Brewery owners wear lots of hats – in addition to your CEO duties, you may also handle your company’s production, bottling, canning and/or kegging, marketing and hiring. You might even shovel the sidewalks in the winter.
A critical job responsibility that should always be on your mind is that which a CFO handles. Your brewery may not be big enough to warrant having a CFO, but that doesn’t mean you shouldn’t think like one.
The CFO’s responsibilities are among the most crucial to the strategic success of your company. Will you make your budget? How will you find new revenue opportunities to expand your brewery? What are your most profitable beers? How do you manage cash flow cycles? How do you time strategic purchases?
Below are several ways a brewery owner can think like a CFO to improve the financial performance of the company:
Good CFOs Ask the Following Questions
What is the company’s plan for growth?
You can’t plan for growth without budgeting and accounting for the related costs that come with any plan to grow your operations, whether it be launching a new beer type, investing in a bottling line or expanding sales into a new region or state. Make sure you have the ability – whether it be the market opportunity or available capital – before you pursue any growth plan.
Where are we losing value?
Is the juice worth the squeeze, or rather, is the outcome worth the effort? Looking at ways to manage costs is an obvious but crucial factor in business financial planning. When investing in efforts such as marketing and advertising, is the benefit you’re receiving enough to justify the cost? Ask yourself this question on a regular basis to obtain cost savings.
Financial Matters to Consider
Annual and Multi-Year Budgets
Company executives sometimes overlook a formal budget all together, or if they make one, it’s sometimes a case of set it and forget it.
Good budgeting can be the make or break for a company, and not a once-a-year process, but one that includes regular reviews and adjustments. It’s important to maintain up-to-date financial data in order to prepare meaningful and accurate budgets. And set aside scheduled time – whether it be weekly, monthly or quarterly – to take a real-time look at the progress of your brewery compared to expectations.
It’s wise to prepare for the future and constantly evolve to meet with consumer needs. Will the beers you make today still be in demand in five years – or even next year? If you’re seeking to sell in a new territory or open a second location, how much competition will there be? Market research can help guide you on both production and sales decisions.
Consult an Expert
Even if you’re a brand new brewer, it’s best not to go it alone. New businesses get long-term benefits by taking the right legal and financial steps from day one.
An early choice every new company has to make is your business structure. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file. There is a lot to consider tax-wise on choosing your business structure – we can help you weigh the pros and cons of the different entities.
Attorneys, bankers and financial advisors also all have important roles to play in both the startup and continued smooth operation of your company. They all want your business to succeed to the fullest, and if you’re working with advisors with significant experience in your industry, they will surely have valuable insights to help your business grow.
While you may feel running a brewery is your dream job, you may not feel that way in 10 years – and especially not when you get near retirement age. If you’d like to exit the business in the foreseeable future, now is the time to begin developing a succession plan.
Planning early will help drive the future success of your brewery and your personal financial success. Waiting too long can be expensive from a financial perspective (covering gift and income taxes, life insurance premiums, appraiser fees, and legal and accounting fees) and a non-financial perspective (intra-family and intra-company squabbles).
Concannon Miller has been advising brewers for more than 20 years and manufacturers as a whole for more than 50. Get more finance tips or personal assistance from our Craft Brewing Team, Andrew Desiderio, CPA, and Harry Pietrouchie, CPA.