One of the fastest growing industries in recent years has been the craft beer industry, and taproom-focused breweries are cash cows. Business is booming, lending itself to new opportunities, but unfortunately, many small breweries lack formalized financial plans and simply grow too fast for the capabilities of their operation. Brewers don’t often moonlight as accountants, and when the cash flow is positive, it may seem like a strict financial plan isn’t a necessity. If you want to maximize revenue and build a healthy business, a strong financial plan is the foundation to build upon.
The three basic pillars of accounting that a taproom-focused brewery should familiarize themselves with first are: a chart of accounts, a general ledger, and financial reporting.
The chart of accounts is a list of the things you need to track on your financial reports. Such items on the chart of accounts would include revenue, expenses, assets, and liabilities. For taproom-focused breweries, revenue can include draft beer, bottled or canned beer, growler sales, and merch, and the list can be as broad or as narrow as you’d like, depending on the level of detail you want to drill down to. Expenses can include wages (including employee benefits), the cost of beer, insurance, utilities, and other supplies. A best practice is to separate the taproom accounting from the brewery accounting as if the taproom itself is a separate entity. This will help you gauge success and plan accordingly.
The general ledger is where detailed transactions are recorded. Sales and wages, then, are recorded as entries in the general ledger. Every sale, transaction, and payment to a vendor ends up in the general ledger. Then, these details are summarized in the form of financial reports.
Financial reports tell the story of the business: is the taproom profitable? How is cash flow? What’s the company’s net worth? The “big three” financial reports are the income statement, the balance sheet, and the cash-flow statement. An income statement records sales, expenses, and net income. The balance sheet records assets, liabilities, and equity. Lastly, the cash-flow statement records cash activity (like a bank statement).
FYIsoft can help you get off the ground
FYIsoft has the tools to help any business develop a sound financial plan. If your taproom has an existing general ledger, FYIsoft can probably integrate with your existing system.
FYIsoft knows that building a strong foundation is imperative to your business’s success. Schedule a brief demo today to see how cloud-based software by FYIsoft can help your brewery succeed.
