5. A Quick Overview of Planning a Distillery
There are many aspects to consider when starting your distillery.
As you start your business, your bank manager and the Australian Tax Office (ATO) will want to see a well-thought, robust business plan. Asking yourself some of these questions early-on will help inform those decisions.
OUR TOP 6 THINGS TO THINK ABOUT WHEN OPENING A DISTLLERY:
1.What do you want to achieve?
Be clear. Is this something you will be doing for the next 20 years, or do you want to build a business quickly and then exit. We suggest getting some professional help at this stage is worthwhile, and doing some different scenarios for your business can also help. We’ll explore this in depth in Module 4.
2.How much do you want to spend?
This is one of those tricky questions because you need to navigate what's ahead to work it out. But generally are you thinking big or small?
Some people when they start out are working on A$100,000 start-up capital. While this is possible, especially if you are able to build some areas of the business yourself, at this scale you will probably still have a fairly small operation. So working out the costs early-on will help you make some of those decisions. We explore this in Modules 4 and 5.
Cash flow is king. Or so they say. When you are planning your distillery and looking at set up costs, also keep in mind that you will also have significant ongoing and operating costs. These will be things like:
- Raw ingredients
- Barrels (if you are making brown spirits)
- Bottle and labels
- Wages, and
Make sure you seek advice from a professional to plan the finances of your distilling business. We find doing some different scenarios will also help. For example, ‘What if I make 100 bottles a day?’, ‘what if I make 500 bottles?’ OR ‘what if I make 50,000 litres a year compared to 20,000?’ Either way, remember you have to be able to sell them at the end of the process for the scenarios to work. We explore this further in Modules 4 and 5.
4.Are you doing it for a hobby or as a business?
This is key. It’s a big outlay for a hobby so you want to have a good plan as to what it's going to look like for you in two, five and ten years.What is the difference between a hobby or a business? If you are planning to start it and one day sell it then you're already thinking about it like a business. Either way - hobby or business - you still, as a minimum, need a licence from the ATO. If it’s a business, then start creating it like you would any other business. If you want some help then we can also refer you to some people we work with. Email us at [email protected].
5.What’s your role going to be?
Are you going to be the distiller, or the 'everything' in the business?Once you get going you will discover that doing everything is hard work, so talk to your better half, your business partner (or both) to be clear on this. The ATO will want to know who is undertaking various roles in the business when you submit your paperwork.Typically, in a new distillery, the Distiller (that might be you) is also the Manager, Marketer, Front of House, Cleaner and Record Keeper. It’s a big job for one person so talk to some other distillers before you get going to get an understanding of what to expect. We explore this in Module 6.
6.Is there a market for your product?
This is not a simple question and involves a fair bit of research. What are you going to sell, where, how much and via what channels? We recommend having a talk to a marketing person early-on to get your head around this. This is usually a consultant or an advertising/marketing agency. And reach out to other distillers to understand your options in relation to distribution. We encourage you to think about this early and make sure you lock down your online ‘real estate’ like Facebook, Instagram and your website address.You then need to think about the brand, including: what's your story; what will your brand/logo look like; your bottle and labels and other packaging; and website and marketing channels. We explore this in Module 3.
All of the above relates to your planning, what outcome you want for your distillery and how big you want your business to be. It’s like any other business.
The good news about all the aspects above is the upcoming modules for the next few months will take you through all of this. If you don’t know the difference between a brand and logo we’ll help you sort it. If you don’t know your start-up costs from your ongoing costs, we’ll help you there too.
We’re glad you’re on board and we look forward to working with you for the next 6-12 months.