Smart Budgeting for Craft Breweries

Most craft brewers don’t start their businesses because they love budgeting, they start their businesses because they love brewing beer! From the outside looking in, a brewery can seem like a relatively simple operation to run. You don’t need hundreds of employees or venture capital backing to get started and be successful. But once you’re in the weeds with an up-and-running craft brewing business you find out the devil is indeed in the details. Knowing how to create and manage a smart budget for your business is essential.

Get Started with a Budget for Your Brewery

Ideally, before you launched your business, you hashed out a preliminary budget for operations. It’s probable that within the first 1-2 years of operation you learned that your original budget, based on estimates, does not accurately reflect your spending. To get started creating or improving your brewery’s budget, you must start by categorizing all of your current expenses. Sit down with at least 1 year of financial records and start labeling all of your expenses into categories like ingredients, operations, packaging, building and equipment maintenance, etc. Once you have totaled all of your expenses by category for an entire year you will have a clearer picture of your current state of finances.

Set Goals for Your Expense Categories

After you have figured out what your current expenses are in each category, you can create your budgetary goals for the upcoming year. Are there any categories where you can reduce your expenses? Are there any categories that you know will have increasing expenses such as ingredients, packaging, or marketing? Once you have your total projected budget for the upcoming year, you can start to analyze your cash flow and projected income to determine if your business will be cash flow positive.

Analyze Cash Flow and Determine Gaps

One of the tricky things about managing a budget for a brewery is that expenses are not consistent from month to month, neither are sales! The cash flow for your business will rise and fall seasonally and depending on your production schedule and distribution model. With a year worth of financial records you should be able to determine when your cash flow needs will outpace your income. Brewery Finance helps clients in these situations temporarily cover large expenditures with Working Capital Loans. These can help cover expenses like payroll, taxes, utility bills, and more.

Other investments likely to exceed your cash on hand include equipment purchases and repairs. Investing in a new piece of equipment for your brewery can take months if not years to pay off. Brewery Finance offers Equipment Financing loans specifically for instances like this, to help craft breweries secure the equipment they need without draining their cash on hand. If you have capital needs beyond your current resources, get in touch with Brewery Finance today to discuss your options for Working Capital Loans or Equipment Financing.