New breweries registered in England and Wales face a myriad of challenges when they are starting out, but the biggest is funding. Getting a manufacturing business off the ground is not always easy, especially as craft beer breweries can be cash-hungry compared to other sectors. A traditional craft brewery has more than just one guy and a laptop in charge of making things happen. Operating through a manufacturing location means that there is brewery equipment, supplies, licensing costs, labor costs and enough money to cover the rent for a few months, too.
A brewery is also required to get a lease and start paying for their space before they apply for their alcohol license. This means that there are a lot of terms and condition hoops to jump through, particularly when the Alcohol and Tobacco Tax and Trade Bureau licensing process is currently taking up to six months. The wise thing to do is to get everything funded as best you can before you start brewing, and for that, you need to know the ways to fund a brewery.
With that in mind, let’s take a look at what you need to know when it comes to brewery funding.
There are plenty of options when it comes down to finding funding for your brewery. You can obtain it for many different reasons, and some of those include:
The next thing that you need to know is all about the types of funding for your business that’s available when it comes to funding your brewery. People choose to fund in different ways, and some of these include the following:
A new option in the financing game according to the financial conduct authority, crowdfunding has only been around for about a decade now. While it’s a newbie to brewery funding, it’s still the type of funding that’s raised billions of dollars. It’s typically referring to the funding that is sourced through a portal online. There have been projects as large as $60 million that have been successfully funded with just the help of crowdfunding.
Breweries are no different, as there have been plenty of projects in the beer industry that have been funded by crowdfunding. The benefits are huge, with fast access to capital, PR and advertising. You can even validate your business concept with it. The only problem? A lot of crowdfunding campaigns fail to get their financing and projects become inflexible because of the terms of the crowdfunding agreement that change. You can’t have every crowdfunder as an investor of your business!
Also known as capital or seed money, seed funding is a type of funding whereby an investor puts their money into your business for a slice of the equity. You’d get the capital to get your business idea off the ground, and the investor gets a stake in your business. When you succeed and are profitable, your investors can sell their shares for a profit. The idea behind it is to get your business up and running, and while you get the capital from a seed fund, you don’t get the advice and ideas that will help your business to continue. It’s simple, and yet effective as a method to fund your brewery.
Made by angel investors, angel funding is cash invested by those of a high net worth. The money they invest is personal wealth and they are usually those who have had experience in your industry before. This means that they can offer a wealth of skills and advice that seed funders cannot offer. The objective of angel investors is to gain a financial return for their investment, especially as there is a high return on their investment.
There are certain start-up companies that have the potential to grow that need to have a little more funding to push them to the top. It’s wealthy investors that like to put their money into the businesses that have a plan to grow over time, and this is known as venture capital. The investors are very cleverly called “venture capitalists.”
A new business venture is a risky one as they don’t have any profit on which to rely just yet. However, breweries can still give impressive returns to the venture capitalists who invest in them. A venture capitalist has the chance to influence business decisions, too, given that it’s their money that’s at risk.
Budding brewers will be happy to learn that there was a tax break introduced by the government in 2002 that allowed microbrewers that produced less than 5,000 hectolitres to pay 50% less beer duty than companies that were larger. Small scale brewers usually don’t have to worry about buying premises for their brewing activity. They have to consider funding, though, and that’s where loans come in. Commercial lenders come in different shapes and sizes, ranging from the mutual fund companies to banks and they usually offer loans that are backed by hard collateral, which is usually real estate. Commercial lenders won’t tell you how to manage your business or how to run it, and they’ll not be entitled to any future profits, either. All you’d need to do is worry about paying it back.
There are grants and loans out there for breweries looking for funding, and they are a popular way for you to gain finance for new projects. There are plenty of benefits to using government funding vs other financing methods, and this is usually that the repayment terms are far less aggressive than commercial lenders. Usually, these don’t involve things like credit checks and deferred payments, but there are drawbacks. As there is a high demand for government funding, the application process is far more competitive and that means you can be at the back f a queue with a lot of paperwork to overcome.
It can also be difficult to find a government-funded scheme that meets the needs of your business. It isn’t something that can be relied on for future plans, and more information about grants for your brewery is the best thing that you can ask for so that you can get the finance that you need.
Your business needs money. Without it, you’re going to fail and there’s nothing you can do about that. Finding the right brewery funding is vital to the health and success of your business, and if you’re a business owner, you need to know that you’ll require some business capital.
Without money, you won’t have the right equipment, the chance to network and you won’t be able to market yourselves properly. It can get you through a rough patch in a way that other things can’t and money talks in business. The more you have, the better you’ll do. Engage in speedy growth with the right funding, you’ll be shocked where it could take you.
We are here to work with business owners and entrepreneurs who are serious about growing their business and making a difference. We have a proven track record with helping startups and SMEs tackle marketing and business growth. We are all about working with you to get you the financing that you need for your brewery, and with our help, that’s exactly what you can achieve. Give Audeo a call today and you’ll be able to take a step in the right direction with regard to your brewery funding.