Opening a brewery can be a costly experience. It is important to ensure that you have adequate financial capacity to fund your planned operations.To get more news about Capital.com Pros & Cons , you can visit wikifx.com official website.

Most new breweries are self-funded by owners or funded through external sources such as investors, loans or crowdfunded (either ‘rewards-based’ or ‘equity-based’). Each option has its advantages and disadvantages – we discuss each briefly below.
Option 1: Self-funded by owners
The least complex and most straightforward arrangement.

Pros: You are the owner – meaning no loan repayments, no interest payments and no shareholders or investors to manage. This is a simple and straightforward means of funding your brewery.

Cons: Breweries are expensive! You may find it financially onerous to fund everything on your own, it may not be the best use of your money i.e. you could have your money invested elsewhere.

Tip: Ensure that you properly structure your business to minimise tax obligations and to mitigate legal risk. This may require incorporating a company (or multiple!) and/or establishing a trust.

If you are going into business with others (even if they are family!), it is important that you have the arrangement properly documented with a Partnership Agreement or a Director and Shareholder Agreement tailored to your circumstances.

Important things to consider include – Who is responsible for what? Who pays for what? Who is liable for what? What if someone wants to leave / sell/ becomes sick or dies?

Option 2: ‘Traditional’ financing
The most common method. Banks and other financial instructions often fund new and expanding businesses.

Pros: This type of financing allows you access to capital upfront and over time, allowing you to open and expand operations. There are a few different types of finance whether it be a line of credit, standing overdraft or specific finance arrangements (i.e. a number of companies offer specific brewery equipment finance). Applying for and obtaining bank finance is typically a straight-forward process that can occur in a relatively short timeframe.

Cons: You will be liable for interest repayments! You may also be required to provide collateral or personal guarantees. It is also not unusual for some financial instructions to only fund operating businesses who have demonstrated cashflows.

Option 3: Funded by investors
More complex than being self-funded. Generally, investment is by way of ‘angel investment’ or ‘venture capital’, which are both forms of private investment that involve investors giving money to the business in exchange for some form of ownership (generally shares in the company i.e. ‘equity’ and/or a right to have a say in business decisions).
Pros: Fast/easy access to money. Can be on terms more favourable than that offered by banks/financiers. The funding arrangement can be tailored to the business (i.e. if money is required upfront, overtime or at certain events).

Tip: If you plan to raise capital privately, it is vital that you comply with legislation in particular as to how you plan to raise money, who from, how much and how you will advertise the raise. Penalties can apply if you fail to comply with the legislation.

Cons: You have to manage your investors! This may include providing accounts or seeking their consent for certain activities if they are a shareholder. Most investors will want to have a say in business decisions. Some investors will only invest on inflated terms. Depending on your arrangement with your investor, you may have to repay amounts at certain times, give up a share in your company, pay dividends, provide security for the investment or provide personal guarantees.
Option 4: Funding by a lot of investors i.e. ‘Crowdfunding’
Increasingly, breweries are opting to raise capital through crowdfunding campaigns, both ‘reward-based’ and ‘equity-based’.

Crowdfunding has been available in Australia for a number of years in one form or another. Traditionally, crowdfunding has been limited to charitable or ‘rewards based’ campaigns (i.e. if you invest $x, the company will give you a reward usually a limited release t-shirt or beer etc.).

In late 2018, legislation changed allowing private (i.e. Pty Ltd) companies to offer ‘equity’ crowdfunding. Equity crowdfunding allows the general public to buy shares in the company.