Those costs keep on Creeping Up

Being a salesperson for the past 15 years has ingrained in my head the need to make everyone happy.  I always seem to take the middle of the road, and that seems to always be a good win-win situation.  However the last 5 years in residential real estate has changed that somewhat.  In fact, my opinion has somewhat swung the other way.  It can probably be summed up by a real estate ‘saying’ that goes something like this:  When a buyer and seller are both unhappy about the price, its probably a good deal.

You see, selling real estate has made me realize not everyone needs to be happy all the time.  In fact, some people look for things to make them even more unhappy.  I guess you could say some people will always see the glass as half full or half empty, and normally these people like to put themselves in situations that reinforce their own personal beliefs.  Anyhow, I will get to the point.

If you are a contractor and you are called about working on our brewery, I am sorry in advance for grinding you on your price.  I feel better about saying this, as in my former life I would have rarely done this.  But the new me is a lot different as every time we can save $1, I feel like I am earning $1.  As one of my recent posts on asbestos eluded to, the costs of our brewery have been steadily going up and up.

I would pass on this advice to anyone else starting a brewery:  The cost to retrofit a 2,000 sq ft space versus a 5,000 sq ft space versus a 9,000 sq ft space is totally different, while at the same time very similar.  They are very similar in the sense that you likely have the same expenses regardless of what size space you have.  I’m talking trade water interceptor, waterline upgrade, sprinkler installation, sewer upgrade, new overhead door, power upgrade, etc.  The difference comes in the amount each of these items costs you.

Sure some of these items like a new trade waste interceptor or new overhead door are the same regardless of the size of your space.  However, upgrades like electrical, sprinkler, waterline and mechanical and their associated cost are dependent on 2 main variables.  First, how much change you need to make from the current layout of the warehouse you lease to the finished layout.  Do you even need sprinklers?  We didn’t, so we knew the only cost would be to retrofit the existing system to fit within our layout (in other words putting new heads on).  Second, and something not to underestimate, is the size of your space.  For instance. to run a pipe from end to end of a 5,000 sq ft warehouse costs a $1 per linear foot.  Well if you double the size of your warehouse, the cost per foot doesn’t change, but the length sure as heck does.

This is where we are at.  We leased a warehouse that is bigger than originally planned for (we planned for 6,000 and we ended up with 9,000 sq ft), and while we increased the costs associated with a bigger space, we are now realizing that we may not have increased the costs enough.  To bring this full circle, we are going to try and grind some savings in different ways, and one of these is through our contractors who will do various jobs for us.  More importantly, I would expect that our tasting room will have picnic tables and be pretty plain when we are finished, as we will surely run out of cash.

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5 thoughts on “Those costs keep on Creeping Up

  1. mikescraftbeer

    Tasting rooms can always be upgraded as cash starts to flow in. Don’t worry to much about its look in the beginning. All we really care about is the beer and the people making it. That is the connection we want to make not the actual space it is located in.

    Reply
    1. locuswest Post author

      Thanks for the thoughtful response Mike (or is that Steve!), i think we have already incorporated some of your comments into our plan, and we will definitely have a look at some of the others as well. Always appreciate your comments.

      Reply
    2. locuswest Post author

      We assumed people who are into craft beer wouldn’t care if it is a hole in the wall, but I hope this is the case with non-beer geeks as well! As much as we are going to cater to guys like you and me, it is the larger market that will help to pay the bills and make us profitable.

      Reply

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