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 by 4.5% and reaching $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 its 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. Cheers to a successful year in the spirits industry! 2017 brought significant growth, with sales increasing by 4.5% to $25.2 billion.

With such promising growth opportunities, carving out a space for your brand in the market is truly enticing. Financing is often the biggest challenge for start-ups, as every company needs capital to bring their ideas to life. Luckily, there are various avenues to explore for funding your distillery.

Developing a Solid 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 numerous benefits to this approach, but it's vital to refine the details when discussing finances. Your business plan should encompass market analysis, your distinct manufacturing approach, and your market positioning strategy. Having clear communication is key when presenting to investors, outlining what you're offering and the potential returns they can anticipate.

Leverage a Range of Local Programs

Start-ups have a variety of options for securing financing at both local and state levels. Numerous organizations throughout the state offer programs aimed at helping new businesses obtain funding. These programs can assist with marketing, networking, facility upgrades, and more to get your distillery up and running. In some areas, the Department of Agriculture might even back up to 95% of a loan if your business pledges to use farmland and resources within the state. While exploring these avenues may take some effort, the potential savings can be significant. Additionally, choosing to lease certain machinery rather than purchasing it upfront can help manage initial expenses. However, it's advisable not to lease an entire distillery, as owning your facilities will be more cost-effective in the long term.

Engage with Local and State Guilds

It is highly recommended for new businesses to engage with their local guilds. They can offer valuable advice and assistance in advocating for legislative changes that could benefit your company. Each state has its own set of regulations governing the sale, purchase, and production of alcohol. Your business strategy may resonate well in one state but face challenges in another. The ability to distribute your products to retailers nationwide can significantly impact your annual revenue. Keeping an open mind and exploring different opportunities is crucial. Some start-ups have even considered relocating their operations to a different state to increase their chances of success.

Understand Your Equity

Analyzing the breakdown of your initial investments can help you better understand how to finance your company. While these numbers may involve some guesswork, they can serve as a starting point for your financial planning. A solid business plan is essential for any successful venture, outlining your company's projected growth over one, five, and ten years. By starting with a long-term perspective and calculating the operational costs for your business, you can make informed decisions about whether to opt for debt, equity, or personal loans, which will significantly impact your business structure.

Crowdfunding To Raise Capital and Awareness

As online social engagement continues to grow, many businesses have successfully harnessed the power of crowdfunding. Over the past year, about 15% of online consumers have purchased alcoholic beverages inspired by social media content. Crowdfunding offers two main benefits for your business: it allows you to raise the necessary funds without incurring interest or giving up control to investors, and it serves as a platform to boost brand recognition. Successful past campaigns have turned contributors into loyal brand advocates. If you're concerned about tied-house laws affecting fund reception, consider setting up a separate LLC to manage the funds, or alternatively, direct crowdfunding efforts towards specific business areas like marketing.

Securing the right financing may seem daunting, but with careful research and planning, you can find the funding necessary to launch your distillery successfully. 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.