Gauging The Growing Pains: The Hidden Costs Of Brewery Expansion

Hidden Cost of Brewery Expansion

Gauging The Growing Pains: The Hidden Costs Of Brewery Expansion

Hidden Cost of Brewery Expansion

As a brewer with a passion for your product, the last thing you want to do is stand still. If you make beers that people love, you everyone to have a chance to enjoy them. There’s no doubt, then, that you’ll expand your sales at the first opportunity. But before you do, you should be aware of the costly challenges that brewers face as they grow larger, including:

Big League Branding

As a local brewer, you had automatic authenticity with your customer base. You understood their culture, cuisine, and drinking habits, and could thus cater directly to them. But as you expand into other markets, you’ll have to start selling to people you don’t know as well. It will thus be an uphill battle getting them to try your beers instead of sticking to their current favorites.

To build authenticity in a community you’re not part of, you will need to conduct comprehensive market research and build a tailored publicity campaign. This strategy is expensive and takes time, so make sure you have access to flexible, affordable working capital to pay for a campaign every time you expand into a new market.

A Cornucopia of Codes

Brewers are subject to a host of health and environmental regulations, and those regulations vary across local, state, and (especially) national lines. Thus the more you expand, the greater your likelihood of running into regulatory issues. Your best bet is to research all the laws and statutes every time you move into a new jurisdiction, and do everything you can to comply with them ahead of time. But this can be expensive, especially if you have to invest in new equipment. Thus make sure you have either the savings or the working capital to make costly investments upfront.

Climbing Capacity

Expanding your operations frequently requires adding production capacity, which means investing in expensive capital equipment. The problem with such investments is that you have to make them months before you achieve any sales in the new market. Consequently, you’ll need to raise a large supply of cash as soon as you make the decision to expand. Unless you have ample cash on hand, working capital is likely the best way to raise this money. Even if you do have cash on hand, you might still want to use working capital, as it will prevent you from tying up all your money in expensive equipment investments.

To learn more about working capital for brewers and countless other businesses, contact Dimension Funding today.

Automation Assessment: The Profits & Pitfalls Of Putting Your Brewery Operations On Autopilot

Automation Assessment: The Profits & Pitfalls Of Putting Your Brewery Operations On Autopilot

It’s hard to overstate the significance of automation. Processes that once took dozens of people can now be done with only one or even no one, giving businesses in virtually every industry an opportunity to cut costs and boost output. Breweries are no exception; automation lets you put everything from bottling to canning to sanitation on autopilot. While there are many benefits to automating these activities, there are also significant costs to doing so. Make sure to weigh these factors carefully before you make the transition.

Advantages of Brewery Automating

One of the greatest advantages of brewery automation is that it allows you to cut your operating costs significantly. By relying on machines and software to carry out essential activities, you can perform those activities at a fraction of their current costs, all while freeing up your employees to focus on strategic planning and other big-picture activities. Granted, automation equipment does require energy and maintenance, which can be expensive. But the more activities you’re automating, the more likely it is to be a net benefit.

Besides cutting operating costs, automation tends to improve consistency. A greater reliance on machinery means that you are less vulnerable to human error. You thus won’t have to worry as much about incorrect product assembly, incomplete cleaning services, and other such issues. This further lowers daily expenses while letting you improve product quality, leading to greater customer satisfaction.

Costs & Negative Consequences

For all the advantages of automation, it isn’t an unqualified benefit. Automation equipment is expensive, and while your savings on operating costs will eventually outweigh these charges, many breweries don’t have the cash to make this investment in the first place. Even if you do have enough money for such purchases, you may not want to tie it all up in capital equipment. Doing so leaves you with less money to spend on other needs. Given that your costs may suddenly go up in response to some emergency or supply shortage, you don’t want to be caught without cash on hand.

As serious as this problem is, there is a relatively simple solution: working capital. Instead of buying the equipment outright, you can use a working capital loan to pay for it, and then repay the loan using the profits that the new equipment helps you generate. In effect, you will be spreading out the cost of the equipment over time rather than paying it all at the beginning.

Dimension Funding offers working capital loans and leases for automated brewery equipment and a myriad of other business purchases. For more information, visit our website today.