Decisions, Decisions... what is my Business Model?

There are two major decisions I have been struggling with as it relates to this grand enterprise. The first is the type of business strategy I want to commit to, which is what this diatribe is about. The second major decision is on the type and size of the brewery that will be used to produce our ales. I will cover that in my next blog.

Obviously, the business model we choose is the proverbial "horse" as it relates to the "cart". All other actions leading to the eventual grand opening of Shire Station Brewing Company directly relate to this strategy. Until recently, I had been standing at a major fork in the road; one that led to either a full-blown brew-pub, which is a brewery in combination with a restaurant, or to a nano-brewery (small-scale full production brewery with a small tasting room). For many years, I had it stuck in my head that the brewpub was the only method that would produce success, but with the advent (and success) of the nano-brewery concept, my "traditional" way of thinking has been realigned. Understand that I am not smart enough to venture into this uncharted world alone nor am I creative enough to have come up with this model without observing others forge the path. It is people like Dan Woodske of Beaver Brewing Company in Beaver Falls, PA, Mike Hess of San Diego's Hess Brewery, and Sam & Rob Dufau of Two Kids Brewing (also in San Diego) who all have a passion for brewing and are creative enough to find a way to make their passion their business. Cheers to them and to all who are like them in their pioneering efforts.

I have been brewing my own beer since 1996, and dreaming of going pro since about that time. I soak up any articles, blogs, and books on anything related to beer and the brewing industry that I can. Several times I have thrown together a business plan for a brewpub, only to be thwarted by the high start-up costs and the reality of having to dedicate the entirety of my professional life to the enterprise while, at the same time throwing away my (and my families) financial security. Every time I have ever thought of starting small, I think about the "conventional" brewing community mindset that says that a small-scale brewery can't possibly be profitable - that it is a guaranteed recipe for failure. Talk about a buzz kill! Here is what I have discovered from those who have tried this before me...

1. A Nano, if viewed as a stepping stone to an eventual larger business, makes sense from a start-up cost perspective. It will determine if you have the "chops" to make a go at it before you put other folks hard-earned money at risk.
2. If you have a "day job" and can suck it up for a few years, breaking even is an acceptable strategy for the short term. Add to that the willingness to put in some very long hours, combine it with a die-hard entrepreneurial spirit, and you might yet achieve the vision.
3. Working out the kinks when there is little at risk (but your own input) is worth its weight in gold. Best case - I find out that my intended market is thirsting for the best craft beer known to man and I end up not being able to keep up with demand. Worst case, I end up with a totally kick-ass home brewing system, the likes of which I probably would have invested in anyway.

I get that my brewing company will never make money with a 1 BBL brewing system. At this point, I just want to get in the market and discover if my beer, which I think is fabulous, will satisfy the "thirst" of my target market. I don't think anyone ever goes into business thinking they will fail, but it's nice to know if you have a shot before investing half-a-mil into a venture.

Nano it is. Bring on the system...