OK, I can’t release all the plans for our space, but I sure can give you a “teaser” of what things may look like. More will come when we actually sign a lease …. which should be the topic of my next blog. “Lack of signing a lease stress.” Anyhow, hopefully those who know the rules around brewery lounges in Vancouver will appreciate the connection we are going to have. The brewhouse is literally within arms length of the tasting room!
I have begun to realize that not everyone who is helping to get this brewery off the ground is willing to work until 2am, or makes this job the sole focus on their day. In other words, answers that I expect within a couple weeks, sometimes take the better part of a month. Sometimes these answers are not needed, so the time to get a response is not important. But it seems like we need most of these answers in a timely fashion, and they set in motion a cascade of changes elsewhere, and each successive change is just as important as the last.
One of these huge considerations is the electrical issues for our space. I have blogged about it, and it seems like we have been close to an answer for the past few weeks. This is likely the biggest and most important answer we have been waiting for throughout this process, as our decision to lease the space rests on the advice and information we gather. A bill of under $100,000 and we are golden to carry on. Anything over this and we have a tough decision to make, and anything well over this means our dream is going to be dead in the water. Additionally, we have already extended our contract to lease our space with the landlord past what we agreed to. We were supposed to give our landlord an answer if we wanted the space by the end of November and we asked for a month extension, given the electrical issues and the lack of an answer around our Development Permit.
So here we are at this point. We have 2 weeks to decide if we want the space, as the landlord requires an answer by the first week of January. We have received our development permit from the City of Vancouver, so we are able to brew beer in this space. We need to submit our building permit drawings to the City of Vancouver, and we need to find a solution to the lack of electrical power our space has.
Well as of yesterday, we found a solution to our electrical problem. It looks like we are going to cut the power to the whole building, and re-run new power that will be sufficient for everyone, including our brewery. This means that instead of getting a bill for well over $100,000, we should now come in around $60,000-$80,000 on this fix. We are still a little upset by the amount we have to spend, but it beats the alternative, which is a pad mounted transformer, and the cost of which is about $250,000.
This means that all we have to do is hammer out the final details of our lease with the landlord, and we are going to lease this space. I can’t actually believe this is about to happen! Its almost like I have to pinch myself. I know there are a few key points to be ironed out with the landlord, like tenant versus landlord improvements, personal guarantee (not unlike a kick to family jewels) length, but most of the important items have already been agreed upon. In fact, our landlord has been very helpful and accommodating in working with our needs and challenges. While his patience has started to wear thin, we hope that he still wants to complete a deal with us, and dot all the i’s and cross all the t’s.
I don’t want to get ahead of things, so I will leave our latest bit of good news at that. I have learned from my mentors and peers that a deal is not done until you get a key to the front door, so I will not presume anything. What I do know is this: The lows we felt about things after our floor issues popped up, and then our electrical issues came to the front, have all been offset by the development permit we received, and then the answers around the electrical.
With any luck, we will have a firm deal in early January, submit our building permit application in 8 days, and start working on our brewery sometime in early March. Should all this come together as we hope, we should be open for business sometime in August 2014. Thats right, in about 8 months our brewery will be producing beer and slinging it to eager locals before you know it.
Given the amount of work to do, and the mountain we need to climb in order to get everything ready, I am going to take this Christmas break to relax and enjoy some time with my family. The way things are shaping up, I may not see to much of them from February to August of next year. Happy holidays to everyone that reads this blog and I hope you have a fantastic end to 2013.
When you sit at home thinking of what it would be like to open a craft brewery, you don’t think about stuff like this.
If you read my last post on the electrical issues with our space, you would know that our electrical bill went from an anticipated $30,000 for a simple upgrade the transformer on the power pole, to almost $120,000 for a pad mounted transformer. It turns out we can’t put a pad mounted transformer in the parking lot, as our landlord needs to keep these spaces for tenants in our building and other buildings he owns in the area. In fact, he has already received a variance from the City of Vancouver for the number of parking spaces he must to have, and anything that takes away from this number is not permitted.
This results in messing this situation up even more, just when I didn’t think it was possible for this process to go off the rails any further. Now instead of a $120,000 bill, which believe it or not we think was actually doable, we are now looking at a substation. Holy crap, I think building an actual Submarine station would cost less than this thing. Initial estimates for a sub station in our building are about $250,000.
Unless we can find a economical solution to this problem, there is no question about it, we are done with this space. When you consider that we spent about 8 months on this space, hundreds of hours of time and effort laying out the space, getting quotes, planning equipment, designing tasting room, etc. it seems almost surreal that this is happening. It doesn’t end there. Financially, we spent over $30,000 in fees, permits, lawyers, engineers, accountants, architects and other misc items. When you add all this together, it’s really painful to have reached this conclusion after so much. But at the end of the day, it is better to walk away without $30,000 than it is to walk away with a business that failed to get off the ground.
We have our last ditch effort to find a solution on Wednesday of this week. I hope that the people we have relied on so much throughout this process are able to come up with a creative idea that works for everyone involved. One thing is for sure, I won’t be getting much sleep tonight.
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