Airtime

I'll be on Beer Talk Today tomorrow. The station is 91.7 FM, aka WSUM, and the show starts at 9pm. I'm looking forward to finding out if my voice still sounds like Mickey Mouse.

Lenders

Thanks to a new Sun Prairie connection, I was recently able to talk with a woman who works at the Small Business Administration. She was surprised that my latest loan application was rejected without being submitted to the SBA. When I told her the bank's primary concern was a lack of collateral, she basically told me that was crap because the SBA isn't a collateral lender. The SBA is currently guarantying 90% of each loan they approve, and they've waived their guaranty fees until at least the end of the year. What that means (I think) is if a bank loans RePublic $850K and the business fails, the SBA will give the bank $765K. The $85K in bank losses could easily be recovered by selling the brewing equipment, which is in high demand these days, and the building. Buzzards will take the restaurant equipment.

Following the advice of a banker, I went on a lender-contacting bender last week. I'll be meeting with two of them next week, another two are reviewing my business plan, and I'm waiting to hear back from a bunch more. I need to be careful, though, because the SBA will automatically reject multiple applications for the same business. Hopefully I'll have to sign some government documents to authorize any applications to the SBA. Too many banks wanting to work with me would be a funny way to fail.

Positive Legislative Experience

It's been a busy couple of weeks for team RePublic. Between design meetings, filling out applications, meeting city officials, a fast-approaching investor commitment deadline and needing to find a new lender (boo to rejection), I haven't had much time for day-to-day tasks such as sleeping or responding to friends' emails. Yet here I am. It's a good thing that very few of my friends read this weblog.

Yesterday morning, I received a notice about a public hearing about Assembly Bill 67 that was scheduled for this morning. The bill would revoke establishments' liquor licenses if their licensed bartenders or liquor agents are caught three times with blood alcohol levels above 0.0 while working. The bill is bad news for several reasons:

-The beers sold at brewpubs and specialty beer bars are available at very few places. As such, employees need to taste the beer to be able to describe it to customers and make educated recommendations.
-I could lose my liquor license if an employee consumes one drink (or some cold medicine) before coming to work.
-As an owner, I'm always considered "at work". If I can't have a drink at my own pub, what's the point?

So I went down to the capitol and testified against the bill. Thankfully the bill's sponsor, Josh Zepnick, intends to revise the bill to better accomplish its intent: punish irresponsible tavern owners who allow their staff to drink excessively, therefore reducing their ability to reduce over-consumption and prevent intoxicated patrons from driving drunk. In fact, he was surprised by the last-minute call for a public hearing and admitted that the bill wasn't anywhere close to being ready. He hopes to gather a lot more feedback before trying to push anything through.

Thank you, Wisconsin legislature, for proving my cynicism wrong on this occasion.

What's Next?

To-do list:

-Apply for a liquor license. The $10K price tag is pretty hefty, but the business will probably get $9,500 back after a 30-day trial period. The good news is that the money won't be due until the business is ready to receive the license.

-Apply for a conditional use permit. The building is in a commercial zoning district, but restaurants and taverns require special approval. The permit will remain in effect even if RePublic fails, so Jane and I will need to write in some provisions that protect nearby residents from future bar owners who may not be as respectful as us.

-Talk with the city's building inspector, police chief and fire chief. The liquor license application will automatically trigger their involvement, but I'd like to meet everyone beforehand. Ditto for the county health inspector and city wastewater treatment superintendent.

-Raise money. Tons and tons of money. This is still our biggest obstacle.

The Location

Remember all that nonsense about how Jane and I would walk away from RePublic if we couldn't raise enough equity capital by May 29th? Here's what happened.

Jane and I originally wanted to locate our pub on Atwood Ave. The smaller of the two Atwood Community Center buildings would have been perfect in terms of geography, but receiving deliveries would've been a nightmare. Aside from ACC and the old Bunky's building, which the landlord wouldn't even let us look at because we weren't fully funded, there wasn't anything available. So we branched out and shifted our focus to the areas near Sherman Ave and Northport. We liked Northgate enough to make it our fallback spot, but it still didn't have the neighborhood accessibility we were looking for. Meanwhile, our May deadline was approaching and we hadn't raised anywhere near the amount of equity capital needed for banks to take us seriously (at least 25% of the total project cost).

Things changed when I received an email from Neil Stechschulte, the Economic Development Coordinator of Sun Prairie. The city's been trying to get a brewpub for years, and it's willing to provide financial incentives to make it happen. After touring some downtown locations with Neil and learning all about tax increment financing and revolving loan funds, Jane and I were sold. After all, our options at that point were (a) give up because we couldn't raise enough capital or (b) hope the money from Sun Prairie would make up the difference. The big surprise was how much better downtown Sun Prairie fit with our concept than any of the non-Atwood places we found in Madison.

After considering a few spots, we ultimately decided on the former ACME Automotive building at 117 Columbus Street. Those garage doors would make an excellent spillway to an outdoor seating area, wouldn't they? Anyway, we hadn't been able to talk about it until now for two reasons:

-We didn't want to motivate anybody else to buy the building.
-We wanted the neighbors to be the first to know about the project.

We were initially going to try and lease the space, but the owner preferred to sell. Assuming we could raise the extra money needed for a down payment, it made a lot more financial sense to buy the place. We'd been negotiating the purchase terms over the last three weeks and finally reached an agreement last Tuesday. Jane and I now have 60 days (from 8/4) to raise about 80% of our required startup capital. During that time, the building owner can't accept another offer. If we're unable to raise the money in time, which is expected (our original offer gave us 90 days), we'll have the option of "buying" another 60 days by making our earnest payment non-refundable. Or we can just walk away and make another offer once we have the money, effectively gambling on the owner not being able to sell the building during that time.

On the neighborhood front, I sent letters to the owners of nearby houses and adjacent businesses. The few responses we've received have been a mix of enthusiasm and concern. Hopefully Jane and I will be able to spread the word about how well-behaved craft beer consumers tend to be, how our atmosphere and pricing will keep out the "pound twelve Budweisers" crowd, and how our business will have a much smaller impact than a giant establishment such as Great Dane.

Construction Estimates

A few weeks ago, I met with Paul from Harmony Construction Management to get the lowdown on estimating construction costs. To my surprise, he told me he could make a couple of trips to the site and prepare an estimate in less than two weeks - free of charge. The budget he created was downright eerie: it only differed from my prior estimate ($100 per square foot) by $3,000. His projected schedule was pretty close to my expectations as well.

Paul was a recommended to me and Jane by Melissa. As usual, her advice was good. Paul has built a lot of restaurants, including the Great Dane in Fitchburg, and he's been very straightforward in educating us about the build-out process. Unlike most general contractors (so I've heard), he shares his itemized expenses with clients and pays himself a fixed percentage of the final cost. That means a few things:

-He can't exploit his clients' ignorance to pad his bottom line.
-Change orders don't allow him to grossly violate his estimates.
-His clients have a healthy amount of control over the final cost.

Jane and I were very impressed with Paul and we're looking forward to working with him as our project progresses.