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Jbay76 (< 20)

Advice for starting a business

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May 03, 2011 – Comments (14)

Hey Fools,

I was wondering if any of you could offer me some advice concerning starting a business, whether that advice is in what books to read, lessons learned etc.?

I am in the rpocess of reading Rich Dad, Poor Dad and it has gotten my fever going to open up a brewery/brew pub again.  I have had this itch on and of, and in the process have come up with a biz name, motto, a list of beers to have throuhgout the year, both specialty/seasonal and standards.  I've narrowed down my area to ventura County, they are one brewery shy of meeting their limit, plus my family lives around there and so are my favorite surf spots.  I've been homebrewing for nearly 4 years and anticipate winning my first 1st place this May, we'll see though.  Nonetheless, I have read up on what other breweries did to get started in their respective area, and in some cases (ala Dogfish Head) its almost blind luck they got it going at all.

I am familair with the laws regarding breweries in CA, but didn't know what accounting book to read or any other advice, lessons learned etc that would be handy.  I figure this place and this community would be a great source of insigh.  My background is in ocean science and aquaculture, non of which will provide me the freedom that owning a successful biz wil, of course I didn't realize that then....

I see the brewery opeartion starting in the next 2-3 years.  I want to make sure the school loans my wife and I have are paid off in full, at which point we'll be back in SoCal and I can finalize site selection.

 Anyways, any insights, tips, pionters or direction is greatly appreciated!

Thanks in advance

 J

14 Comments – Post Your Own

#1) On May 03, 2011 at 9:35 AM, mtf00l (46.68) wrote:

If you've got the time and money to get started, get started.  You'll figure the rest out as you go.

If you don't have the time or the money you'll need both and the mantra of "investors" that will invest in "your" business are, family, friends and fools in that order.

Either way my advice is go for it.  History is full of examples of entrepreneurs failing until they made it.

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#2) On May 03, 2011 at 10:13 AM, Suzeomm (< 20) wrote:

Starting a business requires deep pockets and patience. In my experience it takes at least one year to break even, and two years to take profit. My business was a Hairstyling Salon with two employees. Personal armour in the form of positive attitude is a must!

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#3) On May 03, 2011 at 10:27 AM, kdakota630 (32.05) wrote:

If you aren't comfortable with accounting, hire an accountant.  Sure, you'll have to pay for it rather than doing it for free yourself, but you'll have enough on your plate doing everything else that you don't want to worry about learning and doing the accounting on top of that.

You can always learn later as you go.  You can probably at least handle the bookkeeping yourself and let the accountand do the more difficult stuff.

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#4) On May 03, 2011 at 11:41 AM, chk999 (99.98) wrote:

BYU has a great online accounting class. The class is not religious and is very instructive.

One thing to do is to come up with a business plan with some rough guesses at cash flows: How much to get your licenses, how much to get you brewery set up and how much to get the pub side of things set up and how much your burn rate is going to be per month. Assume it takes you a year to get to breakeven. Can you come up with that much money? 

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#5) On May 03, 2011 at 1:06 PM, Jbay76 (< 20) wrote:

Thanks for all the input!  I guess I need to start by making a business plan and go from there.  So, more DD needed. I was always thinking that it would take 2-3 years to break even.  So I guess that thinking was worst-case scenario.

Has anyone ever used interns from a college to help with aspects of startign a biz.?  Iwas thinking abotu talking to a marketing prof at UCSB about getting some of his/her students to do a marketing projectfor the biz for credits?  Anyone done something like this?

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#6) On May 03, 2011 at 1:30 PM, kdakota630 (32.05) wrote:

Iwas thinking abotu talking to a marketing prof at UCSB about getting some of his/her students to do a marketing projectfor the biz for credits?

That's a great idea if they're willing, and they're usually looking for some real world project they can help with.  You'll get some good ideas and probably a couple of crappy ones, but no loss if it doesn't cost you anything, right?

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#7) On May 03, 2011 at 3:47 PM, Jbay76 (< 20) wrote:

That's exactly what I was thinking.  In fact, I was wondering how many other projects I could get done for free by going to a 4 yr institution and offering a real-life project/internship with real-world applications.  I was toying with the idea of a microbiologist to help with yeast maintenance, I'm not so sure about a studetn studying accounting.  Any other aspects of running a business that could be aqcuired this way?

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#8) On May 03, 2011 at 3:53 PM, mtf00l (46.68) wrote:

Be careful not to study yourself out of business...

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#9) On May 03, 2011 at 4:05 PM, kdakota630 (32.05) wrote:

I don't think you'll be able to expect to get free accounting, but in all likelihood you'll probably be able to find a few willing accounting students to do your accounting fairly inexpensively.  If you go that route I'd suggest doing your best to keep that person if you're happy with them. 

Outside of that, I don't really know enough about the brewery business to have any other ideas, like with the microbiologist, other than to suggest using the same strategy I just laid out with the accounting.

The only other thing which should be obvious but is important enough to bear repeating... since you chose this location in part because of family being nearby, do your absolute best to keep your living expenses to an absolute minimum, and be expected to work a ton of hours for at least a couple of years.  Take as little capital out of the business to either reinvest or pay down/off bills.  Don't spend money you don't have on advertising assuming that it'll pay for itself down the road, because too often, you're screwed if it doesn't.  chk999 makes a great point about start-up cash.  It's hell trying to run an under-funded business.

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#10) On May 03, 2011 at 4:36 PM, Jbay76 (< 20) wrote:

@kdakota630,

 chk999 does make a good piont about under-funding start-up costs, and from all my reading about what successful business people have had to do to ensure success early on, I was planning on maintinaing my current life style, which is way below our means. In fact, my reasoning for waiting for 2-3 years is so that we can pay off all our student loans and be debt free before this venture begins. 

I don't want to be in the position were I am struggling to pay those loans off while struggling to get the brewpub going.  So, in 2 years they should all be paid off, we can set aside some savings, and move back home. During that time, I am perfecting the recipes at home and trying to learn as much about the industry and materials as possible.  I'll probably probe my family to see who would be the best person to pitch the idea to in the meantime as well.

You're suggestion about the accountant makes good sense.

Now I am left with one question concerning family.  When do you give them discounts etc, or not.  I've got a huge family, and I don't want ot be a scrooge, but I want to ultimately make a profit. Any insight?

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#11) On May 03, 2011 at 4:50 PM, AvianFlu (39.70) wrote:

I concur with posts 2, 3, and 8

the most important things:

1) don't borrow money
2) expect to work like a dog and expect not to make any money for a year or two
3) watch expenses like a hawk
4) use an accountant unless you are gifted that way
5) make a list of cheap and creative marketing ideas
6) plan your work and work your plan

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#12) On May 03, 2011 at 4:51 PM, kdakota630 (32.05) wrote:

Jbay76

If you're already living way below your means, you're off to a good start.

As for family discounts, totally your discretion.  If they're supportive, they won't expect any while you're starting out.  After that and your'e in a better financial position, help them out relative to how much they helped you get there.

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#13) On May 04, 2011 at 9:05 AM, Jbay76 (< 20) wrote:

Thanks everyone for your input!  It is helping me formulate my game plan with more detail thatn before.  It'll be hard to do this without borrowing money, but I'm nearly done with the book Rich Dadd, Poor Dad and it has given me many ideas to generate money with little on hand.

Cheers

J

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#14) On May 04, 2011 at 11:34 AM, Melaschasm (85.85) wrote:

Try to avoid making big up front investments.  If you can lease or buy used, that can help you get started.  Once you are profitable, you can always go out and buy land, property and fancy new equipment.

 Networking is likely to be your best marketing.  Since booze is so heavily regulated, your challenge will be to get it into bars and retailers.  

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