Microdistillery Startup Costs—The Spirit of Adventure Made Possible
The path from spirit imbiber to the connoisseur to hobby distiller is a well-trodden one, but the latest trend is to make the final step to become a microdistiller with a flourishing business.
While making and selling your own craft spirits is a dream for many, those that make the leap into the microdistilling business face some tough startup financing decisions.
Getting these decisions right at the beginning of your journey can make the difference between turning the microdistilling dream into a reality or a nightmare.
DoNotPay is here to help you understand microdistillery startup costs and ways to start your spiritual journey to success.
Every business wants to set itself up for success, and microdistilling requires both capital expenditure and a fair amount of regulatory hurdle-jumping to launch successfully.
You will face several expenses before the first drop of nectar can even flow from the last pipe. After you have your production process up and running, you will also have to spend time getting people to consume the fruits of your labor.
You need to plan on a long startup phase and a potentially longer time to establish yourself and reach break-even.
Setting up your microdistillery to beat all-comers in your spirit of choice involves a considerable amount of expenditure on equipment and legal services.
The main cost elements will include:
- Capital equipment
- Legal services
- Supply and delivery logistics
- Raw materials
You will need to lease a facility that is:
- Large enough to make your production line efficient and economical to run
- Conveniently located for suppliers and distribution
- Licensable as a liquor-production facility
Distilling equipment can be as cheap or expensive as you want, ranging from $5,000 to $50,000 and more.
The exact cost of your equipment will depend on what you want to achieve—do you want to grow rapidly and serve a mass market, or are you more interested in producing a bespoke product for a small, select market?
Your choice of equipment should be based on how big you want to be and the resulting capacity you will require in the coming years.
Getting a license to distill liquor depends on your state legislation, but you will need professional help to make the process as quick and easy as possible.
Placing your trust in a lawyer to handle the regulatory side of your business frees you up to concentrate on making your product as sellable as possible.
Depending on your business model, you may have to invest in transport to get raw materials in and the finished product out of your microdistillery.
Your choice of transport should also reflect your growth projections over the lifespan of the vehicle you choose—it would be senseless to run into transport constraints after six months of trading.
You will need enough raw materials to see you through until you start seeing profit coming into your business.
You should be prepared for mistakes to be made during your initial production runs, and it will take time for your processes to bed themselves in and become efficient.
You can negotiate with your suppliers to secure longer payment terms, but you should keep a close eye on:
- Expiry dates for your ingredients
- Storage or warehousing costs if you have bought in bulk
The minimum you should budget for as the startup cost of a distillery is between $30,000 and $50,000—this will give you the best chance of setting yourself up for a successful future.
Distilling takes time to get right.
Although you may understand the process and even have experience of distilling for home consumption, producing a spirit that is unique and marketable can be a long process of trial and error.
During this time, you will need to cover overheads and ongoing costs without necessarily generating income.
These costs will typically include:
- Leases and utilities
- Wages for staff
- Insurance, medical cover, and licenses
- Legal services
- Banking fees and interest payments
The lucky few can finance distillery startup costs through savings, friends, family, or an existing line of credit. Most budding microdistillers, though, will require third-party finance.
- Credit unions or other lending institutions
- Small Business Administration (SBA)
- Angel investors or strategic partners
The choice between a small business loan and a startup loan depends on your business model and the terms of repayment.
If you are setting up your distillery as an add-on to an existing business, such as a restaurant, you may have enough financial history to secure a small business loan based on the restaurant’s financials. If your distillery is standalone, a startup loan is an appropriate product.
This is where DoNotPay’s Business Loan Request Letter product can give you the help you need.
Applying for a loan can be daunting—you have one chance to get it right..
DoNotPay is your partner in making sure your loan application for your microdistillery is watertight—we can help you:
- Gather the documentation you need
- Get a convincing and comprehensive application letter to send to your financier of choice
Here’s how to get your loan application process started:
- Subscribe to DoNotPay
- Click on our Business Loan Request Letter feature
- Collect the required documents, including your credit scores and any financials you have, and upload them
- Tell us about your microdistillery, the loan you need, and your plans to grow the business
Based on the information you give us, we will generate a request letter for you to submit to the finance house you have chosen. Your microdistillery can take a step closer to becoming a reality!
As an added benefit, we can even source the top three lenders who fit your criteria. Our Find Online Business Loan Lender feature will give you the best recommendations for financiers, including rates, terms, and time to secure your financing.
Microdistilleries are one of many different business types we can help with—if you have a startup dream, DoNotPay can help you realize it.
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