You’re doing what? That’s the response you get from a lot of people when you tell them you are quitting your job as an attorney and opening a brewery. Not everyone responded that way, for craft beer drinkers and anyone who had suffered through 3 years of law school and 8 years of practicing law in a large firm, the response was usually: do you need any partners or salesmen?
Before me, Morgan and Connor could quit our jobs though, there were lots of things that needed to be done, none of which could be accomplished without money. While the 3 of us contributed a substantial portion of the capital needed to open the brewery, we knew it wouldn’t be possible to build the brewery we wanted without money from outside investors. Since breweries aren’t exactly a get rich quick investment, we knew we had to put together a kick ass business plan and find the right types of investors (i.e. “craft beer drinkers”).
We worked on the business plan for about 3 months back in spring/summer 2013, with each of us working on a distinct section. Morgan on the marketing plan, Connor on the overall vision for the brewery, and me on the financial and legal aspects. Weekly meetings (at great beer spots all over LA for motivation and inspiration) and self-imposed deadlines helped us put together a great business plan. Some advice for the business plan: Identify what sets your brewery apart from others and what your brewery’s identity is. For us, it was session beer. Way back (it feels like that sometimes) in 2013 when we were writing the business plan, session beer hadn’t blown up like it has now (what exactly is a session triple IPA?) and we thought Los Angeles was the perfect market for a session brewery, because sometimes a 10% double IPA isn’t that refreshing after a hike up Temescal. Second, have a real world basis for all the figures you use in your budget and projections. Call other breweries, call insurance agents, suppliers, contractors, and anyone who can give you real world numbers. People will ask where you pulled your numbers from and I pulled it out of my a$$ generally doesn’t work. Third, it’s a cliché but seriously double your budget, we did about 150% of our initial budget and we are still over budget. Fourth, come up with investment terms that are acceptable to you and your partners and then use terms a little more favorable to you in the business plan. Some investors may want to negotiate terms and you need to know how much room you have to negotiate. Finally, presentation matters. Spend some extra dollars because you want to make sure your business plan looks professional.
So you have a great business plan now what? Send it to everyone you know (lawyer disclaimer: but make sure not to violate any securities laws in the process). Unfortunately, you may need to hire a lawyer for this part. Or email me. One of the biggest surprises to me in raising money was some people I was sure would invest declined, but others who I didn’t even think of initially asking came out of nowhere and made an unexpected investment. You never know where the money is going to come from so don’t be shy in asking people to invest. You aren’t asking them to make a donation, it’s a business transaction. And don’t take it personal if someone says no, you never know what someone’s financial situation is.
Once that first investment comes in and is in your bank account, you are pretty much fully committed and there is no turning back. You are now spending other people’s money and they will expect to see an operating brewery actually selling beer, not just posting Instagram pictures of home brewing in your driveway.
While other people’s money is usually a great thing to spend, in my case, the other people were either a friend or family member, which made the pressure a little greater. I was always more concerned about losing other people’s money than losing my own.
The money is raised, the lease is signed, the equipment is stuck on the water because of labor problems at the port, the brewer moved across the country, the contractor is hired and its finally time to take the plunge and quit your job. Then what? You’ll have to read our next post for that, but just remember, as Walter Sobchak said, “if you will it dude, it is no dream”.