“You lead by letting others know what you expect of them, which may exceed what they themselves expect. Provide them a reputation that they can step up to.” -Kevin Kelly, Excellent Advice for Living
Before we begin, I know many people are buying gifts for the holidays. You can use the links below to find the lowest prices on my various products.
- Beer Business Finance Book
- Beer Business Finance Association Membership
- Beer Business Finance Subscription
Now, back to the program. Here are five rules to follow to keep your beer business financially sound in the New Year:
- Create and follow a month-end financial process
- Build your financial plan
- Review and analyze actual financial results each month (or each week)
- Understand pricing, costs, and margins
- Properly value and safeguard brewery inventory
Rule #1 Create and follow a month-end financial process
Brewers don’t just wing it when they make beer. They follow a process. The process was honed over years or decades. It took time to perfect.
Once the process was perfected it provided a road map to follow to ensure a consistent, high-quality product. It’s the same idea with your month-end financials. You need to follow a process.
Use this month-end Checklist as a starting point.
Rule #2 Build your financial plan
Without a financial plan your income statement is in deep trouble. As they say, if you don’t know where you’re going (financially) you’ll end up someplace else. And you might not like it.
Building a financial plan takes time, something we are all short on.
So, if you’re time challenged, watch this 60 second video on how to build a budget…fast.
Rule #3 Review and analyze actual financial results each month (or each week)
The month-end checklist will help make sure you get complete, accurate and timely financial reporting.
The financial plan will act as a guide to get you to your desired financial outcomes.
A regular review and analysis of actual financial results compared to your plan will help keep you on track.
Rule #4 Understand beer pricing, costs, and gross profit
If you don’t know the fully loaded costs of your products, it is impossible to know what your gross profit is.
And understanding your gross profit and expense structure is critical to staying financially sound.
Start with this gross profit calculator.
Rule #5 Properly value and safeguard product inventory
Inventory valuation and cost of goods sold are the least understood, but most important, drivers of profitability in your business.
A good inventory count process will help safeguard and properly manage these important assets.
Use this 1-Page Outline Inventory Count Process as a starting point.
Wrap Up & Action Items
Some rules were made to be broken, but not these ones.
Do this next:
- Print out these rules and post them where you can see them
- Download the templates or checklists and try them out in your business (start with the month-end checklist)
- Learn more about our beer business financial network. This is a group of brewery owners and managers just like you. We hold financial round-table meetings on the zoom, share ideas and best practices and learn from each other.