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

2. 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

3. Question
What is business?

4. 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

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

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

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

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

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

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

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

12. Tell me “Why”
Start with Why

13. 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

14. Talk to Me
Describe this

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

16. 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

17. 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

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

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

20. 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

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

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

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

24. Parts of a Business Plan
Overall Schedule
Milestones

25. Parts of a Business Plan
The financial plan
Assumptions
Pro Formas

26. 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

27. QUESTIONS?

28. 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

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

30. 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?

31. Social Media and Marketing
Discuss!!!

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

33. 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

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

35. 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

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

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

38. Questions?

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

40. 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

41. 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

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

43. Start-up Costs for a Small Brewery

44. Budgeting for Salaries and Expenses

45. Resume Development

46. QUESTIONS?