Controlling Brewery Costs in 2023 - Podcast

Episode Overview

We're joined by Kary Shumway of Craft Brewery Financial Training to talk about how to better control costs in 2023. A very timely episode considering the current economic climate. Even if we weren't dealing with a recession or inflation, the insights from Kary on this topic are still really useful. 

If you are looking for more financial insight, head to Kary's website, www.craftbreweryfinance.com. 

Episode Transcript

(AI-Generated, please forgive any typos)

  What's up? Welcome to the Get Optimized podcast. This is Chris Overlay, your host, and thank you for being here. We've got an interview podcast episode for you today with a good friend of mine, Mr. Carey Shumway. You know, he is the guy when it comes to answering questions. About craft brewery finance, and if you've been listening to my podcast for a little while, you know, I've had him on the show before to talk about some financially related things, but I had 'em on the show recently because I wanted to ask some questions about how can we better manage costs?

How can we better control cost reduced? , especially because we're in 2023, where we've got all like the UN words that we don't like, inflation, , recession, all these things that we, we don't want to have going on where they are a reality right now. And, uh, that's why I was timely to say, Hey Carrie, why don't you come on here?

I got some questions for you because I definitely can't answer these questions. So let's have you on, let's, uh, let's go through it. And man, very, very impressed with, uh, you know, I'm always impressed with Carrie, but. Did a really great job of answering the questions I posed to 'em. I think you're gonna get a ton of value out of our conversation.

And just before we get into the interview, I do wanna let you know that if you need more information, you're looking for more resources to improve your financial literacy for your brewery, then you have got to go to Carrie's website. It's craft brewery finance.com. and check out his mountains of resources that he's put together for you.

He's got a membership program, he's got courses, templates, and a nice newsletter and blog as well. You've gotta go sign up for that. Like right now. You can do it while you're listening to the podcast. Honestly, it's craft brewery finance.com and uh, again, I encourage you to go check it out. For now though, we are gonna get into the interview and, uh,

Harry, what's up man? How you doing dude, Chris, I'm doing great. It is wonderful to see you as. Yeah man. Um, I'm always pumped to talk to you because it's like money is cool and saving money and learning how to do things with money is cool and like you're just a cool dude. So I'm always down to chat.

Thanks, I appreciate that. You know, it's funny, like when I got into, cuz I started like in school, I was like, You know, just accounting. There was like accounting that sounds awful. And it was, and then all of a sudden I was like, oh, actually, you know what? It's awful, but it's really just counting money, you know?

So then people are like, oh yeah, I like money. And you can kind of walk 'em over like that. So if you, if you try to start with debits and credits and a accrual account and people are like, I don't want any, I don't want anything to do with that. , but then you say, no, no, no, we're gonna talk about money. Oh, well, tell me more.

Yes. Uh, you know, I, I failed accounting in college the first time I took it. Um, probably because I made some poor decisions. I, like, I set my class to be like, you know, at the nighttime I started at like five or 6:00 PM when I shouldn't have done that for accounting cause it's a harder course. And then like, also, I was like partying and stuff like that.

So it just wasn't a, a good combination of timelines. Uh, but uh, then I took accounting one and two and it was one of the worst classes I ever took. I got season it and it was a hard time, but then now in like business life, it's like, dude, I have to do so much stuff. I have to talk to my accounting. I gotta like all this QuickBook stuff, I gotta keep all this things in line and ordered and.

It's so much part of my life that, um, I wish I would've paid more attention in school. , it's hard because they teach it, it, it's such an abstract subject, right? It's kinda like math. You take algebra, calculus and most people like, I don't like that. Those that do really love it, but it's so abstract and the way they teach it is like, I do remember they would literally be talking about.

Widgets. It's almost like a cliche. Oh, wi, you know, so we're gonna, we're gonna be making widgets. I'm like, really? We're making widgets. So if they had said, Hey, we're gonna start, we're gonna do a, um, a case study on a brewery, right? Because, you know, it's college, everybody's drinking, and you know, we're gonna show you how to make beer.

uh, you know, theoretically. And then we're gonna talk about the cost of beer and the pricing and how you blah. And that people might have actually paid attention. I don't know. Um, but yeah, back then they, they teach it in such a dry and awful way. So that's kind of what trying to, what I'm tr trying to do in the world is say, look, it's, it's not as dry as a subject as you might think.

It is practical. It can be a real great tool for you to have, you know, this financial literacy. But let's throw away the widgets and let's talk about something fun like, . Yeah. Widgets are dumb, you know, are dumb. Nothing. There's no context around what that really is. And, and I, if I remember, you know, like I said, I, I didn't pay that close attention, but a lot of it's like huge biggest corporation level, like stuff that you're dealing with in these, in these classes.

And even when you read online, it's like, oh yeah, this is how it's done. It, you know, the, the megacorp level. And it's like, well, like what really plays out? For a small business that has, you know, five employees and that's it, you know, and, and an owner. It's like, okay, that's, it's a different scenario on a different level of things and costs matter in different ways.

And I think you're right. I, I would sign up for your class. When, where is it? Can you teaching at the Community College ? It sounds fun. . You can get it online. Craft brewer financial training.com. Chris. Oh yeah. But I think that's right. It's. , you know, we really we're, I think as a species we just overcomplicate things and you know, the accountants and the lawyers, they all love to do that cuz it's a little bit of, it is sort of this, uh, you know, wanting it to be mysterious.

So then you'll have to pay a lot for it when the reality is you, it really doesn't have to be that complicated, you know, it's just like anything you get in there and you're like, all right, let's simplify this down to the basic, what do I need to know? Um, and then just make it as basic as possible.

Because once you start, , you know, where it's approachable, you know, you're gonna give it a chance and then you'll learn a little bit about it. Um, so yeah, I think it really has to start with like, what, what am I using this for? A lot of folks know, oh yeah, I know I need to know that, but I don't even really know where to start or what I'm looking at.

Most of the clients that I work with are like, g I, I just don't think my numbers are right. I don't know what they're telling me. They're all disorganized, blah, blah, blah. So it's really the first step is I go take a. We're just gonna come in, come in and kind of talk about from a practical standpoint, and then you just, just like anything step by step and you know, before you know it, you're, you're off and on your way.

I think one of the things that that comes to my mind, especially now, we're still in the early stages of 2023, and, and we talk about, okay, how do you start to piecemeal accounting and finance and start to break it apart in the little like bite size pieces and considering. Where we're at in the year and, and what's really important this year with, you know, rising costs of things, you know, inflation, recession, everything is more expensive, is how to cut costs or how to manage costs more effectively so that you can, you know, reduce those things and improve your.

your margins and your profit for the business. And that's what I'd like to talk to you about today is kind of, you know, about how, what does this even mean? How do we do some of these things? How do we go about in smart ways of reducing costs? Because it's one thing just to be like, yeah, just pull it off.

Just stop spending money on it. But like, I think a lot of things you're writing about in your blog and you know, I see you coach about and talk about is like, okay, there's a smarter way to go about doing this and to, and to improve your financial literacy when it comes to costs. So, um, let's talk about that a little.

One of the things I, I was checking out your, your blog and you've got some, some good tips on there. And one of them is like a term, I'm like, oh, what is that? I have no idea what the heck that even means. And it's zero based budget, having a zero based budget mindset, which sounds dope, dude. I'm like, okay, great.

That sounds cool. What, what does that mean, mean ? So can you, can you, uh, increase our literacy on that term for us? Uh, well attempt to do so. Yeah. It's funny. It's like traditionally I see, I see generally two. Buckets of approaches when it comes to budgets. One is we just don't have one, cuz we could, you know, we, we don't really quite know how to do it or if we did do it, we're not really sure what we'd use it for or it's probably gonna be obsolete as soon as it's done.

So Mo honestly, most folks really don't even have a budget. And then the other approach is those that do have a budget. There's a tendency to do this thing we call Sally, s a l y, same as last year. So you basically look at, well, what did we do last year? Oh, let's increase it a little or decrease it a little, or maybe we can chop this out.

And you, you tend to kind of replicate what already was. So if you look historically and you say, oh, here's what it was, probably gonna be about the same this year. And if that's your approach, then most likely it's gonna probably be about the same as last year. Now if those results are. Good on you. But more often than not, those results are not quite where you want 'em to be.

You know? So the zero based budget mindset really says, let's just start fresh, you know, and really have kind of that beginner's mind. You know, the whole Buddhist thing. So if you were to say, look, if I were to start this business all over again, , like what cost would I really need to keep? Let me just examine everything as if, you know, I don't know, maybe I'm coming into this completely fresh.

So zero base means don't look at last year because you, we tend to get biased by, well, I guess with that cost there, we probably need it, you know? Um, there's, there's all these other things well on. You can't really get rid of those. You, you tend to kind of. Stuck in that momentum of what already is, as opposed to creating something that you, that you want it to be.

So zero base means really kind of taking a blank slate. You still need all the major columns, right? Sales, what kind of sales, tap room sales, what kind of tap room sales? Well, we've got, you know, over-the-counter beer. We've got package products, merchandising. So go through that whole list and start building these things.

Looking at your, the big chunks in, in expenses are often payroll, occupancy costs, certainly all of your cost of good sold. So really kind of going through each of those with again, sort of that blank slate. So not trying not to be biased by about what was, um, But really starting fresh. So it, it, it's more, I say mindset because, you know, some people may, might take it too literally.

Like what? Like a blank. Like where do we even, how would I even know what numbers to come up with? Well, it's not as literal as that. It's a zero base budget mindset. So you, you can look historically and see what these are, but you don't wanna anchor on them. You don't wanna take them as fact. You don't wanna take them as well, they must be right.

No, no, no. You wanna start with art? That's kind of where we were. Where do we need to. . Right? And the other way to think about this is using zero-based budget mindset in conjunction with, begin with the end in mind. So another fancy saying there. You know, we often say that end in mind. I like some of that too.

So it's like, you know, very often what we'll do when we're trying to create a plan is we'll say, well, all right, let's start at the top and work to the bottom. We'll start with sales and look at cost of sales and then margins and operating. By the time you get to the bottom, you know, you're like, I don't know.

I guess that's the number that it's gotta be. Well flip it around and say, where do you. , you know? Mm-hmm. , a very easy approach is to say, well, we really need to have 15% net profit. So 15% of sales really has to go to the bottom line. Okay. So you start with that, and then you work your way backwards. So when you create the plan, you're forcing it to the number and the outcome that you want, as opposed to, well, let me, let me put all the bits and pieces together and see what it comes out to.

Oh, it came out to that. I guess that's what it is. So it's really taking those two sort. Mental models, if you will, and applying those to your, to your budgeting approach. Healthy mental model for other things too. You know, apply that to your sales goals. You know, I remember when I was on the phone, you know, phone sales back in my early like, you know, college working days, uh, we'd have our sales managers be like, what's your goal?

And it's like, okay. You know, work back from there. So in order to get 10 sales, how many, how many. First appointments do you need to have? And in order to have that many first appointments, how many calls do you need to make to set those, uh, number of appointments? And you work that back down to a, a number so that you can actually obtain and say, okay, I gotta make 200 calls this week in order to, to hit that number.

And it actually sets up your goals a lot more accurately based on what your end result is. And I think you're saying something similar is that, put the end number out there, say where you want to be, and then work back from there. And that almost tells you where your, your budget should. Their costs and what you're aiming for at least.

Do you think that there's a propensity to fear cutting costs in some of these ways? So if you're looking at your budget saying, okay, this is my goal. I'm trying to get rid of some stuff, but like, ah, you know, we kind of need that because. of this reason or we like to have it for this or that's helping us make money.

Like is there a kind of propensity to be afraid to cut costs and how do you overcome that or, or what have you seen work for for businesses out there? Yeah, I think there's either a fear or a hesitation and I think it's largely momentum cuz once a cost is there. We almost look at it like, well, we need to, if we wanted to get rid of it, we would need to have a pretty good argument to get rid of it, you know, as opposed to the opposite, which is make the cost justify itself.

So there again, it's sort of a, a mindset shift in terms of how you're looking at these things. Um, but yeah, I, I think that we don't wanna cut cost number one cause it's no. because yes, one of, one of a couple things is gonna happen. It's like, well, well, where, what costs are we talking about? Mm-hmm. , A lot of the costs might be, oh boy, you know, it's really, it's really convenient to have this product or service, and if we get rid of it, you know, now somebody else is gonna have to pick up the slack, or something's gonna fall through the cracks.

You know, think of any service that you have, you know, whether it's a cleaning service or we just have a couple extra people to help out, you know, with this task or that task. . So there are those items that are kind of buried in there that are just, they just make life a little easier. So there's some fear and hesitation around cutting 'em because you're like, mm-hmm.

oh boy. That really actually is nice to have. Um, so I think looking at it through the lens of kind of two things. One is as you're approaching those, cost number one is, um, you know, does this benefit the customer, right? So if you look at all of your costs and. Just use it as a, as a framework, like a questioning framework for your cost.

Like does it benefit the customer? You know? And if you go through it and you're like, gosh, I have all of these things I'm paying for that, really have nothing to do with it. Cause they make my life a little bit easier, but they have nothing to do with improving the customer or the product. Um, and the other is, you know, does it make us a better business?

You know, so if you're looking at this thing, and that could take any, any shape that you know is relevant for you, but one thing you know, that's that. As an example might be, you know, safety, you know, does this make us a better business that we have, you know, these services or we're, we're maybe some equipment that's helping folks, you know, to avoid injuries?

So does it help the customer? Does it make it us a better business? Those are ways that we can kind of break down this hesitation or fear over cutting costs. And if it doesn't fit either one of those, and those aren't the only ones, mm-hmm. , um, but those are good in terms of a filtering mechanism to say,

Yeah, no, it really, I'm not sure that it does. Um, so then we can, we can put that on the list and you can, even, as you're doing it, just kind of two columns, you know, it, it, it does make us better and or benefit the customer, or it doesn't. Then if it's in the doesn't column, then you know, you gotta hit list for, for things you might be able to cut.

That's a great cutting block, you know, dump, dump everything you can In those two buckets, does it benefit the. , does it benefit the business? And then go from there, you know, and then you can whittle down, uh, at that point, at least weeds out some of the things that makes it easier to make that decision.

Mm-hmm. . Um, I certainly feel that way with some of the things I face. And in my business it's a little different than a brewer. You know, we, we, our highest cost is labor. You know, it takes, we we're a people business, so looking at costs, and I imagine this is true with, with lots of businesses that labor costs are very, very, very high across the board everywhere.

So it's. , you know, how do you make choices on that front? It's, it's hard cuz you're dealing with people at that point and you're like, well, you know, I really like that person. Or they do good work or whatever. And, you know, it's then you have to put on like your cold-hearted business hat and be like, all right, like, this is things we have to try to consider.

Um, but, uh, I like what you said too about is this, does this make us a better business? The thing I thought of was like, um, Thinking about labor was, was benefits. You know, it's like a lot of businesses now are like, you know, we, we give these benefits because it makes our our business better, cuz we offer.

good things to our employees, vacation time, health benefits, whatever. And that's, that maybe is a cost worth that fits that justification, but what else doesn't, what, what falls outside of that category that maybe we can save some money on? Um, yeah, well just pick, picking up that thread for a second. I think that's very true because, you know, one of the bigger expenses that we have is, is trying to fill these open positions.

So if it's legit, hey, we need these positions. Mm-hmm. , you know, I can't just cut it to save money. No, no, no. I need to, I need to produce the beer. I need to sell the beer. I need staff from the table. I need these positions. And then the, the retention becomes super important. So how do we avoid the situation where I've got a vacancy now I'm spending all this time trying to fill it, you know, doing interviews and train.

Now I got somebody that didn't work out and I'm spinning this wheel over and over again. So the benefits is a good point, and there's lots of different ways to be creative with that, that aren't always. Super expensive. Like I was at a seminar recently and they were talking about, you know, traditional benefits.

You think, well, health insurance, dental, maybe there's a 401k. Is there a match? Great, great, great. But to a certain segment of. You know, employees or potential employees that those aren't super important. You know, they may be at the point where they're still on mom and dad's insurance. They, they don't care about your health insurance.

Right. That's true. But, and this was an interesting thing I had not heard of is a lot of folks maybe got a covid puppy. Right. And now they have a dog that's now, and you know what's might be interesting to them is pet insurance. Okay, that, that could be crazy. I get it. Yeah. But if you look at it and you're like, wow, it's actually not that expensive.

They're not gonna be under main health insurance cuz it, you know, they're under mom and dads. But this could be a tool that either helps with recruiting or retraining cuz never it's a little creative and a little out of the box. And while you're spending money, yes you're spending money so that you can protect that turnover.

And that's just one maybe silly example, but I think the idea there is to think what are some out-of-the-box sort of creative. You could spend money, maybe not a lot, that's gonna help protect those other costs down the line, retain those employees. And there's a, there's a whole long list and, and this, this particular presenter was kind of going through some things that I thought were, were really cool, but.

Yeah. I mean you, when you're, when you're looking at cut and costs, you know, you really wanna start to fish where the fish are. So I would say one of the areas that gets overlooked, cuz it's often misunderstood, is cost to consult. So if you're thinking about, you know, what does it cost to make our products, you know, really starting with what, what are the bill of materials look like?

And then you're like, well let's start with what a bill of materials is. You know? So it's a list of everything that goes into making your product. So it's all of the. Things that you can touch, right? It's the liquid, it's the packaging. It's everything that kind of goes into it's direct materials. Then there's direct labor, all the people power that kind of goes into the production and packaging, and there's the overhead.

That's all the other stuff that is necessary. To produce and package the beer. So overhead gets very confused. Like I don't, I don't know what that, so it's utilities and it's insurance and there's some rent associated with, you know, and labor is just everybody that's involved in that process. So I tend to say, let's start by just kind of getting our hands around.

What are those costs? Uh, so if you're using a brewery management software system, you, you should be able to kind of run these things and say, well, all right, lemme just run, let's start with materials. Let me just run that bill of materials. Lemme run that recipe. Right? So big old list. And then we kind of go through the recipe and we think, all right, what are we, what are we paying for everything?

Now, the obvious, you know, the hops and the grains, most people are like, I'm doing the best I can on that. You know, maybe there's an opportunity for cans. Can we get printed cans? Can we buy in bulk? I know it's more cash flow. The answers may not be readily apparent, but the process is gonna help you kind of uncover.

Cuz often what'll happen is somebody will run this and I'm like, wow, are we really paying, you know that much for, for this item? You know, can we do better on that? And then you start thinking about, well, okay, what could we, well there's buying groups, you know, could we get in a buying group? Yeah. There, there's plenty of these buying groups that are out there that do group purchasing, uh, that might be able to help on, you know, this cost or that.

But you gotta start by identifying like, what, what are the costs? These companies can also do benchmarks for you and say you're spending X, but you know, really the market is 80% of X. So we, we could have some, some advantages and it's the things you might not even be be thinking of. So I'd say cost control's a huge area of opportunity for folks.

Number one, it gets avoided cuz we're just not quite sure. , we know we're making beer, we know we're buying hops and grains and cans, but we're not always quite sure what all the other pieces parts are and what they add up to. So I think you shine. It's like you shine a little bit of light on it. You're like, oh, and then you can kind of dig in and try to brainstorm ways to, to reduce costs.

You, I think you hit a good point there about the assumption that, oh, we're doing everything we can there. So therefore, right off the entire. Section and it's like, wait, wait, wait, wait, wait, wait. What you're saying is, wait, let's look at this really quick. And like, if you were gonna go, I, I would imagine, because I've, I'm making a reasonable assumption here because I've done some of this kind of work throughout the different businesses that everyone, but when you go start talking to a financial person, cause they already help me figure out this stuff, one of the first things they're gonna say is, okay, what gimme the breakdown?

Like, what is all this stuff? what? And your cost of good sold is part of that. So at the very least, you're gonna need that information line itemed out to have somebody come in to help you with it. But you, I think your point, and this great point is going through that process, we'll shine a light on things that maybe you weren't thinking of before.

Uh, another example, I think of my wife and I were putting together a puzzle. We did a puzzle thing for Valentine's Day. I'm literally looking at this puzzle, looking for some stupid piece, a little like white cloud on it. And like I have all the puzzle pieces and I scan through it and I'm like, where the hell is this piece?

And I have looked through a section once or twice, but then looking at it a third time, I found like four or five pieces that have, uh, you know, the, exactly the kind of little pattern I had on. It's like your brain just. Weeds things out and doesn't think about them all the way through until you really start looking at them in a more granular way or a third or fourth time.

And funny example with the puzzle. But it's what I thought of in, in looking at these financial things. I look at it as a puzzle cause it's confusing to me, but I'm like, you know, uh, I think that's a good practice to be in. Um, something else I think of is, okay, one thing is cutting costs, but trying to forecast your costs.

is another thing, and you kind of talked about this once, uh, at least that I saw about purchase orders being a way to forecast costs. And I'm kind of ignorant on how purchase orders work, you know, from my perspective. So maybe you could shine a light there for me and any other people that are ignorant if I'm the only one.

Sorry guys', be a boring segment. But what does that, what does a purchase order really mean? And then how is that helping you forecast costs? Uh, . Yeah. So, you know, purchase order is really just a me another mechanism to kind of control costs before it's too late. And it's really a way to say, like, in our ordinary lives, if we're gonna buy something, if you and I are gonna buy something, so you're gonna buy a car, whatever, probably not just gonna go down a lot and you not need a car, I'll take that one, right?

You're gonna shop, you're gonna go to different, you're gonna, you're gonna test drive, you're gonna get different quotes, you're gonna look at reviews. You're gonna be like, man, should I just keep my old car? You know, my car is still working and you know, maybe the expense feels like it's getting a little bit high, but does it really make, and you do a little bit of a cost analysis.

It's very sort of the same approach as if we're gonna buy something. Let's, and in, in this context I'm talking about maybe a, a larger purchase, you know, maybe it's, you know, new tanks or you know, it's a new kegging line. Candy liner, you name it, you know, the purchase order is really gonna force you to ask some questions that frankly you'd ask in your ordinary life.

Anyway. I e the, the car example. So it's basically saying, Before we spend any money, we, we need to go through a few steps. You know, number one is what is it that you wanna buy? Uh, and let's, and, uh, let's get some quotes on that. So if you wanna buy, let's just say, you know, we, we want a new fleet of kegs. So let's say, um, well you're gonna get multiple quotes for that.

You're probably gonna look at a lease option as well. How does that compare to buying it? You know, what are the economics of that? , you might look at what do we really need this anyway? Have we forecasted what is the basis for, we want new, you know, our sales expanding, or we, you know, do we have a old fleet of kegs that needs to be updated?

So really kind of forcing some questions and then maybe the ROI piece of it, which is, all right, if we were to lease versus buy, what are those? Dynamics look like and which is, which is kind of the better option for us. So it forces sort of some business decisions into the, we need new cakes. Because usually it's like, Hey, I'm doing the best I can.

I know we need new cakes cause we don't have any, well, where are they? Well, I don't know. So then you're like, well, why don't we know? Well, we should, maybe we should put a system in place whereby we do know. So if we order the fleet, there's lots of systems out there. You can use QR codes. You scan them in, you scan them out, you know exactly where your kegs are, how long they've been.

uh, you know how long the turnover is. You might, before you need to buy anything, maybe you just say, oh man, we got about 600 kegs in the market that haven't been back in six months. Let's go get those bad boys, and then you don't have to spend the money at all. Cause that might be a little bit of an extreme example, but this little purchase order, just a piece of paper, is trying to force all these questions and saying, what do you need to buy?

Let's get some quotes. Let's think about alternatives. Let's look at through the lens of a business decision. You know, is there a return on an investment on it? And then once you answer all those questions, maybe you get to it and you're like, no, we need 'em. Okay. What's the best, you know, vendor? What does the pricing look like?

What do the term shipping? Are we including all the costs, uh, et cetera? And then you go through the approval process, and that's basically just like, all right, we wanna spend. , someone else needs to sign off on it cuz it's over a certain amount. They're gonna put some eyeballs on it. And this is all in service of really protecting what might be your most valuable asset.

I know it's always people, but I'm gonna say cash. You know, cash is gonna keep you in business. , you try to protect your cash, you know, so Perch store can help you do that. Now that's one that's sort of a. Bigger ticket item. You can do this in your day-to-day expenses, though it doesn't always have to be, you know, tanks or canning lines and, and thousands or tens of thousands of dollars, many businesses will establish a threshold for spending over that threshold.

Somebody else needs to sign off on it, and we still have to go through some steps. Now that number can be whatever is material or appropriate, but let's just say it's a thousand dollars anytime. So if you give your manager. Purchasing authority, and very often we have to, to run a business. You know, so-and-so does our, our, uh, raw materials order.

They do all of our purchasing, okay? So they can really purchase whatever they want. But if it goes over a thousand dollars, we need a separate set of eyes. We need to purchase order, we need to run it through this system. We need to run it through these questions. Now, maybe there's not an always an ROI calculation, a return on investment calculation, but there really should be, um, com competitive quote.

in writing a good description of what it is we're buying and why we need it. Um, and if we're buying materials, you know, there should be some analysis of, well, what do we have on hand right now? You know, what does that stock level look like relative to say we're buying, you know, a any grains or hops or whatnot.

Um, do we have a good inventory on that? And then you're like, oh, actually, you know, have we taken inventory in a while? It's another hidden area. , we talk about cost control. A lot of it is really sort of protecting the assets that you have. Mm-hmm. . So when you're doing these ordering, you're like, well, it looks like we're out.

Well, are we out? Because maybe it's, you know, we, we moved into a different location. We actually still have it. Yeah. Uh, well the inventory says we have zero. You know, often it's the opposite. The inventory says we have a lot, we go out, we don't have many cause we haven't been counting it. And you know, something happens to it, but the purchase order can really serve.

The end result of the purchase order is, it's. Safeguard, protect, control your cash and help you use it more efficiently. And the sort of unintended benefit of it is it, it does teach people to kind of think like business owners. Cuz very often we're just like, I just need it. I need to buy it. Why are you standing in the way of me purchasing this thing?

Oh no, no. We wanna think about like, like if this was your cash, you'd handle it differently. I know you would. We all would. So how can we kind of force that into the system? , um, and, and have people kind of walk through these, these questions to help not only potentially control or reduce costs, uh, but to maximize the return on those dollars that we're investing.

So the last thing you want is, you know, somebody buying something and then you being like, you bought how much of it and how much cash is now out of the, the system. I got something else to pay for. That is really, really important that I need that cash. For now, we don't have it. Uh, that would be a worst case scenario, but, um, I, I'm seeing now the, the benefit of, of these purchase orders, and I'm making a note here, you know, use port purchase orders for stuff.

Uh, you know, it, it's funny cuz you know, I'm a marketing agency so my business is very different than than breweries. But in talking to folks and in seeing how these things operate on the backend, it makes tons of sense. When you've got tons of inventory, you've got big purchase items coming through.

These are multi-leveled systems of people where some checks and balances and some forethought on why do we need this? I'd love the ROI portion of that would be an excellent question on so many things. Why do we need this? Is it gonna help us? How is it gonna help us? What are some of these competing, uh, quotes that we have on this?

Um, it helps ultimately make, help us make the right decision, even if it's just there for the sake of going through the mental process. I certainly see the benefits to it. Um, Thinking ahead. Forecasting is, is a look at the future. What's, what's on the horizon for 2023? You know, I think that there's some trends that I'm seeing out there where it's like, oh, we're gonna try to come up with some different beers because it allows us to control costs or lower costs a little bit.

Looking at how expensive things are this year. So maybe that's one trend. I don't know if you're seeing the same thing. And then your, your businesses are the people you talk to. What else is going on out there in, in Brewery Finance for, for this year and really, I guess we're already almost through q1, but what's going on the rest of the year?

Yeah, I think the big thing is, is really the fundamentals, right? We've gotta have a financial plan. You gotta understand how it works. You gotta have a mechanism to kind of check back, you know, how we doing relative to the plan. Um, that, you know, is still really, we're, I think we're lacking. I think as an industry, we're really just lacking.

It's not anybody's fault. It's for the reasons we talked about earlier, which is, you know, it's, it's accounting. It seems boring, it seems like, what's the point of this? You know, whatever happens is gonna happen anyway, regardless of what I put in a plan. Yeah. Um, which, you know, it's, it, the, the, the beauty of the plan is not so much like putting numbers on a page, right.

It's like each of these numbers. is going to happen if we make it happen, right? It's gonna have associated action items. If we say sales is gonna grow 10 per what? 10%? Well, how, where we're gonna expand the portfolio. We're gonna expand market, we're gonna add people, um, you know, we're gonna, we're gonna have a new marketing ca.

How exactly? So it really has almost nothing to do with the number and everything to do with. , uh, the action items that we're gonna take in order to help achieve that. So it's sort of that process and outcome. What's the process? We're gonna follow, we're gonna expand our portfolio. We're gonna open new markets.

We're gonna add a new sales rep. Oh, okay. Well, those are all within our control. We anticipate a 10% lift in sales as a result of these actions. Good. They're not, one's not gonna happen without the other. So I think a number one is, Looking in the mirror and saying, do I have a financial plan? Mm, I don't. Or I do, but it's not very good or nobody knows about it.

I mean, this year not, you're in the majority and there's nothing wrong. So I think the first step is recognize that you need it, and then here's the, here's some practical applications of it. Uh, so I think that's super important. I think that, you know, from a trend standpoint, you know, clearly it's, it's very tough out there to grow sales, right?

Whether you're taproom only or you're self-distribution or wholesale. . It's tough. I mean, you know, the on-premise business is really not coming back. Uh, you know, there's just, you walk into any. You know, package, store chain, convenience store. It's like there's a remarkable amount of variety. So it certainly is hard.

A competition is hard. Having said that, you know, the diversity of the portfolio is still really important. You know, you kind of wanna look at, all right, what's selling? Look back over the prior year. You know, what, what did we introduce what works? Innovation is still a thing. Even in your tap room, you know, more and more important to have, you know, offerings for people that come in.

I think there was a mindset that's shifting whereby, you know, it's like, Hey, these are the beers we make. If you don't like it, go somewhere else. Okay. I mean, that's fine if that's what you want, but you know, what about having, you know, a cider available or cocktails or a glass of wine or non-alcoholic products, you know, expand your portfolio.

And that's sort of the old saying. You know, should we go deep or go wide? So if you wanna go wide, you go wide in your portfolio, in your offerings, and you go deep in the specific territory in which you're selling. So that might be tap room and some local self self-distribution. Um, so, you know, those are sort of some, some trends I'm think seeing relative to the portfolio.

But yeah, I think the fundamentals still, still are there. You gotta have a financial plan and, and stick to it. It makes sense, you know, and in times, , you know, uh, competition still exists and costs go up. It's a little harder to maintain business. You know, uh, you gotta get back to basics. And do, you know, some of the things, uh, some of the foundational things really, really well.

You hear that from sports coaches all the time. So you've gotta get back to basics. Gotta come and do the, the fundamentals really, really well. And I think it's true in, in business, and that's what you're saying as well. Is, get the financial plan, right? Do the do the core things really well and it'll help your business overall.

I think the common theme from our conversation today, There are certain practices that if you get into the practice of doing, will help you in so many, so many different ways. And I certainly see that in my business. I think folks will as well. Um, and folks need to learn from you, Carrie. I mean, dude, you run an excellent website.

You got tons of amazing content. You've got templates and coaching, all the stuff you do. and, uh, I think getting help on these things, like from my perspective, I'm a dummy when it comes to these kind of things. I like make pretty pictures and, and help people buy stuff. I'm crap with accounting and anybody else who's like me and, and is like really good at cooking or cooking, brewing beer, all these other things that aren't very good at the numbers, gotta get help.

Um, and that's where you come in and, uh, you've got stuff going on this year. Tell us about that. What, what's coming on, what's going on in, uh, craft beer, finance world, craft brewer, refinance world in your world? Uh, this. Yeah. Well, I appreciate that, Chris. Thank you. And I think, you know, it's, it's likewise, it's like, you know, when I, I come to you for marketing help, for seo, for, hey, this my website, I have no idea.

So there's areas where I'm just like, I don't know, but I know Chris knows, so I'm gonna talk to you. Um, so I think we do have to write, you know, we talk about the importance of team building in anything. and you know, nobody can do it all. And I know a lot of brewery owners try to, and you know, sometimes you do.

You have to, you get a bootstrap, you gotta wear all these different hats. I get it. Um, but there's certain disciplines where you really will get an outsized benefit. And I, I think marketing for sure, I think financial literacy for sure. , you know, really protecting those core assets is super important. So in, in that vein, yeah, I work with people in really one of three ways.

You know, one is I have online courses that are, it's basically an all you can eat buffet style, you know, it's subscription. You sign up, you get all the courses, you get access to me if you have questions. Um, I see all the comments, respond to all the comments and questions, uh, from folks. So that's one. The other is we'll work one-on-one on sort of a project based or more of a.

Kind of ongoing. Um, so project-based might be, Hey, I do need a financial plan. Why don't we, and I try to make it a affordable, I also try to make it a quick thing. So it's basically four weeks. We meet once a week, uh, for an hour, and we're done with four weeks. You've got a financial plan. At the end of each of those meetings, you get a little video.

I kind of, all right, here's what we talked about. You know, you do this, I'll do that. See you next week. And we, and we're done. So people are like, oh, that's good. You know, in four weeks I'm done. I don't have to think about it. . And then there's some ongoing work where it's like, all right, you built your financial plan.

Let's have the discipline. It's a tough word, but have the, and I don't, I, I, we all struggle with discipline, right? Doing those routines and system and processes in a disciplined manner. Um, but I can help with that and say like, all right, each month you're gonna close out your books. and each month you and I are gonna sit down and we're gonna go through it for an hour and we're gonna talk about benchmarks and KPIs, how'd you do compared to plan, uh, and so forth.

And the last thing I've got going, which is kind of new, not kind of new it is new, is creating, um, what I'm calling Beer Business Finance Association. So it's an association of financial professionals in the beer industry. We come together on a quarterly basis via Zoom. Uh, we do a lot of peer-to-peer.

Information sharing, best practices, ideas, what are we struggling with, what challenges are out there? I present on a certain number of topics, um, and then we have a lot of open discussion. You know, we talk with different, and I've found. , it's great that I, I know, you know, I've been doing this for 25 years.

I, hopefully by now I kind of know a few things. I certainly don't know everything, and I'm, I learn all the time from everybody when we do these, but folks often learn better from each other. So if it's peer to peer, you know, this person from a b ABC brewery might be talking to x, y, Z brewery, and they're like, oh, really?

Is that how you did? So it's interesting. To see sort of that cross uh, communication between, between folks and in that form. So I'm kind of trying to facilitate it, um, and bring these things out. So anyway, those are kind of some ways that hopefully we can get the, get the word out there, something for everybody there.

And you know, they're self-driving. , you know, with your, all your can eat buffet of templates and resources or some one-on-one help or team approach, mastermind kind of approach. And I love the mastermind approach, man. You know, getting together with a bunch of other people in the same industry, dealing with the same stuff I'm dealing with, it's incredibly beneficial.

It's like, oh damn, they're, I didn't even think about that. Or at the very least it's like, oh man. , you've got, you know, uh, pain from the same things I'm having pain from, let's commiserate a little bit. And, and that gives me motivation to keep going after it . So that's helpful. Um, so yeah, you just need to, yeah, sometimes you just need somebody to talk, to, talk to.

And I, you know, the genesis of this is you, when I started 20 plus years ago, that was kind of lonely. Like, there's not a lot of finance people in your, you know, or even if there are, it's like they don't may, maybe they need help too. So I think having a group to talk to like that Yeah. Can be. Helpful, beneficial from a financial, but it's also a little bit therapeutic to your point.

Like I just kind of need to, uh, talk about this and Oh, you have the same problem and Okay, good. I don't feel like I'm the only person struggling with this, so that can be very helpful. And, uh, you're gonna be at C bbc, right? You're doing a little thing there as well. C bbc. I'm looking forward to it in Nashville.

And May, it's gonna be fun. We're gonna do a pre-conference workshop on the Sunday before C B C. It's a financial workshop and it's all day. I know 9:00 AM to 4:00 PM believe it or not. And it's not just me though. There's, I think we have about half a dozen. Folks that, um, are in sort of the, the brewery finance field Cool.

Uh, that are gonna be presenting on different topics. And basically we're gonna, you know, create a, create a financial plan together, you know, sales and cost goods, and talk about cash flows and all that good stuff. Um, and then, yeah, on Tuesday I'm gonna be presenting on. Uh, the topic's called cash is king.

So we're gonna go through the major drivers of your brewery cash flow, and then what you can do to, to monitor it and protect that all important asset. So, and you're going too. Tell us about what you got going on. Yeah. Um, man, I mean, your sessions sound dope. Definitely gotta attend those if you're, if you're interested in crappier finance for sure.

Um, I'll be there. I'm presenting on the last day I think is Wednesday and we're doing. , or I'm doing a presentation on advertising. So it's called, you know, how to advertise like a pro, um, how to advertise craft beer Like a pro specifically is the name. But it's gonna be like, you know, us showing some of the formulas and the templates and the things that we do for our clients throughout the industry and what's working so that you can apply it yourself, you know?

So let's show you, let's give you a look behind the curtain. It's like, okay, here's what we're doing and why it works and how to build these systems so that you can kind. Cut to the front of the line instead of, you know, spending your wheels and, and wasting a bunch of money doing things that might not work.

So it'll be, it'll be a fun time. Nothing too heavy, but that's fantastic. But good stuff. Yeah, that's great. and what you and I have done in the past is we've sort of done this sort of combination of finance and marketing, cuz they really aren't, they really do work well together, right? So the finance, Hey, here's the plan, here's where we need to be.

And the marketing is, hey, here's how we're gonna get there. It's like, we've got a product, there's a customer. How do we bridge the gap? What are some things that we can do that are either, you know, new or innovative? I know you've got a lot of new, you know, tech stuff that's come along that's like, wow, that didn't even exist before.

You know, and you can use this, you know, as a way to. You know, kind of advance your market. Everybody's trying to do that. Like, how do I get noticed? How do I stand out? How do I bring more, you know, people into the tap room? It's, these are questions that everybody's wrestling with. So that sounds great. Very timely topic.

I can't tell you how many times I've asked the question, I'm like, okay, you know, we get to the conversation about, all right, what are we, what, what are we gonna be spending on marketing? You know, and I asked the question, well, what's your budget? What have you budgeted for marketing in the question and the answer.

I don't know how much should I spend? And it's like, you know, from my perspective, it's like I can give you a recommendation on what I think kind of works out there and what I've seen work. But like, at least the way that I like to approach marketing is it's like, okay, what, what is your budget? Let's give you the most bang for your buck given that dollars, because it's an, it's an unlimited amount of things that we can do.

We can get, we can be very basic and make that work, or we can do a bajillion million butt bells and whistles, fancy stuff and really blow it up. What have you got to work with? Let's make the most out of that. And that starts with figuring out, you know, your budget, working back from where we want to be profit margin wise, and how much money do we have to move around, and that kind of stuff.

So you're totally right. They go hand in hand and one comes before the other. But, uh, funny, I, I always think of, uh, this is kind of a goofy little thing, but the movie Storks, have you seen the movie Storks? No, I haven't . It's pretty good. Anyway, I've watched it a million times cuz my daughter likes to watch it and it, so it, the, it's, it's just a, it's kind of a funny thing, but they, uh, the storks deliver.

It's why Storks do, right? They used to deliver babies and they got out of that business and now they deliver cell phones in this movie. It's hilarious. Um, but their, their tagline is, make a plan stick to the plan. Always deliver . I think about that, whether it's marketing or your financial plan. Hey, make a plan.

Stick to the plan and always deliver. I love it. All you need to know right there, storks. Have it storks. Sound like good business people. , they got it unlocked. They're pretty solid. They're pretty solid. Nice. Well, Carrie, it's, it's been a pleasure man. It's, it's always a good time talking to you and, uh, this has been educational.

Um, I appreciate it, dude. Thanks for, for giving us the, Okay. I'm happy to do it and always good to see you as well. And as I said, you know, before we started recording, your beard is looking excellent. I can't wait to see it in person in Nashville in a couple months. I'm gonna keep it growing, so we'll see how long it gets in a couple months.

That's awesome. Can't wait. Oh man. Thanks.