Get creative in financing your business expansion

Funding your business is no easy task. Banks are tighter than ever on loans, so how can you expand your business if you don't have the cash on hand to do so or you can't get a loan? Get creative! East End Brewing Co. in Pittsburgh, PA has started selling voucher books to gain capital for moving the brewery to a new facility.

Scott Smith, owner of East End Brewing, developed a program called the "Good Beer Investors". For $1000, you can buy $1000 worth of counterfeit-protected brewery vouchers which can be redeemed for beer and merchandise. With a goal of 100 investors, Smith had 54 investors as of July 7th.


To read more, click here.

As an ag entrepreneur, how difficult has it been to get financing? Would you ever try financing your business expansion with a program like "Good Beer Investors"?

Craft brew- Is it right for you?

Beer industry sales as a whole dropped 2.2% in 2009 and 1% in 2010, but craft brewer sales are up 12% (as reported by the Brewers Association). What exactly is a "craft brewer"? The Brewers Association describes a craft brew as "small, independent and traditional. Small: Annual production of 6 million barrels of beer or less. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition. Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor."



Some facts about the craft brew industry:
-Growth of the craft brewing industry in 2010 was 11% by volume and 12% by dollars compared to growth in 2009 of 7.2% by volume and 10.3% by dollars.
-1,759 craft-breweries were in existence in 2010 (up by 100+ since the previous year) and over 600 are being planned.
-Craft brewers sold an estimated 9,951,956 barrels of beer in 2010, up from 8,934,446 in 2009 (11% increase).

Is this an industry for you? As always, DO YOUR RESEARCH! The Brewers Association website offers some great materials on getting started in this industry. Their business help includes marketing tools (press releases, a media list program, sell sheets, etc), an export development program, and label approval guidance for the Tax and Trade Bureau. Some other things to think about if you are considering entering the craft brew industry:
-What type(s) of beer do you want to offer (stout, lager, porter, etc)?
-What ingredients do you need and how easy/difficult is it to obtain these ingredients?
-What training do you need in beer-making?
-What supplies do you need(bottles, tanks, boxes, etc)?
-What are your state's laws on producing and selling alcohol?

The above points are just a glimpse at the many, many questions you will need to answer before entering this or any industry. As always, Penn State Extension is here to help you in this process!

Standing out from the crowd

Recently, Smart Money magazine interviewed Jeremy Cowan, founder of Schmaltz Brewing Co., a niche craft brewery in San Francisco. In his interview, Cowan stressed how important it is to stand out from the crowd. As a small business owner, it can be very hard to gain customers with the "big guys" having an established market share. Shmaltz Brewing Co. has "learned to aim for the fringes and explore the counter-intuitive." Some of the company's brews include very interesting themes like "Chosen", a Hebraic-themed beer, and are introducing circus sideshow-inspired lagers. Cowan also says, "Although we lack the budgets of giant beer companies, we bring attention to our products through unique branding and promotions. For example, for the past two years, we've hosted 'Freaktoberfest,' a boutique beer and music festival in Brooklyn, N.Y. That and other promotional events have helped us attract a loyal following."

Another piece of entrepreneurial advice Cowan gives is to seek out professionals if you are not capable in a certain business area. "I like to be creative, which helps in running a business. However, I generally have a tough time with numbers, margins, and negotiations. To make up for my failings, I tapped a business consultant friend, who helped me craft a budget based on my company's sales, expenses, and profits...In time, I hired a professional bookkeeper and small business accountant to keep the company's financials on track and on budget," he states.

At the conclusion of his interview, Cowan was asked to give the best piece of business advice that he could offer. "You do not need to spend money to make money. You'd be better served if you learned to starve, struggle, save and sell. That way, you can achieve your vision based on quality, sincerity, creativity and hustle," he proclaims.

Cowan interview article

As an entrepreneur, what do you do to stand out from the "big guys"? Have you or do you plan to seek out professional help with matters you are not great in? How do you feel about Cowan's piece of advice? Do you agree or disagree?