Investments can be risky and you should never invest more than you could afford to lose. We recommend that you consult your own advisor before choosing to invest. Shadow Grove Brewing will do as much as possible to mitigate all risks, but for full disclosure these are some of the risks that we foresee:
Laws & Regulations: The brewing industry is highly regulated and subject to new and evolving laws on a yearly basis. While organizations such as the Brewer’s Association lobby in favor of laws that help the brewing industry on both state and federal levels, they don’t always win. Laws restricting sales could hurt the industry, particularly for breweries that rely on retail sales. If for instance a law surfaced that prevented breweries from directly selling their products to patrons in a taproom, our business model would become significantly less profitable as we would have to pivot to distributed sales that do not carry the same profit margins.
Overestimating Demand: We believe that our location in Downtown San Fernando is an amazing location for a brewery that will be heavily focusing on retail sales and as such, we are purchasing capital assets that can fulfill the demand for sales that we believe that area is capable of. However, estimating demand can be challenging and if we are incorrect, we will not see the estimated sales figures we are confident in achieving. If this happens, the total time for return on investment could become much longer than originally anticipated.
Experience: While Ron has extensive experience as a home-brewer and some experience interning at a local brewery, he does not have significant experience on a large system. While he is confident that his capabilities will translate to the larger system, there are certain difficulties that could come with the cost of lost product. Additionally, while Tom has many years experience in sales and running several business types, he does not have significant experience in the brewing industry. While we are both continuing education to help with all aspects of running this type of business, challenges could arise that have the potential to harm profit margins.
Unforeseen Capital Expenditures: Starting a brewery is a capital intensive process, often much more than other business types. An unforeseen expense requirement in our build out phase could force us to seek additional investments or the procurement of a loan which would reduce the amount of profit and thus dividend payouts. A major equipment malfunction during operation could cost us thousands and also lead to reduced profits and dividends.
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