“It has been awesome working with the Sonoma SBDC. After our meetings we have a clear understanding of the next steps we’ve got to accomplish.”
Alley 6 is a small batch whiskey distillery located in Healdsburg, California. The company strives to make sure that every step in their distillation process is sustainably and responsibly managed, and all of the spirits are made using the best organic grain sourced as locally as possible. The entire distillation process is done in-house every step of the way to ensure the highest quality product.
Their first source of rye will be from family and friends in Montana, who are already raising the crop they need. In the future, they hope to purchase more locally sourced grains.
The primary challenges for Jason and Krystle were related to ‘the business of business.’ According to Jason, “We’ve never started a business before. It was hard to know what needed to be done and when it needed to get done. I know how to make great whiskey, but I’m not an expert in all the areas of business.”
One of the most critical challenges was to come up with a viable way to raise the amount of funding required to buy the equipment that the business would need to operate until sales revenue reached breakeven. There is a significant lag between the time the spirit is distilled and when it is ready to go to market, with the aging process taking anywhere from 6-months to 2-years.
The development of reliable and accurate start-up costs and 2-year financial projections was also a challenge and needed to be done to support the fund raising strategy as well as provide Krystle and Jason some peace of mind.
In addition to funding, a step-by-step process of how to move from idea, to production, to sales was important to establish.
The first step with Jason and Krystle was to understand their vision for Alley 6. When their vision was established the process of working through estimating start-up costs was initiated. Once anticipated start-up costs were established the next step was the development of 2-year pro forma financial projections.
With both the start-up costs and financial projections complete, there was a baseline to estimate the total amount of funding required to allow the business to hit cash flow break even. Then came the work of developing multiple ideas on how to craft a fair and equitable investment structure that friends and family could participate in.
As things began getting closer to production, elements like proper permitting and building infrastructure items (lease, tenant improvements) were always topics of on-going conversations.
Jason and Krystle have submitted a business plan to city officials and secured an industrial space near downtown Healdsburg that can act as both a distillery and tasting room. The building is currently being brought up to both fire and seismic code. The Alley 6 logo is being finalized and a trademark application has been filed with the USPTO. Alley 6 just completed a successful Indiegogo campaign where they met their goal of raising $10,000 from the crowd. The majority of equipment (including an imported still from Europe) has been secured and is being installed at their location.
It is estimated that production of the first batch of whiskey can be complete in the next four months and sales can begin toward the end of 2014.