Phase 6: Leased Signed but Pre-Possession

This is a period of time between when you sign your lease and when you take possession of your space.  Don’t be mistaken, this is a hugely critical period for a brewery, as you can make some decisions that will set you up well for the future.  Take a few missteps, and you could be set back months on your build out and eventual opening.  Like everything else, we did a few things really well and a bunch of other things not so well.

After you have a night of celebration that you have secured a space to brew your very own beer, wake up early and get cracking on the thousand details that go into the next step.  For starters, have you raised all the money you need to raise?  Have you come up with a name?  More than these questions, there is a myriad of things that need to happen at this point.  In no particular order, I would say the following needs to happen:

  • If you haven’t submitted for development permit and you need to, all your effort should be focused on this.  This can take 90 days to receive from the time it is submitted, so getting on top of this is huge.  It will require you to have a basic floor plan and layout of the space, and you should try and get this as close to the reality as possible.  This can be a real tricky thing, as you need to plan for now and in the future.  My partner, Iain Hill is a master of this kind of thing, so if you are here, send me a message and I will get him to help you out.
  • If you have submitted your Development permit, you should immediately start working on your building permit submission.  This the other big item to look into and work on.  You can do no work without a building permit.  In Vancouver a building permit can take up to 16 weeks, so this is another huge amount of time spent doing very little while you are waiting for the City to approve your plan.  Submitting for building permit will require getting detailed answers from other professionals, so be sure to be ready for some big bills.
  • Put it this way:  The process of getting a development permit and building permit took a total of 6 months for us.  We were able to negotiate the time we need into our lease agreement, thereby minimizing the amount of time we had to pay lease while we waited for the permits we needed.  You need to keep this in mind when assessing spaces and making offers on properties.
  • Hand-in-hand with the above points is to work closely with your architect.  You will have lots of meetings, and hopefully you are working together on building out your space, and figuring out a layout.  Your architect will know the building code, and can advise a little on the cost-benefit of making choices.  Focus on layout and not finishing at this point.  Your architect should have an idea of what things will look like, but they are secondary to getting the layout locked in.
  • Start meeting with Electrical and Mechanical engineers so that you can plan the layout of these things.  We made bad choices on these things, and though initial returns were great, throughout the process they have slowed us down measurably.  When you are getting a professional to agree to a scope of work, I would encourage you to put in specified dates as to when stuff should happen.  Leaving this open ended will mean that there will be delays in getting stuff done.
  • Get building insurance as you will need (we needed it as part of our lease) for possession.  I can’t imagine a landlord letting you take possession without it.  We used Brody Stonehouse from ACD Insurance.  You can get all his companies details at this link.  He specializes in brewery insurance and he has done a great job for us.  When you deal with someone who knows an industry, he is able to help give you a plan that saves you money and fits with what the landlord and your operations need and want today, and change that for tomorrow.
  • You may also want to have in your back pocket a Structural and Geotechnical Engineer.  You definitely need a structural and you may or may not need a geotechnical engineer depending on the site and situation of your warehouse.  These bills can be substantial so make sure you do your research.
  • Open a bank account.  By now you should have one of these, and if you haven’t opened one, just go do it.  Don’t wait any longer, as it will make balancing your books, taxes, etc a lot more difficult if you don’t have one.
  • If you have collected money from investors, put it into something more than just a bank account.  We are earning 2% with no virtual risk, and on $500,000 that can be a really good return over a few months.  It will help to offset some of the costs down the road.
  • Start getting quotes for brewhouse, tanks and packaging line.  Knowing what your system looks like, and I am talking all the nitty-gritty details is important when it comes to pipes, intakes, power requirements, etc is really good to be able to calculate loads, etc.
  • Continue to work on your marketing and branding.  By now you should have all your social media locked in, as well as having an idea about what your brand will be and how you will enter the marketplace.
  • You will likely be needing a lot of American dollars in the next 9-12 months, so if you think you can get a good rate, I would suggest changing some money over, especially if the outlook is for the Canadian dollar to fall.
  • If you have picked your name, then apply for trademark.  I seem to hear of more and more breweries being sued or approached to change their name because of trademark infringement.  We picked a name that we knew we are pretty sure we can trademark in Canada and hopeful that we can get passed in the USA.
  • Start hammering your budget to figure out exactly how much everything is going to cost.  Get a preliminary budget for your space.  A good ballpark would be as follows:  For the first 5,000 square feet I wold assume $100 per foot minimum.  For every square foot passed this, use $75 per square foot.  So if you are 5,000 square feet, expect retrofit costs of $500,000.  For 10,000 square feet, expect retrofit costs of $875,000.  This is a very rough estimate.  I couldn’t imagine anyone being able to retrofit a space for less than $250,000, so I would use this as a minimum.
  • Start deciding on equipment.  I would encourage you to talk with other brewers and find out their experience with different manufacturers, costs, advantages of using different equipment, etc.  We went with a system that would take advantage of our space, and if we got a different space, we would have looked at different equipment.
  • Keep your nose in the business plan.  As you make decisions on packaging line, brewhouse size, location, your brand will begin to evolve.  It is important to keep checking back in, updating your plan with the latest details, and keep on top of all the changes.  The business plan is really a living document that is meant to help guide your business.  So keeping it up to date, and adding to it, will keep your ideas refined, your scope on point, and make you aware of some things that you may be ignoring.
  • Keep working with the end in mind.  Focus on how you want to end the process and make the necessary step to get there.  There are so many thousands of details and decisions that if you start to veer slightly off your course, you will end up at a different place than you had intended when you first started out.
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