April 29, 2011 —
You are passionate about wine. Perhaps you’ve been making your own wine for family and friends. Maybe you’re even growing a few vines! But now you’re really excited and motivated about living the dream – owning a winery and sharing your passion with many. Where do you start?
One of the biggest Catch-22’s of starting a winery is getting your permits. Technically, if all of the rules are followed, you have to setup your winery before you can even get your permit. State agencies want to visit the winery to see how you are going to do business: visit the physical location, check out the equipment, review the actual building to ensure it will meet health inspection….you got the picture. And this is all before they will issue the permit to run your winery. Once you get the state permit, then you go after the federal TTB (Tax & Trade Bureau) permit. Oh yeah, and did I mention this entire process typically takes 4-6 months?
You’re thrilled about your new adventure, but this IS a business and there IS a lot of cash out of pocket long before you can even start to make wine on the premises. There are loans on land and equipment, building the winery, the tasting room, insurance and more, and it’s taking all of your time. Often the state or federal laws contain phrases stating you cannot “do business” until you have a permit. Part of the definition of “doing business” as interpreted by many states, is that you cannot advertise, put up signage or market your winery in any way to build a customer base prior to opening. And, while you’re busy building the winery, don’t let harvest pass you by. If you do, it will be that much longer before you have wine to sell. Remember, it takes a year for your wine to be ready too!
Lots to think about and plan for the future. As a business owner, establishing your brand is your first goal. But you can’t market, build your brand or customer base without your permits. Even then it will take 6 months to a year to get the word out that you exist. Brand brings in revenue, which is crucial to a startup for a few reasons.
1. Revenue establishes the viability of the company. The best measure of your business plan is how much sales and profit you bring in. No sales = no business. If you are investing a large amount of capital in a business, you want to know as soon as possible whether the business plan works.
2. Revenue is needed to actually run the winery – pay loans, employees, insurance, buy grapes or wine, etc.
3. Sales by themselves are a form of marketing. Someone buys your wine and pours it for their friend. Word-of-mouth has started!
How do you get sales in the door as early as possible? The best way to do this to have wine shipped into your winery (bottled or bulk) the day after permitting. This wine should be chosen with your winery’s style in mind and representative of the kind of wine you will be soon be selling. Thus begins your adventure!
Each winery has its own set of unique challenges and possibilities. But within the differences of each winery, we’ve found there are a few specific and creative steps we’ve been able to take with our winery owners to get them through these initial stages efficiently and smoothly. In fact, assisting early stage wine owners through this is one of our most popular services. The process can be cost effective and successful for you too, from permitting to designing a unique wine portfolio, creating a brand and marketing your product.
There is much value in asking the right questions and seeking information from those who have already hiked up that mountain. Winery owners, I know you’ve got stories and insight that could benefit those about to take that leap towards their passion…and for those of you who are already winery owners, you’ll enjoy (or not?…) the joggling of the old startup days. Future winery owners, where are you in the process? Are you asking good questions? More about asking the right questions coming soon.
Above all, remember to have fun starting your winery! One of the best things about the wine industry is the amazing people you get to work with. Salut!