Profit Players,
We’re nearing the finish line of our Back to Basics series, but there’s one critical piece we haven’t touched on yet. And today, we’re tackling it head-on.
If I asked you what your biggest cash outlay is, what would you say?
…would it be….labor?
No doubt about it. We need people to run the business, and people are expensive.
So why aren’t we tracking labor to the max? If it’s the biggest slice of your operating costs, it deserves more attention.
Let’s give it that attention.
Take a moment and visualize: what would be the most useful way to see labor broken down on your income statement?
At a minimum, we recommend breaking it down by department. Most breweries have five standard departments:
Production
Admin
Taproom/Retail
Outside Sales
Kitchen
Now, do you remember that chart of accounts I’ve been floating around? Some breweries tweak the categories a bit. That’s okay as long as the numbers are meaningful and you’re actually tracking them.
What we don’t want? Labor lumped into one big number. That tells us absolutely nothing.
Breaking it down by department lets you track trends over time, compare against benchmarks, and make better financial decisions.
Create a parent account in your expense category called Payroll Expenses.
Each department gets a sub-account underneath it.
Check your payroll system. You may already have departments set up. If not, create them! Your payroll system might call them categories or groups.
Assign each team member to the right department so pulling reports is simple.
Sync with your accounting system—if it exists, use it! Automating this can save you a ton of time.
I’ve been asked before why we don’t put production labor in COGS. The only reason to do that? If you have GAAP financials. And if you are? Great. But for the rest of us, it goes with the other labor categories.
Labor is expensive. It’s complicated. But setting it up right makes a huge difference.
And there you have it. We’ve reached the finish line of our Back to Basics series. Thanks for following along!
From the SBS Chart of Accounts template to our SBS Revenue Goal Tracker and beyond, we hope you found this series valuable.
If you have any questions, you know where to find me.
Until next time,
-cf