Laying a strong foundation for your distillery starts with a comprehensive business plan. Distilling might be where art meets science, and that’s true, but it’s also where commercial reality is partnered with creative pursuit.
No dream survives without solid commercial foundations and while distilling and the drinks industry doesn’t feel like proper work for most of us impassioned souls – don’t be fooled. This is a business. And it’s a brutal one that when you’ve put up your house to leverage finance against maturing casks, spent the rest of the savings buying the equipment and bills keep pilling in – gets real very fast.
Great liquid is not enough. Great brands are not enough. All the great craft brand are built on business savvy and commercial acumen.
That all starts with a Business plan.
Why a business plan is essential
Vision & Strategy: Your business plan shapes the kind of spirits you wish to produce, whether it’s an aged whisky echoing the tunes of history or a contemporary gin infused with local botanicals, premium rum or speed rail vodka. Your business plan is the action plan for your vision.
Funding: Financial institutions, investors, or even crowdfunding platforms are more likely to support a distillery with a structured plan showcasing potential returns, realistic projections, and a sound strategy. That’s just common sense. Even if you are just looking at self-funding, why not spend some time ensuring the investment you are about to make is as well considered and tightly defined as you can? Going on a hunch will only get you so far.
Navigating Regulations: The distilling industry, more than many others, is fraught with regulatory hurdles. A business plan helps identify areas where you may have compliance challenges, how to manage initial costs vs ongoing ones, and minimise legal surprises.
So how do you build a decent plan for Craft Distilling and what should it include?
1. Manifesting Your Vision
When you dream of a distillery, you might envision copper stills bubbling away, the sweet aroma of fermenting mash, or barrels lined up in a dimly lit aging room. But these romantic visuals need grounding. A business plan translates these dreams into actionable steps, schedules, budgets, and targets.
Stick to that and to the process of putting the reality onto paper.
- Clarify investment needed: Set out the scale of production, the equipment you’ll need (everything, including costs), the personnel, the infrastructure, the likely cost of goods going forward. The more you know and have in that cost column both up front and ongoing, the fewer surprises you’ll get.
- Clarify Objectives: Define the unique selling proposition of your brand, why there is an audience for that, the size of that audience and where to find them. Define key competitors and what they do well. Then define your route to market and how you are going to get in front of your target audience.
- Set Milestones: Milestones (like first batch produced, first sale, or opening of your tasting room) become your guiding posts and how you can measure success. Don’t just set out when you want to measure and what the metric is – do financial calculations and fiscal projections.
The above essentially starts out you sections on market analysis, organisational structure, and financial projections – which is a classic Business Plan for any type of business. It will have already helped scope out the reality of what you are getting into.
Time to start testing and build in some extra layers…
2. Reality Check on Assumptions
Every entrepreneur, seasoned or newbie, carries a set of assumptions into a business:
- E.G “There’s a huge demand for organic gins.” Or “Local bars will prioritise my spirits over big brands.”
A business plan forces you to challenge and validate these assumptions. Don’t get caught up in confirmation bias where you are simply looking to validate what you already think. Look objectively at what’s out there, then test your assumptions.
Through market research, competitor analysis, and financial modelling, you can identify which assumptions are sound and which are shaky. For the above two examples, the answer is that while we wish them to be true, in practice, they are not. Which is helpful to know. Now you can start answering the actual question you need to ask and have a solution for – how am i going to get people to want my organic gin and get local bars to focus on me over big brands?
This exercise can be the difference between success and an expensive lesson learned too late. Success at this stage lies in how honest you are being with yourself, and whether you truly asked for unfiltered opinions, or just talked to those who agree with you.
Get out of your comfort zone now, not once you are several thousand dollars in…
Having scoped out a lot of assumptions, opportunities and challenges and tested the validity of them – you are now in a strong place. Go back over your document and ensure some key distillery specific themes are covered in more detail, including all that you’ve learned.
Distillery specific questions to address in your business plan
Go into as much detail as you can for the following areas as you’ll often find they make you think of aspects you may not have fully mapped out yet. They are threads – just keep pulling for as long and far as you can. It’ll also help others who review your plan (more on that below) to make a full assessment.
Product offering & distillation process: Detail the types of spirits you intend to produce and the methods you’ll employ. Are you opting for pot stills or column stills? Who is the manufacturer, what’s their lead time? Will you be grain-to-glass or sourcing some ingredients? Why?
Aging & storage: If you’re producing aged spirits, your plan needs to outline storage requirements, cask types, and aging duration. Have you spoken to suppliers?
Tasting room & tours: Will you offer on-site tasting experiences or tours? This can significantly impact revenue and marketing strategies. Have you spoken to local licensing about it?
Distribution strategy: Are you aiming for local bars, regional distributors, or direct-to-consumer sales? Your route to market will dictate many of your future decisions. Who are the companies involved, who are the key competitor brands they carry? How realistic is it to be carried by them, and in what volumes and timeframe do think is feasible?
Environmental & sustainability initiatives: Modern consumers are eco-conscious. How will your distillery tackle waste, energy use, and local sourcing? Are you going to sign up to initiatives and codes of conduct?
Branding & storytelling: Craft spirits aren’t just about taste. What story does your brand tell? Will you hire an agency to create it, have you spoken to suppliers? Who shares your brand platform, how is your ethos going to be a differentiator for you? What are your product’s features and benefits?
And then, answer the impossible question. Why does anyone want your stuff? Spirits do not solve a need. They are desired, loved and admired – but they are not needed. Fundamentally, it’s unlikely that you’ll solve a problem for consumers either. Don’t have the hubris to think you have a solution to a major category problem a plough through this- take a moment to question that assumption instead.
So, why are they going care? Why are they going to buy it? Why are they going to keep coming back?
It sounds bleak when it’s spelled out like that. But it’s the tough question you need to be certain about being able to answer. Take your ego out of it. Be pragmatic. Especially if you are looking at this venture vs remortgaging or helping your kids go to college…
Structuring Your Business Plan
A business plan isn’t just a document or a folder filled with random thoughts and mood boards – it’s a roadmap.
Here’s a structure to guide you as you clean it all up into something shareable:
- Executive Summary: An overview of your distillery, its mission, and key objectives. Think of this as your elevator pitch.
- Company Overview: Legal structure, location, history, and the milestones you plan to achieve.
- Products & services: Detail your spirits and any other offerings like merchandise, tasting sessions, or club memberships.
- Market analysis: Understand your target market, industry trends, and competitive landscape. Who are your competitors and what sets you apart?
- Marketing & sales strategy: From brand positioning to sales tactics, describe how you’ll attract and retain customers.
- Operational plan: Dive deep into your production process, equipment, suppliers, and daily operations.
- Management & organisation: Who’s on your team? Highlight key players, their roles, and experience.
- Financial projections: Lay out your expected income, balance sheet projections, cash flow forecasts, and break-even analysis.
- Appendices: Include any supporting documents, licenses, permits, detailed product specifications.
An opportunity for collaborative troubleshooting
Now, you are ready for the litmus test and to TAKE THE FIRST BIG STEP. Getting people to review it. It can be nerve wracking but remember, better now than later and that’s the point of a business plan – it isn’t just an internal document; it serves as a bridge to stakeholders outside your immediate team.
If you feel like you have someone who can lend you some time (or hire a consultant), get feedback with certain experience and biases, such as:
- Potential investors: These individuals or entities want to know their money is safe. A business plan lets them evaluate the feasibility of your idea, the potential for returns, and the competency of the team. If they voice concerns over certain areas, you know what needs to be honed further.
- Industry experts: Seasoned professionals can offer valuable feedback. Sharing your plan with them can uncover pitfalls you hadn’t considered or offer a fresh perspective on strategy.
- Lenders: Banks and other financial institutions need to see that you’re not just passionate, but also practical. Your plan assures them of your seriousness and your commitment to repaying any borrowed amount. Go to them asking for a sum and see what they say about the idea.
- Partners & collaborators: For those who might join you in this venture (like distributors or co-founders), the business plan communicates your vision, ensuring everyone is on the same page. Getting them to see it at a draft stage can be helpful to gauge their interest and make them feel (and actually be) part of the process.
- Family: It can sometime be helpful to show it to close family as they will have highly personal advice based on what they know about you as an individual.
Once you’ve done this start to finish, do it all again. Yes, it sounds like a complete pain, but it’s a process. You will have gained valuable feedback from family, friends, lenders, mentors and investors. Don’t expect an A+ or a gold star. Expect notes. Take a moment to digest, assess and adjust.
Go back to the start of your plan, implement that into words, into actionable plans and calculable metrics for what success looks like.
The final act –
Now that you know your plan and the path to success, beyond the point of tedium by now, you want to just get on and do it. Fair enough.
Last question though… Now that you’ve got this far, is this still what you want to do?
Business plans force sobering reality checks. They force you into altering that vision and breaking it down into micro-steps. For some, it takes an idea and develops it into something far stronger and more focussed. For others, it brings in realities that make them fall out of love with romance of craft distilling as a commercial venture.
So many remain devout enthusiasts and champion distilleries having dreamed of doing their own thing, but can’t quite subscribe to the day to day realities of what it involves. They are the best people in the drinks industry as they know what the true meaning of craft spirits entail, and they found out before losing their savings half heartedly chasing an idealistic dream that never existed. It’s okay not to take it further.
You must absolutely believe every word you wrote and still feel the burning desire to press on. To feel compelled to motor on. To feel empowered by how fastidious you’ve been and fuelled by an energy that’s ready to burst into creation.
Good business plans can do that. They empower you and ensure your project is far more viable. It will have cost you time, but saved you a fortune.
And now that you have that winning game plan – it’s time to go!
Interested in learning more in this area? How about Looking into Marketing Plans and Marketing Funnels.
