Profit Players,
As the start of this year flies by, let me ask you a question:
I know it’s cold, dark, and rough in some areas, but we can’t afford to take our eye off the prize. Profit is the goal.
By now, you might’ve caught onto the rhythm of this series.
We started with overall financial importance, then moved through prepaid expenses, inventory, and fixed assets.
Ding ding ding. We’re working our way down the balance sheet. We started with current assets, moving into long-term assets, and now…
Ah yes, liabilities. Or, what you owe. Credit cards, leases, loans…
Today, we’re hyper-focusing on loans (aka debt).
Let me be clear: Debt is a good thing…until it’s not. When used strategically, debt fuels growth. But when it’s unchecked, it can drain your cash flow faster than you realize.
Every loan has two components:
Principal – the original loan amount.
Interest – the cost of borrowing.
Each month, you make a payment that includes both. But here’s the key distinction:
Principal payments only affect your balance sheet. They reduce your loan balance but don’t hit your P&L directly.
Interest impacts your profit and loss statement. Higher interest payments mean less profit.
A brewery owner told me last week: “Chris, we have positive net income, but our cash is low. What’s going on?”
My first question…How much debt do you have?
You can be running a highly profitable brewery, but if large principal payments and inventory purchases are eating up your cash, it’s going to feel tight. Profit and cash flow aren’t the same thing—and debt plays a huge role in that gap.
To help you manage this, I’ve included a loan tracker. This tool lets you:
Track each loan separately (don’t lump them all together; be sure to duplicate the master template)
Monitor principal vs. interest payments
See your total payments at year-end
Trust me, this is essential when evaluating your brewery’s financial health.
Download it, use it, and let me know if you have any questions.
See you next week!
-cf