According to stats published by CraftBeer.com the craft beer industry has been booming. In 2014 the industry experienced 18% growth in volume of beer sales, selling over 212 million barrels of craft beer in the US alone. With this explosive growth entrepreneurs everywhere are opening new craft breweries. There are some significant startup costs associated with opening a new craft brewery, so startups are looking for capital to open their doors, and undoubtedly those pesky bankers and investors are asking for financial projections.
So my goal with this post is to walk you through the process of creating projections with our new brewery financial projection model. So crack open a craft brew or two and settle in for a fun hour or two of number crunching.
1. Sign up – So to get started you will need to choose the Brewery Financial Model here and sign up.
2. Business Model Selection – After signup you will need to set up your company and we will have already added the Brewery Business Model for you so you can just move on to start adding revenue.
3. Revenue – Next you will need to add your revenue projections. You will notice that we have already added 4 revenue line items that we think could be relevant for a new brewery:
- Keg Sales – This will probably be sales to restaurants and bars
- Growler Sales – Likely to be retail sales to walk in customers
- Bottle/Can Sales – This is typically wholesale to retail stores
- Retail Sales – This would be walk in beer sales if you have a tasting room or restaurant
So as you will see in this example I assumed that you would start selling to restaurants via Keg Sales right away and then wholesale to distributors and liquor and grocery stores in month 2. In month 6 I assumed that you open a tasting room where customers can come to fill growlers or buy beer by the pint.
4. Expenses – Next you will be asked to complete your expense projections. You will notice we have already added several expenses that are likely relevant for your brewery. You may need to make a few calls to get quotes on different expenses like Insurance, your raw ingredients, a bottling line rental cost, etc.
For this example I assumed that your raw ingredients are going to cost 10% of your sales and your labor to produce the beer is going to be 10% of sales. You, of course, will need to dig in and calculate this for your unique situation. This guide published by the Brewers Association – What does your beer really cost? – is a great tool to walk you through the process of costing your beer. I also assumed 5% of sales for your bottles/cans/growlers/kegs.
The rest of the expenses are generic expenses like accounting, advertising, rent, wages, etc which I have estimated in this example.
5. Assets – In the assets section you will notice that we have already listed a number of relevant assets. In this example I am assuming that you own some equipment and furniture, but you don’t own any vehicles or buildings, you are just renting so you wouldn’t enter anything in for assets. If you own your equipment and some furniture that you purchased for the tasting room, you will need to add them here.
You will notice that I added $50,000 worth of equipment that I think will last 7 years and will only be worth $1,000 after 7 years.
6. Liabilities – In order to pay for initial startup costs while sales ramp up and to pay for the equipment and furniture you might need to get a loan and/or investment.
7. Investors – For this example, let’s say that the $90,000 loan was enough so you didn’t need to find any investors.
Finally you will head back to the Dashboard and view your projected income statement, balance sheet, and cash flow statement.
You can download this example projected profit and loss PDF report here.
Let me know if you have any questions, please feel free to reach out at firstname.lastname@example.org