Biggest Unforseen Expense?

[Ale]

Hey all,

I am just about to move and expand our little brewery and I was wondering what the biggest surprise cost was in getting the brewery up and running.

This isn't a startup, we just need to bump up production and open a tasting room, no restaurant. We are moving in to a new building and installing new (used) equipment that is in good shape.

So, I've done my years of homework/research/work experience and I think have all my bases covered. The question is to those who said just that - "I've got my bases covered", now what about that curveball? What was 2 or 3 times more than you budgeted? As an aside, where did you save the most money?

Thanks!

[liammckenna]

Anything can happen man.

I've seen a lot of those things too.

Number one would be failure to set aside funds for marketing/product support.

Hard to comment having not seen your plan but A good rule of thumb I used to give clients was my 5% rule.

If you spend $100k on a brewery project, reserve $5k for year one as a contingency aside from everything else you've thought of.

S#$t happens all the time. Those that followed the advice were pretty happy they did. I only had a single client fail to consume that 5% whether they reserved it in advance or not.

[pjbroyles]

Electrical.

Saved a bunch of money by doing as much plumbing, drywalling, general contracting as was possible. Learned a lot.

[Moonlight]

Time.
Everything will take longer, except the people sending you bills.

[South County]

Time.
Everything will take longer, except the people sending you bills.

TIME.....cant stress this one enough. Also doing all the trade work yourself if local regulations allow will save tens of thousands.

[nick79brew]

Glycol Chiller Installation

My biggest unforseen expense was the installation of the glycol chiller. We had to hire a crane to pick it on the roof, then add in the plumbing, electrical, piping and glycol, cost as much as the cooler itself!

[rudge75]

I'll +1 for the electrical.

You're expanding and you don't want to have to do it again for a while, so build in the infrastructure now so you can add in taller/more tanks, larger bottling systems, etc. etc. at a later date. That all takes power, and that's something you don't want to have to re-jig when you're up and running in the new place.

[Ale]

Thanks everyone for the comments so far. That's exactly what I'm looking for.

[lhall]

1. Sprinkler system - didn't see that one coming, $80k on our new building
2. Steam piping - the cost of the boiler itself is tiny compared to the piping, condensate returns, blowdown separators, feed tanks, water softeners, etc.
3. lack of credit - I was surprised how hard it was to establish credit as a new business with vendors - most of our first grain, hop, glassware orders were prepaid

[Capt. Bob]

My biggest unforeseen expense is all the bills my creditors keep sending me month after month!

[tsewong73]

Capt. Bob, I'm right there with you. I just read an article about you guys recently and I was surprised to see the similarities between your operation and our own. We are also a husband/wife team with no other employees. Apparently, we also share a shit-ton of bills in common, too.

In our start-up project, there were two things that I failed to research fully and they both bit me hard on the ass. 1) boiler installation; and 2) building codes/fire separation. For the boiler, I have to echo Linus here. The piping, condensate return, etc. cost us a bundle. I budgeted about $5,000 to install it and it ballooned up to $13,000 very quickly. As for codes, I wasn't aware that a brewery (mostly a wet environment) would need a two-hour fire separation from the car wash (also mostly a wet environment) that occupies the space next to ours. That cost us an additional $10,000 to add a second layer of drywall to BOTH sides of the wall between us and the car wash.

Like I said, the only two things that I biffed on researching really hurt us.

[Ale]

That's great to know. The boiler system install was definitely the great unknown and it helps to see some real world numbers.

Other concerns are of course electrical and glycol system setup.

[tsewong73]

Let me add this about the boiler: you have to research your state's codes on boilers. In our case, even though we have low-pressure boiler, we have to have redundant controls on everything - the high-pressure limit, low-water limit, nat. gas pressure control, etc. Your state's codes might be completely different from what the boiler manufacturer recommends, too, so beware of that.

[Capt. Bob]

Capt. Bob, I'm right there with you. I just read an article about you guys recently and I was surprised to see the similarities between your operation and our own. We are also a husband/wife team with no other employees. Apparently, we also share a shit-ton of bills in common, too.

In our start-up project, there were two things that I failed to research fully and they both bit me hard on the ass. 1) boiler installation; and 2) building codes/fire separation. For the boiler, I have to echo Linus here. The piping, condensate return, etc. cost us a bundle. I budgeted about $5,000 to install it and it ballooned up to $13,000 very quickly. As for codes, I wasn't aware that a brewery (mostly a wet environment) would need a two-hour fire separation from the car wash (also mostly a wet environment) that occupies the space next to ours. That cost us an additional $10,000 to add a second layer of drywall to BOTH sides of the wall between us and the car wash.

Like I said, the only two things that I biffed on researching really hurt us.

We've been pretty lucky on getting free press of late. How far are you from Philly? I'll be up for Beer Week, we should compare notes.

There were a series of stupid little things along the way that added up. I don't have a boiler. We use direct fire. Don't have a hot liquor tank-use a commercial tankless heater that supplies up to 180 F water, and we still ended up paying rent on our unit for 15 months with no production (income) while the county and state figured out what to do with our permitting. That was our single biggest unforeseen expense. The sprinkler thing seems to come up a lot. What about being required to install a water fountain. We also had to replace our kettle exhaust venting before we even used it because the codes changed during construction and the county inspector wouldn't let us grandfather-in. Somethings you just can't research.
But, the good news is, once you are up and running, most everything else is in your hands.

[liammckenna]

Just looking at variances budget vs actual.

Three things jump out. HVAC - variance - almost $100k. City planners reclassified our project from renovation/restoration to new construction mid stream. Even though the building we're in dates back to 1740.

Sprinkle system/fire suppression - variance - $60K - fire code changed mid construction.

Structural engineers - variance $40K - The building was falling down when we moved in and the interior steel beam structure we installed to stabilize the structure required small but significant modification to satisfy the engineers. 400% margin of error is what they sought and got.

Pax.

Liam