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Jason Sleeman

Tips for your Business' Next Build

As you probably know, construction is currently expensive and slow (August 2022). We’ve seen recent projects double in cost from initial plans. Timeframes for getting architecture drawings and GC contracts have been up to 90-120 days. Right now, if you’re looking to complete a construction project, I’d recommend a timeframe of 6-12 months, depending on the scope of your project. There could be some good news on the horizon. Construction spending fell .8% in May—the first drop since September of 2021. Lumber prices have also fallen over 50% from their January peak, bringing the price per thousand feet from $1,329 to $651. With all of this in mind, there are a few things you can do to ensure your next project is a success:

  • Consistent communication: Make sure you’re in constant contact with your partners, including your architect, general contractor, bank, equipment provider, etc. You need to know what’s going on with your project, what each partner’s timeline is, and whether or not they’re still on track. Without frequent communication, you could experience further delays and ultimately lose revenue for your business.

 

  • Be flexible: Before you start, decide what’s essential for your project and what is just nice to have. As prices rose this year, we saw things like fireplaces, kitchens, patios, and offices all cut from budgets. Essentials like trench drains, increasing a cooler size, taproom space, and forklifts remained. Make sure you know what would have a negative impact on your business if it didn’t make it in the project.

 

  • Prepare for construction overruns: Because construction overruns are so common, the bank will add a cushion to your loan request of about 10-20% of your project costs. To be safe, you may also want to build a cushion in your business reserve funds to cover any costs that exceed the bank’s cushion.

 

  • Ask for recommendations: If other businesses in your area recently completed an expansion, ask them for vendor recommendations. I hear all the time from clients, “when we do our next expansion, we won’t use that vendor again” or “we have to use this vendor, they did a great job last time.” Save yourself the headache and find out in advance who’s good and who’s not.

  • Stay organized: A new construction project is not for the faint of heart. If project management isn’t your thing, there are plenty of good small business-focused project managers that can help you oversee your project. Even still, you’ll need to stay involved and aware of every element of your project so that you can answer questions that come from the bank or any other partners during the process.

Dogwood State Bank: SBL Craft Brewery
Samuel Adams Brewing the American Dream


As rates continue to rise and inflation continues to fall, we should see some of these challenges subside. Construction costs should fall, and timelines should shorten. At the same time, hopefully the rising demand for your brand means that an expansion is in your future. If you are thinking about expanding in the next year or know someone who is, now’s the perfect time to get that conversation started.

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Contributing Author

Jason Sleeman                                                     VP, Craft Beverage Lending, United Community Bank

Jason funded his first brewery 9 years ago and enjoyed the challenge of providing the right funding for the project to ensure long term success.  Following his passion, Jason has now worked on many brewery, winery, and distillery projects developing an understanding of the specific needs of these businesses and what roadblocks can happen in the lending process. 

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Piggy Bank Saving

In Need of Financing for Your Business:

Consider an SBA Loan

Scott Birkner

Personal liquidity, investor raised capital, commercial bank financing – there are several options when starting or expanding your brewery or distillery, and you may find yourself overwhelmed with choices. While all of these options can help you obtain the necessary capital to achieve your goals, you may find that not all will be available to you in your personal situation. Instead of allowing financing to be an  

Cash, Hops & Malt

Advice About:

Applying for Financing

Rick Wehner

Congratulations on getting through the Planning stage of your brewery! Now, all you have left to do is….everything? It probably feels like it, but you’ve built a nice foundation by putting together a well-thought through and realistic business plan, researched your finance options and figured out what finance options are likely a good fit for your specific needs. Now it is time to take action!

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Don't Let COVID-19

Stop Your Dreams of Expansion

Jason Sleeman

The global health crisis caused by the COVID-19 pandemic has disrupted our economy in unimaginable ways. Thousands of businesses have struggled to remain open, unemployment has skyrocketed and consumer habits have changed significantly. Disruption in the market has caused many businesses to suffer, however there is a silver lining for others.

Child holding stack of cash

TIPS:

Pandemic Equipment Funding, Part I

Rick Wehner

As craft beer wades through the COVID-19 crisis, the search for funds in all forms is more important than ever. But COVID-19 has made it harder than ever to get funding. And some seemingly helpful emergency steps can make it tougher to secure dollars down the road. How to avoid the funding pitfalls of this surreal health crisis? Here are tips to help you keep your brewery out of the financial Emergency Room.

PLAN

  • Learn about funding options

  • Understand credit criteria

  • Include projections and capitalization in business plan

  • Review personal guarantees with partners

  • Gather financial records

  • Collect equipment quotes

ACT

  • Open bank account

  • Apply for financing

    • Application

    • Business Plan/History

    • P/L Projections – 3 yrs

    • Resume(s)

    • Personal Financial Stmts

    • Personal Tax Rtns – 3 yrs

    • Credit Check Auth

    • Lease Agreement (or)

    • Real Estate Agreement

    • Business Acquisition

    • Construction Estimates

    • Equipment Quotes

  • Sign financing docs

  • Fund your equipment

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GrOW

 

  • Keep financial records

  • Maintain relationship with finance ppl

  • Understand improved funding options

  • Collect equipment quotes

  • Apply/secure financing