Favorite Books: Brewery Finances

There are so many good business books out there that can help you improve financial results in your brewery business. Here are three of my favorite business books of all time:

Cash Rules: How to Learn and Manage the 7 Cash Flow Drivers for Your Company’s Success, by Bill McGuiness

The book provides practical instructions to measure, monitor and improve cash flow in your business. The primary drivers of cash flow: Sales, Margins, Operating Expenses, Accounts Receivable, Inventory, Accounts Payable and Capital Expenditures.

I’ve taken this concept and modified it to be useful for craft breweries. Check out the Ultimate Guide to Cash Flow for more details.

80/20 Rule: The Secret to Achieving More with Less, by Richard Koch

You’ve probably heard of the 80/20 rule, otherwise known as the Pareto Principle. Essentially, it states that 20% of efforts create 80% of results. So, there’s 20% of what you do that makes 80% of the difference.  The challenge is trying to figure out what the 20% is so that you can do more of these things, and spend more time on efforts that really make a difference.

In the beer business you can use 80/20 to identify your most profitable customers and products (brands/SKUs). Run the analysis and you’ll see that 80% of sales comes from 20% of your customers. And 80% of sales come from 20% of your brands. Then use this insight to improve financial results in your brewery.

Financing the Small Business, by Robert Sisson

Every brewery should have a financing strategy. A game plan so that you have access to capital when you need it. In good times, and in tough times, a good financing strategy will keep your brewery on solid financial footing.

The book covers how to approach banks, how to create loan proposals, how banks make lending decisions, and more.

Wrap Up + Action Items

Check out the books, and apply the ideas in your brewery business. Learn about Cash Flow Drivers, how to use the 80/20 rule, and how to create a financing strategy.  Your financial statements will thank you.