Sunday, October 26, 2008

Overlooked Business Advice

If you plan on opening a business that requires outside investment, you'll need to learn about securities laws. This website will get you started:

Small Business and the SEC

If you're in my boat, i.e. you want to privately raise a small amount of money (relative to Microsoft), you'll probably be exempt from having to register your investment offering. If that's the case, you should have around $10,000 on-hand for a lawyer to translate the government regulations into a human language, write your offering documents and prepare any required forms. If that's not the case, you should expect to pay around $40,000 for a non-abridged version of the same services. Just so you know.

Investing is for rich people. No conspiracy theories here - I believe it's a natural consequence of laws that are intended to protect investors - but that doesn't make it any less frustrating for me. Logistics aside, Jane and I would love to raise money from everyday people like ourselves. Unfortunately, exemptions from securities registration (which we can't afford to not qualify for) exist primarily for these types of scenarios:

-Unlimited number of accredited investors. For the most part, accredited investors are people with net worths over $1M and/or who earn over $200K a year.
-X or fewer non-accredited investors. X = 25 for Wisconsin, which (and this is total BS) includes out-of-state investors. This means that if you need to raise $750K, each investor would need to contribute an average of $30K.
-Private offerings only. If this post implied that I was offering you a share of RePublic equity, I'd already be disqualified from this type of exemption.

Now you know something that most introductory business guides don't tell you.

Saturday, October 18, 2008

Army of Experts

Before I talk about us, let's talk about them. Regarding the bailout bill, from the Wisconsin Restaurant Association:

As a result of the restaurant industry’s presence on Capitol Hill during these historical proceedings, one of the restaurant industry’s key agenda items was included in the bailout bill. Depreciation for restaurant construction and improvements was accelerated from 39 1/2 years down to 15 years.

I hate that @#$%. Yes, changing the depreciation schedule is good for the restaurant industry. No, the change doesn't hurt anyone else. Yes, I know that sidestepping the legislative process is Standard Operating Procedure for Congress and that people need to play the game to get things done. The loophole works both ways, though - Team Evil is equally capable of attaching unrelated contingents to bills that require urgent passage. That's how Wisconsin's idiotic Brewpub Tourism Development Act got passed last year. I hope the craft brewing community continues to beat that dead horse until brewing companies like Goose Island and Dogfish Head can legally exist in Wisconsin once again. I want that dead horse on television. How awesome would a New Glarus beer hall be, all serving cheese and sausage platters on the grounds of their new production facility?

Anyway, I have a Private Placement Memorandum (PPM) written and I'm scheduled to meet with a lawyer next week. I don't know if writing the document myself will make life easier or harder on lawyers, but at least Jane and I will have options. The big reason for seeking legal advice is to determine how our capital needs and various investment-solicitation strategies will affect which securities registration exemptions we'll qualify for. The following week, we'll be meeting with the city's Office of Business Resources to outline the city's involvement in our project. Our business plan's proposed timeline is pretty sad, so hopefully the city will help us straighten it out a bit.

Wednesday, October 8, 2008

Burlington Northern Pulling Out of the World

Our business plan is ready to shop around! We still have a small amount of revising to do, but I don't expect that to change as the fundraising process generates feedback. Jane is taking over the business plan tweaks while I assemble an investment offering. I use the word 'assemble' instead of 'write' because I'll be stealing most of its content from the investment documents of two other breweries.

I haven't bought any hops yet, primarily because most of the ones for sale were grown in 2007. Brewers are selling off their old stashes while the 2008 crop comes in. Properly stored year-old hops would be fine if I needed them right now, but I don't want to be using them next summer. I met with James from Gorst Valley Hops a couple of weeks ago, and it looks promising that I'll be able to buy all of my citrusy American hops from him next fall. At the risk of digressing, he's a horticulturist who's more interested in turning Wisconsin farmers onto hop growing than he is in growing them himself. His main reasons for growing them right now are to prove their worth and to test a mobile processing facility that he's building. It was pretty awesome to show him my beer list and hear him say "I can get you that" almost every time I mentioned a weird ingredient. He even knows some used equipment dealers.

It's been a while since I talked about pilot brewing. First off, my beer fridge is working again! A sloppy moisture control vs. energy efficiency switch is a much better problem to have than a fridge that's actually broken. 'Nuff said. The second mint porter tasted awesome, except when I drank it too cold. Low temperature gave it an unpleasant shaprness - I still believe a hop/mint interaction is involved, and I'll name CO2 as a suspect as well - but the beer is basically a dessert at "cool but not cold" temperatures. Despite it's warm leanings, the beer made an excellent custard float. Much better than the first batch. Reducing the beer on the stove to use as a syrup, however, did not taste good. Holy bitterness! Although I reduced the hops dramatically, the beer wasn't too sweet. I suspect the mint lends its own bitterness, which balances malt sweetness in a similar manner as hops. Next time, I'm gonna brew the beer with no hops whatsoever. I transfered the maple farmhouse ale into its serving keg on Monday, which tasted very nice in its uncarbonated state. I have a batch of pale ale in bottles as well, which will be given away at a Locksley after-party this Friday, and I brewed a batch of Belgian pumpkin ale last week for my brother's wedding. That's about it for now!