Monthly Archives: August 2013

Raising Money …. Almost there

This part of starting a brewery involves no glamour, lots of rejection, and takes a thick skin. Most importantly, looking for investors takes patience.  Sometimes, the last thing I want to do is is take time away from the Brand Guide, Business Plan or other more ‘fun’ projects (OK I’ll say it, liquid research) to focus on this.  There seems to be a lot of people interested to know more, but to have ongoing discussions with them, means reducing the number of people who actually want to make an investment.

You see sharing your business plan, and your thoughts on everything from Marketing to Financials is like exposing your inner-most thoughts on business and branding.  Inevitably, we all have different viewpoints on these items, so there are things about my business plan that some people jive with, and other parts that turn people off our business.  Likely, if you are reading this blog you are a fan of craft beer; so explaining the market, how it’s growing and what the future holds is easy …. like selling candy to a kid.

However, about 75% of investors that read my plan don’t know a lot about craft beer.  For instance, they think Granville Island or Sierra Nevada is craft, have never heard of many of the smaller craft brewers, and don’t seek out establishments that cater to craft beer.  Some investors have even approached the business plan from a pure business standpoint.  They ask, “Why wouldn’t you brew more beer, sell it cheaper, market the crap out of it, and have higher sales?”  As you can imagine, this is not what I have in mind for my brewery! #FollowMyDreams

Most of all, you are asking mostly friends and family to invest their money in your dream.  This simple fact means that people start out skeptical in the first place.  We all know someone who is offering some multi-level marketing investment, or someone else who is selling diet pills or a weight loss plan.  Personally, I find this annoying, especially when its very in-your-face.  Also, people work hard for their money, and there is nothing worse that pissing your money away on a bad investment.  All of these things stick in my mind when I ask people to part with their hard earned money.

The net sum has been very positive.  I feel lucky to be based in Vancouver with this dream, as craft beer is bigger here than most any other place in Canada.  From a Canadian perspective, craft beer in BC is very sophisticated and has set the standard for many years now.  The Canadian Brewing Awards is littered with BC breweries winning gold medals over the past 5 years.  I just have to keep reminding myself that this opportunity is not for everyone.  I have also learned to take the feedback that people give me as not a personal attack, but ways to make our business and prospects for success better.  Ok, sometimes people are just jerks, but thankfully they are in the minority here.  Most people just can’t afford to drop $25,000 on something like this …. living in Vancouver is expensive.

As of today, we have raised over $1 million dollars towards starting this dream.  When I really step back and think about that number, it is a LOT of cash.  Depending on the space we lease, and the retrofit cost involved in making the space suitable for brewing, we will likely need another $200,000 to be fully financed.  I hope that we can find this money within the next few months, as the thought of being so close to connecting with all the investors we need is both motivating and exciting.

I am always open to comments, support and help from anyone and everyone in making my dream of a craft brewery become a reality.  If you happen to have any advice, thoughts on anything about the industry, or any other insights on anything to do with starting a business, please feel free to pass them along.

Thanks for reading this post ….

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Making an Offer and Finding the Right Brewing Space

Well its official, we have made an offer on a space in East Vancouver.  This will be our 5th property that we have made an offer on, and I hope that its 5th time lucky.  My friends who know me well, and have been kept abreast of the past 3 or 4 years of this process, are the ones who encouraged me to start this blog, as there always seemed to be so many ups and so many downs throughout the process.  None more than finding a space to call home!

In my opinion, the biggest and most important decision a brewery can make is the space you lease.  Sure other decisions are important:  Like, the name of your brewery, the beers you make, the employees you hire, the way you disperse your cash, and the image you present to the marketplace.  But what I have learned is the space you are going to be married to, for better and for worse, is the most important decision you can make.

For starters, finding a good space for brewing is difficult as the list of requirements is long, making an ideal space unique.  You benefit from having high ceilings (18 feet is ideal), a good water supply, good floors for taking the load of full fermenters, about 400 amp/3 phase power, and solid overhead loading doors.  If the list were limited to just these items, the search would be difficult in itself.

But lets not forget some of the other key items in a warehouse that are important in starting a brewery.  In Vancouver, M2 Zoning is the only commercial zone where brewing is an outright use.  All the other zones (for instance I1 and I2) are conditional use, which means you need to apply for a Development permit from the City of Vancouver.  This costs about $5,000 and takes anywhere from 8 to 16 weeks.  I heard Brassneck took 16 weeks, and I have heard rumours that Bomber brewing got their DP in 8 weeks.  Most importantly, you can’t apply for a development permit until you have a signed lease on a space.  That means you have to take a giant leap of faith you will get a development permit.  Why you ask?  Well inEast Vancouver good quality commercial real estate is so hot, and you likely won’t deal with a landlord who will let you have getting a development permit as a subject of the offer.

The list doesn’t end there …. Another key component is the size.  Small breweries need at least 2,000 square feet, and the size can go all the way up from there, depending on how ambitious the brewery is for sales.  I think a space of about 6,000 square feet seems good for starters, but it comes down to how much beer do you think you will sell?  Will you follow the path of Storm Brewing, and have sales that are modest, and keep the operation small?  Or do you plan on having higher sales, like Parallel 49 Brewing, thus requiring more space for production?  Like everything, there is a direct correlation between the size of the space you lease, and the risk an owner takes.

With the new Tied-House rules in the City of Vancouver, another huge aspect is the Tasting Room and Retail Area within the brewery.  It is hard to explain to people how oppressive the bureaucracy is when starting a brewery, and the ability to have a tasting room on site is huge bonus. It not only allows for a tangible connection with consumers to gauge their opinion and interact with, but it also helps to add a few dollars in sales to the bottom line of a brewery.  As such, the location of your warehouse, along with the design, aesthetic and interactivity with the brewery is huge.

The last big point that comes to mind is scalability of the space.  It costs about $500,000 to retrofit a space for brewing.  In other words, this whack of cash goes to upgrading power, floors, water, pipping, cooler/cold room, installation of brewhouse, offices, tasting room, grain handling, etc, etc, etc.  You essentially never get this money back, as its an investment you make in the landlords building.  Hence, its important that you find a space that works now, but also for 5 and 10 years down the road, as you need to avoid having to move spaces because you have outgrown your current facility.  This is of course a good problem to have, but at the same time, its important to be mindful of this fact.

There are obviously other factors like the quality of the landlord, the neighbourhood you locate in, the look and feel of the space, and the lease rate you pay.  All of these items go into making a space for brewing difficult.  However, if patience and an ability to pounce on the right space when it comes available are kept at the front of everything, it is possible …. just ask 33 Acres and Brassneck who both did very well with their spaces.

I hope today is the first day in securing the right space for my brewery.

What size Bottle would you put your beer into?

If you could only choose 1 size of bottle to put your beer into, which size would you choose?  This is a decision that we need to make, and one that I have had a difficult time making a final decision on.

How Important is the Name???

One item that I have grappled with for some time is the name of my brewery.  There seems to be three different avenues people take in naming a brewery, which appear to be popular.

The first is to name the brewery after the owner.  Think R and B Brewing, Phillips Brewing, Hoyne Brewing, and even Molson.

The second is to name the brewery after an area or landmark.  Think Coal Harbour Brewing, Deep Cove Brewers and Distillers, Granville Island, and Stanley Park Brewing.

The third is to name the brewery after nothing in particular.  Think Storm Brewing, 33 Acres Brewing, Bomber Brewing, and Dead Frog Brewing.

There seems to be no rhyme or reason why names are chosen, and some end up being good and others end up being a little less than interesting.  My belief is at the end of the day, a name is not that important.   In my opinion, If you make shit beer, but have a great name, your chances for success are not going to be great.  On the other hand, if you have a shit name, but make great beer, I think you are going to succeed.

I would love to know what people think are good names in the marketplace?  I have my opinions, and for the most part, I think having a variety of names in the marketplace is a good thing.

Cash Is King.

Holy crap it takes a lot of money to start a brewery!  I am not sure how else I can say this.  I am dumbstruck by the amount of capital and effort it takes to get to day 1, the day you can start producing beer.  The process of starting any business, especially one like a craft brewery, is a real test of many attributes of your personality.  I would say the biggest is your ability to raise, conserve and allocate your money.

I have spoken to several in the business about how much cash I need to do a production brewery, and the range in numbers I get is astounding.  For smaller breweries, it seems you can do it for about $400,000, and depending on your lease agreement, size of the space, and how quickly you can start making sales, the number can climb really high from there.  Its scary when you hear about how much Red Truck, Red Racer, and others are spending on their new breweries.

For my ambitions and goals, I am hoping that $1.1 million dollars will be sufficient, along with a line of credit to help me out until we get into the black …. likely about 12  months or so (I hope).  I do hope to connect a little more deeply with some of the newer breweries to see if this number is realistic or not.  I would love feedback from anyone.

A big plus to making things more hopeful to succeed is the tasting room that breweries are now allowed to have.  The connection you can make with craft beer enthusiasts, the ability to sample new styles of beer with immediate feedback, and the ability to sell your own beer make gutting it out during the first couple years much more possible.  I am not sure how companies like R and B, Storm and even Coal Harbour were able to succeed without a tasting room.

At the end of the day, I like to think that I am good with money.  But budgeting in my real estate finances, and the finances of my family is a much different beast than managing the budget for the brewery I am starting.

Tags:  Craft Beer, Financing your Start-up, ImStartingACraftBrewery, Vancouver, BC, Starting a Craft Brewery, Cash Is King

Decisions, decisions, decisions!

One thing that struck me today while I was working on my business plan is the number of decisions a business owner has to make. More importantly each successive decision you make has a cascade effect on all the other decisions you have already made, and the future decisions you are going to make. This can mean taking a zig in stead of a zag results in a completely different finished product, one that was not intended when things started out.

I wonder sometimes if that is what happened with other breweries; like Dead Frog, CHBC, or other breweries?  When Dead Frog first put their beer in clear glass bottles, I am sure they had a good reason …. like the image would be great, or it would appeal to a certain customer.  The reality is that they have changed this tactic, and now moved to a regular brown bottle.  Looking back on things, I wonder if they would have still made that choice years ago?

All this leads me to wonder:  How will all these tiny little decisions made throughout this journey add up in the end?  Will they produce a brand and image that I intended when I started this process?  Or will they lead me to a product like Fat Cat Brewing, where I will be going bankrupt or having to rebrand my beer in 5 years?

With all this in mind, I have been diligently putting together a brand guide over the past few months.  I hope that this document results in an excellent roadmap to a brand that accurately reflects my taste, passion and preferences.  I hope that these things then combine to produce a brand that others see as something they should ‘invest’ in.

Tags:  Imstartingabrewery, startingabrewery, Vancouver, BC, Craft beer, Brewing

Im Starting a Craft Brewery

Call me crazy, call me nuts, call me anything you want (my wife and family have already thrown all those verbal grenades at me). I am hell bent on starting a craft brewery based in Vancouver, BC.

Why you ask? It might be because I was raised by a father who would teach me his secret home brew recipes that my grandfather had brought to Canada in the 1950’s, after being entirely dissatisfied with the quality and range of beer available in Canada. Or it could be that I was surrounded by friends and family who were actively entrepreneurs and spoke about the great things that happen when you push your own boundaries. But I think the biggest reason may be the most simple. Life is short. These 3 words mean so much. Think about it for a second … we all know friends and family that have passed away too early, or a grandfather who sees their perspective of life change as they are older. The truth is, I wasn’t entirely happy with my life about 5 years ago, and this moment has been five years in the making. More to come on that in subsequent posts.

I hope this blog becomes a useful too for people who are thinking the same thing as me, people who are interested in craft beer and for people that are fascinated with seeing others take the biggest gamble of their life in pursuit of a passion.

So there it is. I am going to commit to uploading regularly with video, information and somewhat humorous posts about this process. I have been working towards this dream for 5 years, and I hope that I am closer now that I have ever been in the past.