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Strategies for getting started?


tb42

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From what I've read, the TTB requires that your facility, equipment etc. be fully operational before you can get a DSP license

Is this correct? If so, how did you go about lowering the upfront investment costs during this period? (before being legally allowed to make sales)

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The way to minimize upfront costs is to ensure that you are completely buttoned up with regards to the building/facility selection and local approvals, and that you've ensured that your location selection is not going to expose you to unbudgeted build-out costs or a capital bonfire while you fight local authorities.

On the equipment, you are going to spend the money either way - you can't produce without it.  Whether you spend it in month 1 or month 4, it's still getting spent.  You aren't lowering this.

It's the unexpected that is going to be the problem, not the known costs you are budgeting for.

In terms of specifics regarding equipment delays - the TTB says what they say, but they don't set any minimum requirements for equipment.  Delay with your fermenter getting delivered?  No problem, get a 55 gallon plastic drum - label it Fermenter-1 - done.  Amend the equipment after the fact, nobody said you couldn't.

That said, you are going to be burning rent and overhead for months while you wait for federal and state approvals, you need to budget for this.  Assuming you are making sales on Day 1?  Probably unrealistic.  Budget as pessimistically as possible.

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I would consider having product made for you or maybe trying to work out a deal where you make the product at someone else's DSP and just work on getting the first bottle sold.  There are so many DSPs now that I think it makes more sense to go this route and probably quite a few have more capacity than they can afford to use.  If you are doing brown spirits this makes even more sense, that way you can have "your" product ready to go the day you open your own doors (if you even bother at that point).

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My rule of thumb:

  • If you estimate something to cost $10,000, expect that it will cost $15,000
  • If you estimate something to take 6 months, expect that it will take 9 months
  • If you estimate to be selling 200 cases per month, expect that you will be selling 100

This makes for surprises in the form of dollars in your pocket instead of dollars being spent.

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I hate to even suggest this, Being as I'm so against NDP's, But there is a lot of really good bulk Bourbon available right now. It might be a good way to generate a positive cash flow while you are waiting to get set up. As a bonus, The TTB is running faster than ever as far as COLA's and formulas go. 

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2 hours ago, Distiller76 said:

I hate to even suggest this, Being as I'm so against NDP's, But there is a lot of really good bulk Bourbon available right now. It might be a good way to generate a positive cash flow while you are waiting to get set up. As a bonus, The TTB is running faster than ever as far as COLA's and formulas go. 

You'd still need a DSP license in order to bottle it though, since the excise tax will be charged to you & not the bulk supplier, correct?

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