How We Got Here

Permitting for Dummies

Permits in retrospect are one of those things that we should have been more knowledgable about. We really appreciated everyone who stepped in to help with our project from the outside, but in practice we ended up with some loose ends that we weren’t expecting late in the game.

We had a huge advantage in getting our project started. Networking.

  • First, we have a great friend, Cari Mullaney, who had a ton of great experience as a commercial interior designer. She’d previously worked on projects that far exceeded our scope and though she’s since transitioned to being a kick-ass stay-at-home-momma, she was willing to dust off her design apps and get to work. Other than the three partners, Cari has invested the most time in getting this project off the ground. We honestly cannot say “thank you” enough.
  • Second, our architect, Tony Shapiro, was phenomenal. He had a ton of experience working on TI (tenant improvement) projects like ours and his ability to foresee obstacles ahead of us was priceless. Tony is like that father-figure that has the serious talks with you sometimes, but at the end of the day, you know this dude’s in your corner (and he’s the one you want in your corner).
  • Third, we had Jon Krombein, a friend who Mark used to pastor with who was willing to do our electrical drawings pro bono. Oh, and he also found someone interested enough in the project to do the mechanical and plumbing (Thank you, Robby!). Collectively, these are known as our MEPs (Mechanical, Electrical and Plumbing) and they are the major part of your permitting.

I suspect that we inadvertently led each of the parties to believe that someone else was handling another part of the project. Each knows their stuff and they are unbelievably qualified. Lesson #348 of owning a brewery: Ask questions until you know for sure that you get it. Ask them even if they make you seem incompetent. A little bit of loss in pride saves a surprise in the end.

We all assumed that the MEP drawings that the engineers did were sufficient for the project. They weren’t. They needed to be stamped, which means that insurance is backing them. And the insurance was held by the firms that employed these guys. And, they weren’t about to back our project for free. 

What the drawings did do was allow us to accurately bid and contract the project without a lot of risk. While you’re waiting to sign a lease, you’re potentially putting out a lot of money in planning. If that lease falls through, you’re out the money for your planning and the drawings are in effect, worthless. These guys set us up without a lot of risk and that was really valuable to us.

When you do a TI build, you need stamped drawings and you need several of them. In Washington State, you’ll need the following:

  • Building Permit (think of this as the wrapper for everything else);
  • Structural Permit (this may have been required because of the weight of our fully loaded equipment (roughly 38,000 lbs.)
  • Mechanical Permit (think HVAC or how you’re taking care of equipment heat or getting your cold room cold)
  • Electrical Permit
  • Plumbing Permit
  • Fire Permit

All of these permits set you up for your inspections. You pay a fee. The City reviews your plans and eventually issues you a permit to build. They then inspect after your contractors do their work and verify that everything was done up to code.

We found out late in the game that our drawings weren’t adequately stamped. We also learned that another firm couldn’t simply review and stamp the drawings. Their insurance is insuring “their” work on the project, and if we ran into issues, that insurance would be worthless. So, we had to have the drawings re-done, granted, with our other drawings close by. $14,000 later. Damn.

Financing Your Brewery

(Disclaimer: We're not attorneys or bankers. This is free advice from our own experience with the process. Take it at your own risk.)

Every brewery is unique and the financial needs that you'll have for your expansion are unique. Let's just say that we came from the worst case scenario in that none of us come from money or have killer jobs that make a lot of money. We started this with a lot of patience and on a shoestring budget.

Investors. We briefly explored taking on investors. The positive of private investors: generally there's no interest on the financing and the money you do get comes with fewer strings attached. The negative: you've gotta make it worth their while, which generally means that you're giving up equity and giving up a portion of your profit.

Bank Loan. The common alternative is a bank loan (generally an SBA loan). Like an investor, you've gotta convince them that your project holds muster, but you'll retain all of your equity.

Here's a quick rundown:

  • Loans are either 10 years (tenant improvement) or 25 years (typically for building construction);
  • Interest is generally 2.25% to 2.75% above prime and the rate adjusts quarterly;
  • There's no pre-payment penalty on the 10-year loan; It's progressive on the 25-year loan (In the first three years: 5%, 3%, 1% respectively);
  • During construction, you can elect to pay interest-only as you progressively withdraw funds (up to 12 months);
  • Anyone with more than 20% equity in the company needs to act as a personal guarantor of the loan;
  • Collateral is necessary (generally real estate, rental properties, etc.);
  • There are packaging fees paid to your bank (ours was roughly $2,500) and there is a 2.5% fee paid to SBA at funding;
  • Your project categories matter. Once you set a budget for a given category and the bank approves it, you need to fully satisfy that category before moving those funds elsewhere;

Don't let this intimidate you. It's a big hurdle, but it's doable. Your banker can make all the difference. We worked with John Weber at Coastal Bank in Everett, WA. His willingness to walk us through this process was the difference maker. He reviewed our business plan, helped us see the deficiencies and gave us checklist after checklist to work us through the process. We owe John a ton.

Writing a Business Plan for your Brewery

I suspect that if we didn't need to get a bank loan in place for our expansion, we'd have never written a business plan. When we started, we had very little idea of what it was for other than convincing a bank to give us money.

We started by buying one. Our first attempt was to purchase a plan. Seriously. We found a brewery in North Carolina that made their plan available as a template for $199. It seemed like a good, cheap solution and we figured that it would be helpful in getting scope around the task. What we found was unreal. It was super detailed and in ways that we didn't understand.

Our first attempt flopped. The result was a joke. We didn't understand what we were submitting and hardly understood how we were arriving at the numbers we were presenting. We blew through talks with six banks before scrapping it and starting over.

A friend of ours was our biggest help, and he didn't write it for us. I was on the phone with a good friend of ours. He's a business guy. MBA. A resume to knock your socks off. This dude is wicked smart. He casually made the comment, "I should totally start a pinball machine shop. Gimme thirty minutes and I'll have my business plan your way." Wait, what? Seriously!?! Okay. I knew this dude was smart, but you're telling me that you could knock out a legitimate business plan in thirty minutes? Folks, this sounded like a diet too good to be true. I pressed and he went off. His biggest point was that you're making an argument. You're answering the question, "why do you think this is gonna work?" What information does someone need to know about you, your business, market conditions, etc. to make the argument that you can make this work? Make the argument. And, do it yourself. You need to believe what you're putting down on paper. And if you need more information to make your argument, go ask someone how you should arrive at that information. 

Our second attempt killed it. We developed our plan, not in thirty minutes, but in a matter of two weeks. We wrote an outline and made a linear argument. We also ended up with a really awesome banker. Our seventh call. He asked the right questions and we iterated. And it grew. In fact, it's roughly six times it's original size. But we understand it. And now it's a tool. We can measure against it. We can make legitimate projections based on the trends we're measuring. 

If you need help, ask us. We'll gladly talk you through it in more details. But, we insist that you understand your business plan. And you'll hold onto it like a two-year-old holds onto his blanket.