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IT’S NO SMALL BEERPractical business tips for your brewerythrough its life cycle
A presentation by James Sleight and John Twizell
PKF Geoffrey Martin & Co
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Reasons to be cheerfulAccording to the SIBA members’ survey of March 2015
• SIBA membership increased 13% in 2014• 83% of members plan to increase staff levels• 75% believed turnover would increase in 2015• 15% are exporting• 80% of beer sold is within a 40 mile radius• 70% of breweries made capital investments in 2014• 12% invested over £100k in capex• Production up 15%• 20% plan to double production and sales by 2018
The independent brewing industry is clearly growing!
Business lifecycle is like the brewing cycle
Start-up and Mash-Tun
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Start-up
• planning / research for the brewery• business type• business plans / budgets• funding• implementation (before the first mash)
Run a successful business to keep brewing great beer
“our concern is making great beer that we love, not making a buck. But in reality, unless you have an extremely detailed way to track your finances, you won’t be able to make great beer for very long” …. Spencer O’Bryan, Fermaentra Brewery
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Planning / ResearchA key part of building a business
• profitable sales• premises• trademarks and designs
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Business typeWhat are you going to be?
Did I get it right?
• partnership• sole trader
• limited liability company
Am I still getting it right?
• limited liability partnership
Business plans and budgets
• your business ideas
• your potential challenges
• your targets
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• milestones of your progress
• your funding requirements
A business plan should help to explain
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Funding
• establish how much?
• what do you already have?
o personal funds to investo friends and family
• loan finance
o bankso leasing / hire purchase o cashflow finance
• equity investment
o individualso private equity houses
• other
o crowd fundingo bonds
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Implementation• follow your business plan (as finally agreed and funded)
business vehicle funding premises equipment staff legal agreements (as required) brew some beer repeatsell some beer repeat
• review your business plan regularly • compare budgeted numbers to actual figures repeat• make adjustments as necessary to improve results
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Lifecycle – part two
Growth and Kettle
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GrowthAreas
• capacity increases
• funding
• overtrading
The 5 Ms – what to consider?
• Machinery
• Methods
• Measurement
• Money
• Manpower
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GrowthCapacity increases
Equipment and Premises
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Grants
• enterprise schemes
• local funding
• government schemes
Funding
Crowd funding
• loan based
• equity based
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Overtrading
• borrowing money to get through each month
• missing your own wages
• low profit margins
• customer late payments
• on stop with suppliers
• concerned advisors
All related to cash management
Life cycle – part three
Maturity / Stability and Fermentation
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Stability
Always think of the
• end game
• business plan
Ensure your business is constantly evolving
….. IT’S A MYTH
SWOT analysis
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• media attention• SIBA • exports• delivery Medium
Opportunities• media attention• SIBA • exports• delivery medium
Strengths• great tasting beer• quality workforce• good local support• quick paying customers
Weaknesses• static sales• innovation• premises• smaller player than competitors
Threats
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Threats• supplier power
• cost of finance
• entrants to the market & competitors
• government intervention
• thriving counterfeit alcohol trade
• changing consumer preference
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Supplier power
• know your suppliers
• spread the risk
• have a contingency plan
• consider fixed/forward price contracts
• know your margin
• be creative
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Cost of financeLoans and financing
• covenants and agreements
• price of flexibility
Insurance
• are you insured?
• read your policies
• broker relations
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CompetitionIt’s getting a little crowded in here ….
• increasingly popular
• SIBA membership increasing year on year
• British public’s love affair with the industry continues
However….
• beer consumption is down
• fickle public
• innovative pressure
• business failures
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Competition• know your market
• know your competition
• identify the threats and react
How will your business cope from ….
• additional local brewing presence?
• similar products?
Government
*
“Beer duty cuts in last three Budgets have funded investment and growth, SIBA is urging the Government to continue to support this important industry.” …. Mike Benner, SIBA Managing Director
Current legislation/standards and directives
• health and safety
• employment law
• licensing
• food hygiene
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Taxation and other external factorsTax
• Small Breweries’ Relief scheme
• pay your duties
• others
Other external factors
• lobbying bodies/pressure groups
• leaving EU
• currency fluctuations
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Preparation is keyBe prepared … and read
• newsletters• press releases • SIBA publications
If unclear …
• contact Napthens / trusted advisor • don’t always trust the internet• contact SIBA• contact us!
Life cycle – part four
Exit / Decline and Extraction
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RestructuringGood businesses fail
No business ever went broke for making a loss – they just ran out of cash
A slow death
• inability to adapt
• owner dispute
• litigation
• increased competition
Immediate vulnerability
• macro changes
• customer
• disaster
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Don’t be an ostrich!
• discover and monitor
• stakeholder expectations
• forecasting is fundamental
• professional advice …..the sooner the better
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Selling your breweryWhy on earth?
• retirement
• joint owner disputes
• illness/death
• bored/overworked/had enough
• accomplishment
• money
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SellingThings to consider
• valuations• brokers• planning• negotiations• consideration• future involvement
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Contact detailsLeeds office 0113 244 5141
• James Sleight 07786 175216 [email protected]
https://uk.linkedin.com/in/sleightjames
• John Twizell 07867 520448 [email protected]://uk.linkedin.com/in/johntwizellgmco
• Mark Gledhill 07775 756122 [email protected]://uk.linkedin.com/in/markgledhill1
London office 0207 495 1100
• Peter Hart 07813 212452 [email protected]://uk.linkedin.com/in/peterhartgeoffreymartin
