Jason M said:

As of now, I'm shooting for a 175ish gal combination mash tun/column still and a separate alembic still (unknown size). For fermenters, I don't think I'd need more than 3 but I imagine everything I just typed will change in some way after I've met with a consultant. :)

Very wise answer! 

 

On 11/8/2022 at 4:36 PM, Jason M said:
  • I am planning to start small. From a volume standpoint, however, I don't have a number. I plan to keep my product line pretty basic for the first year or two as I perfect my skills. I will hopefully be able to afford someone to help me with sales and marketing, but I've lived in my town all my life so I have a lot of contacts in the industry. I will absolutely be beating the streets myself, doing tastings at bars, events, etc. as well as working on partnerships with local breweries for collaborations.
  • I will likely need to source my whiskey off the bat (which is going to be a whole other rabbit hole from what I'm seeing.)
  • 100% swimming with the fishes. No following yet, as I just ordered my first still this morning.
  • At this point, I just have no way to know what to expect from a traffic standpoint. Am I going to sell 10 bottles of rum per month or 100? Can I expect to pull down $10k a month in my tasting room? $20k?
  • I will absolutely be looking into a consultant. From what I've seen so far they're more reasonably priced than what I'd anticipated so that's a relief!

I appreciate the post and would only ever want someone to be direct and honest. Thanks!


So you’re going to want to find ways to drive revenue on site. You need to pull in 10k. 20k. 30k. 40k. 50k. 60k etc per month because you have to pay for fucking fermentables. More and more and more and more fermentabulz. Because your fermenters can’t be empty. Because you have to make as much great alcohol as quickly as you can to justify on site traffic to drive revenue to support fermentables. If your business isn’t bulk alcohol, running an event space or a really successful and profitable cocktail program or other on site revenue flowing activity is the only way to support your hobby of distilling. That’s not meant to be said disrespectful or condescending at all this is most of our lives in varying ways. My hobby of distilling is supported by selling it as a commodity. Neither you nor I can realistically sustainably compete with large mass marketed mainstream conglomerate brands in 3 tiered distribution channel, it has to be icing on the cake. To keep people paid. To flowwwwww some revenue! But you shouldn’t “expect” shit! You should expect trickling by cash flow negative. You are going to literally need to drive revenue to get cash flow positive. It’s taxing. 

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