Finance for Craft Spirits | Size = Budget & Scalability


The PDF is a slide deck on the topic of budgeting your finance department for a Craft Spirits company.

TCA - Craft Spirits Finance - size equals budget and scalability
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Here is text only outline of the slide deck.


Size = Budget

  • How much of the “wants” you address necessarily are constrained by budget.

  • Accounting costs $$$. Shortage of accountants before the great resignation.

  • Budget approximately 3% of the business “size,” until hit scale (around 20M).

  • Measure size by sales if funded by operations.

  • Measure size by “burn rate” if venture backed.

Size = Budget Example 1

  • Assume size is $1M business

  • Budget approximately $30-40K per year for accounting

  • Doesn’t leave room for much beyond meeting “Level 1” (basic) needs

  • No one in-house dedicated to accounting

  • Probably use outside experts to help setup process

Size = Budget Example 2

  • Assume size is $3M business

  • Budget approximately $90-110K per year for accounting

  • May have an in-house person dedicated to accounting or use an outsourcing firm for greater breadth of experience

  • Start to address “Level 2” wants

Size = Budget Example 3

  • Assume size is $5M

  • Budget approximately $150 -$170K annual for accounting function

  • Have some amount of regular expertise on the team or use outsourcing firm

  • Should be addressing most Level 2 wants, with some constraints on management reporting

Scalability

  • You know that “one offs” can be costly in time, focus and $$ operationally.

  • Ex. “let’s do an export deal, just this once.”

  • You know that spreading yourself too thin costs time, focus and $$.

  • Ex. “Let’s sell in every state we can get distribution, open the maximum number of tasting rooms permitted by law, do e-commerce, ect…”

  • You weight the benefits of those actions against their costs.

  • Don’t forget to consider the costs of Accounting and Compliance.

  • Controversial Position?

  • Don’t build an Accounting process for a $10M business when you are $1-5M business.

  • Ex. Complex ERP systems, excised management/department level reporting, over staffing at the clerical level


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