Page 17 - Beverage MasterOct Nov 2020

Craft Brewery

Budget Building Block #4:
CAPITAL BUDGET READY TO ROLL

The capital budget is the place for big purchases
like a new canning line, a keg washer or delivery
van. INTRODUCING
®
Keltech Portables
Anything that costs more than a set amount, say
$1,000, and will last longer than a year should be Electric Tankless Water Heaters
on the capital budget.
®
Bradley’s Keltech
The difference between a Capital Expense and an Electric Tankless
Operating Expense is that capital items need to be Heaters on trans-
depreciated (or written off) over a certain period of portable carts make
it easy to supply
time. If you buy a box of copy paper for $50 it’s an heated water or fluids
expense on the current income statement. If you on-demand wherever
buy a $15,000 forklift, that’s a capital expense that & whenever needed.
will be depreciated over the next five years.

Make your wish list of needed capital items.
Determine what the items will cost and when you
expect to buy them. This will help with cash needs
planning and be an important building block of your
financial budget. (800) 439-6909 • (707) 252-6839

Lastly, match up the expected spending to the www.rssupply.com
expected funding. During this step of the budget
process you’ll need to determine how you’re going
to pay for a new canning line, keg washer or deliv- profit goals for the new year.
ery van. List any new bank loans or new equity
you will need to invest in the business to make the Starting the budget process can be tough. So,
Capital Budget a reality. begin by writing out your budget goals in words.
Simply write out what you want to accomplish, how
Budget Building Block #5: you intend to do it, and what resources you will
DEBT SERVICE need. Start with words, and let the numbers come
later.
Debt Service is the amount you pay each month
on your loans. These payments are made up of two Once you have the goals and objectives written
parts: principal and interest. The principal portion out, it’s time to add the numbers. Use the five bud-
reduces the loan amount on your balance sheet get building blocks: the sales forecast, margin plan,
while the interest portion is an expense on the operating expense plan, capital budget and debt
income statement. schedule.

To start, create a schedule of all your loans and An effective brewery budget is within your reach.
the payments due on each. List the bank, type of Use the ideas here to get started and to finish your
loan, term of the debt and payment amounts. This plan. Your income statement is counting on you.
schedule will be an integral part of the financial
plan and will serve as a reminder of how much is For more information please contact...
due and when. www.CraftBreweryFinancialTraining.com

Wrap Up + Action Items

The brewery budget is the financial road map for
your business. The plan will provide clear directions
to your team so that you can reach your sales and
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