Tag Archives: Storm Brewing

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.

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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.

34 days out …. sneak peak at our Layout

Not much to say on this post.  I am a little foggy this morning, and needing to get 2 blog posts out as I missed one from yesterday.  The first post today will be around the finalized layout and look of our tasting room, and the exterior elevation of our space

We agonized for months over how exactly to design and locate the entire production and front of house spaces.  There were likely 5 or 6 meetings with our architects to get this correct, and hopefully at the end of the day, we got it right from a production standpoint, but also a tasting room standpoint.

Some keys about the front of the house:

  • The tasting room has a direct connection to the brewhouse, where most of the fun stuff happens in brewing beer
  • The art gallery is directly connected to the tasting room, allowing people to view some artwork while they visit the brewery
  • We have 2 long communal tables, which is a direct result of bring people together through beer.  If you want to come to our brewery and sit quietly on your own, you might have a tough time
  • We will have lots of natural light.  There are about 14 windows across the front, that will provide heaps of natural light into the space
  • There is a moderately separated retail area from the tasting room, which will allow the patrons of each to not interfere with each others good time
  • The lines from our serving tanks to the tasting room are crazy short, as the cooler is right there
  • The front of the house has really high ceilings, something you can’t really see in the drawings, hopefully making the space very interesting and welcoming

As for the exterior of the building, not much to do other than clean it up, repaint and put a few new doors in to make the building secure and a little more functional.

There was a lot of found value in the space, which we have tried to salvage and add to in a positive and authentic manner.  Both Iain and like things that are authentic and interesting, and we hope to have created a space that is, if nothing else, both of these things.  We hope you pop-in and say hi the next time you are in the area.

Architectural drawings Oct 31.2014

 

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!

Marketing Decisions

One thing I have underestimated up until now is the number of decisions that need to be made for marketing.  I always thought the big marketing decisions were the tough ones, but now walking through this process, it is the small ones that suck all your time and cause the most headaches with the schedule.  Paying others to do some of your work will help bring in a fresh opinion, move things forward, and get you to a place you wouldn’t otherwise have gotten.  It will still take hard work and lots of re-working things to get them right.

As a craft brewery, we kind of thought that marketing was secondary to making really great beer, and having a great tasting room to hang out in.  For the most part, it still is but the gap has narrowed quite measurably.  With so many amazing breweries swinging open their doors in the past few years (Brassneck, Parallel 49 Brewing, Powell Street Brewing, Postmark, 33 Acres, Steel and Oak, Yellow Dog, Main Street, and many more), it is now imperative that your brand be spot on.  Don’t get me wrong, I don’t think you need to have a perfect brand for customers to see, rather I think you need to achieve a few important things in your message:  Authenticity, why you did this, and what makes you so different.

Yes, yes the quality of beer is still paramount.  Make crappy beer or have the same selection of beer at your brewery week in and week out, and you will find yourself floundering.  At the end of the day, consumers care most about this.  But the people that spend their hard earned dollars at breweries also want to see a brand that meets their expectations.  What makes it harder for a brewery to meet these expectations, is that no 2 people have the same ones.  Some want authentic, and others want playful, some want seriousness, and others want unique.  What do you want?

Getting back to my original point, we decided to go in the direction of making something we think is representative of us.  Authentic, Fun, and pretty straight forward.  However, what you set out to do, like everything in this process, is not necessarily what we are going to end up with.  You see, making thousands of decisions over a period of months, if not years, puts you down a path that you didn’t necessarily intend.

For instance, we always wanted our brand to be what it has become.  But to think that we named our company Strange Fellows Brewing is somewhat comical.  My partner and I always wanted a more serious name, but through indecision, other names being taken (this is huge) and the input of others, we ended up with Strange Fellows.  This set off a cascade of events that has slowly morphed our brand into something that neither of us could have imagined.

Also changing where we ended up is the list of decision that we needed to make, with each of these decisions having hundreds of little decisions to make the big decision:

  • website design and look and feel – hundreds of decisions in this bucket
  • can versus bottle versus growler – design, size and look
  • label for all product
  • logo – you will need to pick something that works on its own, with your can design, and in sizes all the way up to a decal on your car to sign-post at your brewery
  • bottle cap
  • merchandise
  • growler design
  • your story and how it relates to your brand
  • business cards
  • tasting room design meshed with your personal taste, budget and consumers taste

Each of these, and many others, have hundreds of layers to the decisions you need to make.  Its not as simple as just making the choice and living with it in a bubble.  Your decisions are not mutually exclusive, as one decision will impact another, often forcing you to rethink exactly what you are doing.  Let me give you an example.

We knew we wanted to put our beer into cans, so we charged ahead with this.  However, we didn’t know what kind of beer to put into cans.  So we had to decide which of our favourites we were going to brew, and put that out there to the world, without ever actually brewing these beers.  Which means you need to talk about flavour, alcohol percentage, etc without ever having tasted the beer.  Then you need to make a description of the beer, a beer name, a theme to your beer, create a UPC code, get preliminary approval from the LDB, get all the details on the can correct and be happy with where it is at about 10-12 weeks before you plan on packaging this product.  You see, cans need to be manufactured and that takes some time, which means before you even do anything, you need to have all your marketing complete.

It also means that once you make decisions, going back on those decisions will change other aspects of the design.  Invariably you will makes changes, and while you have your head down in the sand making all these decisions and changes, you end up with a can that may be great, but also may be quite far from where you intended to end up.  We’d be lying if we didn’t admit to this, as well as every other craft brewery in the Province.  So go easy on those people who have missed the mark with their marketing, as they may have gotten to a place they didn’t intend, and have no way of getting out.

To me, marketing matters most in terms of how much I connect with a brand.  This is everything from; what are the owners like, what is their message, what does the beer taste like, what are their thoughts on craft beer, why are they making beer, is this their passion, what other breweries do they like, and are they helping to keep Vancouver at the forefront of craft beer.  If a brand conveys all this information to me, or if I pick up on these things along the way, my decision on whether I like the brand is already made.  A company could miss 2 or 3 of these things and be alright, but if they miss 2 or 3 of these things and one of them is the quality of the beer, then I will move on.

For us, we’ve had the luxury of time, which has been our worst enemy for cash, but our best friend for crafting our story.  Having a brewery build-out that has taken about 9 months, in addition to a 12 month period that we were actively working on our brand, which comes after about 1 year of starting the process.  All this has meant we’ve been able to work out the kinks, and get it where we are pretty happy.  We could still make a few changes to our marketing, but for the most part we are pretty stoked about it.  I went through my diaries and have the following summaries from just our name selection:

  • January 2010 started working with my brother on a brand called The Crafty Monk
  • Over the next 18 months came up with a logo, and design for label
  • January 2012 met Iain Hill and started our partnership.
  • March 2012 Iain and I agree that we need to come up with a name together that is indicative of both us.
  • July 2012 changed name to Low Countries Brewing
  • Sept 2012 worked with Iain’s wife Christine on logo and branding.  We had a really tough time making the name look interesting and work well.
  • October 2013 after a year working with Low Countries Brewing, we decided to ditch the name as it was boring and not exactly what we wanted to do anymore,
  • January 2014 false start on Allegory brewing
  • February 2014 with our partnership about to dissolve over indecision about our name, we finally agree to Strange Fellows.
  • March 2014 to present we worked on our branding and marketing to end up where we are, which we hope is a pretty good place.

Without the time we had available to us, we might have ended up with a name like The Crafty Monk, or Allegory, both of which would have led us down a path that is much different than where we are today.  So take your time in making decisions, as creativity knows no time boundaries.  It would also relate to this entire process, as for us, getting all aspects of this project correct the first time is the most important thing.

 

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.