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PROFITABILITY

  • Five-year Business Plan
  • Five-Year Cash Flow
  • Napkin Cash
  • Accounting Systems: Quickbooks and Innovint
  • Funding Packages: Start-Up Capital, Live Oak Bank, LOC

Five-year
Business Plan

Winemaking is a unique type of manufacturing.  Certain “products” will be in production (crush to bottling) for several months.  Most will be in barrel for many months, some for several years.  It is essential to plan for enough current product to be available to support the sales projections for each year.  Creating a five-year business plan will help you think through how your particular mix of wines will move from the vineyard to the tasting room, with enough product to meet your sales projections.  Plan and plant for growth.  Save for expansion.

We have devised a workbook of linked spreadsheets that will help you navigate your way to a profitability plan.  From the moment you enter production costs, this system quickly illustrates how and when that investment will pay off in product sales.  You’ll be able to forecast the availability for each wine for sale, varying how soon each is in production, and know how far your production volume will take you.  Want to grow from 500 cases to 2,000 cases, or 10,000?  You also can use the system analyze how much production will be necessary to support your sales goals.

Five-Year
Cash Flow

Napkin Cash

Keeping track of how and when money comes in and goes out of your business month-to-month (or week-to-week) is complicated.  We’ve developed a series of linked spreadsheets we call Napkin Cash that project where the ebb and flow of cash might create problems, so that you can plan to avoid them.

Napkin Cash looks at all sources and uses of cash and documents when each transaction is anticipated.  It is further informed by downloads of your Accounts Receivable and Accounts Payable.  It gives you a tool to monitor and consolidate all banking and credit sources on one page.

You can build this tool to manage things month-to-month or week-to-week.  It should be built out with a 12-to-18-month horizon, so that you can see past the near-term shortfalls and/or plan for leaner months when there’s plenty of current cash.

Managing the Cost of Goods in winemaking is no easy task.  It has taken us years to figure out how to document everything that goes into a wine so that the real cost of production is properly expensed when the wine is sold.  We can help you navigate the parallel systems of Quickbooks and Innovint to accurately track these costs to help you manage your wine sales intelligently.

Innovint is an exquisite accounting system for wine production.  With diligent data entry, it cleanly tracks (and accrues costs for) various lots of wine through from fermentation, through blending to bottling.  Those costs then inform the Quickbooks accounts to attribute the Cost of Goods Sold to each item.  It takes a little manual finessing to transition bulk wine expenses to the bottled product cost, but it is critical to making accurate decisions about pricing for wholesale, distributor or DTC channels.

Accounting Systems: Quickbooks and Innovint

Funding Packages: Start-Up Capital, Live Oak Bank, LOC

In a business that has large swings in demand for cash (harvest, bottling), an adequate operating line of credit is essential.  When it’s time to acquire or build your winery, an industry-experienced lender relationship is equally essential. We can help you connect with lenders that understand the enduring value of stainless steel and the necessity to bootstrap the creation of vineyards, facilities, equipment and inventory over a prolonged initial period.

The purpose of a long-term lender is to fill the gap between a cashflow plan, which ignores depreciation, and a Profit/Loss projection, which ignores principal payments, so that both plans resemble one another.  Initial capital input will be required to get the winery through the start-up phase before lenders like Live Oak will back a successful start-up looking to grow.

In addition to long-term lending, every company needs a revolving line of credit to smooth out the inevitable bumps in cash flow and should be paid off when tardy revenues arrive. This is a shock absorber rather than fuel.  Generally an LOC should cover one month’s gross revenue.

Let me know if you’d like a $100 Mini-Consult to adapt this information to your situation.

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