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Entrepreneurship 201: Business Case Assignment
FLOW RIGHT BREWERY & BAR: Background opportunity (#1)
Chris Flow had long ago wanted to be his own boss. Working for one of the bigger banks in the
area, he sat in a cubicle processing mortgage applications. Although there was always something different
in each application, he had the process down to a science. He was so good at his work that his boss gave
him the unenviable task of handling mortgage workouts for people who had fallen behind in their
payments. As technology continued to advance and the mortgage crisis had subsided, the industry was
changing, and he could see the writing on the wall. He felt that virtually anyone involved in the mortgage
processing business was eligible to be laid off. Several of the nation?s largest banks had already
announced layoffs in their mortgage divisions.
Since graduating from college, Chris had a fascination with brewing beer. He worked at a
microbrewery in Boulder, Colorado, during his college years and had taken several classes on making
beer. He was a member of the local brewing club and regularly won the club awards for the beer he
brewed at home. What?s more is that Chris?s passion to brew beer had taken over his two-car garage
much to the consternation of his wife. He regularly worked with new club members to learn what he
considered a craft.
On his way home from work one day he noticed that one of his favorite restaurants had closed.
The location was very good, but there was never much of a crowd. Chris personally knew the owner of
the restaurant and contacted him to find out what was going on. The restaurant owner indicated that he
was planning to move from the area and wanted to sell the business but there was not sufficient cash flow
generated from the business to entice anyone to buy it. Thus, he had decided to simply close the business.
That night Chris and his wife talked at length about Chris taking over that location and turning it
into a brew pub where enthusiasts of craft brewing could gather and enjoy locally brewed beers. He and
his wife had saved up $100,000, which they were willing to commit to the venture, and he was confident
that he could bring in a set of partners who would also invest in the business. There were a lot of things to
do over the next few weeks if this was going to be a reality, but Chris was truly excited about business for
the first time in years.
The next day Chris contacted the real estate agent and found out the owner of the previous
restaurant had broken a 10-year lease that still had 6 years left on it but no personal guarantee. The owner
of the property was anxious to get the property leased again and was willing to throw in everything inside
the restaurant for no extra monthly charge if Chris would sign a new 10-year lease. This time the building
owner would require that Chris personally guarantee to pay the lease. The lease payments seemed quite
reasonable- especially given that all the kitchen equipment, tables, chairs, counters were his for free-it
was nevertheless a big financial commitment as Chris would still have to pay for the lease even if the
business was not a success. Chris and his wife decided the opportunity was a unique situation and they
should move forward to put together a plan for a business they would call Flow Right Brewery & Bar.
FLOW RIGHT BREWERY & BAR: Factors to consider (#2)
Chris was very excited about the potential for the new brewery business but still didn?t know if he
could really make is work-or whether it was even really a good idea. Looking over the past 10 years he
found out that the location he was considering had previously been four different restaurants with various
themes and concepts. None of them had succeeded. None of them were a craft brewery and bar so he
thought that this concept was more in-line with what might work in the area. His main concern of starting
the business was that he was unsure about his qualifications.
Looking honestly at himself, Chris recognized that although he was a smart guy, he had no
experience running any type of business. He had worked in a microbrewery in college but was a waiter
and bartender most of that time. He spent a fair amount of time with the brew master learning the trade,
which is what had sparked his keen interest in the craft brewing over the past 10 years. He was never the
brew master in his prior working experience, but he did have experience brewing beer at home.
Therefore, Chris decided to examine some aspects of the business before he committed to the idea.
Financially he and his wife were in a sound position. They rented their house, owned both their
cars outright, had retirement savings that were beginning to grow, plus they had over $100,000 in cash to
invest in a new business. Doing some quick research, Chris realized that he would probably heed
$500,000 to purchase everything he needed, run the business for six months until it reached breakeven,
and provide him with a salary sufficient enough to keep up with some of the household expenses. This
meant he would either need to bring in partners to obtain the extra $400,000, take out loans, or obtain a
combination of partners and loans.
The time commitment was going to be substantial. Chris knew that it was a business that would
need to be open most days until midnight and that the brewing aspect was a seven-day-a-week activity.
The business location was less than three miles from his house, he and his wife had no children, and they
were both ready to commit the time they needed.
As mentioned in the case background (#1), Chris was well known in the local brewing
community. He had won a number of local brewing awards and was a sought-out teacher of home
brewing. Thus, Chris felt he had the expertise to move from small amounts of brewing to running a
microbrewery. However, Chris also recognized that he had to consider the competitors in the area. There
was only one true microbrewery in the area, but there were many bars, restaurants, and clubs in which
customers could enjoy beer. Local brews were not readily available, however, he felt that was positive on
one hand, but it really concerned Chris on the other. Would there be sufficient interest in local brews and
in a local microbrewery to generate a real revenue stream? The only other microbrewery was part of a
national chain with a very well-known name. A micro-brew is typically not the cheapest beer to brew or
sell. It takes a customer base that is more committed to drinking high-quality beer and paying a little more
per beer. He knew it was an unknown risk that he would be able to sell enough craft beer for a
microbrewery to prosper.
Chris now needed to weigh all the factors to make a committed decision to pursue this effort or
pass on the opportunity. Using the information in this case, refer to the textbook to list some of the factors
that Chris should consider and give your opinion on what Chris? decision should be and why.
SWOT Analysis Exercise?Flow Right Brewery
Read the Flow Right Brewery Case #1 and #2 above and evaluate this potential start-up using a SWOT analysis. List
3 strengths and 3 weaknesses. These would be internal to Chris and this business. Also, list 3 threats, and 3
opportunities. This would be external related to the industry, competition, and market environment. Then answer
the questions that follow on the next page referring to the information in the textbook and associate it to the case.
Strengths
Weaknesses
Opportunities
Threats
Case Study Questions?Flow Right Brewery
Read the Flow Right Brewery Case and evaluate this potential start-up using the criteria
outlined in Chapter 2. Answer the questions below in complete sentences.
1) Name the three Entrepreneurial Orientation Factors and then give examples of how Chris
measures up for each factor as a potential entrepreneur. (p26-29)
1)
2)
3)
2) Review the 10 Triggers listed in the Textbook on page 30. Which of these do you think is the
greatest trigger for Chris? to start a new business and why? (explain your answer).
3) Name the four supports mentioned in the text and identify how Chris? support network fits in
each of them. (P31-35)
1)
2)
3)
4)
4) Discuss your opinion of whether Chris Flow should move forward in opening a craft brewery
business. Either Chris should make the long-term commitment to move forward and sign the
lease or Chris should abandon this opportunity and prepare for the next one.
a) Give your main reasons for your decision with explanations of the information that
helped you come to your conclusion.
b) Identify at least one area he needs to improve as he moves forward and why.
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