So, Wot’s… Uh, the Deal?

Obviously, I haven’t been writing.  Haven’t been brewing, really, either.  Three or four batches in the last year, which is pretty much an all-time low since I started all-grain brewing.

What happened?  As Raoul Duke said, “What’s the score here?  What’s next?”Fear-and-Loathing-in-Las-Vegas

 

*sigh*

I spent much of the summer of 2013 researching what was needed to start a brewery.  I’ll spare you the gory details, or I would if I hadn’t already written them, but the basic answer was obvious:  Money.  More specifically, money I didn’t have.

There are varying levels of investment for various levels of expectation.  I could start a brewery out of the garage for a relatively small investment of time and a few modifications.  My intent, though, was to create a new job for myself, and virtually no one is supporting themselves out of a garage brewery.  Income minus expenses would equal bankruptcy and loss of the brewery.

A real, income-producing brewery involves a much larger scale that I could not afford.  I had no industry experience to bargain with, or borrow against, as it were.  No one was lined up to invest, and even if they were, it would be difficult for me to relinquish any sort of control over the business.

The same was true for the taproom idea.  Leases, build-outs, employees, little cash, and no real experience to work with were not a winning combination.

The real deal breaker, though, was that over the months I had ceased to be income-positive.

So I went back to work.  Having a generalized IT background and years of experience means I can still get a job around here, in most cases, pretty quickly.  As it worked out, I found one within a couple of weeks and am still working there, this time as a supervisor.  Managing a team of six is a great opportunity, and the experience gained should help me when I revisit the brewery and taproom idea a few years down the road.

I’m eager to get back to brewing more regularly.  I brewed a stout and brown ale on back-to-back weekends and it was fun to get back to basics.  I only brewed five gallons, didn’t use the Tower of Power for anything but the hot liquor, and relied entirely on gravity to move the fluids around.  Hit all of my marks on the stout, but flubbed the brown a little.  Nothing fatal, but too hoppy.

Proximity to my LHBS has had an impact on me.  My previous job was less than five minutes from Larry’s.  Now I work a good bit further away, and Larry’s isn’t really on my way to anywhere, so I’m less likely to go.  I need to get over my aversion to ordering ingredients online.

bee and borageAt any rate, this site will probably be changing over the coming months.  I’m spending  time on other projects, like Madera Verde Garden, and I’d like to showcase some of that work (most of which is my wife’s).  I still enjoy writing, and I’m looking forward to presenting some topics for which I have a passion equal to brewing.

In the meantime, support another local brewery, and cheers!

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Perfection in Five

I’ve been slowly progressing through what I call my “Perfection in Five” series. I haven’t been brewing the same recipes often enough to really dial them in.  By that I mean I haven’t defined a repeatable recipe and process.  Perfection in Five challenges me to produce one perfected recipe within five brewing sessions.

For years I’ve been brewing 10 gallon batches per session.  As I’m sure I’ve said before, it takes the same amount of time to brew five gallons as it does 10, so why not brew 10?  If I make a good beer, I want to drink it and I want other people to try it, so it works out well.  But if I don’t think the beer is good… well… it sticks around too long and becomes a burden.  Since Perfection in Five is an experiment that was meant to be completed quickly, I didn’t want a bunch of beer hanging around, so I decided that five gallon batches made the most sense.

Except I disposed of all of my “small batch” equipment when making room for my new equipment.

I’ve invested in a system where even a 10 gallon batch is small, so trying to produce five gallons really is asking too much.  I understand now that I want the option to scale back, so I decided to buy an industrial 10 gallon Igloo cooler for a mash tun.  This cooler is designed to keep water cold for a few days at a time, which tickles my fancy for mashing in a near-freezing garage.  My assumption is that it will do just as good of a job insulating a hot mash as it would a cold drink.  Yes, temperature control is a fetish.

I wanted another control for this experiment to be the ingredients, so I put together the recipe and calculated how much of everything I would need to produce five 5-gallon batches.  I gathered up enough grain and hops so that every run of my experiment would use the same batches of those ingredients.  Unfortunately, there wasn’t enough yeast available at my LHBS, so the control is slightly less controlled in that I will be using two different batches of the same yeast.

This is going to be fun for me, and it’s a great time of year to brew the German pils style I’m trying to duplicate with this recipe.

Research: Demographics and Location, Part 2

In my last post, I wrote about how I used a free online tool from Nielsen to research basic demographic information for potential taphouse locations.  Today I want to show how I used another free online tool to gather more detailed information about the same locations.

King County Library System

Because I am a resident of King County here in beautiful Washington State, I have access to the King County Library System.  If you are a resident of King County and are considering starting a business, run out and get yourself a library card if you don’t already have one.  Online, you can verify that you are in the KCLS service area and apply for a card, though you’ll obtain your card faster if you go into a KCLS location and fill out an application in-person.  Many of the research tools provided by the library system are not really affordable for individuals and small businesses, so kudos to KCLS for buying subscriptions and making them available to their patrons online!

If you are not within the KCLS service area, check with the library systems in your area to see if they offer SimplyMap or other similar products.

On the KCLS home page, I scrolled down and clicked on the “Databases” link found under the “Browse for…” header.  On the next page, I selected the link for “Business, Economics & Investing”.  There are a number of databases available here.  KCLS provides YouTube videos to help you use of some of these tools.  I selected the link for SimplyMap.

There was a learning curve with SimplyMap, but the YouTube video helped a lot.  I started by selecting a location.  Here is the list of locations I researched in my last post:

  • 98001 (Auburn)
  • 98002 (Auburn)
  • 98092 (Auburn)
  • 98010 (Black Diamond)
  • 98038 (Maple Valley)
  • 98042 (Maple Valley)
  • 98027 (Issaquah)
  • 98029 (Issaquah)

I clicked on the “Locations” tab, then selected “Find location by: Zip Codes” and entered the first zip from the list, 98001, then clicked the “Use this location” button.  A little box popped up at the bottom of the screen to let me know that the location was selected, but otherwise I couldn’t tell that I had accomplished anything.

Next I clicked on the “Variables” tab.  This is where I got to pick from some awesome data sets.  One of the categories listed is Consumer Expenditure — how much money people spend on things.  That sounded like something I’d like to know, so I selected it.  Then it prompted me for a “Folder”, so I selected 2010 to get the most recent map data.  The list for 2010 expanded to offer about a dozen industry types.  I chose “Food”, because it seemed to most closely match my business.  Food expanded into three subcategories, one of which was “Alcoholic Beverages”.  That expanded into two more categories, from which I selected “Away from Home”.  Finally, an actual list of variables appeared, one of which was “Beer and ale away (Household Average)”.  That sounds like some good data to me, so I selected it.  Another little box popped up at the bottom of the screen, but otherwise nothing changed.

SimplyMap - 98001 Beer Away %

There must be a better way to display this information.

It took me a while to realize that, in the background, the map had populated with the information I requested.  To actually see the map I had to close the window I’d been using to select the location and variable.  The resulting map was fugly to look at. I could have tweaked the colors in the tool if I wanted to pretty it up.  From here it was just a matter of associating the color of the zip code with the numbers in the legend, which in this case reads “52.76 – 55.22”.  Unfortunately, I have no idea what those numbers mean!

I poked around in the help and did some searching online, but I was unable to find anything to help me clarify exactly what this data means.  If you know, please leave a comment.  Because the numbers in the legend range from 0 – 100, I assumed they represent percentages. So, approximately 54% of households in the zip code 98001 went out and had a beer in the past year?  That’s what we’ll say until someone tells me otherwise.

Beer and ale away %

New column on the sheet: Beer and Ale Away %

I recorded the data for the rest of my target zip codes and stepped back for a look.  It didn’t actually go into the level of detail that I had hoped, but one thing did stand out:  Auburn looks like an even worse option than it did before.  Not only do the Auburn zip codes have lower incomes and lower spending, but when they do spend their money it doesn’t seem to be on beer.  Conversely, Maple Valley and Issaquah have beer spending habits at the top of the range.

The other variable I wanted to look at was how much money these potential customers typically spent on beer.  These numbers were even less telling.

demographics - by zip code xls - beer and ale away $

New column on the sheet: Beer and Ale Away $

Fortunately the map can be broken down into smaller chunks called block groups, and by looking at that data I can identify areas within the zip code that spend more on beer.  Theoretically, these areas are where I should be looking to locate the taphouse.

After some fiddling around, I was able to create custom locations in SimplyMap that grouped together my common zip codes.  This pic shows the block groups within the highlighted 98010, 98038 and 98042 zip codes, and the amount of money they spent on beer away from home.

SimplyMap - Maple Valley Beer Away $

This view shows better detail about who is spending the most money on beer.

There is a lot more data available here. In my next post I’ll be looking closer at the buying habits of my target markets.

Research: Demographics and Location

In my last post, I wrote about my experience researching competition for my proposed taphouse.  I did the research at the behest of my advisers at the Small Business Assistance Center and they didn’t steer me wrong.  In the process, I learned a great deal about my customers and what my competition is doing to attract them.

Next, I wanted to learn more about where I should locate the taphouse.  Until recently, my plan was to find something in downtown Auburn, but I decided that as long as I’m starting over from scratch I should also open myself to the idea of doing business elsewhere.  What do they say about what makes a business successful?  Location, location, location?  Well, that may not truly be what they say, but the sentiment is spot-on.  An otherwise great business in a poor location may never reach its potential.

To start, I looked at a few basic statistics for a number of zip codes immediately around my own.  I used a free tool provided by Nielsen, the same company responsible for TV viewership ratings.  Enter the zip code for the area of interest and you get a quick snapshot of demographic data.

Neilsen Data for 98092

More data!

I chose to examine a few specific details:

  • Population, which gives me an idea of how many potential customers live in the target area.
  • Median income, which gives me an idea of how much discretionary income these potential customers might have to work with.
  • Per-household spending, which gives me a good idea of how much money these potential customers tend to spend.

I selected the following markets:

  • 98001 (Auburn)
  • 98002 (Auburn)
  • 98092 (Auburn)
  • 98010 (Black Diamond)
  • 98038 (Maple Valley)
  • 98042 (Maple Valley)
  • 98027 (Issaquah)
  • 98029 (Issaquah)

I chose these markets for the following reasons: 1) They are close to my home, 2) They are areas I expect to have income and spending levels that will support a luxury business, and 3) They are areas I think have market space for a taphouse.  Arguably, I’ve left off a few good potential zip codes and a couple of good data points.  The good news is I can easily do this analysis again with any other zip code or data point.

Nielsen demographics by zip code XLS

Numbers and colors. This must be important.

As I did with my competition research, I created a spreadsheet to help me track and compare the data.  Using colors, I grouped the results into “neighborhoods” that make up a common market.  There’s one color each for Auburn, Maple Valley/Black Diamond, and Issaquah.

Looking at these numbers, the Issaquah and Maple Valley markets stand out as having the best overall demographics: Issaquah has the highest per-household spending and median income, and Maple Valley has the highest population but only slightly lower per-household spending.  Auburn, unfortunately for me as a hometown supporter, doesn’t pan out as well for a luxury market–there are more people, but significantly lower income and spending.

In my next post, I’ll discuss another online tool, SimplyMap, that helps me understand my demographics in different detail.

Research: The Competition

In my last post, I wrote about restarting the start-up process for the business I want to open.  First I wanted to open a brewery, but now I want to open a taphouse.  Dreaming up these businesses was the easy part, but understanding what to do next was less clear.  My instant gratification personality told me to go find a location, but my advisers steered me in a different direction.

One of the first things to do, they said, was to get to know my competition. As an avid beer drinker, I already have a good idea of which businesses I’ll be competing against, so I put a few of their names down on paper:

There are hundreds of pubs, taverns, bars and restaurants around me, so why did I choose these particular ones?  1) They offer products and services similar to what I want to offer. 2) They are geographically situated near locations I’m considering.  3) They have proven to be popular with customers.  4) I have been a repeat customer at each of these businesses.

I entered the business name and city into Yelp’s search engine and examined the results.  In addition to reviews, Yelp provides basic information that a customer would want to know, like business hours and amenities, so I built out a template in Excel to keep track of some of the common information I wanted to compare.

Competitors Template

I love data!

Qualities List

Whoa.

Then I plugged through every review for every competitor on the list and I recorded each time a quality was mentioned positively or negatively.  I built the list as I went along and the template filled out substantially.

Tallying reviewer comments took some time, because you often have to interpret what someone is trying to say and tie it to a specific label.  Certainly, it’s not a scientific process, but I’m sure some marketing company somewhere has turned it into one.

Many of these qualities were common to all of the competition, but some were specific to one business.  Finding unique qualities and quantifying the number of people who talked about those qualities really helped me understand the identity (or story, as a marketer might call it) of that business. It also became clear very quickly which common qualities, like friendly and attentive service, customers look for in their pubs.

competitors - data

Lots of pretty numbers.

Using this template, I can move on to profile businesses within a more specific geographic location, or ones that have not met their customers’ expectations, or ones that share the same “unique quality”, all of which can help me better understand how I might be more successful with my own business.

What I Learned

A few clear facts emerged during this first run at competition comparison: 1) People expect pub food at a pub, and having good pub food means they are more likely to come back.  2) If you’re going to serve food, people really notice if you also offer vegan, vegetarian and gluten-free options.  3) People will come back if they feel they are getting a good value.  4) People want to have entertainment options.

I suppose none of this should come as a surprise, but it changed my thinking about a number of things:

I didn’t want to open with an in-house kitchen, but now I’ve heard it loud and clear: People expect to have food with their beer.  I knew this, really, but my answer was to locate in an area where there were plenty of take-out options from restaurants nearby.  These kind of off-site food arrangements seem to be awkward for the customer, though, and I would sacrifice a lot of potential revenue if I wasn’t providing the food, myself.  If John Taffer is right, customers are likely to spend 52 minutes more in my taphouse if I have food available.  So, in addition to profit on the food, that would typically include another beer.

I was blown away by the number of comments related to diet-specific concerns.  I should understand this because, hey, I’m lactose intolerant.  I tend to avoid certain menu items when I eat out, so why wouldn’t someone else do the same?  My real takeaway from this, however, is that having good and plentiful diet-specific options really makes you stand out.

One business in particular received props again and again for the value they provided.  Their food is cheap and easy to prepare, which allows the business to keep prices low. The tantalizing preparation options really engage the customer and encourage them to come back for more, which they will because it’s such a great value!  This will be a challenge for me:  How can I create a similar value?

Dartboard

Entertain me.

Finally, people want to have entertainment options at the pub.  Originally, I envisioned a quiet place with nooks and crannies for people to tuck themselves away with a book or a tablet or for a quiet conversation.  Well… that’s what I would want, but I think I saw maybe one comment about how great it was to be left alone in a bar.  Instead, dozens of reviewers talked about shuffleboard, pinball, pool, darts, TV and movies.  “I loved that we could play a game of Boggle!” said no one, ever, apparently.

And that’s a perfect example of why research is important — it encourages you to compare your expectations against real data.  What you like isn’t necessarily what will sell.  Your niche may not be much of a niche.  Your target market might not be what you think it is.

Next up: Where should I set up shop?

Where to Begin?

Over the past couple of weeks I’ve been particularly focused on my business.  Recently, I made the decision to change course, and because that means starting the “start-up” process over again, I thought I’d make a better effort at blogging about what I’m doing.

Maze

This is what starting a business can look like from a high level.

When I first met with them, the Small Business Assistance Center provided me with a basic map for the start-up process.  From a very high level they break it down into nine stages:  1) Concept, 2) Research, 3) Planning, 4) Protection, 5) Funding, 6) Start Up, 7) First Mile, 8) Growth, 9) Profit!

The first step, your concept, should be the easy part because all you have to do is conceptualize what you want.  Presumably, you’ve already been doing that.  Until recently, I wanted to open a brewery (I still do), but today I’m envisioning a taphouse with many, many more beers than just my own.  I see two dozen taps, top-notch service staff, and a physical space that encourages customers to settle in for a couple of drinks.

It’s fun to play around in the concept stage and dream many dreams, but at some point you have to act or the dreams will go nowhere.  Once you have an idea of what you want to do, it’s time to do some research.  Kirk Davis from the SBAC says that this is a step that many new business owners overlook or don’t appreciate enough.  I was one of those.  I wanted to go from the concept stage to the planning stage to the start up stage, but it’s simply not effective to try to do that.  In my next article, I’ll talk about what kind of research I’m doing and what I’ve discovered so far.

Sea Change

aquarius-wallpaper-11778-hd-wallpapersThey say that the only constant in life is change. According to my wife, that’s doubly true for an Aquarius, which, unfortunately for her, I am.

dude question

That doesn’t look like a beer, Dude.

I’ve been thinking hard over the past few months about what I need to do with my business.  Starting a brewery is capital-intensive, which means it’s expensive.  Yes, I could brew a barrel at a time, but I wouldn’t have time to do much else.  If I want to be efficient (and profitable) then I have to buy a larger system, and that takes money, which means investors or loans, which means increased risk.  I knew this going in, but I chose to look past it.

I’ve always been concerned about how I will make money during the down time between applying for my brewer’s notice and the point when I can sell beer.  I bounced a few ideas around in my head but never came up with something that really made sense.

So my wife asked me the question, “What are you really trying to accomplish?”  Truth is, I had been asking myself that same question over and over.  The answer was much clearer in my mind than I expected:  I want to run an establishment where people want to go to drink really good beer.  Not just my beer–any good beer.  That’s different than what I’d envisioned.

I love to try new beers.  I make it a focus to try every new beer I find in a tavern or restaurant.  I know other people are like this, too, and I can’t think of a better quality in a customer.  Are you like this?  If so, I’ll make you a deal:  You keep coming in, and I’ll always have something new for you to try.

cheers

Where everybody knows your name… and only occasionally get up in your business.

I love a place where I can be comfortable by myself or when I’m with a group.  Sometimes I want to tuck myself away in a corner to read or write, sometimes I want to sit at the bar and chat with the beertender and other patrons, and sometimes I want to sit at a big table with nine of my friends and celebrate the end of the fantasy sports season.  That’s a tall order for one establishment, but that’s what I want to offer.

And I love to teach.  Sometimes to a fault.  I want to help my customers understand and appreciate beer, and that has to be a fun thing to do when you have a wall of taps behind you, through which flow some of the best beers in the world.  Or… I can take your order and piss off so you can enjoy it in peace.  Whatever works for you.

A successful tavern could pave the way to starting the brewery, especially if I can find the right location to make that easy.