Busy!

Uber quick post. Last week I was approved for my small business loan which is HUGE! More investors on board (and room for a few more). Lease negotiations seem to be complete, contract being written up now. Will be ordering 20 BBL brew house, 40 BBL fermenters, 40 BBL bright tank, 40BBL hot liquor tank and accessories this week. So busy, lots to do in order to close on the loan. I'll go into great detail on loans, leases, and such when time allows.

For the absolute latest news, follow me on Facebook.

The brewery is finally happening!

Cheers,

Gary

Wandering About Equipment

Ha! See the title of this post? It's a pun! You'll see how in a second, but right now let's just talk about how incredibly inventive I am! I'm the goddamn Einstein of puns. Alright then.

I can't figure out why I'm the only bidder on this sweet, sweet deal. Who says used brewing equipment doesn't exist?

I've been collaborating a lot with my friend from brewing school, Chad, who is opening Wander Brewing in Bellingham, Washington. (See the punniness now?) Chad is one of the few people I've run into who's done as much if not more research than I have on opening a craft brewery. Quite frankly, Chad has me beat on several fronts, including brewing equipment quotes. I received quotes from the main players in the game, Premier Stainless, DME, JV Northwest, NSI (Newlands), and a few others. Chad has received quotes from pretty much every single domestic based brewery equipment manufacturer, including the aforementioned and quite a few I was not familiar with. The one that has really stood out for him is Marks Design and MetalWorks based in Washington state. Unlike Premier, DME, and others, who build some components in North America, but have some or most components built in China, particularly vessels, Marks is 100% built in Washington state. Chad visited the factory and was well impressed with everything and has placed an order. Because I trust Chad implicitly, I've received a quote from Marks as well and will be comparing it line by line to my other quotes this next week.

Chad also had a very smart idea that I will be using. He was able to put 10% down just to get into the manufacturing queue. See, these manufacturers have hellacious lead times right now. Anywhere from 6 months or more. So if you order today, you'll be waiting at least 6 months to take delivery. That's a long time, especially if you're paying for a lease. And usually manufacturers want 50% up front. By getting a place secured in line, Chad was able to remove a significant amount of waiting time as he secures his funding. I love that idea and will try to do the same in the next couple of weeks once I have a final price negotiated. That's a big step.

One thing you'll discover if you're publicizing your start up brewery is that you'll get lots of interest from Chinese manufacturers who will email you seeking your money. My advice: avoid like the plague. You'll have no service, huge language barriers, questionable quality at best, and little if any post purchase support.

Folks like Premiere Stainless have their fermentation vessels manufactured in China, but they have very high quality standards, provide plenty of support, and fit the vessels with top of the line valves and such. I have a very simple rule: if it has a moving part, make sure it's not made in China. I'm sure there are plenty of exceptions, but I'm not willing to seek them out.

Until next time.

Cheers,

G

Where You At?

Chicago Craft Beer Week is over and what a week it was! My favorite part of the whole week was meeting new Panic Alarmist fans and admirers. I've lost count how many people came up and thanked me (I was wearing my Panic T-shirts all week) for sharing so much and offering wonderful words of encouragement at the four events I attended. My wife, Bridget, who isn't usually a big beer festival fan, accepted that beer events would be a part of our lives from now on and joined me for all of them. She really got to see first hand how much all this work I've done has started to pay off and she's more excited than ever to get this brewery up and running. And as usual, people liked my wife more than they liked me. I'm used to it. This is what I hope to be the home to Panic Brewing. There's lots of space, but the other tenants are either a bit insular, pregnant, or dead.

Let me start with the biggest news thus far: I've found a space I'd like to lease. I like it a lot. It's almost perfect. I say it's "almost" perfect as there are some potential zoning issues I'm trying to hash out with the alderman's office for the location. I want to be able to open a retail store first, and then a tap room down the road. There could be some problems with the current zoning, but like everything else, it will all work out. As much as I'd love to reveal the address, I can't let the cat out of the bag just yet. There's a lot that has to happen before I can sign the lease and it will definitely be several weeks or more before the deal is done, but I REALLY want this space. I'll gladly share the ins and outs of leasing once I have it signed.

Another big deal for me was opening a business checking and credit card account, which I did last week. Yes, it's easy to do (you need to be a registered business entity with your state and get your EIN from the IRS, which is easily done online here), but I had put it off as I thought it might be an additional expense I wasn't ready to take on yet. Turns out, it's pretty cheap and actually free if you maintain a certain balance. An easy task, but it's checked off the list, and that's a good thing.

Now, the big question is, where is Panic Alarmist now in the process? It seems like I'm always saying, "almost ready to fund raise", or "finishing up the legal investment documents". Well, I'm almost ready to fund raise. I'll officially begin once we finally finish up the legal documents. I spent 2 hours on the phone with my attorney last week to go over the damn near final versions of the operating agreement and PPM. We've agreed to have these 100% completed by mid June. Monday, June 17 to be exact. I'm sure I'll have to go through at least a couple more reviews before then, but that is my focus right now. I want this shit done NOW!

I have some final tweaking to the business plan that I will be finishing up over the next two evenings and then that's it. No more business plan changes. Over the past couple of months I've received some new equipment quotes and learned some new info that has allowed me to make some pretty significant changes to my financial analyses ranging from start up costs to ongoing monthly costs. Some changes are required due to how some banks underwrite loans. I'll go into painful detail on bank loans, especially SBA backed ones once I have my loan in place.

Let me go into my business plan process real quick. I finished the plan months ago. Since then I've made numerous revisions both big and small. This is how I operate. When I am learning something new, I iterate over and over until at some point I feel comfortable with the result. I'm not looking for perfection with the business plan, but I'm definitely looking to not commit any egregious errors. Perfect example: there are so many things that could go wrong during the construction process that my costs could be way beyond what I've budgeted. I've tried very hard to mitigate that. But at some point, you have to let it go, roll the dice, and do your best. Most people would've started the dice rolling much sooner than me. That's ok. Everyone is different and I'm very comfortable with how I learn and execute. It's now time to execute.

So here's kinda how the rest of this story unfolds, as I see it:

  1. I get the completed investor documents from my attorney (which is my current primary focus)
  2. I contact all the folks who've expressed interest in investing (there are quite a few), email them the operating agreement, PPM, and some other stuff.
  3. We meet or talk on the phone, I answer any questions investors may have. (more on this when the time comes, which is SOON)
  4. Investors invest, money goes into an escrow account and stays there until a certain funding level is reached
  5. Once a certain funding level is reached, I continue my conversations with the banks I've been dealing with. They see I have investor money and personal investment, they analyze the business plan, they approve, the SBA agrees to guarantee it, loan gets funded. This takes several weeks.
  6. As soon as the loan is funded, I order equipment. Brew house and fermenters require about 6 months to arrive.
  7. Also, as soon as loan is funded, lease is signed. This will take a few weeks of negotiation.
  8. Once lease is signed, contractors allowed to bid, contractors hired, work is completed. How much and what type of work will depend on the space I lease.
  9. On the day the lease is signed, I will submit my paperwork to the TTB (Federal agency in charge of breweries amongst other things). I will have begun completion of this paperwork way before this. TTB approval takes about 2 months. Could be more, could be less.
  10. Once TTB approval is received, I can then start the Illinois state approval process which can take up to 2 months. It would be nice to start this process in parallel with the TTB, but that would make Illinois business friendly.
  11. Construction finishes, equipment is installed, licenses all received, brewing begins.
  12. Beer is brewed, packaged, and sent to a distributor in the Chicago area. I will not be self distributing.
  13. Once operations are smoothed out and cash flow is good, I'll begin the process of opening up a retail store or tap room, depending on zoning and Chicago liquor license bull shit.

So, that's the plan. There are lots of mini tasks in there as well, but this is a good overview of what's involved yet. From the day I get the loan, we're looking at at LEAST 6 months to opening day, most likely 7 or 8. Who knows?

But this I can promise you, it's moving along better now than ever before. It feels very real and there's no stopping.

Last note: My latest batch of Panic Pale Ale is finally in the ballpark of what I'm looking for. There's a lot of tweaking yet to do, I'll be experimenting with some hop schedules, but it's close. Very close.

Cheers,

G

Screw Glaciers! Panic Is On The Express Train!

Funny how things change in just a few weeks. Two weeks ago, I couldn't stop wearing pantyhose and now I want nothing to do with them! No wait, that's not what changed! I mean, yes it did. No, no...oh never mind!

What's really changed is that my glacial pace, as mentioned here, has become more of a missile-like pace! A high speed bullet train-like pace! A Millennium Falcon-like pace! Some other analogy regarding something really quite fast-like pace! One reason for this change is that with the increased rate of global warming, glacier references won't be very meaningful to people who should happen on this blog in a couple of years. Another reason is, well, I'm in my zone and it's time to finish this up. I have beer to brew and people who want to drink it! At least I hope people want to drink it.

First, let me explain that even though I'm not blogging every day or even every week or even every year (it seems), I am constantly writing quick status updates on the Panic Alarmist Brewing Facebook page. So if anyone is interested in very up to date news, that's the place to be. If you're not interested in reading what I had for breakfast or why Panic Alarmist will not be brewing any beer with turnips, well, I can't say I blame you.

Now, onto the news....

Here's what I've done since the last brewery related blog post (not the post about correspondence, that one is boring):

  1. Worked with my attorney to finish up the operating agreement. It is now 99% completed. There will be amendments once the financial picture becomes clearer, but the hard part is almost complete.
  2. Hired a CPA to review the financial statements in my business plan for accounting accuracy (balance sheet, profit and loss statement). I will also be hiring her for all general accounting and tax issues for Panic Alarmist as well. She has my latest business plan in her possession and I should have that wrapped up next week.
  3. Received feedback from my CPA and made lots of tweaks and changes to my financial analyses. Most changes were simply accounting related, but I want to ensure that any would be lender or investor is confident in my business plan, and that confidence is directly proportional to the accuracy of the business plan finances.
  4. Requested and received an updated quote from DME, one of the brewing equipment manufacturers I'm strongly considering. They are the manufacturer of choice by no less than three brand new breweries here in Chicago and all three breweries have told me nothing but good things about them. I also have a lead time from DME as of yesterday. That lead time is 18-20 weeks, meaning the amount of time from the date I order to the time it arrives. Pretty typical timeline and not as long as some other manufacturers.
  5. Started the real estate search. That's right, you heard me. Real estate. The location of Panic Alarmist Brewing. The answer to the most oft asked question about Panic Alarmist will soon be answered. I am searching for a space to lease somewhere on the North/Far North/Northwest/Far Northwest side of Chicago. Nothing fancy, just your standard commercially zoned area. I have a commercial real estate agent looking for me. We'll be doing our first tour tomorrow. I'm very excited.
  6. Decided that Panic Alarmist will definitely have a retail store before a tap room. Eventually both, but due to probable capital limitations (the bane of all start ups) at the outset, I will only be able to do one or the other. After talking to Gabriel and Matt, owners of Half Acre Beer Company, which has both, it became obvious that the retail store was the way to go. I think when they said, "Retail store, not even close" was probably what won me over. Why a retail store first? Revenue. Money. Cash inflow. I'm going to be a nervous wreck until this brewery is cash flow positive and then profitable. Until that time, I will be focusing on figuring out how to maximize revenues. Based on Half Acre's experience, a retail store generates much more revenue than a tap room because of sheer volume. Fear not, there absolutely will be a Panic Alarmist tap room, but first I gotta make sure the business is healthy.
  7. Decided to begin a new fast recipe prototyping process with 1 or 2 gallon batches using "brew in a bag". I spent a couple hours working out the water calculations in my fancy brewing spreadsheet that I've been using for a couple of years. Now I simply click the "Brew in a Bag" check box and all volumes convert automagically. This involves using a single brew pot for both the mash tun and kettle. No sparging, no pumping. I'll ferment in growlers which will allow me to try different yeast strains, fermentation temperatures, and/or dry hop schedules. I'll then bottle/carbonate the finished beer in 22 oz bombers. I thought of doing this months ago and finally getting around to doing it. Should be interesting.
  8. Received the first draft of the Panic Alarmist Brewing PPM (Private Placement Memorandum) from my attorney. This is the second of three documents required to execute the LLC member interest offering. That's the correct legal term for "investors" in an LLC.

Lots of big stuff happening all at once. Yes, it's stressful, yes I'm busy, but I love it and this train isn't stopping until the beer is brewing. There is oh so much more to share and I will when I can. Again, for quick updates, check out the Panic Alarmist Brewing Facebook page.

Cheers,

G

Quickie: Progress This Week

Great scotts! As I mentioned last week, I'll be doing short and sweet blog posts just to let everyone know I'm still alive and moving along.  I spent a lot of time this week tweaking my cash flow and profit and loss spreadsheets and completed the break even analysis spreadsheet.  At this point, I'm pretty confident in my models for costing out everything and cash flow. I added some logic to account for buying an additional fermenter when production reaches a certain level as well.  Utilities were broken down more accurately to allocate the lions share to cost of goods sold based on production volume.  I'm really pleased with how far along all of this analysis has come.

I also created a quick timeline spreadsheet which back calculates when major milestones need to be completed based on an opening date.  These milestones include TTB Brewer's Notice, equipment ordering, lease signing, etc.  My current model says that the brewery will open 10 months from the day the business plan is completed.  Of course parts of the timeline are complete guesswork so who knows?  It could be 14 months, 16 months.  Depends on a lot of factors.

This week I received an updated quote from Premier Stainless for a 15 bbl brew house with 30 bbl fermenters instead of 20/40 bbl.  The price difference is about $40,000.  That's a small amount of money for what would be a 33% increase in production capacity, but I'd rather start up with a smaller loan (and loan payment) and be able to launch with a canning line.  The canning line will significantly lower packaging costs and I'm dead set on that path.  As I've mentioned a few times before, I'll have a very detailed post discussing canning costs when time allows.

All of this was completed while also preparing for the final push of finishing my giganto container vegetable garden project and finalizing the fill date for my group Templeton Rye barrel project with English barley wine.  I need 35 hours in a day. Working on very little sleep.

The next steps are to complete the opening balance sheet, which won't take long and then move to the written portions of the business plan.  My goal at this point is to have the entire business plan completed and off for review with a select few friends (including an MBA or two) by end of June.