The Real Hard Work of a Successful Brewery Owner
Sure you lift 55 pound bags of grain, repair broken pumps and messy glycol systems, fill in for a sick bartender after a full day in the brewery, but sit down for 10 minutes per month to write up a budget? “Hell no, that’s too hard, damn it!”
When we started our crazy journey in owning our own business, we did most things right. We worked the business, did our inventories, watched our labor, and then at the end of the month our accountant would gather up all our information, put together a profit and loss statement for us and then schedule our monthly P&L meeting. This would be by the 15th of the month.
After about a year of this I came to a realization: By the time we looked at the previous months numbers, we were already half way through the next month. There was absolutely nothing we could do to change those numbers, and any lessons we learned from that session would be hard to implement them in the current, half-over month.
Finally I decided it might be better to create a hypothetical profit and loss (P&L) statement at the beginning of the month and then come up with some way to try to make that P&L really happen. This of course is called a budget, and it isn’t hard to do.
First you have to guess what your sales would be. That shouldn’t be too hard because if you’ve been open at least a year, you have a pretty good idea of the busy and slow months are. You also know if your sales are growing or shrinking.
The next line is your cost of goods sold. This is the cost of the raw materials you sell. You calculate this as a percent of sales by doing your inventory spreadsheets that I’ve covered here ad nauseam.
Then come your expenses. Other than labor, most of them are consistent month to month, and by looking at past P&L’s you know pretty much what you spend for utilities, rent, brewing supplies, pub supplies and so onn. Repair and maintenance can jump up and bite you on the butt, however I usually just plug in $500 per month and that covers it for me.
Labor is the big one. I use a spreadsheet to plug the positions in, how many hours they work per month and their wage. Email me and I’ll send you a copy of what I use so you don’t have to make up your own spreadsheet, just modify this one. Anyway, this spreadsheet will give me a total labor which you add to your budget.
When you are all done - this took about ten minutes - is there any money left over from your projections? If not go back and fiddle with the numbers. Labor might be the easiest to change. However running a special that has a food cost could lower that line item. Or doing some sort of promotion could raise sales.
All you need to do now is work this every day to make sure the big variables - Sales, Cost of Sales, and Labor hit their marks. This is done with your daily Scoreboard, and that my friend will take an extra 30 seconds per day to do.
This is some powerful stuff. It really separates the pros from the mom & pop operations. It also frees you up to do the fun stuff in running your brewery and not having to worry at the end of the month if you made money or lost it. I cannot recommend this enough.
e.
