So, you are looking to open your own craft distillery and need a business plan. The business plan is of the utmost importance in the process of beginning any business; this goes double for opening a craft distillery.
The reason for having a stable business plan is that there are additional challenges that distillers face that are not present in other industries. It’s a unique market and one that investors will be intrigued by with the right story. That’s basically your business plan - the story of how your business will go from 0 to Awesome. Even if you’re not planning on searching for investors, working through the steps of the business plan development will help you identify your brand, mission, goals, and all of the tangible assets you’ll need to get started.
Let’s dive into the top eight pieces of a killer distillery business plan.
1. Define Your Mission
Every business plan starts with a section called the "Mission Statement" or "Executive Summary." This section explains your creed and sums up the essence of your business. The Mission Statement is often written last, although it comes first in the plan.
Writing out a mission statement forces you to take a strategic look at your brand concept, your products, and your ideas and align them into one sentence that sums it all up. It’s the hook for both your investors and your consumers and should emphasize what differentiates your brand from the guy down the street. Because your mission statement is a summation of your brand-building experience, it’s typically written last - after you’ve narrowed down what you’re all about.
2. Highlight Your Goals and Vision
The "Objectives" section should encompass the goals and visions of your company's brand. Here, you’ll also focus on your company’s crafting philosophy.
These objectives are the results that you’re looking for from your business venture. Things like profit, productivity, employee retention, customer service, and growth, are some of the most common objectives in a business plan.
Having this comprehensive list laid out will give your investors a clear picture of their return and help you develop your brand identity now and as your business grows. It can become your tick-board as you reach each goal and need to write out new ones. What a great feeling that would be!
3. Know Your Demographic
Who is your distillery designed to serve? This is a vital question to answer in your plan. This helps with the "Need Statement" and identifies your target consumer base. There are a few questions to answer to determine who your demographic is. What age group, gender, income class, etc., does your ideal customer fit in?
When you’re formulating this concept, think about the feelings you want to equate with your brand. Do you want your tasting room to have a young crowd passionate about climate change gabbing at hightops or are you looking for well-versed bourbon aficionados to unwind with a dram? Identifying the mood you want to create will inform who your audience is and what you should serve.
4. Know Your Market
How does your brand match up to other distilleries in your area or region? What are your competitor’s strengths and weaknesses? How can your brand fill a gap that your local or regional competitors have missed?
Make sure you do some market research in the area you’re planning on opening in. Grab some stats on your demographic in the area, how many distilleries are already in your region, and how much of that market share is up for grabs.
5. Know the Regulations
The legalities involved in the craft distillery industry range from federal to local. Making sure the licensing and permit requirements are met is a vital aspect of starting a new distillery. Include the federal, state, and local requirements in your business plan to highlight the all-important factors that the authorities have set in place.
Having this information readily available will show your investors that you’ve done the research, you know what’s needed, and all of the associated costs are presented on the front end. It’s a good idea to hire a consultant to help you navigate your local building codes & permits. They can also help with your TTB paperwork and any other regulatory requirements.
6. How to Reach Your Market
How will you reach the marketplace? Where will you find your demographic? Your marketing plan is one of the essential parts of the business plan. You must clearly identify the nuances of your marketing strategy.
Not only that, but here you can identify your plan for taking your product to market. How will you market to distributors to get your product in bars and restaurants? Or will your distillery be a destination itself to drive sales with tours and a large tasting room? Once you identify your primary means of distribution, walk through what marketing strategies you see working.
7. Define Your Sales Process
This goes hand-in-hand with your marketing strategy. How will your team generate sales? How will you create an environment that is indicative of converting visitors into customers? Your sales culture is crucial to the success of your distillery.
Don’t forget that this piece isn’t just about figures and numbers, it’s also about the culture you’re cultivating within your staff. Will you have servers pushing cocktails on a patio or just a bartender? What sales team will you need to work with distributors and how will that relationship work?
8. Know Your Budget
The final part of your business plan is your Financial Summary or Budget Plan. Carefully itemize everything it will take to open your distillery for business and the cost associated with each item. The objective here is to calculate how much your entire project will cost to open for business.
Include your marketing costs, production and equipment costs including materials and software, building costs for both initial and recurring items like rent and utilities, and staffing costs.
As a distillery owner, your passion for your craft comes first. As a business owner, you must make sure you have all of your ducks in a row. These tips will help you formulate a winning business plan that will provide a clear roadmap for running your distillery operation and an impressive plan for any potential investors.