Category: Finance

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.

Tips for Taxed Business Owners in 2023

Cyndi
2 people discussing in a meeting

By: Raj Tulshan, Founder of Loan Mantra

If you’re worried about finances and retirement – and after facing inflation at a record 40 year high this year, who isn’t? – there is a little good news from the IRS. Due to soaring inflation, reported at 8.2% over the past year, the IRS has raised contribution limits on 401(k)s and IRAs for 2023. In fact, inflation is at its highest level since 401(k) annual indexing began, causing 7% to 11% increases for most 2023 contribution limits. These changes are intended to help offset the higher cost of living.

  For the coming year, the maximum amount that people can contribute to their 401(k) has risen to $22,500, a $2,000 increase. The annual 401(k) employee contribution limit typically goes up by smaller increments – usually around $500 at a time – but sky-high inflation has led to a more significant increase for 2023.

  The limit on total employer-plus-employee contributions will also increase significantly to $66,000 in 2023, up $5,000 from $61,000 in 2022. Again, these increases are usually made in smaller increments – typically $1,000 – but given the unusual state of our economy, it will increase five-fold for the coming year.

Max Out Contributions

  With the annual 401(k) contribution limit rising, many people might think they must take advantage of this increase but may worry that they can’t afford to contribute the maximum amount to their retirement accounts. Many financial experts would advise that your personal contributions depend on your individual goals, salary and financial situation. Employer matching can help. Often employers provide an incentive to encourage their employees to save for retirement by matching contributions (either in full or in part) up to a certain threshold.

  If you feel pressure to “keep up with the Joneses,” keep in mind that most people aren’t contributing the current (lower) maximum amount to their 401(k). A recent Vanguard report discovered that only 14% of people with Vanguard 401(k) accounts were contributing the maximum amount allowed in 2022. And more than half (58%) of those people were earning annual salaries of $150,000 or more at the time.

Boost IRA’s

  There is more good news for retirement accounts. In 2023, people can get an extra boost for their IRA savings. As income tax thresholds have risen, so have the income limits for IRA contributions. Like a 401(k), an IRA can be effective way to save tax-free money for retirement.

  The amount you can save into an IRA plan will increase from $6,000 to $6,500 next year – or $7,500 for people aged 50+. For people over age 50, or who have 15+ years of service for a 403(b) plan, you may be able to contribute significantly more than this – as much as $30,000 – through “catch-up” contributions.

  As a financial professional who has witnessed the ups and downs of the U.S. economy over the years, I offer the following advice:

Stay Calm – Although the current state of the economy – and record-high inflation – is worrisome, it’s wise to stay calm and focused on your long-term financial goals. Saving for retirement has never been a “quick fix.” People spend their entire adult lives working towards their retirement goals, and there will always be ebbs and flows to the economy over time. The best thing you can do in any economy is consistently save and invest, not making any sudden moves based on what the market is doing.

Focus on Slow Increases – Small increases to your contribution rate – even raising your contribution by 1% – can make a big difference in your retirement savings over time. What may feel like an insignificant amount right now can really add up over the next few decades.

Contribute Enough to Earn Your Employer’s Match – If your employer offers to match a percentage of your contributions, prioritize contributing enough to earn the full match. If you don’t take full advantage of the employee matching program, you’re essentially leaving “free money” behind.

Build Loyalty –  Employee wages, compensation and retirement savings matches are tax deductible as well.

Contribute Early and Consistently – Regardless of how much money you can contribute to retirement, it’s essential to start early and keep contributing consistently. It’s wise to start contributing to your retirement account as early as possible so your money can earn interest over time.

Strive to Invest 12% to 15% of Your Annual Salary Towards Retirement – If that seems unfeasible, try increasing your contributions slowly over time. For instance, if you’re currently investing 5% of your salary, aim to increase to 6% next year, and 7% the following year, and so on until you reach this target.

  Learn more about the contribution changes for 2023 by visiting Notice 2022-55 on IRS.gov and talk to a financial expert about your own financial goals and how to reach financial freedom for your retirement. In addition, there are a few more tips for taxed business owners.

Take Advantage of Business Tax Deductions

  There are options for business owners, too. Make sure your business is making the most out of the current tax deductions available to business owners and entrepreneurs. Tax deductions can greatly reduce a business owners tax liability, saving money. Many business owners are aware of the typical expenses that are eligible for tax credits like: Inventory, meals and entertainment, Office Supplies, Medical Insurance, Employee Wages and Advertising and marketing. But an often-overlooked expense is interest paid on business loans or lines of credit.

  A record number of businesses took out small business loans in the past 2 years. Small business loans that are issued through financial institutions, alternative lenders and online lending marketplaces or FinTechs like Loanmantra.com are financing options for small businesses and have deductible interest expenses. Loans issued through the Small Business Administration or SBA and guaranteed as part of the Infrastructure and Reinvestment Act also have interest that is deductible if the money is used strictly for legitimate business purposes.

Purchase Equipment Sooner Not Later

  End-of-year small business spending can save businesses money through tax benefits or year-end sales. For instance, in 2022, expenses on equipment or a depreciation of 100% of the purchase price can be taken. In 2023, taxpayers only receive 80% toward the purchase price of those same expenditures.

  In early 2023, car dealers who are looking to unload last year’s vehicle model will be more willing to discount vehicles from the previous year to make way for new inventory. The same may be true for technology and software subscriptions. Any way you look at it, there are many angles to come up with new ways to tackle taxes to provide some relief from tax time grief.

About the Author

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Small business owners identify two obstacles to their success: access to capital and financial education. Loan Mantra removes these hurdles so business owners can spend more time actually building their business.

For more information visit their website…www.loanmantra.com

Beer Wholesalers: 5 Best Practices to Control Costs

Cyndi

Cost increases are Cost increases are coming from everywhere these days. Here are 5 Best Practices you can use to control and reduce costs in your beer business.

Use These 5 Best Practices to Control Costs

  1. Create a Financial Road Map
    • Purposeful spending
  2. Adopt a Zero Based Budget Mindset
    • Costs must justify themselves
  3. Review Vendor/Supplier Spending
    • Sort $ high to low
  4. Use Purchase Orders
    • Make it hard to spend money
  5. Set Regular Financial Reviews
    • Variance analysis, trends, ratios

​Watch the 3 minute cost control video for your beer business

Buying New or Used Equipment & How to Decide

Cyndi
bronze brewing machine

By: Kris Bohm, Owner of Distillery Now Consulting

When it comes to starting a distillery or a brewery it takes money to make it happen. In most cases it can literally take millions. The cost of the equipment is a big chunk of the cost required to start up a beverage alcohol business. Most folks who start a business will buy all new equipment. An alternative to the high price tag and long lead times of new equipment is to buy used equipment. When it comes to buying used equipment there can be many hidden costs and problems that come with what outwardly appears to be an excellent deal. By seeking to understand the hidden costs and potential problems that come with used equipment you may just uncover the perfect opportunity to land a deal on the equipment you need to start your business. Our aim is to help you avoid falling into the proverbial used equipment money pit. Let’s look through key considerations of buying used equipment and explore its potential.

  There are many reasons for wanting to buy used equipment instead of new equipment for a brewery or distillery. Lead time is a strong factor that drives folks to look at used equipment. In 2022 there have been massive disruptions to supply chains across many industries. Beverage manufacturing equipment is certainly one of them. For many manufacturers of equipment they now have lead times of well over a year. That means from the time you put a deposit on equipment to that equipment being delivered will almost certainly be beyond 12 months.

The opportunity to buy used equipment and take possession of it quickly has become an attractive option as a result. The downside here is that used equipment is in high demand these days and as a result the price on used equipment has gone up.

  There are many factors to consider when looking at used equipment. Age and condition are the two that are most important. As equipment gets older it can sometimes become hard to source replacement and repair parts. In some instances replacement parts do not exist and will need to be manufactured or redesigned which can be costly. The key here is to be diligent. Take some time to talk with the manufacturer and ask if they are available and willing  to continue to support the equipment they built. Here is an example of a situation where this occurred.

  There was an equipment manufacturer (who will not be named) but we will call them Acme in this example. Acme Company built equipment that looked great but their engineering and quality of manufacturing was shoddy. Acme went out of business only several years after opening due to lawsuits from equipment buyers.  A person new to the industry bought some equipment from Acme second hand that was still in crates unused. The buyer quickly bought the new and unused equipment from a 3rd party seller at what appeared to be a good price but did not do any research. Acme is no longer in business, and buying replacement parts for the equipment is impossible. When the time came to assemble and start the equipment there were many missing parts. To make it worse the equipment needed major repairs just to function as parts of the equipment were not operable. For the folks who bought this equipment, they had to spend lots of money and time to have custom work done just to make the equipment function. The repairs and replacement parts were so costly that the buyer would have spent less money on new equipment from a reputable manufacturer. 

  If the equipment comes with automation and controls the age of the equipment is critical to consider. Some older equipment does not age well and can in fact be more outdated than an 8 track cassette player. This is not to say that old controls or automation will not work, but there is a strong chance they can break and become unrepairable. If the used equipment is decommissioned and sitting in a warehouse it may not be possible to test the controls. If the controls cannot be repaired they may likely need to be replaced. The cost of replacement can eat up the money saved from buying used in the first place. Furthermore the cost of parts on older controls can sometimes be astronomical. The best way to test this before buying it is to buy equipment that is currently operational and can be tested.

  An important consideration is the cost of relocation. The cost of taking possession of the used equipment can vary hugely from one opportunity to the next. In most cases the equipment can be removed quickly and cleanly in the hands of skilled tradesmen. Most of the time there is room to disassemble and remove the equipment and also a door that allows for easy removal. In some instances this is not that case. There are some facilities that are literally built up around the equipment. In most cases continuous column stills in distilleries are installed via crane. In these cases removal of the equipment can be quite costly and require extensive building demolition and heavy equipment to carefully extract the equipment from a building. In one instance we saw a distillery in which the column for vodka distillation was encased in a metal and glass shaft. To remove the column required extensive demolition and a crane to extract the column from the building. After reviewing a plan and considering the value of the column we found that the cost of removal and relocation was going to negate any savings from the lower cost of the used equipment. This instance was one in which the buyer backed out of the purchase after investigating the cost of relocating the equipment.

  A common question asked by those buying used equipment is why are they selling it. The owner of the equipment can be selling it for a multitude of reasons, and it is an excellent question to ask. It is common for a business to outgrow its equipment capacity and sell its equipment to make room for larger equipment. Sometimes a business is closing permanently and is selling its equipment to liquidate the business. New entrants to the industry often ask how it works to buy used equipment. The transaction of buying used equipment is straightforward.  The seller of the equipment and the potential buyer connect and work to meet an agreed upon price and terms on purchasing the equipment. The agreement will often include a written contract that stipulates what equipment is being sold, how much time is there for the equipment to be removed, timeframe for deposit and payments, details on process of decommissioning and costs associated. If the buyer of the equipment is unsure of how to approach this process it is wise to hire a group or consultant to assist with this process. Typically a 3rd party will handle the disassembly, crating and relocation of the equipment. The process of decommissioning and relocation definitely has a cost so it is important to consider this in the overall cost of purchase.

  There are many factors to be considered here before buying used equipment. Although there are stories of bad deals, there are many more stories of success. In some instances, we have seen and helped folks save tons of money through buying used equipment. We hope you will give careful consideration when buying used equipment. If you are unsure whether or not to buy used equipment, it is best to bring in a professional to aid in your assessment of a potential purchase.

What to Do if EIDL Payments Become Due

Cyndi
SBA logo

By: Raj Tulshan, Founder of Loan Mantra

Restaurants, bars and other businesses within the hospitality industry were hit hard by the COVID-19 pandemic. For instance, restaurant industry sales in 2021 were down a staggering $65 billion from 2019’s pre-pandemic levels. During shut-downs, quarantines, social distancing and other pandemic-related disruptions, many hospitality businesses struggled or shut down, including 90,000 restaurant locations that temporarily or permanently closed because of COVID.

  During the pandemic, bars were forced to reduce capacity limits, negatively impacting their profitability. Reopening after quarantine was expensive, requiring costly adaptations, including air filtration systems, plexiglass dividers, equipment for touchless transactions, cleaning and sanitation supplies and personal protective equipment for staff.

  Hospitality businesses – like companies across many industries – also struggled with employee shortages, supply chain issues and soaring inflation.

  This “perfect storm” of unprecedented challenges led four million small businesses to take out $390 billion in loans through the Economic Injury Disaster Loan (EIDL) program. The EIDL was part of the U.S. Small Business Administration (SBA) and US Treasury as an expanded part of The Coronavirus Aid, Relief and Economic Security or CARES Act.

  Although the loan payments were deferred for two years, they’ve still been accruing interest until the first EIDL payment was due.

  Many small business owners have questions and concerns about the repayment process. The timing is not ideal, as many businesses – including restaurants, bars, hotels, and other hospitality venues – need funds to prepare for holiday sales and events.

If you took out an EIDL loan, here are some valuable tips to act:

      Contact:  Business owners can contact their local district legislators by calling, e-mailing, or writing letters to express concern. Loanmantra.com has put together a tool kit with:

        A sample form letter, an e-mail draft, a phone script and phone numbers to save time. Unsure of who a district representative may be? Find them here.

      Share:  There’s strength in numbers, so share this message with other businesses, business networks, chambers of commerce, businesses in the same area, associations and like groups.

      Reach out: Talk to people every day for the “sphere of influence” to gain community support.

      Ask for help: Don’t be afraid to ask for help when and where it’s needed.

Also, here are some valuable repayment tips:

      The loans won’t be forgiven:  Unlike the Paycheck Protection Program (PPP), EIDL loans won’t be forgiven and need to be repaid. All Economic Injury Disaster Loan recipients received an email from The U.S. Small Business Administration (SBA) with the subject line: Important EIDL Reminder, which contains important information regarding your EIDL account setup and payment.

      Set up a repayment schedule:  Payments were deferred for the first two years, during which, interest accrued. Now, business owners must start making their monthly payments on their due date, which is determined by the “Effective Date” noted on your business’s promissory note.

        Another payment can seem overwhelming stressful given inflation, staffing and supply-related pressures. Don’t look at the big picture. Instead, think about the incremental payments today as steps in the right direction. Set a calendar reminder or appointment to make this payment every month so you will stay ahead of schedule.

      EIDL loans must be paid via a special platform: There are two separate platforms you will need to access your loan information and pay your loan balance.

        First, Capital Access Financial System (CAFS) maintains your EIDL & PPP loan information. This includes your original balance, interest, accrued interest balance, etc. To obtain the EIDL loan information for your business, please select ‘EIDL’ and then ‘borrower search’ from the menu options. When registering on the CAFS website, carefully follow each step. There is no room for error when using this system, so be thorough and accurate when inputting your information.

        Secondly, pay.gov allows businesses to input their bank information and to set up recurring payments online. Inside your profile, choose ‘Make an SBA 1201 Borrower Payment’ as the menu option. While registering on pay.gov may be simpler than registering on CAFS, it is not easy to change bank account information after you begin your loan payments.

      Use the right number:  Keep in mind that your SBA loan number is different than your EIDL loan number. This information can be found on the top of the second page of the promissory note.

      EIDL loans accrued interest:  Many business owners received their first EIDL loan in early 2020 and a second EIDL loan in 2021. For many borrowers, that means interest has been accruing for more than 24 months, with additional interest accruing for more than 16 months. Borrowers are responsible for paying back the loan plus all accrued interest.

      This type of loan program has ended:  The COVID-19 EIDL program is not accepting new applications, increase requests, or reconsideration.

  Business owners should focus on what they do best: Run the business and do it well. That’s why Loan Mantra is providing advocacy tools for business owners on  loanmantra.com so they can be empowered to take action and have the latest information to make the best decisions.

  Small businesses have been the backbone of the US economy and deserve fair economic terms and transparency. Loan Mantra is here as a resource to serve companies of all sizes and types during both good and turbulent times.

About the Author

Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative, and transparent platform. Clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human—even friendly—way.

About Loan Mantra

  Small business owners identify two obstacles to their success: access to capital and financial education. Loan Mantra removes these hurdles so business owners can spend more time actually building their business.

For more information visit their website…www.loanmantra.com