Starting Your Own Business: Early questions

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Yes, you should definitely include this in your business proposal if you don't feel you will be hauling in the cash early on.

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Start-up costs for a brewery are fairly large, from what i've read. Brewhouse equipment is costly.

Thanks for the info. I had an idea, that's what i'd have to do.

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what did you do for money before your product started turning a profit?

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Had enough saved up to live about 18 months without ever making a dime.

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Does some of the loan money go towards paying yourself?

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Within reason of course, and any investor will expect that.

Whether they will want to pay for someone with little to no professional experience is another matter.

I started my business with $30000 from my retirement account and some equity I had in a house I sold. Moved in a rent house. Did not pay myself year one. Paid myself $25000 for two years. That was 22 years ago.

I left a $100K job to do it.

Now I still keep my salary low. I have a small 7 figure net worth that is tied up in the business in things like inventory and receivables. I have rarely been able to take significant cash from the business because I still have the ambition to grow it. YOU WILL NEVER HAVE CASH in a business whose assets are mostly inventory, equipment and receivables as long as you grow the business. YOU CAN NOT stop growing IMHO. So forget cash.

I will disagree that working for someone else is less risky. IT IS MORE RISKY than owning your own business. Ask any 50 year old whose employer decided to exit the business they have been employed in the last 25 years.

It takes a different mindset.

Breweries are a dime a dozen and market share is VERY hard and VERY expensive to obtain. Transportation cost are a very big cost and getting placement through marketing is very costly.

Anyone can be successful in business if they work and manage properly regardless of how tough the business is.

Have you thought instead of making a recipe book of brews you could market to home brewers? or God forbid a film about brewing which you could screw the taxpayers for third of it making it?

(Laugh at the last suggestion if you like but nothing keeps you from forming a LLC to make a film and funding it at $300,000 then becoming an employee of that LLC and pay yourself the same $300000 as salary and getting 35% of that from the state. Use your $300K salary to pay back the money you funded the LLC with. You could do your own editing and as long as you used it commercially---buy cheap time on a local cable station to air it --you would qualify for the film tax credits and be out nothing--you would actually have a profit. You would have a no cost product to sell about a subject you seem to enjoy.)

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Not having cash and having net worth "tied up" in receivables doesn't sound great to me. Neither does having my net worth tied up into depreciable assets either. That's just me though.

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Well the appreciable assets are the real estate the company owns --after all these years the buildings are worth a pretty good bit more than the depreciated balance sheet. The most valuable thing is off balance sheet too---the trademarks and brands.

Unfortunately to turn those appreciable assets to cash means to end ownership of the business.

You are exactly right about cash being tied up in AR and depreciable assets. That is the nature of hard good manufacturing or distribution however. A beer bottler, for example, is going to have a lot of money tied up in bottling equipment and receivables and both ingredient and finished good inventory. If the bottler gets into distribution--and he has too somehow either through loss of margin using an existing distributor or with his own trucks--then that eats cash too.
To grow such a business is going to consume the cash the company generates.

Selling media content or soft ware content is far less cash consuming thus the suggestion to write a book or make a film or do a website on brewing if that is what interests the guy.