Tag Archives: New Breweries 2014

30 Days to go …. Running out of cash

Where the hell has all our cash gone?  Sometimes I wonder how this business is costing us so much money.  How the heck do other breweries start a brewery for so much less than we are spending?  I know we have bitten off more than we can chew, but seriously, what the heck.  Running out of cash is not an option for our business, so we have moved on to plan B, plan C and soon plan D.

We have raised $1,200,000 and we figured that would be enough to get us to day 1.  As you know from reading my previous blog posts (check the finances category), it was a process getting to a point that we were comfortable.  About 8 months ago it seemed like we would go over by about 20% and so we secured a loan and line of credit to cover this amount.  We felt comfortable we would have more than enough to get through the tough times to day 1, and then profitability.

Surprise, surprise, a few things go over and all of a sudden we are projecting a cash shortage starting about 60 days after we swing open our doors, that reaches a maximum about 180 days after we open for business.  Thats right, even though we will be open and selling beer, and doing well, we will still be running out of cash.  It makes us scratch our head and realize the importance of keeping our costs down, and brewing some kick ass, killer beer.

So we have a few options for gaining access to this additional funding.  If you come to a situation like ours, here are the paths you can take to secure medium term financing (longer than 12 months, but shorter than 5 years).

  1. Get funding from your shareholders.  Maybe you have a shareholder that has deep pockets and is willing to lend you some cash for a short-term to help with your cash crunch.
  2. Get financing from the BDC.  The BDC is able to help with financing, especially if you have equipment or machinery that you are able to secure the loan against.
  3. Raise additional money.  Either from your current investors, or another batch of new investors who can help you keep your loan commitments down and your cash position positive.
  4. Owners lend money to company.  Thats right, time to put your money where your mouth is.  Take a line of credit that you have personally, and sign over the funds to the business.
  5. Pre-sale some of your products.  Thats right, maybe you can sell some of your capacity to another brewery, or start selling your merchandise before you open in order to help with smaller amounts of money.  This won’t work with larger sums.

I am sure there other ways of getting money, but these are the options we have available to us.  We have 2 strong contenders and 1 outlier, and we think one of these is going to work out for us.

One thing is for sure, manage your money, stay on top of your finances, and don’t forget to always have your next 3 possible steps planned out.  If you don’t, you might get to a fork in the road and have insufficient options available.  This is not a good place to be, especially when you are near opening day.  It would suck to come this far and have it fall to peaces at this point.

One of these options will provide us the money we need, and we hope we make the right choice.  Only time will tell whether or not we did make the correct choice.

32 Days to Go ….. I need a vacation

A few people in the craft beer community have told me how busy the last 30 days of starting a brewery can be.  They told me that the previous month would be like playing the minor leagues for how busy you will be in your last month.  I thought to myself, there is no way they can be right.  I am already working 15 hour days, 6 days per week, how could it get busier.

Well I guess the reality is that I am not busier than I was last month or even the month before.  In fact, we have been working our asses off for the past 5 months.  It has been non-stop and go-go-go.  But in terms of how much effort is required, I don’t think I have been able to give more than I have.  For a more mature man like me, 14 hours feels about the amount that I can do on a day-in day-out basis.  This amount of effort, allows me to see my kids a little, not overwork to the point of exhaustion, stay on top of things at the brewery, and get enough rest to keep going.

The times that I worked longer than 14 hours, I quickly become a train-wreck.  About 6 weeks ago, those who follow me on Facebook know what I am talking about.  I nearly lost my marbles, and a big part of it was how much time I was spending working, and also thinking about work.

What you will find is that you need to find your balance.  And that means you will need to go up and down each side of the fulcrum to get it right.  Too little effort, you will not get everything done and you will find yourself being less productive.  Too much effort, you will be tired, stressed and feel like you are going to have a break-down.  My 14 hours per day, usually goes something like this:

  • 4:00 am to 8:00 am – Work 3 hours 45 minutes straight until I have to get the kids ready for school.  Sometime I do sleep in until 4:30am
  • 8:00 am to 8:45 am – get kids ready for school and drop them off (I love this part of my day and wouldn’t trade it for the world)
  • 8:45 am to 4:45 pm – Work a combination at the brewery (mostly) and some days at home (accounting, business plan, etc)
  • 4:45 pm to 8:00 pm – Do a little work in between hanging out with my kids, coaching, driving kids to activities, etc
  • 8:00 pm to 10:00 pm – finish work from the day and set my to-do list for the following day

I think you need to find what you are going to cut out of your life.  I personally value my family too much not to spend every evening from 5pm to bedtime with them.  Sure there is the odd time, I have evening work, things to do, etc, but I couldn’t imagine not spending 4 night per week with them, helping with homework, doing crafts, etc.  It means the world to me and I would never give it up.

What are you going to give up when the time comes to work 14 hours a day, or more?  Family time, friends, sports, reading books, video games, etc.  I gave up hanging out with friends, exercising every day, puttering in my garden (I do miss this most days), and spending a lot of time with my wife.  For now, we are spending the bare minimum in hopes that we will have time together in the future.  She is such a good partner to go through this with.

Time to go, I need to send a few emails and plan my Tuesday!

33 Days to go …. Hiring Employees

One thing we have learned is to leave LOTS of time for your first hire(s).  The process of hiring someone is full of ups and downs, offers, counter-offers, negotiations, discussions with lawyers, time for reflection, and a few other variables.  Ultimately, there is a saying that says, “hire slow and fire fast,”and it is a very worthwhile thing to take note of when going through this process.

Its not that we have or anywhere near firing someone, but giving yourself time to find the right person, can mean a bunch of time that you never thought it would take.  For us, we are still not 100% certain who our first hire is, for a variety of reasons.  I can only speak generally about it, but it goes like this.  You may find the right person, but you may not agree on compensation or start date, or you may find the wrong person but everything seems so easy to move forward, but it still feels like a square peg in a round hole.

This is the generalities I can make from things on our side:

  • Your first hire is super important, so make sure you make the right choice here
  • Look for someone who can do a variety of tasks, as you will have a lot of things to do in the brewery that you will need a hand with
  • Get an employment agreement early on so that you are not struggling with this at the wrong time
  • Be definitive in your actions and your approach to things.  Go with your guy, but also do thorough checks and questioning to make sure all is good
  • An ability to work hard and honesty are two traits that should be found in every candidate you are considering.  These should not be anyone who you would question this with
  • Structure the agreement so that it is beneficial to both your company and to the employee.
  • Overpay for the right person.

Both Iain and I have little experience hiring staff.  Actually Iain has more than I do.  I have been interviewed a lot of times, but never on the other side of the table.  It is a little different, and definitely not as nerve racking, but it is tough and intense all the same.  I can think back to people who were great interviewers, and others …. not so much.

We have worked with our lawyer to create the employment agreement that we have.  It is a good place to start, as they usually have boilerplates that you can add things and take away other stuff to suite your needs and what you want to achieve.  If you need a employment agreement boilerplate, there are lots on the internet.  Unfortunately, I can’t share our agreement with you, otherwise I would.

36 days out … Use a Notebook and to do list!

Of the many things this process has taught me, there are several that stand out as key learnings overall.  Its hard to say how one should practice for these things, but likely knowing about them, reading books about them, and talking with others about them are a huge help.

The first thing that I have learned is how to get things done.  I feel like I have always been quite productive in my life.  Not quite sure where I got this, but ever since I turned 30, I have increasingly become a highly productive machine.  To that end, one of the best books I read for preparing for this venture was Getting Things Done by David Allen.  You will not be disappointed if you make the time to read this book.  It will help you be more productive with your days, and organize your life to stay on top of all the details.

Another trait that I knew was deep inside me, but never really exposed is an ability to work long hours with little sleep.  Normally, I am a high energy guy, so when it comes to sleep I like to get 7 hours of bed time a night.  Continuing to exercise and stay fit means that sleep is important.  However, for the past couple months, this has been shaved down to about 5.5 – 6 hours per night, with one night a week at 12.  I find I am capable of this, definitely a little more grumpy, unhappy, etc, but that should be expected.  Find your ability to work long and hard, and you will be in a good position to succeed.

One last trait, one that might just possibly be the most important trait is the ability to not get overwhelmed by the gravity of this situation.  Really, this is one of the most stressful and intense situations an average person could go through, and with the help of friends and family, I have managed to stay positive and on track.  If you have a tough time dealing with stress and multi-tasking, you will need to either take course, read or learn to deal with this possibility.

Another huge help is always having a notebook that contains a to do list.  Make sure you cross things out when they are complete, so you can get the satisfaction of accomplishing something. To do lists are key as are notebooks with all your notes from meetings and discussions.  I can’t tell you how many times I have referenced the book to find something I have been looking for.

Until next post, keep on keeping on!

50 days out update … this may be my last

For a long time this blog has been a pleasure to write.  I enjoyed going over my notes of things, and putting that into the greater community.  The response and positive energy I received along the way was amazing and helped encourage me to continue writing, especially at times that I was either tired or busy (which seems like all the time).  About 2 months ago, the blog started becoming more of a burden, as the amount of time I spent working at the brewery and on my computer increased weekly.  Add in a complete gut of a house my wife and I purchased, and all of a sudden all of my free time evaporated.  Poof!

So given the state of my personal and professional life, and for the sanity and health of my family life and longevity in business, I have made the decision to free myself from the burden of having to write this blog.  Rather than see a note pop up in my calendar every Sunday night to write a blog post, I have removed the reminder from my calendar, and will let things run their course.  For those of you who follow my blog with regularity, feel free to email me with questions you have.  Also, I promise to continue taking my notes, and should I not find the time to blog about this process until the day we open, I will catch up afterwards.  That way this process will be complete.

So for now, this last blog post may actually be 4 or 5 posts rolled into one, as I update all the different aspects of starting a craft brewery that happen about 2 months out from opening.

Brewhouse:  Ideally, you will have your brewhouse arrive about 60 days prior to opening,  Definitely make sure you put any coatings on your floor.  Also make sure you have your installation procedure decided well in advance.  I am sure by this point you know what you are doing, but it had to be said.

Tank Farm:  Big or small, your tank farm should also be in about 60 days prior to opening, most ideally just before or just after your brewhouse goes in.  Be sure to have your Glycol system scheduled for installation, which needs to be done before you can move your tanks into position.  Also plan for your unloading of tanks for the truck and installation into position.  This can be a really finicky process that needs an experienced touch.

Kegs:  You ideally would get these delivered with about 30 days to go until opening.  Getting them delivered too soon (like we did) means you lose valuable real estate in your brewery that could be used for some other things.  More on use of real estate later.  At the end of the day, get the kegs early, but not too early.

Electrical:  If you are getting major upgrades as we are, make sure you the majority of the work done as soon as possible.  Don’t use an electrician who doesn’t commit to getting things completed by certain dates.  More important than saving a few thousand is someone who works with your schedule, and is always ahead of the game.

Mechanical:   I could literally write the same thing again for this heading that I did for electrical.  Make sure the work gets completed when there is the space and option of doing it.  Never wait for stuff to get done.

Marketing:  Holy crap, the marketing becomes a beast by this point in time.  The decisions you make mean the brand you are creating is formally taking shape.  The big important decisions are long complete, but there are a million and one details.  And the saying goes that the devil is in the details.  Some of the important balls in the air right now are:  Website, content for website, business cards, merchandise, increasing social media presence, glasses, sell sheets, coasters, keg labels, etc.  I would say marketing at this point will likely be taking you about 15 hours per week if you are doing anything similar to us.

Tasting Room:  This is one of the last things to get finished, as the production equipment needs to prioritized, but certainly by now the tasting room is well on its way to completion.  You are definitely making the finer decisions now on this.  Things like designing tables, finishing of walls, merchandise area, etc are all needing decisions to keep things moving forward.  We are about to start on construction of a bar, and I can tell you that there are a lot of factors that go into putting this together, and I promise to one day blog about it.

Accounting:  By now, I hope you have figured out a system for managing your books.  It is easily something that gets left, and before you know it, your GST reporting is due, and instead of a few hours work, you have 3 days worth of book keeping to catch up on.  Dave at Powell Street Brewing gave me the recommendation early to do your accounting every 2 weeks, and while I haven’t yet gotten to that frequency, I can see why he recommends it.

Organizing Trades:  We are sooooo thankful we have a general contractor.  Trying to organize and manage the schedule is a full time job, and one that we couldn’t have imagined not having the support of Graham Disher and his fine team.  They have helped us immeasurably every step along the way, and we are firm believers that paying someone to help is the best move we made.  Organizing trades and their schedule is so important as you come down to this point, as when things get done (or not) has a cascade on all the other things that have to happen after.  Any delays means a delay to every subsequent job.

Cold Room:  After going through the building of a cold room, we are really happy we did this, but man, we think getting a prefab cooler would be a lot better choice next time.  I know we will get exactly what we want and need, but the process of building a cooler is an expensive one, that takes a lot of time, and draws people away from other tasks they could be completing.  Depending on your space and the size of a cooler you need, strongly consider a pre-fab.

Cash Flow:  Hopefully you are meeting your budget, but most likely you are not.  This is where you need to make a decision if you have investors.  Do you take a bigger loan to cover your shortfall or do you raise more money.  In about another month we are going to be pressed with this decision, as we will be out of money.  Managing your cash flow until you get open is the most important part of this process and one that you need to keep on top of constantly.

Government Stuff:  Make sure you keep on top of all the interactions you have with government.  You can easily drop the ball on this one, and the resulting error could be catastrophic to your business.  In British Columbia the government has a website that itemizes all the things you need to do and I suggest you refer to this consistently.

Hiring of staff:  About 50 days out you need to figure out your staffing situation, and start getting ready to hire people.  For us that means people in the brewery and also in our tasting room.  We have been dragging our heels on this one, so do as I say and not as I do.

Other General stuff of note:

Use of Real Estate:  During the process of building a brewery, as you reach about 2 months out, your space is a mess.  There are a hundred things inside your brewery that are at various states of completion, which means there is a lot of stuff sitting in different areas.  For us, even though we are in 9,000 square feet, we are running out of room to put stuff.  We have kegs, barrels, packaging, tanks, wood, plywood, insulation, drywall, tools, work stations, etc taking up space all over.  My advice would be to work on being organized as best you can from day 1.  Don’t let the mess and organization become an issue, as it can overwhelm you.

Manage your Expectations:  I am someone who was raised by a very European father, who was adamant that we were never late for things.  While I am not 100% on time, I do think that making a scheduled deadline is important.  When it comes to something as complex as starting a brewery, just plan for 7 months of building if your size is 6,000 square feet or smaller.  And if you are over 6,000 square feet like us, plan for 8-9 months of building.  I know you will always be able to point to examples that go against this timeline, but do so at your own peril.  Just expect things to go wrong and problems to come up that add time.

Manage your sleep and stress:  For me, a lack of sleep goes hand in hand with being more prone to stress.  To give you an idea, right now I am working about 75 hours a week.  I easily work 12 hours per day 6 days per week, and I do try and take a 1/2 day off on the 7th day of the week.  The 2 things that I hate to lose is my sleep and my exercise.  If I do, I get more stressed, grumpy and unhappy.  So for me, I need to continue to exercise (a lot less intensely with all the physical work at the brewery) and get my 6.5 hours of sleep a night.  Any less than that, and I start to burnout.

Celebrate:  If you don’t stop once and while to celebrate the process, you will miss out on the process of following your dreams.  We are all following our dreams when you start a brewery, and if you don’t take a moment to recognize this, then the process will be less rewarding.

Decisions are now to save time or save money:  The process of making decisions has gone from really taking your time and agonizing over the details, to one that is marked by a lack of research and a plethora of going with your gut.  We are still trying to save money as we always have, but now there is a healthy dose of getting decisions made.  In fact, I would say the first question we usually ask is which option is the quickest?

Stay connected with your partner(s):  It is really easy to divide out a job and then not keep in good enough contact with your partner.  We are all guilty of this, but make sure you take time every day to speak with anyone that needs to be part of a decision.  It also helps to have a master sheet schedule, as I have talked about before, so you can itemize the decisions you need to make, who is doing it, and when the drop-dead date is.

Hopefully, with all this stuff going on you can understand why I am going to blog if and only if I have time over the next 50 days.  My to do list is insane, and I can’t keep up with all the items that need decisions.  I hope you understand!  As such, I am going to take off and get some of these things done.  Until next time …. and always email me with any questions.

 

 

 

The Cooler

Busy doesn’t even begin to describe our life right now.  We are so busy trying to get things organized with regards to all aspects of this brewery, it is literally starting to make us crazy.  We are dealing with it the best we can, but it seems we are taking less and less time to make constantly more important decisions.  There is just no time to think, it is more of a reactionary process now.  One of these things we have been reacting to over the past few months is the cooler.

Early on in the process of building a brewery, you will need to make some decisions around the cooler.  Most likely, the first will be where the heck to put the thing.  There is a bunch of factors in making that decision, like if you will have a tasting room, where are your shipping docks, how high are your ceilings all over the warehouse, how much space do you have, etc.  Generally speaking, if you are going for a model that has a tasting room, and you are planning for some production, make sure you put your cooler very near the tasting room, and make it big enough for whatever your beer sales are at year 3.

After you pick out the location, things start becoming more and more detailed in your decisions.  A big one is whether you want to have your cooler pre-fabricated or built on site.  A pre-fab cooler is a quicker option, but you may not get exactly what you want.  Also, depending on the size of the cooler, you may need to build a box around it to support it.  There are some coolers that are not meant to support any weight above them.  If you build your own, there are engineering costs, and the time and effort of putting the things together.  The bigger you build it, the more the costs for everything like labour, materials and professionals.

We also did a few extra things in our cooler that has made it more expensive, but will enable us to have a more functional cooler, and one that works better with our situation.

  • We insulated the ground beneath our concrete to R20.  This was an extra few thousand dollars to do this in extra digging, dirt removal, labour and materials, but we hope the energy savings will benefit us moving forward.  Cool air falls after all, so we thought best to insulate the floors.
  • Since we poured new floors underneath the cooler, we put in drainage.  I think Iain would say that drainage is a must in a cooler, but it can be a time consuming and difficult process.  We just decided to put all new concrete down, so we didn’t have to worry about these things …. we just did it.
  • And since we put in new floors we also put a slope on the concrete so water would run to the drains.
  • Make sure you put footings all around the cooler for the walls to sit on.  Since the cooler will be wet and damp, you should avoid having the walls touch the ground.
  • We made our cooler structural, so that we could store boxes, pallets and other stuff up top of it.
  • Don’t use drywall on the inside of your cooler … even the stuff that is rated to handle wet situations.  You can talk to Dave Varga about that one, as he told us at 33 acres they want to rip it all out.  Use marine grade plywood.
  • If you have any breaks in your moisture barrier, you will moisture in your cooler.  So plug these holes.
  • Use a big door for your cooler, and have a second man door.  The bigger your door, the easier it is for a forklift or pump truck to move pallets in and out of the space.  You want to try and avoid turning on the inside of your cooler with the forklift.  Our cooler is about 25 feet wide, and our door is about 18 feet wide or so.
  • Use a little man door to walk in and out of to avoid needing to open the big door to get something little.
  • We incorporated a cooler very close to our tasting room, so that we could have really short runs for the beer we will have on tap.  Again, Iain could tell you exactly why we did this, but all I know is that it will save us a lot of headaches in the future.
  • We will have jacketed tanks, so this means they will not be inside the cooler.  This frees up a lot of space and will allow us to store finished product in a cool place, ensuring it lasts longer and stays as fresh as possible.  This goes back to making sure your cooler is big enough.
  • Retail doors are important.  One thing we like about Bomber Brewing is that their cooler is also a place to put packaged product.  So you can grab a 12 pack of cans directly from cooler doors and purchase them on site.  This means you don’t need to get a separate cooler to do this, saving energy and costs.
  • We are placing 4 double stacked 15 hectolitre tanks in the cooler for holding our beer.  This will mean we don’t have to change loads of kegs for our most popular beers.  We have been told how much of a challenge this is, as tanks of your most popular beers can run dry 3 or 4 times a day.

All of the decisions around this cooler are pretty much made, so it is just a matter of implementing what we have planned.  The last decision we have to make is whether to use spray foam insulation versus standard insulation.  There are major differences, not the least of which is price and ease of install.  Like every other decision we have made, I am sure the answer will come to us in time …. and hopefully soon.

That is about all I can think of when it comes to our cooler.  For us, we definitely underestimated the spend on an engineer for this, as there is much to figure out when you are building walls that are 14 feet high, and span a 25 foot length.  There are lots of plates and reinforcements you need to install so that this thing will stand through worst case scenarios.

Have a few questions that I am not thinking of???  Send them along and I can surely help you out.

 

Quick Update on Things …

I think back to the days when we were first getting started with the brewery, and I can’t help but think how much time I had to do things.  It didn’t seem like I had a lot of free time, but in reality I did.  What I really had was the ability to get on top of things, which I have completely lost now. Let me try to explain.

When you first start writing your plan, you have time to dream, think about your beers, your brand, name, etc.  It is a natural part of things, and something that if we didn’t do, we wouldn’t be doing this.  As time moves on, you tend to get to more of the meat of the operation, and you need to start figuring out some details.  As time progresses, you think you have figured out a lot of the details of your space.  Things like brewhouse, packaging size, general location of warehouse.  You think you have made a lot of these decisions, but you haven’t.

You continue to work on your business plan, making what you think are decisions and changes of direction …. and then you do it.  You find a space to lease and you take possession.  This is when it starts to really happen.  You actually start making decisions, like general contractor, architect, brewhouse size, etc.  You think you are doing well, because you have made actual and concrete decisions.

What you don’t realize, is that you have only started on the tip of the iceberg.  There are thousands of decisions to make.  None of them are more or less important than any of the others.  Think of details such as these:  Size of cooler door to the inch, length of drainage trenches down to the inch, slope on concrete pour down to the degree, exact location of trade waste interceptor, etc, etc.  There is so many small decisions to make, it can become overwhelming.

Coming full circle, each of these decisions take time, and trust me when I say, you have very little of it.  Your funnel at the top is getting loaded faster than you can empty it.  About a year ago, you could pound out a good 60 hour week and be back on top of everything, but that is a pipe-dream now.  A 60 hour week will only mean that I have about 300 hours of unfinished work sitting around waiting for me to complete.  There is no way of catching up short-term, it is a matter of prioritizing and getting small jobs done.

Add to all this the work around the brewery.  I have been tying rebar and working around the brewery 7 days a week for the past few weeks, and there is still so much to do.  Take for example a typical day in my life.

  • Get up at 5am to 530am
  • Work in front of my computer until 745am
  • Get kids off to school and lunches made 830 to 9am
  • Drive into brewery to do work 930am
  • Manual labour all day at brewery until about 930 am to 3pm
  • Home to do work in front of my computer (accounting, marketing, business planing, etc) 330pm to 5pm
  • Down time, hang with family, 530pm to 8pm
  • After kids in bed, back to computer for more work 8pm to 11pm
  • Off to bed to do it again

This is a pretty standard day, and I know one that my partner also goes through.  If you are going to open a brewery, and you want to take an active role in starting it, be prepared for a day like this.

What you will find is that how badly you really want to do this will go a long way to making the above feel like work, versus feeling like a dream.  Luckily for Iain and I, the long days are a dream and the passion is burning brighter than ever, so we know we have made the right decision.