Craft Brewery Financial Training Podcast
Craft Brewery Financial Training Podcast
Brewery Budget Basics
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In today's podcast we cover the basics of brewery budgeting, keys to success and 3 simple steps to get started building your plan today.
Key Topics
- Budget questions: Who, what, where, why, when and how
- Common obstacles and how to overcome them
- Budget quick-start guide
- The details: How to build the plan, models, tools and templates
- Financial cadence: How to use the plan every day
Resources
- Get the brewery profit brief - tips, tactics, and strategies to build a more profitable beer business
Ready to transform financial results in your beer business? Learn more about the Beer Business Finance Association, a network of owners and managers working together to build more profitable companies.
Today on the podcast, we're going to talk brewery budget basics. How do we build a budget? I think most folks would agree that we need one, and most folks don't have one. So why not? What are those obstacles and how do we overcome them? And a lot of times I think we're just not sure where to start, how to build it, and then what to do with it exactly once it's done. So that's what we're going to talk about today. We're going to talk about those common obstacles and how to overcome them. I'm going to give you a budget, quick start guide, three easy steps to get you rocking and rolling. Then we'll get into the details. How do we build this plan? What models, tools, templates do we use? And then once it's built, how do we install this? We're going to talk about a financial cadence, how you can use the plan every day to help achieve your financial goals. So for now, please enjoy our podcast on brewery budget basics. Welcome to the Craft Brewery Financial Training Podcast, where we combine beer and numbers to provide you with tips, tactics, and strategies so that you can improve financial results in your brewery. I'm your host, Carrie Chemoi, a CPA, CFO for a brewery, and a former CFO for a beer distributor. I've spent the last 20 years using finance to improve financial results in our beer business. Now I'm helping other craft breweries to do the same. Are you ready to take your brewery financial results to the next level? Okay, let's get started. Just a quick note, we'll be right back to the podcast. I want to let you know about a new network for beer industry professionals. It's called the Beer Business Finance Association. It's an organization of financial pros, just like you, looking to improve financial results, increase profitability, connect with your peers, and share best practices. So I'd love to tell you a little bit more about this. If you are interested in learning more, please email me, Carrie at Beer Business Finance.com. That's K-A-R-Y at Beer Business Finance dot com. Or you can visit BBFassociation.org. That's BBFassociation.org to learn more. Today is a solo podcast. Just me and just you, and we're going to talk about budgeting basics for your brewery. So I think we know that we need a budget. It's a roadmap, it's a game plan to help us really build an amazing business. Um, but most folks don't have a budget. So I wanted to kind of explore why that was, talk about the obstacles, how we can overcome, and really just give you some starting points because I think that's the hardest part is building that momentum. Sometimes we're just not sure where to start and how to build this thing and what exactly to do with it once it's done. It feels like a really big task. So I'm wondering for those listening, who has a budget now? And if you have one, are you using it? And do you see the value in it? And if you don't have one, you know, just explore why that is. You know, what are the what are the reasons, what's holding you back? So that's what we're going to talk about. We're going to start with some budget questions, the basics. I find these useful. You know, the who, what, where, why, when, and how. So we'll kind of go through that. I'll go through the obstacles that I've heard and experienced as to why a budget doesn't get done and how you can overcome these. I'll give you a budget quick start guide, really three steps to hopefully get you off and running. Then we'll get into the details. How do you build this plan? What are the models that we can use? What are the tools and templates? And then, lastly and importantly, is how do you use this plan every day? So we'll talk about how do you can install a financial cadence into your business so that you keep the budget, the plan front and center every day and every week. So the budget basics, let's start with the who, what, where, why, when, and how. So the the who is just asking who's gonna be involved in this plan. So kind of sketching that out. You know, there's different ways to go with your budgeting, top-down budget, bottom-up budget, some sort of hybrid of those, but who do you want to have involved in creating this plan? Think about that. Next is what tools are you gonna use to do this, and what information do you need? So tools might be as there are software that you've used or could use, are you gonna use uh spreadsheets like I often do? You can use a combination, and what sort of information, what kind of historical data do you need in order to project? Because I think that's the challenge too, is you know, budgeting, forecasting is really trying to predict the future. I think we'd all agree that's really hard to do, but it's made easier if you have some data to look at. Again, I like to look at a lot of historical information, I like to look at kind of where we've been, what the numbers tell us, like look at the trends, like you know, what is what is happening over time, um, you know, comparative data, ratios, lots of lots of stuff. So, what tools and what information will you need? Next, where will the work be done? Kind of a simple question, but you know, are we gonna gather in a conference room? Are we gonna meet and where are we gonna do this? Off-site, on-site? Why is the budget important? You know, that's really the first question, of course, is you know, this is this is our tool to give us a roadmap to show where we are and where we want to get to. And ultimately, you know, if we don't have that plan, you know, we just we could end up anywhere, and very often we won't like where we end up. So the budget's important so that we have a roadmap that everyone can follow to get us to the financial promised land. The when of this is when is the process going to start? When's it gonna finish? And how, how will the plan be used? How are we gonna implement this? So, just some questions. Again, I think the budgeting process it feels so big and overwhelming. Sometimes we can just start really small, really simple, uh, with those questions that kind of provide some clarity. So let's talk about a few more common obstacles. You know, we're not always clear on how to start this thing and how to finish it. When do we call it done? And the project can feel overwhelming, like any big project, you know. So we get to start with the small pieces, break it down. Sometimes it feels like the budget is obsolete once we complete it. Because business changes super fast. Like, how can we possibly create a plan that's gonna be useful tomorrow, let alone in six months? So that that feeling like, what's the point of this? It's impossible to predict what's gonna happen. Or maybe there's a little bit of baggage. Maybe you're like, ah, we've done this before, and you know, we never use the plan, and it's just a waste of time. So there's lots of kind of bad feelings sometimes around a budget. So, how do you overcome these things? You know, the common big problem, break it down into small, mini projects. So when we look at the budget, we've got different building blocks. You can think of it like a puzzle, um, you know, your sales plan, margin, expenses, capital expenses. So I would say start with some small wins, some things that are approachable, that make sense. Uh the budget has many pieces, uh, but you don't have to do them in order necessarily. So maybe you start with your capital expense plan. You know, everybody has ideas on what we need to buy. You know, we need more tanks, we need more kegs, we need this, we need that. So start with that. That's a listing of what do you want to buy, what's it gonna cost, when do you need it, um, are you gonna get a return on that investment? So just start with something like that. Get those small wins. Next is, you know, enlist your team. You don't have to do it all yourself. I think there's a feeling maybe as an owner or a GM that like you have to do it all yourself, but you know, frankly, you get better engagement and better results when you when you involve your team. Next to overcoming these obstacles is to have a mindset shift. So plans, the the as the saying goes, plans are useless, but planning is essential. Uh, but when you put a microscope on the numbers, it's amazing what you can find. When you dig in there and you really spend some time, um, you can find some really cool stuff. So the planning process really is an unlock. You know, the plan itself is is a nice byproduct, and we got to get stuff in writing. But once you dig in, you know, that planning can really uncover some cool stuff, opportunities. And, you know, lastly, on overcoming obstacles, I would say think about this as an opportunity to dream about your business, not just bang out a bunch of spreadsheets. So it's an opportunity to talk about strategy and goals and objectives and really get excited about things to come. Uh, so that maybe gives you a little bounce in your step as you're digging in on these spreadsheets. So I'd encourage you to think about this for yourself. You know, what are your obstacles to building and using your budget? You know, what's happened in the past? What are you going to do differently going forward? Um, and think about that because it's really hard to get started if you've got these obstacles in front of you. So it helps by naming them, identifying them, figuring out how to go over, around, or through it. All right, let's talk about getting you started. Here's a budget quick start guide that you can think about, really a three-step process. So, step number one is just begin with the end in mind, setting a bottom line goal. Because very often we see in the budgeting process that you know we just don't do it. You know, we do the sales plan, the expenses, this, that, and the other. And, you know, the bottom line just sort of happens. You know, it's a result of doing all these other pieces. I would recommend flipping the script and set that bottom line goal first. The second step is list out your stakeholders and their requirements. You've got people that are relying on your business, um, you know, banks, investors, you know, what do they need? Uh, make sure we get that in the budget. And then the third step is just let's get set the structure for this. Let's complete a budget prep outline. Who's involved? What are the deadlines, uh, and so forth. So, beginning with the end in mind, just to kind of put a little more meat on these bones, we need the specific targets that we're gonna hit. And I typically recommend set a net operating income goal. So, your bottom line, what is that goal? What is that profit target? And let's just say for easy math, you want it 10%. So at the bottom line, I want the net income to be 10% of sales. Okay, that's set in stone. We're gonna, you know, that's our stake in the ground, that's non-negotiable. And then everything else becomes a little bit easier after that. Because now you know where you're headed, you know where you want to go. Whereas traditional budgeting might be, well, we've got to do our sales plan, let's let's bang that thing on. All right, then we'll do our expenses, and then you know, whatever the end result is, is is what it is. But if you turn it around, it really gives you that target to shoot for. Uh, it doesn't mean it's easy, but at least you're clarifying. So that clear financial goal, profit target of 10%. I also think there has to be a sense of urgency when you're doing your budgeting. You know, don't wait, set those weekly deadlines to finalize each section, get it done. You know, done is better than perfect. You've heard all these quotes. For your stakeholders and requirements, you know, if you think about your bank, if you've got a loan, um, you you've no doubt got uh a lender asking you for information. So let's get those in our in our budgets. You know, what information does the bank need from us? Usually there are loan covenants, uh, debt service coverage requirements, um, leverage ratios, things of this nature. So, how do those things work, right? You know, sit with your banker or do do some research online or ask some questions or um you know talk to a fellow brewery owner, like how does this stuff work? You know, so once you understand it, then you can make sure that these requirements are going to be um met by your plan. So, for example, if your loan covenants require a debt service coverage ratio above a certain level, say 1.3, 1.4 times, what they're really saying is that they want to look at how much money is coming in versus going out. And they want 1.3 times as much coming in as is going to go out to cover your debt. So you can usually think of this as like a net operating income compared to your debt service payments, and then you can kind of map that into your into your budget. Leverage ratio is usually a comparison of debt to equity. What does that ratio look like? So without getting into too many details, the the bottom line here is who are your stakeholders, what are their requirements? If you've got investors, you know, maybe they have a requirement to get annual distributions. Uh, perhaps to cover tax liability, perhaps something else as a as a part of their agreement to invest. So what are they? You know, who are your stakeholders, what are their requirements? Make sure they're in the plan. For that budget prep outline, we just have a simple like one-page document where all we want to do is list out when are we gonna start, when are we gonna finish. The deadline is is essential to getting this thing done. And then who's gonna own each section of the budget? So one responsible person. So you might think we have one person responsible for the sales plan, one for the department expense plan, capital expenses. So listing that out and being clear, and then having specific expectations for each owner. You know, what do they need to do and how do they need to do it? So being as clear as possible there. Um so those are three steps to really get you started is begin with the end of mind, set that bottom line goal, list out your stakeholders and their requirements, and fill out that budget prep outline just to provide structure and who's responsible and you know, most importantly, set that deadline. As you start diving into your budgeting process, there's there's different approaches. There's a top-down approach, a bottom-up approach, there might be a hybrid approach, that's sort of a blending of the two. So, top-down budgeting in in this, you know, traditionally what that means is the leadership or ownership is gonna build the budget and give it to the managers to execute it. Uh and it's generally a little quicker to create these. Uh, we're we're using a lot of assumptions and trends and comparative data to build this thing, but we can usually get it done. It's usually done by people that have done budgets before, so there's not a lot of necessarily a lot of training that needs to go into that. And of course, the challenge with that is you you were handing budgets to managers that didn't have a say in how they were built and may not even understand where the numbers came from. So that can cause some confusion, maybe even irritation at times. Uh, some people like it. They like just they just tell me what to do and I'll go do it. Uh other managers really don't like it so much because it's like, well, I didn't have any say in how this is going, and now you're holding me responsible. So there's some some pluses and minuses there. Budget up, uh, I'm sorry, bottom-up budgeting is more like high involvement planning. That's where we're including, say, department managers in the process of creating their plan. And it often will take a little more time to get it done. It takes some faith because we're trusting our managers with financial information. Um, but we're more likely to get that buy-in, that understanding, uh, because they they had a hand in making the budget. Uh, so it does require some training, so not every manager really understands how to build a budget, and frankly, most do do not. So we've got to train them on how to do it. Uh, but the end result can often be uh quite a bit better. But the trade-off is, yeah, it takes takes longer. A hybrid approach might be you know, leadership sets these bottom line targets, 10% of net operating income, and then they ask the managers to build a plan uh to achieve those goals. So, you know, any one of these can work. Um, so I think it's experimentation, it's what what's the culture of your business, what makes sense to you. You know, I prefer the bottom-up budgeting because I want to involve the people that are going to be, you know, tasked with executing the plan. And furthermore, I I learn a lot in that process. You know, everybody's got different perspectives, and the people that are actually doing the work um know what they're doing, you know, and so it's useful to talk to them and ask them, you know, what do we need this year? How do we get better? Where where are our strengths, weaknesses, opportunities, and threats, and then how do we how do we build that into the plan? Some tips and tactics. So these are sort of high-level um approaches that you might think about taking. I love uh these decision models. I have a book called 50 Strategic Models. It's called the Decision Book, and it's got some really cool models in there. One one of which you might be familiar with, the Eisenhower Matrix, where you're just sort of identifying the tasks that are urgent or important or not urgent, not important. You know, you've probably seen it the four quadrants there. So this particular book has a number of other models like that that can can help kind of unlock. I'll just kind of reference my book and give you a couple here that I like that. So one was uh feedback analysis, which I think is kind of interesting. And we're we're looking basically what we're looking at is what's the expectation? What do we think is gonna happen, and then what actually happens. So expectation and result, just continually testing. Uh and I think budgeting this fits very well with that. And the book says, you know, most people think they're no most people think they know what they're good at, but they're usually wrong. So feedback analysis is a super helpful way to kind of test those theories. What do you think is gonna happen? Uh and then test the result. You know, and one of the practical ways we do this is when you're installing your your financial meetings, that financial cadence. Uh it's a great way to get that feedback analysis. I'm going to project what I think is going to happen from a sales expenses, net operating income. And then next week we're going to come in and look at the numbers and what actually occurred. So my expectation a week later, what's the actual result? Oh, I was way off. What happened? How can I do better? And then you repeat that process. Uh so that's that's uh feedback analysis. Another one is a market analysis, a gap in the market model. It's kind of interesting. It's like how to recognize a bankable idea. So, like most models, you know, you've got a y-axis and x-axis and this and that. And it's basically walking you through a series of different questions uh that you can use to try to figure out hey, is is this product or um you know a service? Is this is a good idea? Should we roll this thing out? So you can kind of stress test that. So that's 50 strategic models of the decision book. You can check that out. Another book I really like is um it's called The Book of Beautiful Questions. And basically, it has a whole bunch of prompts questions, and what I liked about it was it says basically the m your mind can't resist answering a question. So the specific quote is Um You can't resist trying to answer a question that has been posed. So basically, if you're asking, if you're framing this in terms of questions, like how might we increase sales, how might we bring in more customers, how might we increase the average guest check? You know, your mind sort of jumps into action, and you gotta stay with it. But that's the basic concept, and there's a whole bunch of you know other prompts and questions uh that can help you in the process of doing your planning. Um, and then a third one is this workshopper methodology, the workshopper playbook. Uh so you can Google that, grab it online, and it's basically a process by which uh you can brainstorm with your team, but in kind of a non-traditional way. So traditional brainstorming, we all sit around the table. All right, we're gonna talk about ways to increase our you know revenue per barrel. All right, everybody, what are your ideas? And it's can be effective, but often it can be a waste of time too. So workshop or playbook is you have the same prompt, everybody's around the table, but they're gonna work independently. So they call it you know working together alone. So rather than you know, kind of a free-for-all discussion, uh, which I do think there's a place for, um, this methodology says, all right, the prompt is how do we increase revenue per barrel? And everybody's gonna take six minutes and you're gonna write down on as many ideas as you can on these sticky notes. And then at the conclusion of those, we're gonna put those sticky notes up on the board. So this gives you a little bit of, it's a little bit anonymous, so people don't have to think, uh I probably have a dumb idea, I don't want to say it, but maybe they'll write it down, and maybe it's a good idea. And you put these up on the board, you remove any duplicates, like I might have had an idea that's the same as a couple other people, we only need one of those, and then you're left with, you know, uh X number of ideas that are up there, and then the plan is to take those ideas and then filter them through a system of you know what would be the highest impact and what's the easiest to implement. So a basic grid whereby you can kind of prioritize um and then figure out which ones you're gonna take action on. So I love the concept, I've you know done it in practice a number of times, I think it's really cool. Um, and these can be ways to make the budget come to life a little bit more as well, uh, or or even get better because I think one of the things with the budget is yeah, it's numbers, but it's really about actions. Like, what are we gonna do in order to achieve these outcomes? Um, so that workshopper methodology can give you a whole bunch of really cool ideas, uh, and best of all, you can kind of crowdsource them from your team. So, some more budget tips and tactics. These are more numbers based, like these are the things that I look at as I'm doing the budgeting or getting ready for it. I'll look at a lot of historical information to set the content. Where have we been? So I might go back three to five years. What am I seeing? Where were we? Um where are we now? Um, what's realistic? Because a lot of times we might say, I want to grow sales 10%, but we've never grown sales 10%. Like, how are we going to do it? So being a little bit of realistic, setting the context. I also like to look at a lot of trends so I can spot patterns, problems, opportunities that might be out there. Of course, using metrics and ratios to summarize, to simplify a lot of complex reports. And we do a lot of like per barrel metrics, labor, dollars per barrel, revenue per barrel, things like that. And then I'll look at year-to-day comparative data. You know, how are we doing kind of year over year? And where are the plus-minuses and you know, where are the areas where um we we might have problems, things like that. So just a few tips. It's just really kind of getting familiar with the numbers and the context so that as we're you know projecting and doing our budget, we feel a little more confident because we can kind of see, all right, well, I see where we've been and now I can hopefully project where we're going. Alright, let's get into the nitty-gritty of building your plan. So to simplify, you know, the big problem, we break it down into our six building blocks. So those building blocks are your sales forecast, your cost of goods, or your margin plan, operating expense plan, capital expense plan, debt service, or a loan schedule, and your cash flow drivers. So for each of these building blocks, if you will, you're gonna have you know a separate game plan. And what's important to note is you don't have to do these in order. In other words, a lot of times we'll see, oh, we need to do the sales forecast first, and then we'll do this, then we'll do that. Sales forecast is often the most difficult. I it's hard to project, particularly if you're you know relatively new and you don't have a lot of historical data. So start where you've got some low-hanging fruit, and as I said before, maybe your capital expense plan is a good place to start, because we often know what we want to buy or what we hope we can buy, and we have a pretty good you know idea of what it might cost, and we get a pretty good idea of when we would want to buy it. Then we need to think about where are we gonna get the money for that? Uh, are we gonna borrow money? Are we gonna use cash? It can be a combination. Uh, but you could start with any of those items, you don't have to go necessarily right in order. The operating expense plan might be the second easiest place to start because we typically know where we're gonna spend money or what we've spent money on in the past. And you know, if we look at do an 80-20 analysis, like what are the big operating expenses? Where should you spend most of your time? It's payroll, occupancy, and everything else comes after that. So you can kind of list out building out a payroll plan can be super helpful. Like, who who's on the roster now? What are we paying them? What additions do we intend to make? What changes to compensation? Uh, get that all listed out. That can be a super useful tool because I think we do find the budget is, you know, once it's done, we're like, all right, how do we actually use this thing? So a payroll plan can be very helpful for your managers. Like, well, what's approved? Like, are we gonna add, you know, that assistant brewer, like we talked about? Is it in the plan? Yes or no? You know, what do we have set aside for funding for that? And the plan can always change, but if we can get it down on paper, that's gonna be a great tool to help our uh managers run the business. So that's just one example of operating expenses. You dig into the details, you know, what what is occupancy cost? So it's like rent, utilities, water, sewer, things of that nature. Those we can kind of you know, we got a lot, we typically will have historical data on that. If you're a startup, that's it's a different scenario, but you know, listing those things out. So the point of this is get the six building blocks, don't have to do them in order, start with low-hanging fruit, something you understand, or you know, feel like I got a fighting chance to fill that one out or predict it, um and then just kind of keep working through it. So your sales forecast, cost of goods and margin plan, operating expense plan, capital expense plan, your debt service and loan schedule, and then your cash flow drivers. So your cash flow drivers are things like live on the balance sheet. Inventory, accounts receivable, accounts payable, for example. So think about how to plan these things out. You know, inventory, each of these cash flow drivers has an underlying measurement with it as well. When we think about inventory, the the question is, you know, do we do we have the right amount of inventory? It feels like we might have too much. Maybe we don't have enough, we're we're always running out. So the question is, what's the right amount of inventory? And the answer can be provided by certain ratios. So for inventory, it would be the number of inventory turns or turnover, or inventory days on hand. So you're you're really calculating what are my forecasted sales and what do I need to have on hand right now to reasonably meet those forecasted sales, but not too much, so I'm sitting on excess. So when you do these measurements, you'll be able to kind of calculate what the right amount of inventory is. So those are your six building blocks, and then of course, there's lots of tools and templates that you can use. So for me, I'm still, you know, I'm using a tool called Reach Reporting, and I'll share the link if you want to check that out. I I find it very useful. It's it's sort of like Excel, but it doesn't break like Excel does. But often what I will do, truth be told, is I'll start the budgeting process in Excel. So most breweries that I work with use QuickBooks. So you simply go in and I'm gonna run a series of reports. Um go in and run the income statement by month, and I'm typically gonna run 18 to 24 months worth of data. I'm gonna dump that into Excel, and then I'm gonna basically create some formulas so I can roll forward to the new year. So I'm gonna look at last year and say January through December, and I'm gonna roll it forward to the year ahead, and then I'm gonna keep a lot of the seasonality. So for example, you know, January sales versus July, so they're very different. Um, but particularly if you've been in business for a while, you can kind of see the the patterns, the trends. Um so I'm keeping that same sort of month-over-month um pattern, if you will. So if for example, if we you know, over the course of a year, if we sell six percent of our sales in January and 11% of our sales in July, I'm keeping that that same rough seasonal factor that's baked in. And then I'm just applying another factor, which is if I'm gonna grow or decline. So is it gonna be flat? Am I gonna be up five, down five? What's that number? So just creating a series of formulas so that I can pretty quickly, and it's not super accurate, but it's a good kind of first cut on this, is get a good prediction on what are the trends for sales. And of course, if I've got tap room and wholesale and others, I'm looking at you know the individual line items, you know, what are the trends, what do I think is gonna happen from an increase-decrease standpoint? Plug in those numbers, and then importantly, I want to have some sort of action item related to it. So if I if I'm expecting to grow or even decline or stay flat, or deviate, I guess, from the trend, you know, what are the things I'm gonna that we're gonna do? What are the action items? You know, what are the notes? Because a lot of times we do the budget, then we revisit it maybe down the road, and we're like, how did we come up with that number? So if you're putting notes in as you go, you have you know, first just a justification for what why did you choose you know to be up 5% when you know we were down 5% last year, for example. And then you might say, Well, yeah, I I did choose that. However, we're gonna have a price increase here, you know, we're gonna add more marketing dollars there to whatever it may be, but to put those action items in can be useful. If you're gonna be assigning uh you know financial accountability to your managers, it's also useful to put uh names on your budget. So there's this concept of one number, one name. So as you're doing your budget, looking at each of your accounts, put a name there. So you have a very specific owner that's gonna help you, that's gonna help them uh to really clarify what am I responsible for? So now you've kind of got it all in one package. Like, what are the historical numbers, what are my expectations for changes and projections, uh, who owns this number, and what are the action items that we're gonna take uh in order to hit it. So, in a nutshell, that's how I do it. Now, in the Reach Reporting tool, um a lot of this is automated. So it'll connect directly with QuickBooks, it'll grab that information, uh, put it right into the software. You don't have to do it, you just click a button. Because that is the challenge, of course. One of the many challenges with Excel is it if you want to update anything, you gotta go in and re-re-update it, right? Type everything in, or oh gosh, a formula broke. Uh so the Reach tool doesn't have those problems, and it can sync and update. And then once you're done with your budget, I think another challenge with doing it in Excel is how the heck do I get that thing in QuickBooks so I can do budget to actual numbers? Well, it's not easy. Uh in Reach, it is quite easy. So you simply just uh build the budget in Reach. You're connected to QuickBooks each month. You click a little button and it says, Alright, show me my budget to actual, show me my variance. Uh Reach has also got some really cool dashboarding tools. Takes a little bit to set it up, but once you do, you can get a real nice look at, you know, we we typically talk about these key metrics and scorecards and dashboards, and I do a lot in Excel there as well because it's just easier to kind of sh demonstrate here's here's what the metric is, and here's how we calculate it, and here's why it's important. Whereas Reach can really automate all that. So if you think about some common metrics, might be um, you know, what's our revenue per barrel through the tap room, revenue per barrel through wholesale distribution, uh you can pop those numbers in and uh it will report them for you and do it in a graphical form as well if that's useful. And I'll also create um kind of pre-packaged month end, quarter-end, year end reports, whatever time period you want. And that can be a real time saver as well, because I know for me at month end, if I'm going in, I go, okay, I gotta run my income statement, my comparative, my my balance sheet, my cash flows, I got some of this, some of that, and it it takes a while. Um, and now I gotta send it to whoever needs to see it. Whereas you go into reach, you literally once once your month is closed. I mean, you have to do the month-end checklist, you gotta make sure you know your numbers are complete and accurate and ready to go. Um but that report will generate basically at the click of a button, and you can dump it into PDF format, looks really good, and you can email email it off to the people that need to see it. So if you've got other you know, ownership, investors, you know, obviously your key managers and whatnot, uh, that can really really be a great time saver and give you um really good information. Alright, so those that's just a little bit about budging. Obviously, there's a lot more involved, but you know, the the point of this and what I want to talk about is to is to really overcome the obstacles and get started, get that momentum. Um and then the the devil's always in the details of sitting with the numbers and building out a template. Um, but you start small, it's like the the puzzle, you build that puzzle one piece at a time. So let's wrap up with alright, the budget is done. Now what do you do with it? How do you put the budget into practice? Because I think we'd all agree the traditional annual budget that you might you'll have a picture in your head of what that is, not super useful. So we need to use some common sense here and think about well, what would make it useful? What would make it useful is when maybe I have some daily, weekly targets. So how do I think about that? How do I give my taproom manager or maybe my food manager or my my distribution sales manager, what what are their daily, weekly metrics, targets, and how do they, how can I make them align with the budget? So, in a simple example, you've got your annual plan, you've got your expectation for taproom sales, here's my sales forecast, here's what it is January through December. Let me just break that down, you know, into weeks and weeks into days. And a lot of times your point of sale system can just do this automatically. So you don't even need to, but we want to make sure that the goals align with that annual budget. So now your taproom manager every day can say, um, you know, here's my here's my goal for the week, here's my goal for the day, and then we're focused on that. And then as we're thinking about installing that financial cadence, those weekly meetings, that becomes the number your taproom manager brings. What what's your goal for the week? Where are you at? What's your goal for next week? You know, what are what are we projecting? Uh and you can push that concept down to your different department uh manager. So we're looking for real-time or near real-time information, you know, not the month-end financial reports that come out three weeks after the month that's close. We still need those, but not super helpful in running the business. As I mentioned before, the payroll schedules, I find those super useful. Um show exactly what we're managing to. So, for example, if you're like, hey, we don't want any overtime, we're not going to hire anyone new, we're putting a cap on increases, you know, whatever the expectation is, you know, we can build that uh into the plan. So the financial cadence is really a three-step process. One, build your financial budget, your annual and monthly plan. Two, create these daily and weekly metrics that make sense for your managers. And three is install the financial huddle system. So the mindset is that budgeting is not one and done. It's living, it's changing, it's evolving. And these weekly financial meetings, these huddles, uh, ensure that you're going to get at least 52 touches per year on your plan. And that's 52 chances to get it right, 52 chances to improve, and 52 chances to, you know, constantly see how we're doing relative to the plan. So these financial meetings, these are the form for communication and for accountability. I think that's super important too. Is we're not just going in and you know spitting out all the numbers. We're saying, you know, where are we at? What's the goal? What's the gap? How are we going to close the gap? What are the action items we're going to take? I'm going to do A, B, and C. Next week, you report on that. I did A, B, and C and it worked, or I A worked, B and C didn't. I'm going to try X and Y, whatever the case may be. But it's what are you going to do to close the gap? Hold them, hold each other accountable, um, support each other. All right, here's an idea, let's go try this. But constantly watching, you know, did that thing work? And that that maybe speaks a little to that uh sort of feedback analysis. What's your expectation and what's the actual result? So it's a structured, efficient meeting to keep you laser focused on your most important numbers and create action to ensure your targets are being hit right in the bullseye. So again, at a minimum, it's 52 times per year laser focused on the financial results of your business. So let's wrap it up here. Um so for next steps, what are you gonna do? I would I would throw out there that you commit to building your financial plan, that you create those daily and weekly key metrics that align with your plan and engage your managers in actively monitoring them, and install a financial HUDL system, that financial cadence that keeps the financial plan front and center and keeps you laser focused on your most important numbers. So that is all I have for you today. I hope this was helpful, gives you some starting points. Um, if you're interested in learning more about Craft Brewery Financial Training and the Beer Business Finance Association, this is what I do. You know, I can help you build your budget. Uh we've got courses on it, uh, I work one-on-one with folks. You can just reach out and let me know. Carrie at Beer Business Finance.com, K-A-R-Y at Beer Business Finance.com, or you can click the links that will be in the show notes or in the blog post, uh and you can get more information there. So, regardless, I would encourage you to build that budget, create those daily metrics, and install a financial meeting system in your brewery. And believe me, if you do so, your income statement will thank you. Thank you for listening to the Kraft Brewery Financial Training Podcast, where we combine beer and numbers so that you can improve financial results in your brewery. For more resources, tools, guides, and online courses, visit Craft Brewery Financial Training dot com. And don't forget to sign up for the world famous Kraft Brewery Financial Training newsletter. Until next time, get out there and improve financial results in your brewery today.