Zen and the Art of Raising Cash

February 05, 2018


Whether you’re a garage brewer (upgraded from a basement brewer) who’s looking to open a microbrewery, or you’re an established brewpub that’s looking for money, there’s a lot to consider. Although interest rates (the cost of money) are low right now, there is always limited capital available, and there are always strings attached. Banks have especially tight requirements (regulations) to ensure they limit or, ideally, prevent any loan losses, so they are very cautious. Every capital source has its own pros, cons, and constraints.

The biggest questions you need to ask yourself before considering any of these sources are Zen-like:

  • Why are we here?
  • How can I remove my ego?
  • What am I doing?
  • How can I best serve?
  • What do I do now?
  • What will give the most meaning to my life?


Whatever you answers, there is a saying that I find to be true: Always borrow from a pessimist because he won’t expect to be paid back.

Whether you need funds for an expanded taproom, working capital, equipment, or long-term growth, consider the quick reference chart below:  





  1. Once credit worthiness established, it can help support you in many ways (revolving lines of credit, credit card processing, etc.)
  2. A loan is less expensive than equity because its interest is a deductible expense.
  3. As long as the bank approves, you can use the cash in any way you choose.
  1. Creditworthiness with a bank can take a while to establish.
  2. There are usually lots of financial restrictions to which you must adhere.
  3. A bank usually wants a personal guarantee from owner(s).
  4. Also, a bank generally wants some collateral, or for you to maintain minimum account balances.
  5. If you’re a start-up, a bank loan probably won’t happen.


  1. Good if you have a lot of wealthy customers and friends.
  2. A means to build customers and loyalty.
  3. You can structure it to keep founder control.
  4. Use a reputable crowdfunding platform.
  1. A poor option if you have less well-off customers.
  2. Equity is expensive, i.e., people expect a good return if they invest.
  3. How do crowdfunders “get out?”

Equipment financing

  1. Lease. (You don’t own, but rather, rent equipment long-term.)
  2. Lease to buy.
  3. Less onerous credit terms/financial restrictions.
  1. Can be expensive. (Shop companies for best deals.)
  2. Only for specific microbrewery equipment, not general purposes.

FFF (Friends, family, fools)

  1. They know you and trust you (silly them).
  2. Not a lot of paperwork or administration but that can lead to misunderstandings.
  3. Usually not a lot of “strings attached.”
  1. They might be too involved or too opinionated.
  2. Too many “cooks in the kitchen.”
  3. How do they “get out?”
  4. Equity is expensive, i.e., people expect a good return if they invest.
  5. Unrealistic expectations to “get rich.” Makes holidays awkward.

Employee Stock Ownership Plan (ESOP)

  1. Builds “owner” mentality in staff.
  2. Can structure it to keep founder control.
  3. Tax advantages if you make money.
  4. Probably best for “key” personnel.
  1. Administratively complex: You pay the accountants and lawyers in time and money.
  2. IRS, DOL arbitrary rules, and “fairness” testing.
  3. Can take many years to build equity and employee ownership.
  4. Many “cooks in the kitchen.”

Your own pockets

  1. You retain 100 percent control.
  2. You retain 100 percent of the income.
  3. Simple.
  1. You must have deep pockets.
  2. You retain 100 percent of risk and 100 percent of losses.
  3. You might not have enough cash for eventual expansion/new opportunities.
  4. You might not have enough cash reserves for bad times.


If you want more information on any of these items, use the Contact Us form on the website to contact Randy Howell.

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