A nanobrewery is THE ultimate goal for many homebrewers.
After all, you get to sell beer without running through the complications of a full-scale brewery.
Starting a nanobrewery is a pretty big decision. But if it’s something you want to do, we have made a step-by-step guide to help you start a nanobrewery.
How to Start a Nanobrewery
This kind of business involves more than just spending all day brewing.
To begin your journey to achieving success in the craft beer industry, we’ve enumerated the steps for starting your own nanobrewery:
Step 1: Know Your Local Laws
Before you plan on making your brew hobby into a nanobrewery, check your local laws first.
That’s because there may be laws that prevent breweries of a specific size (or ANY size) from existing in your area. Aside from that, there may also be regulations on transporting your newly-brewed craft beer off-site.
Minnesota used to prohibit breweries from selling beer in standard 12, 16, and 32oz cans. But recently, the Minnesota House of Representatives relaxed liquor license laws to allow breweries to sell their beer on-site to customers directly.
Every state has laws on breweries, but you should know what they say about NANObreweries in particular. Not educating yourself on your regional laws might cost you.
If you don’t see anything about nanobreweries (or nanobreweries aren’t allowed), you can TRY to talk to your local government and ask them to change liquor license laws.
It’s not guaranteed that they’ll help make your brewery legal, but they may reconsider as long as it still follows the state’s laws.
Be Familiar With Your Location
Aside from knowing the local laws, it would help if you also considered how good the customer base in your area is.
If you live in a rural area, you might not get enough foot traffic. As such, you can think about opening your nanobrewery in a suburban area with a decent population.
This is because selling directly to customers is faster and gives you direct profit than shipping them to distributors first.
Having middlemen might put a serious dent in your earnings. After all, they’ll want a share in your profits while asking you to keep your prices low enough to still be competitive enough.
Step 2: Learn How to Run a Business
Setting aside time to attend classes or study on your own will greatly help you understand how to run a business.
But remember that you won’t spend all day brewing. 🙁 After all, running this kind of business also involves a lot of paperwork (to keep your brewery legal) and interacting with other people.
As such, some things you should also learn are:
- Local zoning laws
- Interpersonal communication
You should PRIORITIZE learning how to properly run your humble brewery business since bad business practices will kill your business faster than bad beer.
Research Your Business
Knowing how to run your business is well and good, but you should also focus on researching about your industry.
People tend to think that entrepreneurs are risk-takers — they’re not. Instead, they’re risk ELIMINATORS who take the leap only when they understand the situation they’re in.
Talk to a brewery consultant and other owners of breweries to listen to their experiences and pick up some advice.
Being up-to-date with the latest brewing trends and market information will also be helpful.
You should also understand the risks in the brewing industry so you can create contingency plans in advance.
Step 3: Improve Your Brewing
As previously mentioned, learning how to run a business comes first and a good brewery second.
Once you’ve learned what bad business practices to avoid, you should learn how to brew GREAT beer.
There are online guides that can help you with this, and you can also ask for tips from fellow brewers or tap a brewery consultant.
You might encounter people who say that they’ll start selling beer after practicing with just a few batches.
DO NOT be like them.
Chances are they’ll realize their mistake after those first few batches, or they’ll end up selling subpar beer that won’t appeal to customers.
We understand it can be exciting to finally be able to sell your own beer. However, don’t expect business-worthy beer right from the get-go —a or even after the first few attempts.
In fact, you might need to brew several hundred batches before you can make beer that’s good enough to compete with restaurants and bars.
This equals several years of practice, but you can try to shorten that by getting good professional brewing experience in a commercial brewing environment.
Of course, you can’t expect to get good profit (or ANY profit at all) at this stage, but you can enjoy them yourself or with potentially a few friends. Take this time to ask them what they think about your beer and how you can improve it.
A good bar to set in knowing how good your beer has become is entering professional competitions and scoring well.
You don’t need to rank first, but your brew should convince professional judges that it’s good enough to be sold.
Some people who have a deep interest in brewing run picobreweries first just to test if they have what it takes to run a business. This is also a good time to know if the beer they’re currently brewing is good enough to sell.
Some people even start homebrewing — which makes about two hundred gallons a year.
Learn to Deal With Bad Batches
Bad batches are INEVITABLE.
After all, the brewing process is a delicate science, so things can still go wrong every once in a while, no matter how experienced you are. Factors like bad grains or how long your batch stays in the machine can also result in bad beer.
You might especially be more prone to bad batches when you’re experimenting — such as when creating new flavors or improving your base recipe.
Be open to criticism. Regular customers naturally expect inconsistencies in nanobreweries since factors like brewery equipment are different from commercial breweries.
As such, they’ll be okay with giving you another chance AS LONG AS you don’t sidestep the problem and explain what you’re doing (or will do) to address it.
The only advice we can give you here is to keep brewing and learn from the problems that resulted in bad batches.
Step 4: Decide How Much to Produce
Brew at least one keg at a time — even if you’re still at the learning and experimenting stage.
That at least gives you just enough beer to share to ask for people’s opinions. This would also be around the same MINIMUM amount as what you’ll usually be making.
You can brew larger batches, but remember that you’re running a business. That means you’re also dealing with other tasks like doing paperwork, paying taxes, and advertising your nanobrewery.
It’s important to decide how much you want to produce right from the start since ingredients and processes will depend on the amount of beer you’re brewing.
There’s no problem if you’re scaling up from a homebrewery or picobrewery. However, you have to decide how much you want to make BEFORE you scale up.
If you keep changing amounts, you’ll also end up introducing errors and messing with the flavors.
Nanobreweries typically brew two or three barrels at a time. But it’s better to wait until you’re more experienced before you do that too.
Then to make enough money, charge per pint — but keep the price lower than nearby restaurants. This kind of competitive pricing attracts people who want a good deal on drinks in the area.
Step 5: Create a Budget
You can expect to spend several thousand dollars just starting your business — and you’ll need to make enough to get that amount back eventually.
When writing up a budget plan, list down EVERYTHING you’ll need for the nanobrewery.
You can lease or buy your own space if you’re not going with a hybrid home/business facility.
If you’re leasing, you have to worry about deposits, utility deposits, and pre-opening rent.
You can TRY to negotiate to get a few months of rent-free occupation just to get your nanobrewery up and running.
If you want something like taproom breweries, you’ll need tables, bar stools, and such. If not, you’ll still need sinks and storage for supplies.
Utilities and Equipment
Good-quality running water is important for a good brew. You’ll also need electricity and a proper drainage system that’s acceptable for food production operations.
As for equipment, you MAY choose to get secondhand brewing equipment to lower costs.
Stainless steel is ideal, but food-grade plastic and rubber (like polyethylene plastic and neoprene) will work well too.
When you buy brewery equipment, some things you SHOULD have are:
- Fermentation tanks
- Bright tank
- Cooling systems
- Brewhouse equipment
- Brewing pump
Licenses and Permits
Check regulations by your local government on what permits you’ll need to obtain. Some examples include:
- Federal Brewers Notice – The Brewers Notice is free, but you’ll also need a brewers bond, which costs around $1,000.
- State license for breweries – Each state will differ in its own fees
- State business registration – You’ll need to file with your state’s secretary of state. Additionally, you can only do business in the state you registered in.
- Local building permits – You’ll need permits from your city building department and the fire department if you’re altering your building. How much this will cost depends on the kinds of alterations you’ll make to the building.
- Local business license – Local governments can help you get this license.
- Local health department permits – If you’re planning to have notable food services or be similar to essentially taproom breweries, you’ll need to be approved by the local health department. But even if you just want to make your production brewery viable, you might still need to be inspected and licensed by your local department of agriculture.
You can ask your local Brewers Association any questions regarding permits since some states might have their own fees and licenses for other things.
Having regular business insurance protects you from serious financial losses. It covers risks such as property damage, liability claims, and natural disasters.
However, you’ll also need liquor liability insurance — which protects you from claims of property damage or injury that an intoxicated customer causes after you serve them alcohol.
If you plan on having employees, you’ll need other kinds of insurance too.
Workers compensation insurance will give employees medical care or cash benefits if they become injured or sick as a direct result of the job.
Meanwhile, unemployment insurance is state-provided insurance that will pay individuals who lose their job but still meet certain eligibility requirements.
To ensure you cover all bases, it’s a good idea to work with an insurance agent.
Step 6: Make a Comprehensive Business Plan
To further solidify your vision for your nanobrewery, make a COMPREHENSIVE craft brewery business plan.
Important parts of the document include:
- Executive summary
- Company description
- Market analysis
- Marketing and sales
- Financial projections
This will let you see if you have a viable business model and acts as a roadmap to improve your business management. Address any potential flaws or problems to reduce the risk you face in the future.
As such, do not rush this step.
Step 7: Check Resources to Kickstart Your Nanobrewery
Even without offering notable food services or being a full-service pub, starting a nanobrewery can cost as much as $30,000 per barrel.
Nanobreweries may have lower profit margins than large-production craft breweries, but you’ll have to buy brewery equipment and other resources that are similar to larger breweries.
Bank loans can be HARD for startups because of the low-profit margin. Because of that, some have taken to borrowing from friends and family, selling their car or house, or even cashing in retirement plans.
Fortunately, as the number of nanobreweries increased, aspiring beer brewers have looked at other sources to fund their humble brewery business.
You can use platforms such as GoFundMe, Kickstarter, and IndieGoGo to fund your business.
For these platforms, people pledge a certain amount of money until you have enough to meet your goal.
There are also equity crowdfunding platforms, where companies (rather than individuals) invest in your business. Then, there are debt crowdfunding platforms, where you’ll have to pay investors back with interest.
There’s even a craft beer-specific platform called CrowdBrewed, which has kickstarted breweries such as Portland, Chicago’s Pipeworks and Raleigh, and N.C.’s Crank Arm Brewery.
Community Supported Brewing (CSB)
This system is similar to the Community Supported Agriculture (CSA) model.
Subscribers can “pre-buy” a certain amount of beer from CSB breweries — often coming in the form of one or two growlers a week.
The money from these pre-buys can give you the capital you need for ingredients. Of course, you also get reliable customers once you’re ready to sell beer.
If they think you’ve made a great drink and like how you treat them, there’s a very high possibility that they’ll be regulars.
You can make a mini brewers association by banding together with other aspiring brewers to form brewery incubators.
This is a viable business model that will operate under alternating proprietorship licenses. The idea here is that several brewers will share one brewing system.
Aside from the shared space and equipment, being part of these incubators lets you interact and collaborate with other fellow brewers.
Once a brewer becomes big enough to need and afford their own space and license, they can leave to make room for a new brewer.
Nanobrewery vs. Microbrewery: What’s the Difference?
The difference lies in how many barrels of beer a brewery makes each year.
Microbreweries sell AT LEAST 75% of their beer off-site and make less than 15,000 barrels.
Generally, microbreweries sell their drinks locally — although some also ship small amounts to other places.
Meanwhile, nanobreweries are essentially taproom breweries but sell only around 5,000 barrels a year.
It’s not rare for a nanobrewery to also be a food service location, and they sell only around 25% of their brews off-site.
Some nanobreweries DO go under 5,000 barrels. But it would be best if you didn’t go too low — otherwise, you can’t expect it to be a good business.
What’s a Picobrewery?
Some who are interested in brewing run picobreweries if they don’t exactly want to handle a business.
There’s no formal brewing industry definition for picobreweries, but brewers consider these as businesses that make less than 500 kegs per year.
If you go below even that, you’re just making batches for yourself and potentially a few friends.
Admittedly, picobreweries are too small to make a production brewery viable — so people who start these normally do it just for the brew hobby rather than for the money.
However, you CAN start your business as a picobrewery to get good professional brewing experience, then scale up from there. This can also let you test if your beer will sell well in your area.
Frequently Asked Questions
Starting a nanobrewery can be both exciting and scary. To give you a better idea of what to expect, we’ve answered a few questions below:
How Much Does It Cost to Start a Nanobrewery?
How much you need to shell out to start a nanobrewery depends on multiple factors, such as:
The HIGHEST you can expect to pay is around $30,000 per barrel.
But if you’re not planning on hiring employees, don’t need much construction, and are buying secondhand brewery equipment, then you’re drastically lowering your startup cost.
Alternatively, you can get bids for the jobs you need.
How Profitable Is a Nano Brewery?
How profitable your business will be depends on your local market.
While it’s certainly an attractive idea to set the price as high as possible, remember that competitive pricing attracts people.
Depending on your location, you can actually charge up to $7 a pint and STILL be cheaper than nearby restaurants and bars. However, compare prices in your area first and ensure that your beer is worth that price.
You can also get higher profits if you don’t have middlemen that want a cut of the earnings while lowering prices enough to attract customers.
As such, you should consider DIRECTLY selling drinks locally. It’s also ideal to sell by the pint.
When deciding how much to sell your craft beer, consider day-to-day expenses so your profit covers those too.
How Long Does It Take to Make a Nanobrewery?
It mainly depends on how long it takes for you to brew business-worthy beer.
This would take several years (and several hundred batches).
Even if you did attend classes online or work at large production craft breweries, you likely won’t get it on your first few attempts.
For one, larger breweries will most probably have different equipment than nanobreweries — so you’ll need to practice with what you have.
Of course, having experience will GREATLY help you eventually brew great beer. That’s because you already know which grains are best or how long your batches should sit in the machines.
While you’ll still end up with a trial and error method of perfecting your brew, you have a more solid foundation in starting. Thanks to that, you may have better direction compared to if you’re starting blindly.
Are People Skills Really Important in Nanobrewery?
Yes, people skills are VERY important in any food service location, including nanobreweries! After all, as a business owner, you’re pretty much the face of the company.
Because of that, how you act can determine whether you get regular and reliable customers or not — and regulars are a huge part of any business. As long as you have regulars, you’re sure there are people you can rely on to avail of your products.
If you make friends with your customers, they’ll feel like they really matter to you (which they should). They’ll also remember your business as having a warm and welcoming environment.
If your customers are happy with you, they’ll advertise your business through word of mouth, resulting in more customers!
Customers can also be sources of information. Aside from giving you feedback, they can give you ideas on what other great drinks they want to taste and you can try to make.
The great thing about nanobreweries is that you can test and adjust flavors more easily than larger-scale breweries.
If you want, you can even make different batches that will cater to different groups of people. This is also something restaurants and large breweries can’t do.
Aside from people skills for serving drinks, you should also know how to handle company matters. This includes returning phone calls, answering emails, and interacting with fellow brewers.
After all, as people of authority on beer, brewers can also have a big influence on your business.
Can I Just Sell the Beer I Make at Home?
Making beer and selling beer on-site at home is technically possible — but only in very specific cases.
The formal brewing industry definition of homebrewing is brewing beer on a small scale for non-commercial purposes.
That means you CANNOT brew beer then sell it. Depending on where you live, you might not be able to take the beer out of the house unless you’re bringing it to where liquor is also allowed.
You can get around regulations by having a hybrid home/business facility. But one catch is that you probably shouldn’t put your brewed beer into your living room.
In most cases, though, you can only brew at home:
- For personal use
- For competitions
- For donations
Local governments will have different regulations, so consult a lawyer first before brewing anywhere.
A homebrewery can make about two hundred gallons of beer a year — assuming two adults are working on it.
If your business does well, you can try to scale up to earn enough money from it.
Summary & Conclusion
Being part of the craft beer industry is exciting — and starting a nanobrewery is something many homebrewers want to try.
Although it won’t give you as many problems as a full-scale brewery, a lot of preparation still goes into it:
- For one, you should check your regional laws to see what they say about nanobreweries.
- Also, pay attention to local zoning laws when planning where to put your business.
- You should also notice if your location has a decent population and enough foot traffic so you can sell just enough beer to make a profit.
- Remember that good business management comes first and good brewery second — so attend classes online or study on your own.
- You should make your great drink even greater, too — you can see how much you’ve improved if you score well in competitions. Here, you can convince professional judges that your beer is worth selling.
Take your time in making a craft brewery business plan to ensure that you’re achieving success in the future.
The nanobrewery business involves more than just making beer and serving drinks.
Instead, you should also consider things such as how to improve your craft beer further, advertise your business, and make a direct profit!
Lead marketer, brewer, dad, and husband. Pretty much an all-round awesome guy.