RICK COX, B.B.A., BREWER Winter ‘18 Business Basics RICK COX, B.B.A., BREWER Winter ‘18

Objectives (Part 1) What you will learn Benefits of owning a small brewery Strategic management Different forms of ownership Purchasing an existing brewery Business planning

Question What is business?

Benefits and opportunities of owning a small brewing business You are your own boss You decide production schedule You decide what to brew and when You choose who you work with You determine growth rate You determine distribution You control the atmosphere Ultimately: you make or break the business

Importance of Strategic Management to a small brewery Finance management Staff management Marketing management Growth

Four types of ownership Advantages and disadvantages of different forms of small business ownership Four types of ownership

Advantages and disadvantages of different forms of small business ownership Sole-proprietorship You are the sole business owner You assume all responsibility Financial Legal

(Cont) LLC (Limited Liability Corporation) Membership, not ownership Members assume all responsibility, not one individual No stock offerings, percentage based on membership

(Cont) S-Corp 100 share holders All U.S. citizens Board of Directors By-laws SEC regulated

(Cont) C- Corp 1,000 share-holders Any nationality can be a share-holder Board of Directors By-Laws SEC regulated

To buy, or not to buy Advantages “Turn key” brewery Establishment in the local market Established brand recognition Established brand loyalty

Tell me “Why” Start with Why

To buy, or not to buy Disadvantages Cost of renovations to old system Cost of renovations to brew house/tasting room Local market perception Negative brand recognition

Talk to Me Describe this

Business Plan There is no greater work of fiction than a business plan. Sam Calagione Dogfish Head Craft Brewery

Parts of a Business Plan Executive Summary Business description Management responsibility Marketing responsibility Business support personnel Financial considerations Sources of funds Share offering Estimated production, sales, and income Conclusion

Parts of a Business Plan Business Plan Introduction Introduction to craft breweries Advantages of craft breweries The market Production process Management team Plan of action

Parts of a Business Plan Products Initial products Future products Suppliers Bottling and export

Parts of a Business Plan The industry Industry history Institutional support Industry prospects SWOT analysis Growth in adversity

Parts of a Business Plan The market and competition Potential customers Priority customers Competition Market size and trends Regional demographic growth Regional craft brewery growth Estimated local market share Estimated regional sales Total sales projections

Parts of a Business Plan Marketing plan The fundamentals Distribution On-premise retail sales Pricing Advertising and promotions

Parts of a Business Plan Company structure Management team Management compensation Board of directors Executive officers Employees Professional support

Parts of a Business Plan Building and construction plans Leased facilities Building improvements Subcontracting The lease agreement

Parts of a Business Plan Overall Schedule Milestones

Parts of a Business Plan The financial plan Assumptions Pro Formas

Parts of a Business Plan Footnotes Attachments Personal financial statements Resumes of principals Cost schedule Building lease-letter of intent Site and building drawings Equipment specifications and designs Tables on beer statistics Articles of incorporation Share offering circular and disclosure document Subscription agreement

QUESTIONS?

What you will learn (Part 2) Differences in: Promotion and Publicity Personal selling and advertising Social media and marketing Three types of capital used by small businesses Location, location, location Cost of brewing supplies and equipment Cost of wastage Components in a purchasing plan Inventory control/JIT inventory control

Promotion vs. Publicity What is promotion? Who promotes? Where does promotion happen? Publicity What is publicity? Where does publicity happen?

Personal Selling and Advertising What is the importance of personal selling? Everyone does it Advantages and disadvantages? Advertising What is it? How important is it?

Social Media and Marketing Discuss!!!

Types of Small Business Capital Bank Non-bank Government financial sources

Location, Location, Location What determines your location? Style of operation Demographics Foot traffic Accessibility and parking Competition Proximity to other businesses and services Image and history of the site Ordinances Infrastructure of building Utilities and other costs Taxes

Cost of Brewing Supplies and Equipment System Size FV & BT/SV sizes Glycol system COG Grain Hops Yeast Nutrients Water

Cost of Wastage in the Brewery Every penny adds up Wastage includes Dumped beer Water Under-modified malts Old hops Spent grains Man hours Electricity Gas Spilled beer

Purchasing and Economic Order Quantity Analysis Budgeting Timeframes Economies of scale Savings vs. Storage

Inventory control systems and JIT Inventory First in / First out “Par” levels Re-ordering

Questions?

What you will learn (Part 3) Total Quality Management and its Impact Small Business Insurance Government Regulations Start-up Costs Budgeting Resume Development

Total Quality Management and its Impact Management philosophy, a paradigm, a continuous improvement approach to doing business through a new management model Focus on meeting owners’/customers’ needs by providing quality services at a reasonable cost Focuses on continuous improvement Recognizes role of everyone in the organization Views organization as an internal system with a common aim Focuses on the way tasks are accomplished Emphasizes teamwork

Insurance DRAM SHOP liability Health Workers compensation Liability Serving of alcohol to an intoxicated customer Health Optional dependent upon size of company Workers compensation Liability Structural and equipment loss Product loss Future retail value

Government Regulations OSHA Department of Agriculture City Inspections Building Fire Health Department

Start-up Costs for a Small Brewery

Budgeting for Salaries and Expenses

Resume Development

QUESTIONS?