Tag Archives: BC craft beer

An Uncomfortable Decision

Throughout the process of starting any business, you learn quickly to deal with unforeseen circumstances on a regular basis.  Things like missed deliveries, unexpected costs, delays by a government body, missing parts, etc.  Recently we had one of the biggest curveballs sent our way, from the most unlikely of places.  Our Structural Engineer who has been working with us a lot lately, just had a heart attack.

For starters, we wish him all the best in his return to health.  Having worked as a pharmaceutical salesperson, I have learned the effect ill health can have on a persons physical and mental well being.  It can effect different people in a number of ways.  So we wish our engineer all the best in getting back to health after such a traumatic experience.

Let me give you a little context to the situation.  A structural engineer is pretty important on most any building process, as there are lots of decisions to be made around making sure big components are sound.  Things like; making sure our floors are structurally sound, the grain hopper is fastened to the building properly, connecting the new curbs to the old concrete slab properly, and making sure the walls and ceilings are properly built so they can handle a heavy load …. you get the idea.  So having someone that understands your project, and someone that works within your timeline is key.

More importantly, when you are at the point our brewery build-out is right now, a structural engineer and their work is critical in moving things ahead.  For instance, there is a list of about 10 things that our engineer is working on, and without his guidance and advice, we can’t make any progress.

Let me now recap a few of our issues with our engineer and you will see why we need to make such an uncomfortable decision.  We picked our structural engineer about 6 months ago, and like a lot of decisions we make, it was based on personality, a referral and price.  He was not from a company or firm, rather just a guy who works on his own … he is the only employee.  Early in the process of things, he gave us some advice, and it seemed very good and we looked forward to working with him on things.

Fast forward to the day we took possession:  February 1st, 2014.  All of a sudden we needed our engineer to start producing some drawings and work for us, but our emails and calls went unanswered.  We reconnected with our architect over this, and they handled things, allaying our concerns and repointing everyone in the right direction (they are good at this).  As our general contractor kept sinking his teeth into the building of our brewery, he had more and more questions for the structural engineer.

He put these questions to the engineer on a regular basis for the next month, until about the beginning of April, when we really started to worry about not getting drawings and answers on what exactly he was supposed to be doing with certain parts of the brewery.  This time we contacted the engineer directly to tell him our concerns.  He gave us a few small little answers, but nothing concrete.  Fast forward to the last week of April, and it was now critical to get answers.  We needed to know about drain construction, floors, connecting old cement with new, etc., and we still didn’t get or have any answers.

A meeting was planned at the end of April to discuss what we needed, and how urgently we needed it, and it went amazingly well.  The engineer agreed that he was late in getting stuff to us, and promised we would have this information for last Friday.  We felt really good about things and moved forward with a positive attitude.

You can probably see where this is going.  Last Friday came and went, and we received nothing. We were pretty disappointed to say the least.  The bottom line is that we need these drawings for work that is getting done right now, and without them, we are opening ourselves up to major problems.  The biggest of these is a delayed opening, which means we will loose even more money in our first year.

Well the news got even worse on Monday morning, as we learned that this engineer had a heart attack and was in the hospital.  And since he is from a company of 1, there was no way to get anything he has done.  So what would you do?  Do you show compassion and wait for him to get out of the hospital, and let him finish the project …. or do we move in a different direction, avoiding any further delays.  We ground our teeth on this one, but as of yesterday we have moved on with a new structural engineer.

In one way its good, as we get a fresh start with someone who hopefully be a little more proactive on getting things done.  Moreover, in our initial consultation he gave us a lot of really good information and advice, something we didn’t get from our last engineer.  In the another way, moving on with someone else is bad.  We have lost all the work that he completed, there is definitely going to be some bad blood over the bill and invoice for work he has done, but not delivered to us on, and we feel bad kicking him when he is down.

At the end of the day, we need to move this process forward now.  So waiting for our engineer to heal and get better, while the right thing to do, is not something we are doing.  We do wish our contractor all the best, and we hope to recovers and gets back on his feet ASAP.  This is just one of the harsh decisions you have to make when starting a business, one that kind of makes you uncomfortable.

 

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Marketing Update – Website, Blog, Social Media, etc

It seems there have been 2 buckets that I have been working in lately:  Fixing the warehouse and building our brand.  I love the physical aspect of working in the brewery, and I am sure you would too.  What I have found is that when you build a company, its hard to see progress and win the little battles that make up the war.  For instance, when it came to picking a name, it took literally hundreds of hours of work and effort, and you don’t see any milestones along the way.  One day you just have a name.  But when you have a physical project like constructing a brewery, its easy to see progress along the way, and I like that.

We have been busy painting the warehouse lately.  The amount of time and energy this has taken astounds both of us.  We have had great help from family and friends who are incredibly supportive of our journey.  Without their help from the get-go, none of this would be possible, and I am sure this is going to continue onwards in the future as well.  Even with this help, we have spent 2 weeks preparing the space for painting and first coat of primer.  I guess that is what happens when you have a 9,000 square foot space, with 19 foot ceilings.

inside brewery pre paint

 

 

 

 

 

 

 

So when we are not going up and down the forklift preparing walls for paint, and applying paint, we have been busy with organizing what our brand will look like.  That means meetings, meeting and more meetings.  I have come to realize that it is incredibly important to express how you feel in a positive and straight forward manner.  When it comes to the way I feel about something, I owe to my partner and the business to say what I need to say, all the while improving the relationship with my partner and leaving my influence on the business.

We have picked a logo, and it may not be finalized, it will look similar to this.

SF-logo#8-max-res

 

 

 

 

 

 

Online I can understand why people are torn between the 2 logos we had everyone vote on, but when you see them on a bottle printed out, the decision was quite easy.  The text on the other option seemed too small, and didn’t stand out on the  bottle like this logo.  So thank you to everyone for your feedback and input into our decision.  The results were virtually even on our blog and also the Vancity Buzz poll, so at the end of the day, we had to make the decision.  There might be people who strongly dislike our image and brand, and we have quickly come to realize that we are ok with that.  But we have also come to realize that our brand is so much more than a logo.

All of our social media is now live:

Twitter:  Strange_Fellows

Instagram:  strangefellowsbrewing

facebook:  strangefellowsbrewing

We are busy working on our landing page for the website, and it will likely be another couple weeks before we have something up and running.  Until then, the main contact points are the above …. and of course this blog.  As Iain so shrewdly put the other day, he is the one doing all the work in starting a brewery, and I am the one telling everyone about all the work he is doing in starting a brewery.  Seems like a good set-up to me!

Your feedback is always welcome and helps us to know what we are doing well and what we can work on.  Should you think of anything we can do to make this company better, we would love to hear from you.

The Odds and Ends of this Process

One thing that takes a lot of time, especially of late, is the final layout and design of the space.  It is quite easy to get approximate locations of the brewhouse, walls, grain room, bathrooms, etc., but it is another thing to lock in the exact location.  This goes against what I ever thought would happen, and makes you choose between saving time, saving money, but only getting one of these at once.

Are you as confused as me?  Maybe the words are not flowing from my brain to the keyboard this early in the morning, but the final location and final detail of things is taking a lot of time.  Why are these things important?  Well, without knowing how long of runs you need for mechanical engineers, electrical engineers, your general contractor and others, you can’t really get accurate quotes on work needed.  If you can’t get an accurate quote, when it comes time for an electrician to do the work, and they need to do something that is not in the original package, there is an up charge for this.  In other words, if the electrician needs to run power to 10 extra lights that were not in the plan, they charge extra.  It is also the time that they can “bend you over the table so to speak.”

So in trying to button down all the details of what to put where, it makes life really difficult for the individual(s) putting together the final plans.  For us that means our architect, our brewhouse designer, and our contractor are all working in tandem, with emails and phone calls going back in forth at the rate of about 10 per day, with weekly meetings, and with miscommunication at every step of the way.  It is very difficult to orchestrate, as often people are not focused on our project alone, meaning sometimes it is not convenient for others to work on our project.  There are also vision issues, time issues, communication issues, and issues with our issues.

One of the biggest issues you cross when it comes to the odds and ends, is saving money versus saving time.  At the end of the day, we try to save both at every step along the way, but it has proven impossible.  If you want something done quickly, you are going to pay more as you narrow the window of options you have.  On the flip side, if you want things done economically, often the time needed to save the money is huge.  For our project this means trying to balance out these 2 things, so that we can save a little time, but also a little money.  Let me give you an example.

Should you build a cooler yourself or have one prefabricated and installed by someone else?  There is something about a cooler that makes it very expensive to pay a company to design and install.  It is not like the engineering is difficult, the materials are relatively inexpensive, and the amount of time needed to put it together is nothing exorbitant.  So when you get a quote from a company that specializes in putting this into your brewery, the cost blows your mind.  The cooler can literally cost $40,000 to supply.  WTF.  So this naturally leads us to look at designing and building our own cooler.  Quickly you realize that you can build the same thing, and save yourself about $20,000 which is huge in the grand scheme of things.  The challenge with this route is the time involved.  The time needed to procure the pieces, put together design specs, meet code, coordinate trades, etc, etc.  What we are now realizing that building our own cooler will save us money, but it will suck a lot of time from spending it elsewhere.

When you have time sucked away from certain things that need it, then you are delaying the process for other things moving forward.  So in other words, there is always a delicate balance between time spent on a project, and time lost on another project.  There is also a balance between money saved and time saved.

Let this be a lesson to other future brewery owners, the balance of these things is a hard thing to do, and you will spend a lot of time heading down a path, and then after a certain amount of time, backtracking and going down the other path, only to realize that you should have stayed down the first path.  The key is to always be aware which path is the best to travel down, and to recognize when you are running into a brick wall ….. because as we have learned, there is never a brick wall to show you are on the wrong path, only a few hurdles, making recognition of this even harder.

My key learning is this:  Sometimes getting overcharged is alright, so long as you spend the time you save elsewhere to move another aspect of the brewery forward, or save money.  There are other times an owner needs to make a greater effort to save money, at the expense of time, as the cost savings outweigh the time spent.  Choose wisely!

The Damn Electrical Nightmare that is our Space

Just when you think all is well, and you are about to move onto making things work and realizing your dream, something comes up that threatens to derail all that we have worked for …. for the time being.  We have recently discovered that we don’t have enough power to our space.  We thought that 400 amps was going to be enough, but it appears that we will need more than this.  What does this mean to our ability to lease this space?  What does this mean to my dream?

The process of leasing a space is filled with many potholes and roadblocks.  Finding a space in the right location, with the right layout, at the right price, with a landlord that wants a brewery in their space, for the right amount of term, in a city with limited quantity and quality of commercial space is not unlike finding a 4 leaf clover:  Tough on the best of days.

We really thought we had found the right space for our project.  We found a commercial space that is located exactly where want to be, with the perfect amount of space for our operations, a decent rate, with an amazing landlord, who would like us to be there for up to 20 years.  It felt really good to find this space.  We negotiated a lease for the better part of 4 months, and finally came to an agreement on terms about 4 months ago.  Our agreement allowed us a 3 month period that we could apply for a DP, and carry out some due diligence on how this space would work for us.

Our first hurdle was to apply for a Development Permit, which we have successfully done.  Though we haven’t officially heard back from the City of Vancouver on the outcome, we don’t see any reason why we can’t move ahead.  Our second hurdle was the floors.  Oh yes, the floors.  Essentially, the substrate of our floors was subsiding, which means that our floor is dropping and dropping.  Like all problems, you can fix anything if you throw enough money at it.  We had some contingency in our retrofit budget , so we figured that we could overcome the flooring problem with more money.  About $30,000 to be exact.

Well we just came across our third hurdle, and it is a little bigger of a nut than our second.  We thought we were free and clear with the electrical in the building.  We have 400 amps available, and we always thought it would be enough for our needs.  In the past week it has become apparent we need at least 500 amps and preferably 600 amps.  It would be simple to say why the hell didn’t you know that 400 amps was insufficient?  The problem is until you make choices on your space, you don’t know what your exact load is going to be.  Draws on power are HVAC, Refrigeration, Tasting Room, Offices, Kitchen, etc.  The problem is that we made assumptions for this power based on a 6,000 sq ft space.  Now that we are entertaining a space about 9,000 sq ft, you can basically multiply all your power needs by about 1.5.  You can see how we ended up here.

OK, so no problem for a power upgrade but just running more power to the building from the pole out back!  Wrong.  The power poles that supply our building already have 3 transformers on the pole, which means that this pole is maxed out.  Crap.  This leaves our option to get additional power either putting in a Pad Mounted Transformer for about $120,000 or putting one on the roof of the building for even more.  What the F#$%!  This absolutely blows.  So now, after all the time and work (never mind money) we have put into this space, it looks like we are about to walk away.  While we would like to make this space work, we just can’t afford an extra $120,000 bill.  We might be out about $30,000 so far, but it is worth it to lose this money in order to not lose our shirts down the road.

So we now have a huge decision to make!  Option A is to drop another $120,000 and push ahead with this space, realizing our dream.  Amortizing $120,000 over 20 years is only $6,000 per year, which in the grand scheme of things isn’t that much.  Option B is to walk away and find a space without the number and cost of upgrades this space needs.  We would go into this process knowing full well that it could be another 6 months before we find another space that works really well for us.

We have another 2 weeks to make our decision, before the subject period on our lease expires. In other words, our landlord will want us to piss or get off the pot with regards to his space in 14 days.  Looks like there will be a lot of sleepless nights coming up.  If you have any advice for us, please contact me to pass it along.  It would be greatly appreciated.  Until next time …..

General Update on Things

I have received some feedback lately around wanting a general update on our progress.  There seems to be genuine interest in how the overall project is going versus what we are encountering on a daily basis.  As such, this post is a little more of a general update on our progress rather than a general rant about this process, or a specific detail of things.

So as you likely know, we have submitted a development permit to the City of Vancouver for a space in East Vancouver.  On Thursday of last week, we were told we’ll be given an answer on this permit in the next couple weeks.  We are waiting for this permit, as we can’t lease the space we are interested in without first getting approval to brew there by the City.  In Vancouver, the only buildings that you can outright lease and know with certainty you can brew is M2.  The trick is that there isn’t a lot of M2 zones, and the buildings we were looking at in M2 just weren’t right for us.  So we ended up in an I2 zone, which is one where brewing beer is conditional upon submitting a development permit.  Any potential for us to use this space hinges on getting this permit, so we are waiting with fingers crossed to get good news.  As of Nov 18th, no news!

Another big process is collecting and securing money from investors.  Luckily, an investment in our brewery is eligible for the eBC tax credit, which basically means that 30% of each investors money is returned to them in the form of a credit from the government of BC.  It looks like we need to raise over $1,100,000 so everything we can do to help secure “financial partners” is welcomed with open arms.  We are going to be collecting money in the next 2 weeks from our investors, so I hope that what people have committed is what they are going to offer us.  If not, I am sure I will post something around my frustration with this.

Financing is another part of the business that is really important.  We will need both an operating loan and a line of credit in order to make the business float during the crucial first couple years.  Opening a brewery can be a recipe for financial hardship, as the line between profit and loss on a monthly basis is razor thin.  If sales fall behind a little bit, and costs are a little higher than expected, money can go out the window very quickly.  Luckily for us we were approved for a loan and line of credit to make our finances come together.  These will total about $450,000, and when added to the money we are raising we feel like we should be in a good position to make things work.

The layout of our space and submission for building permits is something we have been working very hard towards.  In fact, this has taken the majority of our time of late.  With the arrival of our Development permit by the end of November <fingers crossed>, we would like to have our building permit submission ready to go.  This means that we need to have the layout of the space virtually complete, have the work needed by engineers complete, have all the drawings and work from our architect complete, and to have all other inputs ready to go.  It seems really easy when I sit here and type this, but the reality is that there are so many moving parts to this, that it is incredibly complicated and difficult to carry out.  Finalizing the layout of our space has taken us over 8 weeks, as there are SO MANY variables to consider.  For example: Needs now versus in the future when we grow, tasting room connection to brewing space, retail area, production flow and functionality, the location of existing services, proximity of different spaces that need to be connected, etc, etc.

Equipment is something that we need to have ready to go, so that we can be sure it is ready in time for production.  We have looked to China, Europe, Canada and the USA for our brewhouse and tanks.  To be honest, I can see why this step can be either really easy, or one of the most difficult steps.  No two quotes seem to be alike, and the unknown factors of quality, timeliness of delivery, and follow-up support make these intangibles even harder to gauge in terms of importance.  A big hurdle to buying Canadian is the price.  Companies like Newlands and Specific Mechanical are local and have a good reputation in the business, but their prices are among the highest.  Moreover, it sounds as though some of the other start-up breweries have experienced some trouble with them.  Then there are the systems from Europe, where the quality is top notch, and the price matches.  Moving East to China, the land of cheap equipment, but one where the after sale service is poor, and other local breweries have experienced trouble with having to repair brand new equipment.  All of these things make choosing one company to work with very difficult.  At the end of the day, it is a balance between all these things, and hopefully one company stands out as the best.  At this point, we have no idea which one it will be.

Another huge part of this process is our name.  For the time being we are letting this one go for a few weeks.  While we don’t have an official name yet, the focus groups we ran were instrumental in getting us closer to making this choice.  The only problem is that we are putting out other fires that are more important at this time.  Things like financing, layout, legals, accounting, etc.  We anticipate having our name by the end of the year, and that should give us 8 months to create a brand around this.  I hope this is enough time and that we make decisions that are based on sound principles.

The legal side of things is something we kind of let slip and caused us a lot of grief and unnecessary stress.  In order to raise money and run a proper incorporated company you need to have:  A shareholders agreement (aka a partnership agreement), a subscription agreement, a set of articles for your company, and a share ownership agreement.  All of these documents are tedious to create, and require the hard work of a legal team.  Reviewing and revising take a lot of time and mean that you are continually working on getting these documents ready so that you can raise money, and provide a framework to investors on how your company will operate.

There are literally hundreds of other little things to do, some of which are major and some of which are minor pieces of major components.  There seems to be nothing that isn’t important in some way to the overall picture of this brewery.  To be honest, I would love to find the time to blog about all these things, but I just feel too much pressure to write about them, rather than working away at them.