“It’s clearly a budget. It’s got a lot of numbers on it.” -George W. Bush
As the year comes to a close, it’s time to put together a financial plan for 2018. For many in the brewing business, budget season brings a mixture of dread, fear and avoidance. Most folks just don’t like to budget.
Here at Craft Brewery Finance we want to make your next budget simple and painless. Here’s how:
Put your plan in words, and then translate into numbers. Many people are afraid of numbers, and simply don’t want to face their fears. Therefore, the budget never gets done. Start with a written narrative of your plan – write out the sales forecast, gross margin expectations and operating expense goals in words. You’ll find it’s a lot easier to start with a written version and turn it into a numerical operating budget.
Use High Involvement Planning. I first learned about this concept in the Great Game of Business by Jack Stack. If you haven’t read it yet, read it. Fantastic book and you’ll learn a lot. High involvement planning is a fancy way of saying – get your people involved in the budgeting process. You have brewers, packaging managers, sales and marketing people that are damn good at what they do. Involve them heavily in the planning process. You’ll get buy in, ownership, and a much better plan in the bargain.
Learn a little about ratios and key metrics. Many line items in the plan will budget themselves if you know about ratios and key metrics. These are the cost drivers that you can build into your plan. For example, if you need one full time person per every 1000 BBLs of production, you can build this into your plan – every 1000 BBLs of planned growth will require the addition of one FTE salary.
Personally, I love creating operating budgets. The first one can be tough, but they get easier from there. As the saying goes, everything is hard before it is easy.
I’ve put together a step-by-step guide on the process of creating a (painless) brewery operating budget just for you. The guide also includes plug and play spreadsheet templates and a one-page budgeting checklist. To get the details just click below.
No more dread, fear and avoidance. Let Craft Brewery Finance help you create a painless 2018 operating budget today.