Tag Archives: British Columbia

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

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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.

Results from the Focus Groups

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Without a doubt, the 2 focus groups we held were the best ideas we have spawned throughout this process. The opportunity to connect with craft beer enthusiasts, and more importantly, to share our basic business premise with individuals who appreciate and seek out craft beer, was amazing.

We held 2 focus groups over the course of 7 days, and they were more than effective in helping us shape the name of our business. To be honest, the results of these focus groups will help not only name our brewery, but also determine the direction of several other important variables that we are looking at. Things such as the layout of our tasting room, the size of bottle we are going to put our beer into, and the types of beer we are going to produce are all facets of the business that we touched on in these focus groups.

What I learned from focus groups is that a name should be short, easy to pronounce and spell, meaningful, genuine, and unique. There was a feeling among both groups that a generic name, or Vancouver based place name (such as False Creek Brewing or Strathcona Brewing) didn’t capture exactly what we are trying to do. More importantly, people feel like these names can come across as horribly disingenuous. Names such as Stanley Park Brewing (brewed on Annacis Island) and Bowen Island Brewing (Northam Brewing) seemed to come to mind when people thought of place names.

For the brewery we are creating, it seemed a name that was representative of what we are doing was most applicable. In other words, a made up name, or a word that is picked for purely interest sake, with some connection to what we are doing will show people the honesty and approach we are taking to things. This really matters to us, and as such we took this feedback to heart.

So we took out the names like Orange Brewing, Strathcona, False Creek and even East Van Brewing Company. What we were left with was a group of about 8 names that really stood out as top of the list. We are currently looking into the legal side of these names, and how that will impact what we choose to do and how that effects the last part of our naming competition.

Until then, thanks for the continued feedback and interest in things …. I really look forward to sharing the last part of the the naming process: The final few choices and letting everyone vote on those names.

I have never felt so many different kinds of stress!

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One of the things about opening a brewery that you go through is STRESS! Thats right, a word deserving of capital letters, because it is not something, when you are dreaming of this, that you think about at all. In fact I had friends and other entrepreneurs tell me about stress, and I always dismissed it, or paid it some superficial lip service about how I was a laid back guy and it wouldn’t get to me. Well it did get to me over the past month.

What I have realized is there are different levels of stress. I will try and talk about each and how it relates to starting a brewery.

Instantaneous Stress: This is the stress that comes out of nowhere, like being late for a meeting, which is very intense and lasts a very short period of time. Often it is unexpected, and comes and goes before you even realized what the heck happened. I don’t mind this kind of stress, as I don’t loose sleep at night thinking of how I am going to be late for a meeting the next day because of traffic or not leaving enough time to get there.

Decision stress: As I have blogged about previously, there are heaps of decisions you need to make when you open a brewery. Name, bottle size, engineers and architects, size of tasting room, branding, financials, company structure …. you get the idea. Sometimes, you only have the odd decision to make, but other times you have 5 or 6 big decisions to make and they compound to make the decision even harder. How do each of these decisions cumulatively effect your business, and will you end up with the company that you thought you would have?

Performance stress: Ok, it might put a smile on your face, but it isn’t that kind of stress! This is the kind of stress I feel when I think about me as an individual living up to my expectations, and those of my shareholders, and everyone else that is depending on this business to be a success. Full stop, I worry that my performance in the day to day operations will be good enough.

Long term success stress: This is the kind of stress that keeps you up at night. Will I be able to make money, will I be happy, how will this business effect my personal/work life balance, and will I have any investors that want to be friends with me if this business goes bankrupt? When you are investing thousands of hours in time, and thousands of dollars without a paycheque, failure is not an option. I am far too old and far too deep into life to have another “learning experience.” The only way I can cope with this stress is yoga before bed and exercise. It seems to be the great balancer in my life, an I hope to always have time for this.

Family stress I think we all feel this, and it goes without saying; the stress of my families well-being and happiness is more important than anything else. I love my wife and kids too much to sacrifice their long term happiness. How will my kids respond to me being gone 12 hours a day for the first year of this business? How will my wife feel about the same thing? I think the only way to deal with this is to unplug 1 full day a week, and to pick your spots when you work versus when you spend time with your loved ones. I only hope I get the right mix!

Beer Nerd Stress: Thats right, I said it. I worry about how our beer will be received from the world of beer nerds. While we are certainly going to sell our beer to everyone that wants to purchase it, I think the opinion of local and abroad beer nerds really matters to me. I want to make beer that I would be proud to serve to those “in the know”. Unique, unapologetic, and delicious. I would hate my brewery to be a company that was put alongside other less than respected breweries. It would ruin this whole process and take away from my dream to be a respected brewery.

I’ve Got Something to do: This is the stress associated with having a deadline, and a finite amount of time to complete this task. This stress is right up there for me. Its like a real life episode of Chopped. Recently I ran a couple focus groups on naming my brewery (I will blog more about this later), and the days leading up to the first focus group was intense. It was 2 days of preparing, emailing, calling, booking, rebooking, re-emailing, buying, printing …. etc. This is a really hard type of stress to deal with, as any escape from this stress will only put more pressure on you.

The stress of all these things …. In other words the stress of all this stress!: The last bit of stress that comes to mind, is the stress of all these things. Cumulatively, all these stresses can stress you out. This is the kind of stress that can really impact you both in the short term and definitely in the long term. The only way to deal with it is to stay positive, believe in yourself and those around you, and to make lists. Ok, maybe there are some other ways also, but every person is different, and I am certainly one that falls into that category.

My next blog will focus on the naming contest, and the 3rd stage of that process. I hope that we have our list of 3 names in the next couple days, and then pass this out to the world for their opinion.

First Focus Group Results …. coming soon!

Raising Money …. Almost there

I'm Starting A Craft Brewery

We are starting Strange Fellows Brewing in Vancouver. Follow the ups and downs of that process here.