What's Faster, Me Or A Glacier?

Once I kick this guy's ass in the 1,000,000 mile hurdle, I'm going to boil him and make beer. It's been over a year since I first started blogging this adventure. I wish I had remembered the anniversary back in October! Here's my first post. Hard to believe 14 months have passed. That brings me to today's subject which is: "Where's the damn brewery!".

My wife brought up the point today that I'm moving very slowly on this and I agreed with her. I know lots of folks opening breweries in Chicago and they are moving quite quickly. Some have already begun looking for real estate, I have not. Now it's hard to compare apples to oranges as we all have different stories including size of brewery, financial resources, life responsibilities and such.

Of all the folks I know here in Chicago opening breweries, I believe I'm the only one who has all five of these attributes: 1) has kids, 2) is in his mid 40's, 3) has a mortgage, and 4) is opening a full sized non-nano brewery, and 5) has a good paying day job which happens to be the sole source of funds for the family. I could be wrong about the other breweries, but I believe this is the case.

These five things plus a few others combine to make me very cautious during this journey. I have a shit load of responsibilities on my shoulders that weigh in on every decision I make. I'm not saying others do not have equal responsibilities or limitations but these are mine. The only reason I mention my age is the whole idea of waiting so late in life to make these major changes is daunting. Add in children and all these other things and you get a very cautious man moving slowly and deliberately.

I've spent a lot of time playing out scenarios in my head. No failure scenarios, but lots of contingency plans. What if I can't afford a canning line? Can I grow the business by packaging only in kegs for the first year? Would it be more profitable to open a tap room before spending money on a canning line? What about a retail store? Does Chicago need another xyz beer? What about those damn hops I want so badly?

Well, I'm at the point now where I feel I'm ready to deal with just about any contingency. The only really big hurdle that I will be facing soon is getting bank financing. The result of that will play a big part in all of these other decisions.

So that's my litany on why I'm moving at the pace I am. Some might think it slow, some might not care one way or another. Just realize that this is my journey and I have to do it the only way I know how. Patience is not something I'm known for, so this enterprise is a real test for me.

Enough of that touchy feely Oprah crap! On to brass tacks.

I had a really productive meeting with my attorney a week ago yesterday. He's been amazingly helpful in guiding me through the maze of LLC's and member investment. We're getting very close to the first draft of the Operating Agreement. From there we'll move onto the other documents discussed in my previous post.

Despite my glacial pace, things are really moving along now. I've received rousing reviews of my business plan. People are complimenting me on how detailed and well thought out it is, which makes me feel like I'm on the right track.

I now have several commercial real estate agent referrals and I'll be talking to them this week to try to find one who's a good fit. It looks like the search could take several months so I better get my ass in gear to make sure I have a few choices once I'm funded.

Stay tuned, we're getting into the good stuff now.


Ducks In A Row

Honey badger! One of the biggest psychological barriers for me to overcome to get the level of determination I have now to open this brewery was m-o-n-e-y. As a technology worker for large corporations for the past dozen years, I've been well compensated. I've never made lawyer or doctor money, but I've always made enough to support a family of four and pay a mortgage (with rental income as well) in Chicago, which is not a very cheap place to live. It took at least two years of gradual acquiescence, one bout of breast cancer, and one firing from a job to realize that I just don't care about wealth anymore. I don't need a BMW (nor do I want one) and I don't need a four bedroom house. Ok, I technically own a 5 bedroom house, but our apartment has two bedrooms, the other apartment is rented out, so there's that. My point is, at this juncture, I'm a honey badger. I don't give a shit.

Read this previous entry for more on that fear stuff: Fear Factor

Ok, so I'm not frightened of the prospect of a significantly lower household income, but I'm also not stupid. I have no intention of losing my house or go into bankruptcy due to lack of income. So, if income is lower, what do you do? You lower expenses. And what is my biggest expense? Children! We're going to sell the children!

We're not selling the children, I'll need them to squeegee the floors in the brewery. What I'm really going to do is refinance my mortgage in order to significantly lower my monthly payment. I'm not going to go into details on my mortgage but I think it's worthwhile to share the general idea with others in case they are in the same conundrum of following dreams vs. poverty. It doesn't have to be either/or, you just have to prepare.

Because mortgage rates are at historical lows, it seemed logical to look into refinancing. My current mortgage rate is low – very low – and the rate had been unbeatable for years. Because of these new low rates, and despite the fact that I'm 9 years into my current mortgage, I called my trusty mortgage broker. She is the same mortgage broker I've used for about 10 years now and whom I trust completely (and many are not trustworthy, FYI). It only took a few minutes of talking with her to discover that I could lower my monthly mortgage payment by over 25% with a new 30-year fixed mortgage. That's a lot of money per month.

At this point, the question many people might ask is, "Why would you want to start your mortgage all over again after 9 years? Don't you realize how amortization schedules work?". Oh yes, I know. I'll be starting all over and paying all that interest on the front end of the mortgage again. Sounds like a dumb idea, right? Well, first I'll point out that because the interest rate is so low, I'll actually be paying about the same amount of interest for the new loan as I would if I were to stick with the current one. More importantly however, even if I were to pay significantly more interest over 30 years, I've managed to solve a much more important issue: cash flow.

Cash flow is very important in business and in personal finances. As I delve more into my business plan, I'll be discussing the importance of cash flow. Negative cash flow is one of the, if not THE, main reasons small businesses fail. The same principle applies to personal finances. If your spending outpaces your earnings, you're in trouble.

If you are dreaming of opening a brewery and you feel your hands are tied financially, search for solutions. You can do it. This new mortgage gives me and my family some significant breathing room and will lower our stress significantly as this venture takes off. That, my friends, really is priceless.