Views: 1 Author: Site Editor Publish Time: 2021-12-31 Origin: Site
As you may know, running a successful winery requires more than "love of art." But usually, when our enthusiasm drives us to continue to learn and develop our skills, our main focus is often on perfecting the craft; as a result, we often overlook the equally important responsibility of perfecting the business. Fortunately, there is a solution.
One clear way for winery owners and operators to keep their business going is to develop a strong business plan. Many craft brewers have never written a business plan and may not know where to start. To make it easier for you, I created this quick guide.
What is a business plan?
In short, a business plan is a written description of the future of your business: what you plan to do and how you plan to do it. You can also think of it as a roadmap, which contains benchmarks or indicators you set for yourself to reach when you start to expand.
As your winery continues to grow as a business, the goals you outline in your plan should deliberately reflect your growth strategy and projected capabilities and resources. You can demonstrate this in your plan in many different ways, but we will touch on these core elements a little bit later.
Why is it important to make a business plan?
Planning is the key to any viable business. Essentially, a business plan can help you visualize the direction of your business more specifically, and then take action to achieve your goals by achieving smaller, achievable goals.
Achieving or even exceeding your planned forecast can be very beneficial, but not meeting your forecast is equally valuable: it provides a learning experience and motivation for the future. Therefore, although your business plan can be as simple or specific as you like, it will be more beneficial for you to develop a plan that is as clear and concise as possible.
You will most likely also find that successfully starting and maintaining your business and your winery is essential, because in addition to serving as an internal guide, your business plan will also be the first impression of potential investors and future partners .
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Draft your winery business plan
Writing a business plan may feel like a daunting task, but I find that breaking it down into five core elements can make it easier to manage:
This component usually tells the story of your business through an executive summary, product description, and sections about the total addressable market. A quick Google search can define the meaning of each term in more detail, but in general, this part of the document is designed to provide background information and introduce your business to potential investors.
Usually, this means that the section is also full of graphics, pictures, and branding, designed to attract readers and stimulate investor interest. The winery business plan may include your brand story and pictures of the grains you plan to use, your property - tasting room, gift shop, production and storage facilities - and other visual effects related to your expected cost of goods sold .
2. Income statement
This is where we begin to delve into numbers. Your income statement should show your projected income and expenses for the first five years of operations. For winery owners, the cash flow will depend on any type of profit you get from the winery-from the distilled spirit itself to travel tickets and merchandise. The winery loss statement will include any costs related to product damage, facility damage, etc.
Usually, this involves establishing sales forecasts, making production plans, calculating any additional expenses, and determining your expected profit. Using your sales forecast as a starting point, you can refer to the production plan to calculate the cost of goods sold for the product-in this case, this might be your distilled spirit. For services, such as tours or guided wine tasting, you need to set a value for your service and then replace the cost of goods sold with that value. Other expenses that you deduct from sales may include general and administrative expenses, taxes, dividends, and/or interest expenses.
No matter how your winery looks, your income statement is a way for investors to determine whether you have a viable business.
3. Cash flow statement
Cash inflows and outflows will be disclosed to determine the capital required for your winery business. Again, this will be closely related to the previous statement, as it outlines any profit or loss for your winery.
Think of it this way: Customers who purchase products and services at your winery, including the distilled spirit itself and any merchandise, wine tasting or travel tickets, will receive cash from the customer. At the same time, cash will flow out of your business to pay for product raw materials and other expenses, as well as management and logistics costs such as rent/mortgage, monthly loan payments, and taxes.
Your cash flow statement allows you and your investors to quickly view cash flows from different business operations related activities, including increases or decreases in other areas of the business balance sheet.
4. Balance Sheet
The balance sheet is a statement of the financial status of your business. It should list your assets and liabilities and state your net operating value. Usually, it will serve as a summary of your previous projects, including your income statement and cash flow statement, but the focus is on balancing the winery’s assets and liabilities.
Simply put, assets can be divided into liquidity and illiquidity, depending on whether they can be converted into cash relatively quickly. For example, your brewery property, facilities, and equipment will be considered illiquid because they cannot be quickly converted into cash. At the same time, liabilities are defined as any funds owed by the enterprise, including wages, supplier invoices, debts, etc.
If this is your first time running a business, it may be a good idea to hire an accountant or financial adviser to help you draft an initial balance sheet. This prevents you from encountering any potential problems.
5. Sales Forecast
This section should outline your projected annual and monthly sales for the first five years of operation. In other words, you are predicting the number of winery's products and services that you think can actually be sold over a period of time, taking into account your sales costs and projected profits.
It helps to list your products and services first and estimate your sales volume. Next, you should multiply your unit price by the estimated number of products/services you plan to sell, and then determine the cost of each product/service. Finally, you can multiply the cost of each product/service by the estimated quantity you plan to sell, and then subtract the total cost from the total sales.
Although this sounds like a simple equation, economics can complicate matters. You should consider the challenges of the distilled spirits industry: understand who your competitors are, consider how regulatory changes will affect your business, and reflect on how you plan to market your brand. All these and more factors will have an impact on your sales forecast.
Overall, it may be a good idea to talk to someone with a comparable winery business and understand what benchmarks of their business you can apply to your business.
There are other indicators and analyses that will help support your predictions by addressing specific areas of interest to investors. These usually consist of numbers and graphs and involve multiple areas-capital investment/return schedules, fundraising, gross and net profit margin forecasts, variance analysis, revenue growth, etc.
You might really get lost in the weeds. Although Google helps deconstruct some terminology, formulating your first business plan under the guidance and expertise of an accountant or financial adviser may be a worthwhile investment.
It is important to know that sticking to a realistic, well-written plan is one of your best opportunities for success. Recognizing that enthusiasm, expertise, and excellent products do not guarantee retail success, it is also critical.
This may sound cliché, but the phrase "numbers don't lie" is important here: you should understand that your business plan is to make educated numerical forecasts and strive to meet and exceed those forecasts. Many talented winemakers fail to execute their business plans without seeing the success they dream of-you don't have to be one of them.
You can get the best of both worlds-create delicious spirits and manage your business. But understand that in terms of business, you need to prepare a well-written and realistic plan; and then execute it appropriately and effectively so that the plan can be successful.