Tag Archives: Starting a brewery

The Biggest day in this Process – Lease Signing Day

1 Reply

It looks like the day might finally be upon us.  This is the day that seems like it should be the first step in the process, but realistically is more like the 500,000th of 1,000,000 steps in starting a brewery.  I have thought about this day for years.  It’s like I need to pinch myself to make sure this isn’t a dream.  We have signed subject removal for leasing our space.  After a 12 month courtship, and months of negotiating, feeling elated, feeling depressed, and most importantly uncertainty, we have done it.

I know what you are thinking:  Whats the big deal?  You found a place to brew your beer.  Thousands of other breweries across North America have found a suitable place to brew their beer, what makes your accomplishment any different?  When I think about it that way, it doesn’t seem like that big of a deal.  But when you consider that we live in Vancouver, where land and warehouses are at a premium, it feels like a huge accomplishment.

I would say the key learnings from this process would be as follows:

  1. Don’t even consider buying a space, unless you are rich.  And that begs the question, if you are rich, why are you starting a brewery?
  2. Dilemna:  You can only have a one of the following:  A good landlord, a good location, a good space.  Which will you choose?
  3. Get ready for a personal guarantee.  Unless you have a brewery already, and if so why the heck are you reading this blog, get ready to lay whatever personal wealth you have on the line with your landlord.
  4. Expect to spend a lot of money fixing this space up.  Our bill is going to be huge, because we have a larger space, but even for small spaces, expect to spend $300,000 minimum.
  5. Use a good commercial realtor, who works exclusively in an area.  Don’t use a friend or family member who doesn’t know a lot about what they are doing.  We used Matt Smith from Colliers, and were very happy with our choice
  6. If you are ordering new equipment, don’t order any until you get your space secured.  I’ve heard too many horror stories to go down that road.
  7. Expect the unexpected.  There will be a fundamental problem with your space that you didn’t anticipate, so budget some contingency for your build out.
  8. Engage with architects, engineers and other professionals from the get-go.  They will help you understand what is needed and what is to come.
  9. Don’t lock yourself into a size of brewery, type of brewery or anything else until you find your space.  We totally changed our strategy based on the space we found.  Committing to a space is important to do before you commit to a type of brewery you are creating.
  10. Last and most importantly, PRAY.  Thats right, because when you find a space that seems really good, I can guarantee that there will be someone else who also finds the space really good, brewery or otherwise.  There is a lack of good space, and expect landlords hold all the power to pick who they work with.

So now, the process of starting a brewery truly begins.  It is hard to believe that from the time I started to write a business plan to this point in my life has been 5 years.  So patience, if not a inherent characteristic you have, will definitely be something that you develop.  If you don’t, I would say that your journey into the world of starting a brewery might be a short one.

Today will be my last shave, and I can start officially telling people that we have a space to brew our beer.  Many thanks to all those people who helped encourage and support us in getting to this point.  Without all that you have given to this process, I am afraid I wouldn’t have been able to do it.

Thanks for the Support

1 Reply

Not much to say here, but thanks for the support and words of encouragement I have received from everyone who visits my blog.  I want everyone to know that I am touched by the kind words you have passed along, and the nice things you have to say about what I am doing.  It motivates me at times like this (12:45am Wednesday morning) to write my blog and take the time to connect with others.

When I started out in this process, I found there was a lot of information online, but a lack of details on what to do and how to get it done.  There were a few other blogs, but nothing itemizing the process of inception to brewery opening.  So it was my idea to add to the information out there in small way.  To see the positive feedback and read the messages that people are sending me has truly blown me away.

So thank you to everyone that visits this blog. I hope I can continue writing posts and inspiring others, as I was inspired by others who started on the path to realizing their dreams before getting ‘off the couch’ myself.  There is a quote that I love, and it goes like this.  “A dream doesn’t come reality through magic; it takes sweat, determination and hard work.”  Colin Powell (I think).  This is more true than you can ever realize.  I would probably add to this a little luck and a lot of sleepless nights.

As always, if you have any questions, or if there is anything you would ever like me to discuss, please contact me and I will blog about it when I can find the time.

Building Permit submitted

2 Replies

This past week we have successfully submitted our building permit to the City of Vancouver for our the building we are hoping to lease.  It seems so absolutely absurd to submit our building permit without actually having a signed lease in place, but we are making a huge roll of the dice on this.  When you start down the road of starting a brewery, a funny thing happens.  You start doing things that previously you would have thought were crazy.  Things like submitting a building permit without a lease in place!

Let me take a step back and explain things.  When I started off doing creating this brewery, I was quite a bit more risk adverse.  I would avoid over-exposing myself on most anything in business and finances.  Take for instance a personal guarantee, it is something I would have fought tooth and nail not to do about 2 years ago.  However, as time moves on and you are constantly taking chances and risks, what at one time seemed risky, now seems somewhat ordinary.  A good analogy would be bungy jumping.  The first time is scary as hell, the second time a little less so, and so on.  By the 15th time, it is still a rush, but a lot of the fear and inhibition has left the process.

So here we are, development permit in hand, building permit submitted, yet our brewery still has no name and still has no firm lease.  It is exactly the opposite of where I thought we would be considering my personality and this process.  It is where we are however, and I wouldn’t change it for the world.  I hope that we can have our lease signed in the next week, but it seems to keep dragging out and being delayed.  I am sure this will come to a rapid close in the next week, as there is literally nothing left to be done.  Luckily, I have a great group of friends, advisors and family members that have supported me.  Even with all these people around, and experience I have gained, I have learned that nothing is for sure, so my fingers are crossed.

Moving forward, we are going to have to make some big decisions.  Things like contractor, name, equipment, branding and marketing, finishing of tasting room, types of beer, exact size of serving bottle/can, financing to be finished, first hires, legals, accounting, delivery vehicles, etc, etc.  It seems like a mountain of work, but when you work in your own garden, it doesn’t feel much like work.  We potentially take possession of our space February 1st, and while we won’t be able to do much until we get our building permits, I do anticipate some epic floor hockey games.  Anyone want to join me :o)

My next blog will hopefully share some great news  about our lease and officially help our brewery become the newest entrant to the craft beer scene in Vancouver.

Damn Exchange rate!

1 Reply

Well what a bad surprise we received today about purchasing our equipment.  Instead of our equipment costing us about $550,000, we just got a 10% surcharge!  I blame myself, and I would recommend to anyone else who plans on starting a brewery to take note.  Watch the exchange rates and know the forecasts!  When a business needs to order equipment, fluctuations in the exchange rate can have a massive impact on costs.

Let me give you an example, from the time that we wrote our business plan about 4 years ago to today, the Canadian dollar has gone from about $0.95 Canadian for $1 American to what it is today $1.09 Canadian for $1 American.  As you can imagine this is crushing, and seeing the Canadian dollar lose $0.03 in one week, has become too much for us to handle.  We are purchasing some US dollars.

Unfortunately, this means that the cost of every dollar in equipment we buy, will now cost us about $0.10 more.  Just so you know, here are the costs for our equipment, at least what we have budgeted in our plan:

  • Brewhouse $250,000
  • Bottler $100,000
  • Fermenters and Conditioning Tanks $150,000
  • Misc Equipment $50,000

So all the costs of this equipment just went from $550,000 to about $605,000, as the suppliers we are working with accept American money only.  That sucks so hard I can’t even begin to tell you.  I feel so stupid for not thinking ahead to this possibility and changing some money over months ago.  If we had done this even just 2 months ago we would have saved about $25,000 in  costs.

So this leads us to a point that we must now consider.  Do we raise more money to pay for this cost overrun?  Do we look to purchase our equipment locally?  Or do we reduce the size of our equipment and shave some costs off that way?  Maybe there is a combination of a couple of these to make it work.

At the end of the day, there isn’t much that we can do about this.  All we can do is manage our actions from here on out.  It is a tough lesson for us to learn, and while there isn’t a lot that I can do about this, I can at least help someone else out to save some money.

Finally, answers to our Electrical Nightmare ….

1 Reply

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.

First Focus Group Results …. coming soon!

Leave a reply

On Tuesday of this week, we had a focus group with the purpose of getting feedback on naming our brewery.  It was the first time I’ve planned and implemented a focus group, so it was many things rolled into one, not the least of which was a great learning experience.

Like anything in life, preparation is the key.  It was something that I prepared myself for, and even knowing that there was a lot of work for something like this, I was blown away by how much work it actually took.  I did keep a total of the amount of time I spent organizing this focus group, and up until the minute things started, it was 48 hours of work.  Where the hell did 48 hours go you ask?  Let me tell you:  Organizing participants, preparing questions, meeting with the moderator, securing the space, getting the food and beverages, printing copies of questions and non-disclosures, etc, etc, etc.

The focus group itself went well in my mind.  There are always questions you would change, formatting alterations you would make, and slight differences you would make if you did it again.  For the second focus group that we are having this Sunday, I will likely only change one question.

A huge component of the focus group is your moderator.  Luckily I had the help of a real craft beer enthusiast and very personable, yet professional individual.  I can honestly say, that next to the preparation involved, the moderator can make or break the implementation.  Rebecca was so unbiased, and also so personable, and was able to take the outline I gave her, and worked with it in her own way.

The feedback was somewhat expected and completely unexpected all at the same time.  While I would love to go into the details, I will wait for our second focus group to complete before commenting on them.  What I can say, is that the results will help us pick the name that is right for our brewery.  What we do know is the name we pick will represent what we are doing, what words are meaningful and what name fits with the local market.

I will update everyone more after we have our second focus group on Sunday and get closer to having our list of names narrowed down to 2-4 finalists.

When to quit my paying job for one that costs me money?

Leave a reply

One thing that I tended to overlook was the transition from working at my current job, to working at both jobs and then making the jump to the brewery full time.  It is a delicate balance, and one that had its ebbs and flows, so it can be a hard thing to judge when the right time is to make the move.

My journey started about 5 years ago, when I just couldn’t shake the dream of wanting to start a craft brewery.  I have always been an entrepreneur and at various times in my life, I have tried starting businesses, intermingled with jobs working for corporations, other entrepreneurs and multi-nationals.  There was the Crepe restaurant that I tried starting during University with my good friend, an advertising company we tried starting after University, and a destination based travel company I tried starting in the late 90’s.  All didn’t get off the ground, and looking back on those experiences, I am glad, as they would have likely prevented me from following this passion.

It was about 5 years ago that I needed a work/life plan to start a brewery.  I knew that there is a whack of work involved in starting a brewery, a lot of cash needed, and often that work revolved around times that were inconvenient to having a 9-5 job.  Most importantly, I knew that you couldn’t stop doing everything in favour starting a craft brewery, as the road to opening your doors is several years long, and that means no salary for a long time.  So I wrote my real estate exam, and became a realtor.  It was a tough few years, one that made me question what I was doing to my family and my life that seemed so normal and easy up until that point.

You see our life was comfortable.  Both my wife and I worked for large companies, which meant we brought home regular income, and had for the most part 9-5 jobs M-F.  Well when you get into real estate it is often the opposite of that.  Evenings and weekends, and work is excessively seasonal in the Spring and in the Fall.  This can be a real challenge when you have kids and friends who work in other M-F 9-5 jobs.  But it was my dream to start a craft brewery, and as such I thought the best way to have flexibility to start a brewery was to be a realtor, as the hours were flexible, there were some great skills I would learn, and it would provide me a little cash to pay for some of the expenses along the way.

Having walked this path for the past 5 years, there have been many highs and lows.  At the end of the day, there is no perfect job to have when you are looking to start a brewery, and depending on your situation, there are likely a variety of options that are best for you.  I have found the flexibility with my schedule and complimentary hours a positive in working real estate, and the lack of regular income and seasonality in work required with real estate the biggest challenges.

So all of this leads me to question when I should quit my real estate career in favour of working for the brewery full time.  The sooner I move to the beer business full time, the better my business will be prepared and planned.  The flip side is the longer our family will have to go on one income, and the greater the stress on my wife and kids.  I really don’t think there is an answer to this question, but I do feel like I am getting close to that point.  The 60 hour work weeks used to be enough to fit everything in, but now they are insufficient.  The space we are looking at leasing is requiring a lot of work and attention to detail, not to mention money.

I can see all of this leading to a point where I will be exhausted, broke, and likely as happy as a kid in a candy store.  I hope that I have the wisdom to make the right decision on when to break away from real estate, and focus on the brewery.  It doesn’t feel quite right yet, but I expect by the end of the year, when we have our space leased and operations set for a grand opening in 2014 sometime, the right time will emerge.

What is under the floors?

2 Replies

One of my recent posts discussed the floors in the building we are looking to lease.  You can read it by clicking here.  Essentially, the floors are in need of some repair and upgrades, and we are going through the process of figuring out how much it will cost versus what we have in the budget.

When I look through our financials, we have a set amount of money to spend on pouring cement, upgrading floors and making changes to the foundation.  If we want to spend more money than is in this pot, we either have to take it from somewhere else, or we have to raise more money.  Raising extra money is not ideal for 1 main reason.  If you indicate to investors that you are going to need $1,000,000 to start, and you value your company based on that, it is hard to go back to them and tell them that the shares they thought were worth $1.00 each, are now worth something less, like $0.80 each.

Given this, we have raised what we think is a realistic number and based our valuation on a few worst case scenarios.  Hopefully only a few of these come to fruition, and you are left with a little extra cash to spend on items you were off in your estimates.  So all this leads to our floors:  We have about $75,000 for flooring in our space, and after what we found out today, it is likely going to be a little low.

So where to take money from?  The only logical place is either wages or marketing.  That means either I am going to have my salary delayed even longer, or we are going to rely on word of mouth for advertising.  Neither option is ideal, but what else can we do?  We can’t cut equipment costs, and god forbid we cut our raw material costs!

Anyhow, we cut and opened the floors in our space, and I wanted to share those pictures.

IMG_6176

 

 

 

 

 

As you can see, we had to cut the floor in order to see what’s below.  Here is an action shot of the machine in use.

IMG_6173

 

 

 

 

 

 

 

You can imagine how loud this bad-boy was.  It did the trick and gave us a nice little .75 metre x .75 metre section to see below.

IMG_6182

 

 

 

 

 

Here is the hole at grade.  It looks like there is a gap of about 5 cm’s between the top of the substrate and the bottom of the slab.  In other words, there is nothing holding up the floor …. it is essentially a suspended slab = Not Good!

IMG_6192

 

 

 

 

 

A lot of soil came out of this hole …. I was looking for solid ground and could find none!  Finding hard ground would be great as we could use this ground to put new footings in, and then put a new slab into the space; however, ……

IMG_6185

 

 

 

 

 

 

 

I dug for 2 metres and still couldn’t find hard ground.  Shovelling the last of the dirt out was next to impossible , not to mention how dangerous is was being in such a deep hole, so I could dig no further!  The next step is to use the probe and see if you could hit solid ground below.

IMG_6190

 

 

 

 

 

OK, so we went to the bottom of this 2 metre deep hole with the probe, to see if we could hit solid ground.  The probe went down and down and down …. all 2.5 metres of it.  There was no solid ground to be found …. WTF.

So what this means is that there is about 4.5 metres of fill under this slab, with no sign of firm ground.  This is very upsetting and something we were really disappointed to find out <insert sound of air leaving a balloon>.

What does all this mean.  Well like everything else with opening a brewery, it means likely more money and time, and it will also mean that we need to re-evaluate this space.  If the potential cost of fixing these floors is much beyond our budget, we won’t move ahead with this space.  So now we will wait for the Geotechnical Engineers report, in addition to the Structural Engineers report, but at this point, its not great news.

As you can tell, everything is resting on these floors.

Im Starting a Craft Brewery

1 Reply

Call me crazy, call me nuts, call me anything you want (my wife and family have already thrown all those verbal grenades at me). I am hell bent on starting a craft brewery based in Vancouver, BC.

Why you ask? It might be because I was raised by a father who would teach me his secret home brew recipes that my grandfather had brought to Canada in the 1950’s, after being entirely dissatisfied with the quality and range of beer available in Canada. Or it could be that I was surrounded by friends and family who were actively entrepreneurs and spoke about the great things that happen when you push your own boundaries. But I think the biggest reason may be the most simple. Life is short. These 3 words mean so much. Think about it for a second … we all know friends and family that have passed away too early, or a grandfather who sees their perspective of life change as they are older. The truth is, I wasn’t entirely happy with my life about 5 years ago, and this moment has been five years in the making. More to come on that in subsequent posts.

I hope this blog becomes a useful too for people who are thinking the same thing as me, people who are interested in craft beer and for people that are fascinated with seeing others take the biggest gamble of their life in pursuit of a passion.

So there it is. I am going to commit to uploading regularly with video, information and somewhat humorous posts about this process. I have been working towards this dream for 5 years, and I hope that I am closer now that I have ever been in the past.