Category: Finance

Can You Reinvent the Beverage Marketing Wheel?

Cyndi
2 people holding 2 small wheels

By: Hanifa Anne Sekandi

A lot of people believe that marketing a brand is an arduous task. Yes, it requires work. But if you hate this part of building a business, you may find yourself in the marketing denial loop. What is this?

  It is when brands do extraordinarily little marketing and expect big results. It is when brands put in less than what they desire to receive. This mindset leads to a sense of disillusionment and disappointment. We are sure you have encountered individuals who say running a brand is hard. The truth is, creating and growing a brand requires work. But the work should not be regarded as hard. It is important to eliminate this mindset. Embrace a simple, thought-out marketing plan and strategy whether you are a new brand, a mid-range brand or one of the big guys. Understanding how to market your brand should never be approached begrudgingly or negatively. Last Beverage Master issue, we focused on the “why,” as in why is your brand so unique? Why should consumers purchase your beverage rather than Bob’s beverage? Why is your brand making this beverage? Is there a story? The “why” is your first building block, and this will lead you to the most important phase of your simple marketing strategy — who is this for? 

  Nowadays, you do not have to look too far to see the dos and don’ts of marketing. You are in a time where the triumphs and tribulations of top-tier brands are well documented. As of late, major marketing blunders have been put to the forefront. The common mistake among all these brands, not just those in the alcoholic beverage industry, is that they forget the most important marketing building block: the “who,” and I’m not referring to the classic and iconic English rock band. In this case, the “who” refers to your audience, the consumer. Understanding their buying decisions and why they select your brand or your competitor’s brand when purchasing beer and liquor should be at the forefront of your marketing strategy. 

Who is Your Consumer?

  All your marketing initiatives are built from understanding who your consumer is. A concept that seems obvious and basic, yet both new and old brands make it complicated. Since you and your beverage experts are creating the beverage, tasting it and perfecting it, start here. What would appealto you? What would make you run out and purchase your alcoholic beverage over a top-shelf or legacy beverage? Also, what do you wish some of your favorite beverage brands did? How does your brand fill this missing element? A large list is not needed. You are not going to be loved by everyone. Focus on three key features your “who” (consumer) would look for. Look at their lifestyle and how you can highlight that your beverage compliments their personal ethos. Remember, people attach feeling to their purchases. This is why the “why” story is such an essential first step in brand development. It lets you clearly map out how to appeal to and reach the “who.” 

  There are many ways to find your audience. The above is a simple and effective method. If you cannot sell this magical beverage to yourself or your team, then you will not sell it to anyone else. For those who have an existing brand and are struggling with your brand in a marketing landscape, which has become quite cutthroat with the advent of social media platforms, taking a trip back to where you started and your initial goals will help you zero in on your consumer base. Do not be greedy. Do not strive to be all things to everyone. If your brand has been performing relatively well and you are looking for more brand visibility to boost sales.

  Simple changes, more times than not, are needed. Creatively amplifying your existing message can increase your reach and growth. You do not need to burn the building down and start again, so you target a new demographic to buy your beverage. What about the people who have kept you afloat? Your loyal consumer bases? Some brands conduct surveys. Ask the people who have already purchased your drink what you can do better. Or what is on their wish list? Conduct a poll. This will give you some great ideas or help you re-strategize and expand your existing marketing methods.   

Should You Reinvent the Wheel?

  If you are a new brand, the alcoholic beverage world is truly your oyster. You can be outlandish and try something new. You have leeway to reinvent the wheel. Why? Aside from making a quality beverage, there is no sense in trying to copy the marketing strategy of a legacy top-tier brand. Their consumer is loyal. This does not mean that they will not become a fan of your brand. It is like football; people love the team they love, but when it is the Superbowl and their team has not made the cut, they will root for the team they like second best. Some people drink the beer their granddad drank and pass the love of this beverage on to their kids. It is a staple beer at all family events and their go-to beverage when dining out. Whatever the hook was that appealed to their granddad was passed on to them, and so on. Consider this a legacy brand. Legacy brands must strive to expand the wheel, but they should not reinvent it or break it unless they want to lose a loyal consumer base. Ignoring your “who” so you can reach a new consumer is sloppy marketing and a hasty marketing method often spurred on by newer brands going viral on social media. 

  You might be wondering how you would know who your consumer is. What other methods can you use to understand them better to build a formidable marketing strategy? This may sound contradictory to what was stated above. Start by identifying three brands that you are comparable to, your competitors. Study them, but do not copy them.

  Moreover, analyze them and look for what you do not like first. What would you do better, and what is missing? Make this list small. Next, look at the elements you like and what you would do better from a consumer’s perspective. For example, some beverage brands have made different-size offerings for their beverages. This is a simple yet effective difference that sets you apart and boosts sales. Who does not love those single-serve wines or a small-can imperial stout? Your consumer’s needs are not hard to understand if you start with yourself, assuming you are making a product you believe in, and then look for like-minded individuals with the same sensibility. Stay faithful to your plan, even when no one is looking, because someone looking for what you are offering will eventually turn into a large, loyal consumer base that will tell their like-minded friends to purchase your beverages too.

Enforcing Your Trademarks: How Far Should You Go?

Cyndi
corporate man punching the letter R

By: Brian D. Kaider, Esq.

You’ve secured federal registration for your trademarks and you’ve been building your brand recognition.  Per your trademark attorney’s recommendation, you’ve had quarterly searches conducted to find similar marks.  Lo and behold, a new entry to the market is using your trademark.  Now what?  Stop and take a breath; let the initial surprise or anger settle. There is a lot to consider before taking any action.

Take Stock of the Situation

  First, take a look at your own trademark.  Is it the name of your company or of one of your products?  Is it a national brand or one that is distributed in a small geographic area?  In what classes of goods and services is it registered (e.g., class 033 for vodka, class 040 for “rectification of distilled spirits for others,” etc.)?

  Then look at the competitor’s mark.  Is the mark identical to yours or similar?  How similar?  Is it broadly distributed?  Is it used for the same goods and services as your mark?  If not, how similar are the goods and services?  Are your products marketed through the same trade channels?  Are consumers likely to encounter both your products and theirs?  Have they attempted to register their trademark and, if so, where are they in that process?

  No one question will be determinative in any given case, but on balance, they will help develop a sense of how much effort should be expended to enforce your rights.  As discussed below, there are numerous paths, each with its own set of risks and potential rewards.  An international brand that is known throughout the industry, like Jack Daniel’s®, must be far more protective of its marks than a small brewery in Oregon that has a registered trademark for an IPA product only distributed in the Pacific Northwest.

First Contact

  As the owner of a registered trademark, it is your duty to “police” your mark; that is, to monitor unauthorized use of your mark by others and to enforce your right to exclusivity of that mark.  When large corporations learn of potential infringement, their immediate response is generally to have their attorneys send a cease and desist (C&D) letter.  For smaller companies, a personal attempt to contact the owner of the infringing business is often effective.  Sometimes the other party simply did not know about your mark.  If you found their use of the mark before they spent considerable time and money developing it as a brand, they may be willing to simply let it go.

  When making these calls, it is important to maintain a demeanor that is both friendly and firm.  There is no need to accuse the other side of wrong-doing or of violating your trademark knowingly.  However, you should simply let them know that you do have a registration for the mark and that their use is likely to cause confusion in the market as to the source of your respective goods.  If you give them a reasonable amount of time to work through any inventory bearing the infringing mark and to rebrand, this can often be the end of the matter.

Cease and Desist Letter

  If the friendly approach doesn’t work, the next step is generally a cease and desist letter.  This is most effective if drafted and sent by an attorney.  The tone of these letters tends to be more matter-of-fact.  They identify your trademark(s); explain that you have spent a considerable amount of time, effort, and money to build your brand around the mark; identify the other party’s infringing use; state that the use is unauthorized and likely to cause economic harm and loss of goodwill in your brand; and demand that they stop using the mark within a given time frame.

  While these letters can sometimes be effective, especially against smaller companies, they have become so commonplace that often they are simply ignored by more savvy companies who may wait to see if further steps are taken before deciding whether to rebrand.  Accordingly, you should carefully weigh all of your options and decide in advance whether you will escalate the matter if your C&D letter is ignored.

Letter of Protest / Trademark Opposition

  If the other side has attempted to register their mark, there are two ways to try to prevent the registration.  First, you can file a “letter of protest” with the U.S. Patent and Trademark Office (USPTO).  The letter simply informs the trademark examiner of the existence of your trademark and the reasons why you feel that registration of the other party’s mark would damage your mark.  The benefit of this approach is that it is quick, easy, and relatively inexpensive as it generally only takes a few hours for an attorney to prepare and file the letter.  Often filing the letter will prompt the USPTO to issue an office action refusing the registration in light of your trademark, forcing the other side to argue why registration should be allowed.  The downside to the letter of protest is that once it is filed, you have no further opportunity to engage in the process.  If the other side responds to an office action with arguments as to why registration should be permitted, you cannot respond to those arguments. 

  Whether you have filed a letter of protest or not, if the USPTO’s trademark examiner determines that the mark is registerable, it will publish the mark in the Official Gazette.  This publication opens a 30-day window for anyone who believes they will be harmed by registration of the mark to file an opposition to the application.  

  This process should not be entered into lightly.  In some cases, simply filing the opposition will be enough to get the other side to give up its mark.  But, if they choose to fight the opposition, you will find yourself in a litigious process that takes time, effort, and money to complete.  As in civil litigation, the parties to an opposition file motions and briefs, request documents from the other side, take depositions, serve interrogatories that must be answered, and present their evidence to the Trademark Trials and Appeals Board for its consideration. 

  If the opposition goes all the way to the trial stage, it will generally take at least 18 months from when the notice is filed to when the last brief is due and will cost each side in the tens of thousands of dollars.  As with civil litigation, most oppositions do not reach the trial stage, because the parties are able to come to terms and settle the dispute on their own.  But, this often does not occur until sometime in the discovery phase, after both sides have spent a considerable amount on legal fees.

  It is important to note that the object of an opposition proceeding is to prevent registration of the other side’s trademark and, if you are successful, that is your sole remedy.  There are no monetary damages awarded, nor can you recover your legal fees from the other side.  Moreover, while they will lose their ability to register their trademark, it does not necessarily mean the other side will stop using the mark on their goods or services.  In that case, you would have to file a trademark infringement litigation (see below) to get them to stop using the mark, entirely.  In practical terms, succeeding in an opposition will often be enough to get the other side to abandon their mark, because if you were to follow through with a civil litigation, they could be on the hook for treble damages for willful infringement.

Trademark Cancellation

  If you discover the other side’s trademark application after the 30-day opposition window has expired, your only option to challenge the mark at the USPTO is to wait until the trademark actually registers and then to file a trademark cancellation proceeding.  Though there are some differences between cancellation and opposition proceedings, particularly if the challenged mark has been registered for more than five years, they are similar in most procedural respects. 

Trademark Infringement Litigation

  As one might expect, filing a trademark infringement case in federal court is the nuclear option.  Depending upon the jurisdiction, the time frame for completing a litigation may be faster or slower than an opposition or cancellation proceeding at the USPTO.  But, whereas those procedures will likely cost the parties tens of thousands of dollars, a civil litigation will likely reach six figures, or more. 

  The reason for this higher cost is that there are more issues to consider in these cases.  If you are successful in a civil litigation, you may not only obtain injunctive relief, foreclosing the defendant from all future use of the mark, but also may obtain monetary damages associated with the defendant’s past use of the mark, as well as attorney’s fees expended in the proceeding.  Moreover, if the defendant is found to have willfully infringed your trademark, they may be required to pay treble damages. 

  These issues, which are not even addressed in an opposition/cancellation, add breadth to the scope of discovery taken, which increases the cost.  Further, whereas most opposition/cancellation proceedings are decided without an oral hearing, a civil litigation generally requires live testimony and argument in front of a judge or jury.  These proceedings require a great deal of attorney preparation, dramatically increasing legal fees.

Conclusion

  As the owner of a valid trademark registration, you are obligated to police your mark and failure to do so can result in a dramatic diminishment of your rights or even outright abandonment of your registration.  But, that does not mean you have to file a civil litigation against every minor infringement.  Determining the appropriate path in any given situation requires a careful evaluation of all the circumstances and balancing the risks of action versus inaction.  It is critical to engage a knowledgeable trademark attorney, who will properly assess these risks, your likelihood of success, and the most effective course of action in your case.  

  Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation. 

Five Essential Key Performance Indicators for Taproom Managers

Cyndi
taproom at pike place signage

 By: Kary Shumway and Andrew Coplon from TaproomSuccess.com

Taproom managers wear many hats that correspond to a countless number of responsibilities. From hiring to firing, to training and retaining, it is the goal of taproom managers to equally maximize the experience of their guests as it is their staff. One of their most valuable tools to create a successful taproom is data. By understanding data, taproom managers can monitor, maximize, and maintain world-class experiences that customers crave and their team is proud to be a part of, leading to more memorable and profitable taprooms.

5 Essential KPIs for Taproom Managers that can Help You See Greater Guccess

  KPIs, or Key Performance Indicators, are the most important numbers to measure in your business. Think of KPIs like the gauges on the dashboard of your car. The speedometer measures how fast you’re driving, the fuel gauge shows how much is in the tank, and the check engine light tells you if you’re overdue for maintenance.

  Those are important things to know to keep your car running smoothly and legally. Likewise, KPIs for your taproom business need to track the same critically important measurements.

#1: Tip Percentage

  What it is: Tip percentage is the tip amount divided by the total tab (i.e. a $10 tip on a $40 tab equals 25%).

  Why it’s important: Tip percentage corresponds directly to staff member engagement with guests. From Secret Hopper data, we see that when staff offer a low level of engagement, the average tip percentage is 23%. When staff offer a high level of engagement, the average tip percentage is 27%. If Andrew’s average tip percentage is 17% and Kary’s is 27%, it can be deduced that Kary is going above and beyond to build relationships with his guests.

  Where to find this data: Your POS system. If your employees have their own login, it’ll be easy to see their individual tip percentages. If your setup has your team sharing a login, monitor trends over time. For example, if you typically have 3 taproom servers in the taproom and when Andrew’s behind the bar you see a lower average tip percentage, you’ll be able to discover that he’s the weak link.

  How you can use it: Reward and recognize team members who consistently receive a high tip percentage. Make them feel appreciated. When you discover a team member who receives a lower than average tip percentage, use this as a training opportunity. Speak to this employee and discuss what can be done to offer greater support. Even for employees that may treat their position as “just a job,” money can be a motivator. The more employees take the time to build relationships with taproom guests, the higher their tip will be, making them a little bit more money and a little bit happier. As a manager, having happier and better compensated staff will make your life easier.

#2: To-Go Sales

  What it is: To-go sales represent additional purchases on a tab for consumption outside the brewery. Think crowlers, growlers, bottles, and cans.

  Why it’s important: Encouraging beer to-go is an actionable strategy you can train your team to authentically implement that generates immediate returns. On taproom visits when staff do not suggest beer to-go, the guest only makes the purchase 9% of the time on their own. When taproom staff encourage the guest to take beer to-go, the guest makes the added purchase 49% of the time, resulting in tabs nearly $15 higher.

  This metric is not only important as a tool to motivate taproom staff to increase their tabs, but also a valuable KPI for managers/owners to monitor and reward your team.

  Where to find this data: Your POS! Ask your provider the easiest way to filter transactions that include to-go purchases. Consult this data regularly and see who on your team is demonstrating upsell skills.

  How you can use it: Engagement is a common thread in these top 2 KPIs, and you are likely to see those with the highest tip percentages also selling the most to-go beer. Makes sense, right? Your most engaged team members are developing deep relationships with your guests, and are more likely to also suggest taking beer home. Hold frequent to-go beer competitions to see who can sell the most over X period of time, whether a Saturday afternoon, an entire month, or based on hours worked. Moreover, don’t just consistently reward the same top sellers. Consider using this to-go data to recognize your most improved staff on suggesting beer to-go. Whether we’re talking about brand new employees or 10-year taproom veterans, regularly monitor this KPI to make sure they’re using it to their advantage. After all, what server doesn’t want to get tipped a little more when their tab also includes beer to-go? As a taproom manager, monitoring this KPI will help you better maximize the amount of to-go beer sales and increase overall in-house revenue.

#3: Number of Customers

  What it is: The number of customers represents what you might expect – the foot traffic into your taproom. This is how many people come in during a given day, week, month, or year.

  Why it’s important: Clearly, the more people who come in, the more sales you can generate. We often create taproom sales projections using just two numbers to start: 1) Customers x 2) Average Spend Per Customer (which we’ll cover next).

  These two data points are the key drivers of revenue through your taproom. The more you can increase one or both of these KPIs the more you can boost your taproom sales.

  Where to find this data: Here again, your point of sale system will track this data. It may be useful to create your own trackers (hello, spreadsheets!) so that you can easily access historical information and make use of week over week and month over month comparisons.

  How you can use it: Set up a simple spreadsheet to track the total number of customer visits by week and by month. Pull information from the prior year (or years) so that you can see what the trends look like.

•   Are the number of customers increasing or decreasing month over month?

•   Are there patterns that emerge when you look at the historical data?

•   Are there weeks or months that have unusually high volumes of customers?

•   Why did that happen?

•   Can you duplicate this, or do more of the things that brought people in?

  The goal of tracking the number of customers is simple: bring more customers in to spend more money so that you can increase sales. However, tracking the numbers isn’t enough. Review the trends and use the data to brainstorm ways to increase traffic.

#4: Average Spend per Customer

  What it is: The average spend per customer is a measurement of (you guessed it) how much folks spend when they come into your taproom.  You may see this KPI also shown as average spend per check. Whichever measurement you use, this is an important one to track so that you can understand spending patterns, habits and identify ways to improve on each.

  Why it’s important: When customers come into your taproom they want to buy from you. Unlike some retail stores, where people go in to browse and just look around, folks are coming into your taproom to buy. They want a beer, some food, and maybe some merchandise. The more you have to offer, and the easier it is to buy it, the more your customers will spend. And the more they spend, the more financially viable and successful your business will be.

  Where to find this data: We’re starting to sound like a broken record here, but your point of sale system is the place where you’ll find average spend per customer (or check) data.

  How you can use it: The old saying goes that your best customer is the customer you already have. These are the people that have already purchased from you and love what you have to offer. Why not work to offer them more when they come to your taproom?

  As with most KPIs, it is useful to take the measurements over time, analyze the trends, and make comparisons. A key best practice is to benchmark against your past performance and work to improve the number. 

#5: Revenue per Barrel (BBL)

  What it is: Revenue per barrel, or sales per barrel, is a measurement of how effectively you are monetizing a barrel of beer.

  To do the calculation, take the total number of dollars sold through the taproom in a given time period and divide by the total number of barrels transferred to the taproom.

  For example, in the month of January taproom sales were $100,000, and there were 100 barrels of beer transferred and depleted during January. $100,000 divided by 100 barrels = $1,000 per barrel.

  Why it’s important: The revenue per barrel KPI shows how many dollars each barrel of beer is making us, and will provide clues as to how we can make more.

  Furthermore, one of the key tenets of business and financial management is the safeguarding of assets. The revenue per barrel KPI can help with this.

  What this means is that we need to have checks and balances to make sure that our assets are well taken care of and that we are getting a proper return on our investments. The revenue per barrel KPI can help identify beer loss when the number dips below expectations.

  To continue the example above, let’s say you’ve been measuring revenue per barrel for years and it tends to be around $1,000 per barrel. Fairly common. Then one month it dips to $800 per barrel and stays at this level for several months. What happened? The KPI won’t answer this question, but it will force you to go and figure it out.

  Where to find this data: Again, for this KPI you’ll need to know total taproom sales in a given period and total barrels transferred to the taproom. The POS will have the sales data and your production software (or accounting software) will have the total barrels transferred.

  How you can use it: As with the KPIs discussed above, set up a tracking system to show month over month revenue per barrel numbers. Look back for 12-24 months and see what the trends look like. Is the KPI increasing? Decreasing? Staying about the same?  You can use this data to inform pricing decisions, product mix, and pour sizes.

  Understanding KPIs provides you the ability to find out where your taproom stands, spot areas of opportunity, and the tools to monitor consistency and quality. Moreover, don’t just treat the data as numbers, use it to reward and recognize your team for a job well done. As a taproom manager, these KPIs are vital assets in your toolkit to see greater taproom success.

How Beverage Business Owners Can Achieve Financial Freedom

Cyndi
man enthusiastically jumping on high fist

By: Raj Tulshan, Founder of Loan Mantra

They say money can’t buy happiness, but it can help create peace of mind by alleviating stress in professional life – especially if you’re a business owner! Professional financial freedom means taking control of your finances and amassing enough cash and savings to manage daily operations, handle emergencies, drive growth, expand and maybe even sell the business one day.

  For beverage business owners, knowing that payroll can be met, a second location of your bar or location could be opened, staff and vendors can be paid – and there is still enough money set aside for any emergencies can provide stability. We’re all familiar with certain strip malls or vacant locations where different businesses seem to come and go, unsuccessfully. In contrast, towns and cities are identified by the bars, pubs and restaurants that are landmarks, meeting spots and seen as a local staple in their areas.

  Financial freedom offers a variety of benefits that go beyond financial control. A recent study by Harvard Business School found that having more money reduces intense stress, brings greater control, and leads to higher life satisfaction. Other benefits of financial freedom include improved mental health, better relationships, more opportunities, an elevated lifestyle and greater independence.

  The path to financial freedom. We all want financial freedom so how do you get there?

  Become a business owner. Simply becoming a business owner provides an essential freedom that can’t be explained unless you are one. As countless entrepreneurs attest, many people prefer to work for themselves rather than for someone else because they have more control over their future – and their finances. A Baylor University professor found that despite the challenges of business ownership – including long hours and high stress levels – entrepreneurs report consistently higher rates of happiness vs. people who work for others.

  Create a budget. Develop and stick to a budget. Outline operating income, receipts, expenses, loans, rent/mortgage, insurance, utilities, payroll, supplies, equipment, etc. Carefully track spending to account for every dollar. Negotiate where possible, switch vendors or gain better rates for your phone and cable services. Determine which of your products are the best (and worst) sellers and adjust stock accordingly.

  In addition to tracking budget, there are common questions each business owner should ask themselves to manage their financial health. For instance, do you have outstanding accounts? Do your clients pay on time? Have you spoken with your top clients in the past 90 days? Do you have your documentation prepared in case you need to apply for a loan? Loan Mantra’s financial health checklist is a great tool to monitor ongoing questions that will not only help you track your budget, but your continued success.

  Make it “to go” and be in the know. A report released in June 2023 by the National Restaurant Association found that more than half of millennials (62%) and Gen Z adults (52%) would pick a restaurant for takeout if alcohol beverage options were included. Currently only ¼ of adults order alcohol beverages online due to availability or state legislation, but that is changing leaving room for opportunity. It’s also important to know the upcoming industry trends. For example, that same report states that it reaffirms the associations predictions that local experiences would be this year’s hottest trends – 79% of beer drinkers would participate in a tasting event at a restaurant.

  Establish authentic customer relationships. According to the US Chamber of Commerce nearly everyone has been affected by Covid Fatigue over the past couple of years leaving people emotionally drained and physically worn out. As a result, consumers want their shopping and dining experiences to be easy, convenient and satisfying. Satisfied customers are repeat customers. In addition, customers are looking for a deeper emotional connection and a personalized experience.

  Use digital media. For brands to build and maintain customer loyalty, the digital experience matters but it must not make things more complicated for the consumer. Whether a customer is ordering online or on-site it must be intuitive and easy. People find the new hottest brew, bar or pub on social media so having a presence online is a must. Post images of the business with indoor/outdoor dining space, food and drinks. Post happy hours, specials, trivia nights, special tastings, etc. and publicize them. Encourage satisfied customers to leave reviews. Allow customers to order food or make reservations online. Make services like DoorDash or OpenTable available.

  Be frugal. Consider how business magnate, investor, and philanthropist Warren Buffett purchased a $31,500 home in 1958 and still hasn’t moved out of it, even though his net worth is currently $104 billion. He can obviously afford a bigger, more expensive house, but he’s famously frugal. Conversely, controversial rapper and designer Kanye West is known for his extravagant lifestyle. He lives in a $20 million mansion – and rented Madison Square Garden for a stunt with his clothing line – despite being $53 million in debt. In a bizarre move, he asked Facebook founder Mark Zuckerberg for $1 billion on Twitter.

  This is clearly an extreme example, but it shows how financially responsible Buffet amassed a tremendous fortune and achieved financial freedom, whereas financially irresponsible West spent money he didn’t have, wound up in massive debt, and begged a tech guru for a financial handout on social media. While you’re likely not in the same tax bracket as mega-successful billionaire entrepreneurs, you can learn a few lessons from them. Don’t spend more than you have. And keep your endgame in mind. It may be easier to save money when keeping your eyes on the prize.

  Invest.  Go for a long, slow simmer vs. a quick sear. Most investments are like an Italian grandma’s Sunday sauce – they need to simmer for a long time to be any good. Know that you’ll be in it for the long haul. This won’t be a quick sear type of situation, where your money will be tied up only for a short time. While there’s always some risk and market fluctuations involved in investments, putting some of your available funds toward stocks, bonds, mutual funds, Roth IRAs, 401(k)s and other investment opportunities can help grow your wealth and put you on the path to professional financial freedom. Talk to a financial expert about how to build an investment portfolio and choose the investments that will best fit your specific goals.

  Focus. Focus on factors you control. Over the past few years, we’ve seen headlines about banks collapsing, an impending recession, plummeting stocks, and other doomsday stories about how our financial futures are in crisis. Don’t panic. Everything that’s happening today is just part of the normal economic cycle. There will always be recessions, wars, and fluctuating interest rates. Take a deep breath. Unemployment is down. Banks are protected. There’s been recession chatter for years, and it hasn’t happened. Prices and the stock market will fluctuate over time, which is out of your control. Focus on what you can control on your path to professional financial freedom: creating a budget, saving money, and investing.

  Have an emergency plan.  Create an emergency plan, ensuring that you have enough savings to cover daily and unexpected business expenses. Without adequate funding in place for emergency expenses (the air conditioning breaks, the plumbing isn’t working, the roof leaks), as well as for the inevitable periods of higher spends (e.g. extra products and staffing around the holidays, etc.), you’ll get stuck in a cycle of borrowing to fund necessary operating expenses or to repair what has been damaged, rather than using capital to look ahead to the future.

  Find financial partners.  Who is your banker, attorney and loan officer? Does the banker have a vested interest in your community? What are the financials? Does the bank have good leadership? Do you have an attorney in case you need legal advice, or someone should make a claim against your business? What about a loan officer or provider? If you need assistance with funding to cover the business in a pinch, to handle an expansion or to keep you aware of current government subsidies that you might take advantage of.

  Having the right partners in place before you need them can mean the difference between a quick phone call and financial mayhem. Find a financial team that will be trustworthy, provide insight and are available when needed.

  You should have complete confidence in their knowledge, experience and capabilities. Talk to them about your business financial status and goals and create a financial plan to help you achieve financial freedom and long-term financial health.

  “For business owners, becoming financially free is a desirable – and achievable – goal,” Tulshan explained. “It takes dedication, determination, and consistency, but follow these tips and you will be well on your way to financial independence.”

About the Author

  Neeraj (Raj) Tulshan is the founder and managing partner of Loan Mantra, a one-stop FinTech platform that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses.

Software Options Available for Breweries and Distilleries

Cyndi
woman swiping card in cashier

By: Alyssa L. Ochs

As the craft beverage industry continues to grow, many tech companies are focusing on the needs of breweries and distilleries around the country. There are many benefits to incorporating software into a beverage production business, including reducing human errors, automating repetitive tasks, getting staff organized, harnessing the power of data and ensuring quality control. Software is available for accounting, inventory, packaging, purchasing and scheduling. Breweries and distilleries also use software for sales, quality control and legal compliance. Mobile app software is an option in this industry, as well as all-in-one management software that takes a comprehensive approach and handles various functions. Meanwhile, some producers embrace a more manual process and rely basic spreadsheets and paper recordkeeping.

  So, what are today’s breweries and distilleries using for software, and how are those products working for them? Representatives from two breweries and two distilleries weighed in on this topic and told Beverage Master Magazine about their experiences with software. 

BOSQUE BREWING CO. Albuquerque, New Mexico

  One brewery that Beverage Master connected with on the topic of software is Bosque Brewing Co., which has multiple New Mexico locations in Albuquerque, Bernalillo, Santa Fe and Las Cruces. With a history dating back to 2012, it is one of the largest brewing companies in the state and has grown from a small startup producing 350 barrels the first year to more than 10,000 barrels annually.

Bosque’s production manager Tim Woodward told Beverage Master Magazine that his brewery uses Ekos for inventory and production management. He also uses a few self-built spreadsheets for forecasting, sales and analysis. The brewery handles accounting with separate software not directly tied to Ekos functionality.

  “Bosque has been using Ekos since 2015,” Woodward said. “At the time, it was very affordable and relatively simple to use. The tools in Ekos addressed what we needed most: inventory management. We are able to track inventory, manage orders, invoice sold product, track costs, review pertinent data and oversee production steps with relative ease.”

  But while fully functional, Woodward said he often runs into little “Ekos glitches” that can be frustrating, such as the services being laggy.

  “Cleaner, more functional report systems with intuitive interfaces would be wonderful,” Woodward said. “I pull a lot of data from Ekos on a daily basis, and sometimes manipulating the report parameters to pull accurate data can be cumbersome. Ekos has done a wonderful job developing product planning calendar with drag and drop features, which is very lovely. They have other modules, such as order hub and keg asset tracking, which we do not use or have not found to work with our particular business model but are helpful pieces. Another offering which would be nice is perhaps a more robust server system to support software operation.”

ALVARIUM BEER CO. New Britain, Connecticut

  Nick Palermo, the head brewer of Alvarium Beer Co., told Beverage Master about the software programs his team uses in New Britain, Connecticut. Alvarium launched New Britain’s first microbrewery, founded on the principle of creating an inclusive and communal taproom while revitalizing a historical city.

  On the brewhouse side of things, Alvarium Beer Co. uses Beersmith to fine-tune recipes and DIY templates on Google Sheets for its calendar and brewing schedule, individual brew sheets and inventory of raw materials and packing materials. Alvarium uses Google Drive to store nearly everything related to production, from brew logs to SOP’s, manuals, inventory and supplier contact information.

  “Beersmith is one of the founding tools that many brewers have used in a homebrew or production setting, allowing quick integration and easy ways to edit recipes with something that is fairly familiar and quick to learn,” Palermo said. “We ended up choosing to use Google Sheets and Drive because of the ability for company-wide visibility and editing capabilities.”

  “We are an increasingly growing brewery in Connecticut, and such quick growth over the last couple of years has led to use needing to be able to combat the ebbs and flows of this industry,” he said. “Whether we need to make a quick change to the schedule, edit a recipe from home or have different departments be able to access information without complication, we found our method has been working really well as we expand.”

  “I’d say the biggest challenge we face with our method is the need to manually enter all of our data and make changes in the templates as we see fit,” Palermo said when asked about challenges with Alvarium’s current software. “Lack of auto-entered data does take up a little more time when it comes to keeping track with inventory and can lead to some mistakes.”

  In the future, Palermo would like to see more flexible software plans for different brewery sizes and needs, with costs to match. He said that having a method to integrate software programs more easily into companies with a system in place or smaller staffing structures would also be helpful.

  Cherokee Robbins, the director of sales for Alvarium, told Beverage Master Magazine about software this brewery uses for other purposes.

  Robbins said that Alvarium uses Google Business software, such as Gmail and Google Drive for recordkeeping, Google Sheets for reporting and inventory and Google Docs and Google Calendar for events, appointments and employee schedules. She says these pieces of software are user-friendly, easy to access and meet requirements for digital storage. Alvarium uses Untapped for Business to store information about brewed beers, to allow customers to view beers and check in and to use the menu board to list available products. Robbins said this software is user-friendly and great for keeping track of customer reviews, archiving past beers and helping other businesses find products.

  Alvarium uses Square POS in the taproom for on-premise and online transactions. The team likes this software because it is easy to add, customize and categorize items with an online store that is set up as an extension for customers to shop. However, she has noticed that sometimes items can “disappear” in Square POS, or if they are intentionally hidden, customers can still find them online and order something that is no longer available. After experimenting with various email marketing platforms, the brewery uses Mailchimp for analytics and to monitor communications with its customer base. However, sometimes these emails have ended up in spam folders even after the team has certified and legitimized its domains.

  After interviewing approximately nine different CRM/ERP-related software companies, InSitu hit the four major categories of importance for Alvarium’s sales and distribution team: QBE integration for accounting, inventory management, mileage tracking and logistics for sales routes and customer relations.

“This is a relatively newer software for us, as we started using this in February of this year,” Robbins said. “There is much to learn with all of its functions, but there are times when we may have delayed connectivity issues with its integration to our QBE. Our account representative has been great with staying in communication and finding resolutions for us when we need help, so that is a huge plus. Sometimes support teams with software can be hard to get in touch with when you need something fixed right away.”

  Other types of software the Alvarium team uses include Adobe Illustrator for signage and labels, Canva for business cards and marketing and QuickBooks Desktop Enterprise for accounting and payroll. It uses Prolific as its delivery-routing software to optimize routes for delivery drivers with self-distribution, Eezycloud’s remote desktop for multiple users to access QBE and Workable and Glassdoor for job postings and recruiting.

  When asked what she would like to see in future brewery software offerings, Robbins said, “It would be ideal if all of the platforms we use can be lumped into one software for a brewery our size, especially because we have a hybrid business model with the taproom, self-distribution and now working with a wholesaler. I know there are options like Encompass or Lily Pad available, but those can be pricey and are geared more towards larger distribution networks. I have also heard of a few software platforms that other breweries have worked on creating themselves in the past few years that fit close to what we ideally would need, but there seems to be an important element missing such as integration to QBE, delivery routing software logistics or the CRM portion for our sales force.”

MUDDY RIVER DISTILLERY Belmont, North Carolina

  Caroline Delaney, co-owner and CFO of Muddy River Distillery, told Beverage Master Magazine how her company approaches software in Belmont, North Carolina. Muddy River is the oldest rum distillery in the Carolinas and launched in 2011 with 500 square feet of space in an old textile mill before growing its production from 35 bottles per day to more than 1,200.

  Delaney said that her distillery uses QuickBooks for accounting and payroll and Square for POS and retail sales. She noted that QuickBooks is straightforward for day-to-day accounting, and Square has the lowest credit card processing rates without a monthly fee. She was familiar with QuickBooks from previous companies and says while it can be limiting, the next step up in accounting software is much more expensive, and most offerings require contracts.

  Yet running sales reports with multiple customers, states and distributors can be tricky and lengthy, she said, plus QuickBooks raised its payroll fees this year.

  “It seems like once you are signed up with Whiskey Systems or similar systems, they have all your data and it would be hard to switch back or to another software,” she said. “And the monthly fees are quite a bit higher than POS systems, so that will add up. Since we were pretty limited here in North Carolina, we weren’t able to sell unlimited bottles and cocktails until late 2019. We are under construction on a building where we will actually have a bar and event space, so I am looking into changing payroll and POS systems.”

  Delaney shared that Muddy River Distillery does not use distilling software for federal reports but that her husband, Robbie, developed his own system for that purpose and is still using it with the distillery’s production manager. 

  “I know he has spoken to some of the companies, but has not made the switch because of the monthly fees and not wanting to get into a system and get stuck with them,” she said.

STILL 630 St. Louis, Missouri

  Another spirits producer that shared details about its software usage with us is Still 630, which makes award-winning, handcrafted spirits in downtown St. Louis, Missouri. David Weglarz, the owner and distiller of Still 630, uses as many organic, local ingredients as possible in his spirits, with an old-world double distillation method that captures all the flavors while consistently embracing the adventure of experimentation. 

  Weglarz told Beverage Master Magazine that he uses Google software for his distillery’s spreadsheets and recordkeeping. He chose this option and still likes it because it is free and not localized to just one computer that could be damaged.

  “It allows us to edit simultaneously from different locations, and since it’s not based on one physical computer, it’s more safely guarded against a catastrophic loss,” he said.

  However, Weglarz acknowledged that Google Docs and spreadsheets are not specifically built for distilleries, so challenges have inevitably occurred while using this strategy.

  “It’s just an excel-type format so I had to build my own spreadsheets to make it work correctly,” he said. “But I did that, and now I have my own personal distillery software. It’s certainly not as fancy and sleek as the pre-packaged software solutions, but it works and the price (free) is right!”

  In the future, Weglarz would like to see more cost-effective software options offered in the distillery industry. He says that his distillery is priced out at the moment, something many craft beverage producers can likely relate to.

Conclusions and Opportunities

  Based on our conversations with craft beverage producers across the U.S., a few things stand out about what is working for software and where improvements can be made. In general, craft beverage producers are pleased with user-friendly software that offers multiple applications, features analytics to optimize processes and gives multiple users access to shared data. Affordability is paramount for craft beverage producers, and if software seems too costly, they often settle for free solutions that require more manual entry and monitoring despite the extra labor and risks.

  There is a need and demand for software for small breweries and distilleries with limited budgets and modest distribution networks. Many current solutions cater to large operations and are financially out of reach for smaller and emerging businesses. Integration is important to brewers and distillers, yet many of these businesses feel that they understand their needs better than what any software provider could provide and prefer to take a DIY approach, creating their own internal systems to get the job done internally. Therefore, there are significant opportunities for software companies to focus on the basics and adjust their offerings with tiered options to connect with breweries and distilleries in mutually beneficial ways.

How to Scorecard Brewery Taproom Performance

Cyndi
Barrista preparing beer

By: Kary Shumway and Andrew Coplon from TaproomSuccess.com

In sports you need a scoreboard to understand if your team is winning or losing. The same holds true for measuring the financial and operational results of your taproom. You need a scorecard to keep track.

  In this article we’ll walk through the steps to create scorecards for your taproom so that you can measure and improve outcomes.  It’s not difficult, and it can transform your taproom financial results.

Let’s start with some basics: What is the point of the scorecard?

  The purpose of a scorecard is to show the goal or goals you most want to accomplish. It can be as flexible as you like. It can present financial or non-financial numbers. It is designed to capture and quantify your most important numbers.

The scorecard should:

1.  Keep the goals front and center every day

2.  Be only one page (or one number) so that it’s easy to see how you’re doing at a glance

3.  Use numbers (key metrics) to communicate

     the goal

First: Measure the Most Important Thing(s)

  Deep inside, we all know what the most important thing really is. Whether it is in our taproom business or in our life, we know what it is. The problem is that we forget.

  The most important thing is remembering the most important thing. The scorecard helps you identify what is most important and remember it every day.

  It is a simple tactic, but very effective if you follow it. The scorecard provides focus on how you’re doing towards what’s most important.

How to Figure Out the Most Important Thing

  If you are struggling to figure out what is most important, try a few focusing questions:

●   What keeps you up at night?

●   What is the biggest opportunity to take advantage of?

●   What is the biggest problem you need to fix?

  Here’s Kary’s story…cash keeps him up at night.  More specifically, running out of cash!

  So, Kary designed a one-page scorecard to monitor our business cash position every day. It shows the bank balances, borrowing balances, upcoming spending and expected receipts. It shows borrowing ability and future cash needed to fund growth. 

  The cash scorecard helps Kary sleep better at night because he’s focusing on the most important thing.

  Figure out what your One Thing is, measure it, and put it on a scorecard. 

The Process to Communicate & Educate

  The scorecard alone won’t achieve the goal. You need to take action to get things done. Often, you need action by your managers and employees – your team. 

  The process below is an effective way to communicate anything you like, and it works well with the taproom scorecard:

1.   Know the Score. To know the score, you have to SHOW the score.  Don’t play hide and seek with your scorecard or bury it in a desk drawer. Share it with those that can help you win.

2.   Educate your Team. Teach your managers and employees how the scorecard works and how they can make a difference. People want to contribute, teach them how.

3.   Set a Goal to Improve. Use your past performance + set a goal to do better.

4.   Monitor the score, track Progress. Provide regular updates or people lose interest.

5.   Celebrate the win. Free beer works well when you hit the goal!

  Taken together, the 5 steps presented above are an effective method to make sure you get the most out of your taproom scorecard and achieve your goals.

Use Process and Outcome Metrics

  We are a results-oriented society. We like to get stuff done.

  However, it is useful to focus on the Process of getting stuff done in addition to the results or the Outcome. The idea here is to use “Process and Outcome Metrics” on the scorecard.

  Process means the action taken, or steps that need to be followed. We can’t always control the outcome, but we can control actions, effort, following a prescribed routine.

  For example: Teach your taproom staff to ask for the sale and offer an item to upsell.

  Teach them to ask for the customer’s email so you can tell them about new beers or special releases. Send out marketing emails and make social media posts on a regular basis. These are things you do to drive sales, increase profits, or achieve the most important thing.

  Outcome means the actual results. The Outcome is a by-product of actions. If you’re not getting the results you want, experiment with the actions.

Consider measuring both Process and Outcome goals on your scorecard. We all measure the result, but sometimes we need to measure (and reward) the process to get there. 

Scorecard Templates

  There are different scorecards for different needs.  For example, if you want to increase taproom sales, the scorecard will show key metrics to achieve that goal.  If you want to improve the customer experience and satisfaction, you can create metrics to support that goal as well.

Below, are three types of taproom scorecards:

1.  Sales Focused Scorecard

2.  Engagement Scorecard

3.  Motivation Scorecard

#1 The Sales Focused Scorecard:  As the name implies, the Sales Focused Scorecard is laser focused on key metrics to support sales.

Typical Key Metrics to support sales:

●   Total Sales $ / by day / week / month

●   Sales by category / product / service

●   Sales per BBL

●   Customers per day / week / month

●   Average ring per customer

The Chart below shows an example of the Sales Focused Scoreboard:

Chart shows an example of the Sales Focused Scoreboard:

  The Actual Month LY (last year) column presents the results from the same month last year. The Trend Month TY (this year) column presents where we are currently, and how sales are trending. The Goal Month TY shows what we want to achieve this month.

  In summary, the scorecard shows the type of metric to measure. It shows where we’ve been (past results), where are now (current results), and where we want to be (the goal).

#2 The Engagement Score:  This scorecard combines similar elements of the Sales Scorecard, but takes a greater focus on how well your staff is building relationships with your guests. Your ability to understand the below engagement metrics can result in improvements on your sales metrics.

Typical Key Metrics to monitor engagement:

●   Tip percentage

●   Flight sales

●   Tab size

●   To go beer sales

  Your team members’ average tip amount correlates directly with their level of engagement. We see the staff member that offers a high level of engagement receive an average tip of 27.1% vs a staff member that offers a low level of engagement only seeing an average tip of 24%.

  While flight sales may not be an obvious sign of engagement, flights are an opportunity for a staff member to educate a guest further about your beers, and brewery. When staff suggest a flight, guests spend an average of 20% more, and also a tip a point higher.

  Additionally, because a staff member providing a higher level of engagement is seeking to build a deeper relationship with their guests, they are by default more likely to include more upsell opportunities in their interactions (i.e. suggested additional beverages, to go beers). This results in not only higher tabs, but also more meaningful connections. These guests are more likely to recommend your brewery to others and return sooner.

#3 The Motivation Scorecard:  This is a staff-specific scorecard. As a manager or brewery owner, the more successful you are at understanding your team’s needs, the better you will be able to motivate them.

When you are able to create successful

strategies to motivate your staff, you will see:

●    Greater passion from your staff

●    Greater teamwork

●    Higher tabs

●    Higher retention

●    Your job becomes easier

●    Greater taproom success

  But what metrics can you monitor to gauge how well you are motivating your team?

Typical Key Metrics to support motivation:

●   Frequency of rewards

●   Frequency of recognition

●   Frequency of team meetings and trainings

●   Growth opportunities

●   Length of employment

  While offering your team fair base pay is where to begin, it is also important to regularly reward your staff for a job well done. Motivation isn’t a one-time to go beer sales content. Motivation is finding a plethora of metrics, many from the lists above, that you can use to track and reward your team’s performance. The number and frequency of reward opportunities will correspond with how well your team is motivated.

  Through conversations with your staff, you will learn that some people are motivated by rewards, while others may be motivated by recognition. Your repertoire should include both physical rewards and recognizing team members who hit specific goals.

  While it is important to regularly reward and recognize your team for desired behaviors, hosting regular meetings and trainings is vital to provide them with the skills for success. These are opportunities for you as a manager or owner to connect with your team. The more your team feels connected, the more motivated they will be to work together for organizational goals.

  Increases in your team’s average duration of employment at your brewery correlates directly to the quality of their experience, and thus how well you are motivating them. Length of employment can also represent you offering staff the opportunity to grow with your company. This could come in the form of offering staff educational/certification opportunities, or providing them the ability to climb in rank at your brewery.

Wrap Up and Action Items

  The taproom scorecard is a powerful tool to help you increase the sales and profitability of your taproom. It measures the most important thing, the most important goal(s), and keeps it in front of your team every day.

  To get started with your taproom scorecard, determine your most important thing. Maybe it’s growing sales, profitability, or customer satisfaction. Whatever is most important, get it on the scorecard, and set a goal to achieve it.

  Engage your team in the game of reaching the goal. To know the score (and win the game) you need to SHOW the score. Don’t play hide and seek with your sweet scorecard. Share it with your team so that they can help reach the taproom goals.

  You’ve got the intel, and you’ve got the taproom, get out there and build an awesome scorecard today.

Bank Failures: What are They and Why do They Happen?

Cyndi

By: Raj Tulshan – Founder and managing member of Loanmantra.com

In March 2023, two U.S. banks failed, this triggered plummeting stocks, a fast response by regulators to prevent additional fallout, and concerns from many Americans who wondered if their money was safe. These banks, Silicon Valley Bank and Signature Bank, had depositors withdraw more money than the bank had available. Silvergate Capital Corp., which had significant crypto holdings, soon followed. And on April 28th, 2023, First Republic Bank was rumored to be the next to fall, with stocks plummeting over the course of days. What did these entities have in common? Each failed, in part, because they made high-risk loans, loaned too much within one industry (technology) and didn’t have enough assets to back the loans.

  In the aftermath of this news business owners can feel uneasy. Understanding what a bank failure is and why they happen can help ease the stress and allow for better decision making. Here are some key financial terms surrounding these events from the experts at Loan Mantra.

What causes a bank failure? – A bank fails when the market value of its assets declines to an amount that is less than the market value of its liabilities. The insolvent bank either borrows from other solvent banks or sells its assets at a lower price than its market value to generate liquid money to pay its depositors on demand.

So why does a bank fail? – A bank fails when it can’t meet its financial obligations to creditors and depositors. This could occur because the bank has become insolvent or because it no longer has enough liquid assets to fulfill its payment obligations. This might happen because the bank loses too much on its investments.

What happens during a bank failure? – When a bank fails, the FDIC is required to use the least costly solution to resolve the failure. It will often sell the bank’s assets to another bank. The FDIC may sometimes provide reimbursement beyond its coverage limits.

Who pays for a bank failure? – Despite what is discussed in the media, the taxpayers are not financially liable when a bank fails. Most often, bailout of a failed institution is covered by the FDIC reserve, which is replenished through special assessments to existing banks. However, small businesses are stakeholders in the process and can be adversely impacted by a bank failure. Often, bank failure(s) can lead to disruption in inventory, payroll and availability to get cash to cover costs or improvements.

What’s a Bridge Bank? – A bridge bank is an institution that has been authorized by a national regulator or central bank to operate an insolvent bank until a buyer can be found. It is charged with holding the assets and liabilities of the failed bank until the bank is acquired by another entity or is liquidated.

How a Bridge Bank works – The FDIC has the authority, using a bridge bank, to operate a failed bank until a buyer can be found. Bridge banks may be employed to avoid systemic financial risk to a country’s economy or credit markets. They can assuage creditors and depositors and prevent negative effects, such as panics and bank runs.

How do I know my bank is safe? – Go to the FDIC’s BankFind database, where you can search for your bank by name. In the most recent wave of bank failures, aggressive lending can be a sign that your bank is not operating in a fiscally responsible way.

What’s the difference between a credit union and a bank? – Banks are for-profit, meaning they are either privately owned or publicly traded, while credit unions are nonprofit institutions.

What happens to my loan if my bank fails, is my loan forgiven? – Unfortunately, no. Loans held at banks that have failed are still your obligation to pay. Borrowers should be notified within a few days of a bank closure of where and when to send all future loan installment payments.

What are four warning signs of an impending bank closure? –

1.   A drop in deposits – If you notice a large drop in deposits this may be a signal. The FDIC website contains year-to-year comparisons of total deposits for a bank. A sharp drop means other people are heading for the exits. (FRB)

2.   Delayed financial reporting – if earnings are delayed when it comes to reporting financials they could be struggling with changes in valuations.

3.   Cuts in services – healthy banks try to provide incentives for loyal customers. In a struggling bank, cost-cutting outweighs relationship-building.

4.   Desperate Deposit Accumulation– Banks that are desperate to hold onto your deposit relationship may offer terms that are too good to be true. Likewise, if a bank does the opposite, hiking fees to get the most out of their customers, this may also signal trouble.

  In addition, here are some key terms and definitions:

Bank Failure – A bank failure is the closing of an insolvent bank by a federal or state regulator.

Liabilities – the state of being responsible for something, especially by law.

Insolvent – unable to pay debts owed.

Deposit – a sum of money placed or kept in a bank account, usually to gain interest.

FDIC – The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system.

Receiver’s Certificate – a debt instrument that is issued by the receiver of a business and that may have priority over other liens against the business.

Creditors – a person or company to whom money is owed.

Investment – the process of investing money for profit

Bridge Bank – a temporary bank set up by federal regulators to operate a failed or insolvent bank.

Bank runs – A bank run is when many clients of a bank or a financial institution withdraw their deposits at the same time over fears about the bank’s solvency.

Set off Clause – a legal clause that gives a lender the authority to stop a debtor’s deposits when they default on a loan/when you miss payments for a specified period.

Solvent – having assets more than liabilities; able to pay one’s debts.

Liquid Cash/Asset – an asset that can easily be converted into cash in a short amount of time.

  These bank failures have nothing to do with thousands of other banks that are still running successfully. Community banks are in extremely good shape and banks are still issuing loans. It’s important to remember that the FDIC is in place to protect a certain number of deposits – and the people who made them. Additionally, the federal government created the Bank Term Funding Program on March 12, promising to return all depositors’ money, which helped stabilize unsteady markets. Although many people are concerned about the security of their deposits, there are many protections in place to keep your money safe.

  Know that the FDIC protects your money. The Federal Deposit Insurance Corporation (FDIC) started after the Great Depression to protect depositors’ money. The FDIC automatically insures up to $250,000 in deposits per depositor and per insured bank. During a bank collapse like we saw in March, the FDIC ensures that bank customers will receive their insured funds, which is any deposit up to $250,000. In the unlikely event that your bank fails, the FDIC will reimburse your insured deposits, up to the $250,000 per person limit, if they are maintained with an insured bank or credit union.

  Raj Tulshan is the founder and managing member of Loanmantra.com, a one-stop FinTech and financial advisory service that democratizes the loan process. Loan Mantra provides corporate sized services and capital to entrepreneurs, small and medium sized businesses. Connect with Raj and Team Loan Mantra at 1.855. 700.BLUE (2583) or info@loanmantra.com.

Craft Beverage Philanthropy: Brewing with Purpose While Giving Back

Cyndi
person giving alms

By: Alyssa L. Ochs

Of course, the primary goals in the craft beverage industry are to drive a profit, make money and sustainably secure the business. However, an increasing number of breweries and distilleries have become so entrenched in their local communities that it only makes sense to give back to charitable causes when possible.

  Craft beverage philanthropy is on the rise in the U.S., and there are many creative ways in which brewers and distillers can embrace this trend of doing good while drinking well. There are some valuable lessons to learn from beverage businesses that are focusing a portion of their efforts on philanthropy, which are inspiring if you are looking to host a charity event or donate a portion of sale proceeds to raise money for local causes in your community.

How Breweries & Distilleries Can Approach Philanthropy

  Breweries and distilleries can take a variety of approaches to add a charitable element to their operations. The level of community involvement may vary based on the owner’s interests, the size of the craft beverage establishment and the number of staff members available to help with projects outside the realm of making beer and spirits.

  Some craft beverage businesses are skilled at hosting events, partnering with local nonprofits and using social media to get the word out about needs in the community. Other establishments are willing to try profit sharing with partner charities and give direct donations to organizations working in specific fields of interest, such as early childhood education, homelessness or workforce development. A craft beverage producer can also give back to the community through beer or spirit collaborations, supporting local growers by purchasing homegrown ingredients and hosting art shows featuring local artists. Meanwhile, some beverage producers choose to focus on their own internal sustainability practices instead to make their operations eco-friendlier through recycling, water conservation and energy-saving programs.

  Besides just feeling good about what you do and what you brew, there are many benefits to embracing philanthropy in the craft beverage industry. Getting more involved with local causes increases exposure to a business and builds brand awareness. A brewery or distillery can build greater support among like-minded and community-supporting patrons while engaging with customers on a deeper level. Adding a philanthropic element to a business can help create a more community-centered taproom, generate good press to compensate for a past issue and even result in valuable tax benefits at the end of the fiscal year.

Examples of Craft Beverage Philanthropy

  All across the country, you can find excellent examples of how craft beverage businesses engage in philanthropy without sacrificing product quality or putting a compromising strain on their budget. For instance, Ex Novo Brewing, which launched in Portland, Oregon and also has a presence in New Mexico, was the first nonprofit craft brewery in America and has referred to itself as a “permanent fundraiser to support causes.” Charitable causes supported by Ex Novo include Oregon Wild, Friends of the Children, Mercy Corps and Impact NW.

  Deschutes Brewery in Portland, Oregon, teamed up with Dovetail Workwear to support women’s success in pursuing non-traditional occupations.

  The Phoenix Brewing Company in Mansfield, Ohio, has been involved in philanthropy since it opened in 2014 through special beer releases, apparel sales, sponsorships and fundraising events. It has supported summer camps for children with special challenges, a community theater, a winter coat drive, a homelessness initiative and a brain cancer research organization. Phoenix Brewing is unique in that it accepts requests for donations and sponsorships directly through its website and is a non-tipping establishment. If customers leave cash behind as a tip, the brewery donates it to a designated charity each month.

  Pennsylvania’s Tired Hands Brewing Company is another beverage business that streamlines the funding process and outlines its donation guidelines and application protocols on its website to be refreshingly accessible to local charities.

  Service Brewing, started by an army veteran who served in Iraq, is a Savannah, Georgia brewery that has donated a portion of brewery tour profits and promoted charities that include police, fire and first-responder organizations. Over the years, the brewery has raised over $110,000 for local, regional and national groups.

  Franklins, a family-friendly brewery in Hyattsville, Maryland, is dedicated to giving back to its local community and donated over $200,000 through a fundraiser program for local schools, environmental groups and progressive advocacy organizations. It also supports its community by partnering with local farms to source ingredients and the town’s art alliance organization to showcase the work of local artists.

  Finnegans Brewing Company in Minneapolis, Minnesota, has a policy of supporting local food banks and helping food banks work with farmers in the area.

  In Milton, Delaware, Dogfish Head is a large and well-known brewery that launched a Beer & Benevolence program to support over 150 nonprofits annually. Funded organizations include the Delaware Historical Society, Delaware Nature Society and Nature Conservancy.

  To dip a toe into the realm of philanthropy without going overboard right away, breweries and distilleries might consider centering giving around just one special, limited-release beverage.

  For example, an Ashland, Virginia brewery, Center of the Universe Brewing, made a Homefront IPA and donated all proceeds of the beer to a nonprofit that helps military troops and veterans. It often makes the most sense to link a beverage company’s history and the founders’ interests to philanthropic engagement.

  An example is SweetWater Brewing Company in Atlanta, Georgia, which started a long-term, multi-year clean water campaign to improve the local water supply and focuses its giving on environmental groups in the region.

  You might also tap into the intersection of craft beverages and art, like Horse Thief Hollow in Chicago, Illinois, which has partnered with a neighborhood art alliance to turn the business walls into an impromptu art gallery that displays the works of local artists. 

  Another way beverage businesses can boost community involvement is to partner with local sports teams. In Indianapolis, Indiana, craft breweries have created beers that pair with the charitable efforts of local sports teams, including the NFL’s Indianapolis Colts. The local brewery and bistro, Triton, created a Pink Ribbon Saison with pink and white peppercorns to celebrate Women’s History Month and compliment the breast cancer research funding of the city’s professional football team.

Creative Ideas and Looking Ahead

  For breweries and distilleries that have a handle on their essential operations and are ready to take the next step in community involvement, now is a great time to establish partnerships with local charities. Business owners can harness the trendiness and popularity of craft beer to spark awareness about people, animals and natural resources in need of attention.

  Yet there is no shortage of challenges that come with pairing craft beer and spirits with philanthropy. Selling products must always remain the top priority for these businesses to stay operational, and there will always be public scrutiny about which charities they support and transparency with regard to how the money is used. The quality of the beer and spirits produced must come first so that customers keep coming back and supporting the business and the affiliated charities. If the quality declines, craft beer fans may just as well donate to charities on their own without any craft beverage connection.

  There are also challenges with finding staff members who can manage charitable work, getting the word out about philanthropic efforts, establishing donation guidelines and having enough money to go around. However, this is an exciting time to get involved in the world of craft beverage philanthropy because of how prominent beverage producers have become in their local communities and the potential power and influence they hold for rallying community members to enjoy their favorite drinks with a greater purpose.

  As a craft beverage producer, one of the best ways to launch a philanthropic campaign is to learn from the examples of what other breweries and distilleries have done in the past and contact their teams for details, feedback and mentorship. If corporate philanthropy is an interest within your ownership and staff, it may also be worth reaching out to the local community foundation in your area to discuss options for opening up a fund, donating to specific programs or starting an endowment. Most major cities and even broader regions serving multiple counties have well-established community foundations that can offer advice, resources and training about taking a more philanthropic angle as a charitable side venture.

  Despite hard hits from the pandemic, recession and labor crisis, specialized companies are also emerging to connect the business industry to the nonprofit sector. One example is Positive Legacy, a collective group of nonprofit and event industry professionals that created the Pours for Positive campaign to engage craft beverage companies in nonprofit engagement and outreach for mutually beneficial results and a more vibrant and sustainable community. The Brewers Association also provides resources and tips for producers navigating the complex world of philanthropy. Industry-specific recommendations include adding an online donation request form to your website, hosting events that bring a charity into your business and ensuring donations boost taproom sales with silent auctions and gift cards that draw more business to your doorstep.

Beverage Development on a Bootstrap Budget

Cyndi
man in glasses thinking

By: Jorge Olson — Co-founder & CMO of Hempacco and Green Globe International

Starting a beverage business can be a daunting undertaking, especially for the uninitiated. One of the biggest challenges for someone wanting to bring their beverage idea to the market can be budget. The cost of starting and scaling any business can be high, and when one is developing a new consumable product, the costs can be astronomical if they are not privy to the ways of bootstrapping their new business.

  Regardless of the reason one has behind bootstrapping their business, it is a valid way of building any new venture from the ground up. By being savvy with one’s budget and careful to avoid overspending pitfalls, anyone can build a wildly successful beverage business.

Bringing One’s Vision to Life

  Any great beverage company needs to start with an idea. If one wants to build a business around a beverage, the idea needs to be solid, and it needs to be able to be created with consistency, meaning the formula being used should be set before bringing a beverage to the market. Seeking out the opinions and assistance of industry experts can help one avoid costly formulation mistakes. New entrepreneurs should also do their due diligence in researching the market and ensuring their beverage idea has a strong place in the market. While friends and family may all love what an entrepreneur comes up with, that particular product may not translate to a beverage that could find traction with the market at large.

  The formulation stage could lead to out-of-control costs if one is not going in well-researched and prepared. There can be a good amount of information online to help one research the industry, as well as quite a few books and workshops available that can help people with their beginning stages of business building — all for an affordable cost.

Estimating Startup Costs

  Even when one is bootstrapping a business, costs can very often exceed expectations. When diving into initial market research, a new beverage business entrepreneur needs to be realistic about how much it will cost to bring their beverage to the masses.

  To professionally formulate a beverage can cost upwards of $20,000 to $45,000. If one is planning multiple SKUs (stock-keeping units), costs can compound quickly. There are packaging costs, ingredients, shipping, and stocking costs to consider, all of which will add dollars to one’s budget and cut into their profits.

  Bootstrapping this amount requires careful planning and budgeting. Many entrepreneurs have started small and put any money they make back into their businesses. They set up booths at farmer’s markets and sell their beverages piecemeal to raise capital for professional formulation and growing the brand. Though this approach can take time, it is a great way to slowly build a brand without accruing any significant debt.

  Any business, regardless of budget, will often seek out cost-saving measures when it can. Overspending on aspects of the business that do not ultimately move the needle can spell disaster for any startup. Areas where a beverage startup can save include seeking out inexpensive ingredients, packaging options, or distribution avenues.

  Being that costs will rise as the business expands, how does one fund their business if they wish to create a national (or international) beverage brand? Several options are available, from personal loans, investors, and small business loans. Whatever funding options one chooses, entrepreneurs should always weigh all pros and cons to ensure the selected option is the right fit.

Finding the Right Source of Capital

  Any startup is going to need funding, and there are a number of options for receiving this funding. Bootstrapping typically involves forging relationships directly with retailers in order to get your beverage on shelves. This approach can be a slow burn but ultimately successful, depending on how much pavement-pounding you are willing to do on your startup’s behalf. When one doesn’t have the financial resources to fund thousands of dollars of marketing or development costs, that momentum has to be built bit by bit. Those entering the market with a bootstrap mentality must understand that patience is a virtue and that building the brand will take more time.

  Even if one begins with a bootstrap mentality, the fundraising stage may get to a point where one also wants to consider the investor route. However, finding the right investor deal for an idea can also be a long road. Going into pitch meetings with a robust business plan and vision for the future of the product can help entrepreneurs land the best investor partnership for their venture. Any pitch meeting should include samples of your beverage and an idea of how the packaging and the marketing will look.

  One of the best ideas for a small startup is to consider a larger pool of smaller investors instead of putting all of their eggs in the angel investor basket. For example, instead of trying to secure a few million dollars from one investor, work on securing $10,000 in investments from a collection of smaller investors. With those combined investments, one will not only have enough money to get their beverage idea off the ground but will also have a built-in support system from a variety of enthusiastic backers. Smaller investors ride out shifts in the stock market easier than large investment firms and venture capitalists. Individual investors also may request less control over a business than large investors often require.

  Finding the right investor(s) or funding route can make or break a new beverage business. As such, one should consider all options before choosing how they plan to fund their startup.

  With over 2,400 beverage companies operating in the US alone, startups will really need to communicate what makes their product special in order to court solid investment opportunities. Coming at the investor search with passion and an educated approach to the market will increase a startup’s chances of landing dedicated investors in it for the long haul.

The Beverage Industry has Changed

  The pandemic changed many industries, and the beverage industry has not escaped the post-Covid shift towards more direct-to-consumer sales and social media marketing. When the world shut down, beverage entrepreneurs could no longer visit investors or retail partners in person.

  With this in mind, those now seeking to step into the beverage industry with a great idea need to consider how reaching a target market has changed. Anyone looking to break into the somewhat crowded beverage market should work on establishing an online presence right away. Today, word-of-mouth marketing includes chatter online, meaning entrepreneurs could be leaving a lot of money on the table by failing to put effort into their digital marketing presence.

  Any startup should have a website that can be built for a small out-of-pocket cost. The brand’s website is its handshake and introduction to the market and should reflect its feel and personality. Along with a website, the brand’s social media profiles should tie into the entrepreneur’s overall marketing approach. Engaging with one’s target market is a low-cost way to build a buzz around their beverage.

  When building an online presence, one needs to consider what message their beverage and brand are sending. For instance, is the brand being built based on natural ingredients and a sustainable manufacturing approach? If so, its marketing is going to be different from a brand seeking to bring an energy drink to the market.

  Marketing is all about tapping into who the entrepreneur is as a brand, as a business founder, and who their consumers are. Authentic connection with one’s market can go a long way in building a brand, especially when one is not starting with a large amount of capital.

Fight Off Failure

  A staggering 42% of startups fail. With those numbers, it’s a wonder why anyone dives into the murky waters of entrepreneurship. Still, many do and succeed, but not without some hard work and research.

  For instance, many startups fail because they don’t research their target market. They bring a product to the market that no one is interested in or too closely resembles another product. Other startups simply run out of money, which is why it is so important to have patience while one is bootstrapping, thoughtfully invest capital, and seek out partnerships with investors that best align with the product and brand being brought to market.

  Bootstrapping any business starts with believing in a vision, first and foremost. When one is self-funding their startup, the passion for and belief in their product keeps them moving through the most difficult steps of the scaling process.

  The entire concept of bootstrapping is about hard work and perseverance. If market research tells the entrepreneur that their beverage idea is a winner, then it is time for them to roll up their sleeves and get in the trenches. This willingness to get one’s hands dirty sends a message that they are willing to stick with their idea, put in the hard work, and do what it takes to see their beverage hit shelves.

  Starting any business is not for the faint of heart. Bootstrapping a business could be considered insanity by some, given the difficulty of that journey. However, when the business ultimately succeeds and people all over the country — or even the world — are enjoying the beverage you created, all the hard work of bootstrapping will have been worth it.

  Jorge S. Olson is the author of “Build Your Beverage Empire.” He’s a beverage industry mentor and consultant who has launched over 1,000 consumer packaged goods and worked with over 100 beverage entrepreneurs, large and small. Jorge has owned companies in the beverage industry, wholesale distribution, import and export, and beverage development and sales. His over 300,000 newsletter subscribers share his insight into beverages, marketing, and growth. Jorge now mentors beverage executives and lives in San Diego, California.

How to Recession Proof Your Beverage Business

Cyndi
recession proof statement

By: Raj Tulshan, founder of Loanmantra.com

Despite a recent pandemic, record-high inflation, and several years of economic uncertainty, entrepreneurship continues to thrive, with more than 31 million entrepreneurs in the U.S. In fact, Americans’ confidence in small businesses has reached record highs, even exceeding confidence in the military, the medical system, public schools, and the U.S. Supreme Court. But is your business recession-proof?

  Since World War II, the U.S. has experienced 12 recessions, averaging one every six years. Recessions are more common than most people realize, and most people will encounter several over the course of their careers. Therefore, it’s crucial for business owners to prepare to survive the next (inevitable) recession.

  A recession is defined as a significant decline in economic activity – including gross domestic product (GDP), income, employment, industrial production, and wholesale-retail sales – and can last anywhere from two and 18 months. While recessions are common, they can be incredibly stressful for business owners, who will very likely experience some business disruptions. The key to surviving the disruption is to plan, differentiate your business from the competition, cut spending, and create additional revenue streams.

  In addition, here are ten tips to survive – and thrive – during a recession.

1. A downturn doesn’t mean doom and gloom for every business. Nearly 75% of public companies with $50 million or more in annual sales had declining revenue growth during the last four economic downturns, but 14% actually accelerated revenue growth and increased profitability. The different outcomes depended largely on the type of products or services the companies sold and how well (or poorly) they met customers’ needs. Remember that even during economic downturns, customers still buy essentials (e.g., food, utilities, household items, etc.) and need certain services (e.g., healthcare, car repairs, etc.). “Recession-proof” your business, providing what people will continuously need, to maintain sales.

2. Plan for a recession. Ebbs and flows are a normal part of the business cycle, so plan accordingly. Focus on maintaining revenue, preserving cash flow, and generating demand. For instance, running out of cash is a major concern for business owners, so assess your cash balances, expenses, and incoming cash flow. Work within your budget. Track your key performance indicators and adjust if you aren’t meeting target metrics. Pay down debt. Reduce financial waste.

3. Prepare for the unexpected. You’ve likely heard the advice to establish an emergency fund to cover personal expenses, and this is a wise move for businesses, as well. Create an emergency fund that can cover up to six months of essential costs, including payroll, inventory, rent, and utilities. Proactively collect outstanding receivables. Talk to a financial advisor about whether you should consider revolving loans, alternative financing, small business loans, and/or other options.

4. Operate efficiently. Reducing operating expenses can be a challenging task, especially as you must continue providing extraordinary products and services. Whatever expenses you cut should be invisible to customers. Determine where you can make small tweaks that can add up to big reductions, such as leveraging early pay discounts from suppliers, automating manual tasks, and renegotiating supplier contracts.

5. Multiply revenue opportunities. This strategy will require some creative thinking. Brainstorm ways to capture new revenue without making any major investments. For instance, expand your brick-and-mortar retail store’s reach by selling goods online. Adjust your business model. For example, a bakery could start offering take-home kits for birthday parties. Or a bar could sell merchandise and specialized beer onsite and online, in addition to selling drinks and food.

6. Modify offerings. Adjust what you’re selling to make it more attractive to customers and prospects during tough economic times. Think of how restaurants changed their business models during the COVID pandemic to sell to people when they couldn’t dine onsite. To adjust to the changing climate, restaurants started offering more delivery, takeout, and curbside pickup options. And, as more people worked from home, clothing retailers adjusted, offering more loungewear instead of formal suits. During a recession, pivot accordingly. In addition to altering your business model, consider changing your pricing structure and offering more incentives to entice people to buy, even if they have less disposable income during a recession.

7. Strengthen relationships. Acquiring a new customer can cost five times more than retaining an existing customer. Create and maintain strong customer relationships. Understand their changing needs and give them what they want. Offer the “value add” that they can’t get from your competitors, whether that’s free shipping, personal shopping, or a willingness to place special orders on their behalf. At the same time don’t forget your valued vendors, partners and associates. When times get tough those relationships could save the business. Or you could help save someone else’s business. Whether it’s extra time on a delivery due to supply chain issues or just a pep talk, remembering those relationships is essential.

8. Stretch your tech. Most businesses purchase technology to be more efficient and productive but haven’t taken the time to maximize the full benefits of the system or appoint an expert that can fully leverage its benefits. Before you are investing in new systems, stretch your current tech. Tech tools can also help you change distribution methods, such as pivoting from in-person tutoring, which limits you to a specific geographic radius, to online tutoring, which expands your reach.

9. Continue marketing. You may consider cutting marketing to save a few bucks but resist that urge. To maintain revenue, you’ll need to stay in front of your key audiences with social media efforts, online ads, positive news stories, compelling blogs, etc. Launch (or continue) loyalty campaigns to recapture past customers and increase touchpoints with your current customer base. Target your messages to align with customer pain points in an uncomfortable economic climate. Spotlight loyalty programs. Incentivize customers and prospects with discounts, BOGO, and other deals. Maintaining visibility via marketing can help you increase market share, particularly if your competitors pause their efforts.

10. Insulate Finances. Consult financial experts, like those at Loanmantra.com, to develop a plan to become recession-proof. They’ll help you determine how to cut costs, adjust your business model, and secure any necessary loans. If you need a loan to boost your company’s financial health, they’ll help you calculate how much of a loan you’ll need (and qualify for). Financial experts can advise you on all aspects of the loan, including the application process and what types of information you’ll be required to provide.

Raj Tulshan is the founder and managing member of Loanmantra.com, a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to entrepreneurs, small and medium sized businesses. Connect with Raj and Team Loan Mantra at 1.855. 700.BLUE (2583) or info@loanmantra.com.