BusinessHABWine/Brewery Tasting Room: Opening a shop is a challenging task that requires time, money, and dedication.
If running your own business is your dream, though, the effort will be well worth it.
However, they have become increasingly important as outlets for direct-to-consumer sales.
Particularly for small wineries that do not have extensive distribution arrangements.
By avoiding a middleman and selling high-priced bottles.
Tasting rooms achieve much greater profits per bottle than in their wholesale operations.
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Wine/Brewery Tasting Room
1. Meaning:
A tasting room is a part of a winery or brewery.
Typically located on the premises of the winery or brewery’s production facilities.
At which guests may sample the winery or brewery’s products.
Originally an informal public relations outreach effort of wineries and breweries.
To encourage visitors and build brand awareness.
And loyalty by dispensing free wine, beer, whiskey, sake, etc..
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Tasting rooms have increasingly become sophisticated profit centers of winery operations.
Earning money by charging tasting fees.
Selling products directly to consumers.
Signing new members to the winery or brewery’s members club.
Hosting weddings and other public and private events.
And selling various wine, beer, whiskey, sake, etc. gift-related goods.
Wine/Brewery Tasting Room
2. Know the Business Background:
A typical tasting room is operated by a winery or brewery located in a rural vineyard.
Where most of the production, bottling, marketing, and distribution takes place.
It is usually separated from the main production facilities.
Either in a room by itself or a separate building.
With a designated parking area and landscaped gardens or grounds.
Often with picnic areas for guests.
They are typically open during abbreviated midday business hours, several days per week.
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Wine/Brewery Tasting Room
3. Get the Business features:
The primary feature of a tasting room is a tended walk-up bar counter.
Where guests are offered small samples from a list of products produced by the winery or brewery, usually for a small fee.
Wine is poured by staff that has been trained in knowledge of the products and production.
Who will answer questions and make conversation with guests.
In smaller production facilities the owners, winemaker, brewmaster.
Or other executives may personally meet guests and pour the product.
Larger operations often treat their tasting room as a sophisticated business unit.
Wine/Brewery Tasting Room
With its own manager and dedicated staff.
Who usually work on a commission basis according to how much they sell.
Some tasting rooms encourage guests to keep their glass most apply the fee to product purchases.
Tasting rooms usually pour their most popular products available at other retail locations (if any).
But may also offer limited-release products that are for sale only on premises.
They often withhold their most expensive products.
Except for guests who pay a premium fee or who seem likely to be good customers.
Wine/Brewery Tasting Room
4. Know the legal issue
Other common features are gifts, food items, and publications for sale.
Some facilities offer tours as well.
A few have restaurants or markets.
Some offer tastings and tours by appointment only, for business or local zoning reasons.
Whereas tasting rooms were once an opportunity to taste or drink wine.
Economic efficiency and concerns over legal liability for drunk guests.
Have encouraged most wineries to carefully limit the number and size of pours for each guest.
Another legal issue is that wineries have been forced by aggressive litigators to comply with the ADA.
Wine/Brewery Tasting Room
And other handicap issues.
Most are now accessible to disabled guests, without steps, gravel walks, and other barriers.
Some wineries operate multiple tasting rooms in various cities.
Others, particularly smaller wineries or those that are not easily accessible or permitted for visitors.
Join together in cooperative arrangements within a single tasting room, often in a nearby town.
Some larger wineries have special “reserve” or VIP tasting rooms for handling large parties.
Industry representatives, and samples of more expensive or “library” wines.
In other cases tasting rooms are operated as a commercial venture.
By an independent party that buys wines from the wineries, often as part of a wine store.
Tasting rooms are still considered an important brand-building feature in the wine business.
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5. Make your product unique.
6. Calculate your costs.
Will what you want to sell be profitable?
Take the time to compare the costs of creating your selling product with what you can sell it for.
If your product costs a lot to produce, and the going rates for the product are low.
Then it will be more difficult to make a profit.
- As a startup company, calculating your margin is a bit tricky.
- However, you can get a good idea of what your costs should look like by comparing the margins of the industry averages and competitor companies.
- For example, you can find out how much your competitor sells their product for, and compare it with your own calculations of how much the product costs to create.
Wine/Brewery Tasting Room
7. Calculate the number of hours you spend creating the product each year.
Let’s say you work 40 hours/week, 50 weeks/year, and that you spend half of your work week (i.e. 50%) creating your product. In this case, let’s pretend you bake cakes. Using the equation: number of weeks worked x hours per week X the percentage of time you spend creating the product will tell you how many hours you spend creating the product each year. For this example, that means 50 x 40 x 50% = 1,000 hours spent creating the product.
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8. Research the competition in your area.
However, if you really strive to make your store a special experience, you will attract customers.
- The Small Business Association of Nigeria offers a free tool that allows you to map out all of the businesses in your city that offers similar services.
- Identify the top competitors by searching the web. For example, if you want to open a beauty salon, search “beauty salons” + the name of your city. Read reviews about each one. Look specifically for what reviewers like and dislike about different salons. Not only will this help you identify competitors, but it will also give you ideas about how to improve your own business.
- You can also find out about the competition by visiting the stores. Check their prices and chat with their employees. Look at how their store is arranged. You should be looking for some way that you can do better than them. For example, offering an extra service for free or for a minimal charge.
- Remember that even after your shop is well-established, you should keep up with what the competition is up to! This way you can do your best to keep ahead.
Wine/Brewery Tasting Room
9. Construct a sound business plan.
If you plan to apply for financial support (e.g. a small business loan, or government funding) make sure you include a section that outlines how much money you need over the coming five years, how the funds will be utilized, as well as any plans you may be planning to implement in the future (e.g. if you plan to sell the company after it becomes profitable).
- It is a good idea to have an accountant evaluate your business plan. He/she might come up with additional costs to consider, start-up tax breaks, or add additional insights pertaining to your income projections.
10. Find investors to put up the capital for your shop.
When opening up a shop you are unlikely to make a profit in the beginning considering all of the initial money that must be invested and repaid. This means that you’ll need funds up front to cover the start-up costs of your business.
- Information about how much money you need and how the money will be used should be present in your business plan. How you find investors depends on your specific situation. For example, maybe you have friends or family members who want to help you get on your feet, or maybe you want to apply for a small business loan.
- Ask about government grants and loans at your local chamber of commerce.
- Regardless of what type of investor you find, they will probably want to make sure you have a strong plan for getting your business off the ground.
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Wine/Brewery Tasting Room
11. Find out about what is necessary to become a business owner.
Different kinds of business require different permits and follow different tax laws. Before opening your business you will need to find out what is required to legally operate in your city. The best way to find out this information is to visit your local chamber of commerce. There, they can advise you on what is important to take care of.
- You can also search online for state and county government websites.
12. Find suppliers.
You will have to figure out where you will get the product you want to sell or the components of the final product to sell. However, there is no one good way to do this.
- You can ask around at shops who sell similar products to see if they will help, especially if it is a store that is unlikely to be a big competitor because they focus on a different market.
- Search the internet. For example, search for “wholesalers and suppliers” + your industry + your city”. If you have specific requirements you can also include that in your search terms. For example, if you want to offer organic products, include “organic” in your search terms.
- Look in trade journals. Find the most popular trade journals for your industry, and buy a recent issue of the journal. Not only will you find lots of interesting information about your business, but there are likely to be lots of advertisements for suppliers too.
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13. Scrutinize your city carefully.
You will need to think about the best place to sell your shop based on what you want to sell. Putting your shop in a bad location almost guarantees that your shop will fail.
- Think about what areas are trendy for shopping. These areas may have more expensive rent, but may have the exposure necessary for success.
- On the other hand, if you can’t afford a shop in the best part of the city, try thinking about what areas of the city are “up and coming”. These areas are likely to be less expensive, but can still be good for becoming successful because the trendsetters of the city are likely to visit these areas.
14. Contemplate the likelihood that you will be seen.
Is there a lot of foot traffic in the area you want to open your shop? Will your shop be hidden behind other buildings or bigger, more well-known shops? It is ideal if you are in an area with people walking by, who can just drop by because they noticed your shop.
- The best way to learn about how much exposure the shop will receive is to spend time observing the behavior of the people who come through the neighborhood. For example, how many people can you count walking around in the neighborhood in an hour? Are there lots of other shops that people come in and out of? Do people seem to do a lot of window shopping on this street, or are most people walking hurriedly?
- Also pay attention to the auto traffic too. Is there adequate parking for drivers, or do they have to park half a mile down the road to visit your shop? If you live in a city where most people drive, you want to find a location where drivers will be able to stop by with some convenience.
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Wine/Brewery Tasting Room
15. Consider crime rates in the neighborhood.
This information can usually be found by searching the internet for “crime rates” + the zip code of the neighborhood you are considering. If an area is very unsafe, there will be far fewer people willing to venture out to your shop.
- For example, if you want to open a toy store, parents will likely not want to bring their children to the area if there is a lot of muggings and gang violence.
16. Get to know the landlord.
If you are interested in a particular store front, talk with the landlord and try to get a feel for how helpful and sincere he or she is. Having a bad landlord who doesn’t maintain the building well, who would be willing to rent to a direct competitor, or who doesn’t allow placement of signs in the windows will cause unnecessary stress.
- For example, ask him how he will help keep up with maintenance. If something in the building breaks (e.g. water heater) how fast will he be able to fix it? It will affect your business greatly if it takes him a month to gets things fixed. You can also ask him if he would be willing to agree not to rent any other shops in the building to competitors.
- Go with your instincts! When chatting with people, you will often get a feeling for his/her concern and sincerity. If you leave the conversation with a bad feeling, don’t discount the importance of that.
Wine/Brewery Tasting Room
17. Think about how much investment the location will need.
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18. Purchase the equipment you need to run your shop.This includes the decorations for your shop.
If you are opening a bakery, you will need a seating area including comfortable chairs and tables, a counter where people can choose what they want to order, a cash register. Additionally, you will also need to have the proper equipment to make your goods. For example, an oven, a place to mix ingredients, bowls, measuring cups, aprons, etc.
- Again, look in trade publications and online for people and businesses selling equipment. You may be able to buy used if you are having a hard time with the cost of brand new equipment.
- Search the internet for people selling equipment. Many websites allow people to post advertisements for equipment they want to get rid of in your area.
- Some companies may offer leasing options. If you don’t want to commit to a piece of equipment for the long term, or if you can’t afford to purchase one right away, this may be a good option. Additionally, you may be able to negotiate your lease so that it can contribute to eventual ownership if you decide to make the commitment.
Wine/Brewery Tasting Room
19. Hire staff.
In order to do this, you will first need to advertise that you are hiring. You can do this by posting an ad in the local paper, posting ads on job sites, and by word of mouth (e.g. telling friends you are hiring and asking if they know anyone looking for a job). Once you have a pool of applicants you will need to interview the candidates who are suitable, and choose the best ones.
- Be sure that you are complying with all of the employment laws that are applicable to you.
- Your employees are the face of your business when you’re not there. Therefore, do your best to hire people who are reliable, friendly, and efficient.
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20. Advertise your business.
Post an ad in the paper, tell all your friends what you’re doing and ask them to spread the word, post information about your shop on community boards as well as online.
- Harness the power of social media. Create accounts that will allow you to advertise your business for free (you can always put money into later, once you’ve become well-established, if you wish).By doing this, you will be able to post information about your business, post secret deals for followers, and advertise any special events you may have.
- Be sure to share any information about social media accounts you have as much as possible. For example, if you open a bakery, try setting up at a local farmer’s market for a few weeks to get the word out. On your booth, post information about where you are located, your phone number and opening times, as well as where you can be found online.
- You can encourage social media followers by offering a special deal, where customers who follow your business will get a free gift when they come into your shop with a “password” that you post on your social media page/s.
Wine/Brewery Tasting Room
21. Purchase your inventory.
This is perhaps one of the most important steps. Before you can open your shop, you have to purchase inventory. What this means exactly depends on your shop. You may need to order the inventory that you will then sell directly, or you may need to order the ingredients for your baked goods or your sandwiches.
- One rule of thumb is to always have enough inventory on hand so that any customer can purchase whatever they want, whenever they want.
- However, this obviously applies best to businesses who don’t sell perishable goods.
- Contact trade associations to find out the industry standards.
- In your first months, you may have to go through some trial and error to get your inventory on track. This requires that you keep accurate records of how much you sell and when you sell it. Hopefully, over time the amount of inventory you need will grow, making it doubly important to keep good records of your sales. This may also require you to take inventory at least once per quarter to see how much you have of each product.
22. Have a grand opening.
This is another way to draw attention to your business. After your business is up and running for a few weeks or months, have a grand opening party. At your party you can have drawings for free stuff, cheaper than usual prices, games for kids, etc. This will basically be a party where you welcome customers to your shop.
- Although the grand opening may end up costing you money in the beginning, if you have a good grand opening you will make up for it in new business.
- Make sure to advertise the date and time of your grand opening! Have flyers sent out, post an additional ad in the local paper, create a social media account for your business.
Wine/Brewery Tasting Room
23. More tips
- Have some emergency money saved up, just in case. Unfortunately, most new businesses tend to fail, leaving entrepreneurs with very little money. If at all possible, have an emergency fund that you can access, in the event you are not successful in your venture.
- Make sure that you have what it takes to become an entrepreneur. It requires a huge amount of risk in most cases, likely requires that you reduce your standard of living for a time, and means you must be comfortable managing and working with people. In addition, you will (at least at first) spend many hours getting your business up and running, which means less time with friends, partners, children, and pets.
- Create good communication with customers and around the shop clean most of times.
- Don’t open a store without installing a good security system with an armed response that can intervene in the event of a break-in.
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