2018 is off to a weird start for breweries.
Many of my predictions in the 2018 Crystal Ball post are happening faster than I anticipated.
Let me reiterate, the craft brewing industry is NOT A BUBBLE.
Historically, bubbles are associated with products or services that have no tangible value to them. They appear, grow, and pop all on hype.
Making beer has many tangible values. When I think about the tangible value associated with the brewing industry, these four come to mind:
- Distribution Rights
- Alcohol is close to the dollar*
With that being said, the industry is experiencing a plateau. Many of you have heard my webinar 4 Secrets of High Performing Breweries, How to push the Plateau. In the webinar I talk about 4 practices that high performing breweries do on a daily basis to ensure the profits keep coming in the door. I plan to release a recording of the webinar sometime in late February.
If you look at the list of closures and bankruptcies that have occured in 2018, there is a pattern. All of these unfortunate events have happened due to one thing.
So I dont sound vague and lofty let me share 3 key areas of mismanagement I see on a daily basis:
- Financial – Weather you have been reading my stuff for 4 years or 4 days, you will pick up pretty quick I am rooted in financial decision making. Gone are the days of emotional purchases. If you want to add tanks, a crowler machine, or a new retail cooler, you must run the numbers. A few questions I ask when facing this decision are: What is the quickest payback on this purchase? Do we really need it? Is it part of our plan?
- Quality – In my online course, Brewery Business Blueprint, I rank the 7 most important hires any brewery needs to have. A qualified QA/QC person is #2. They would be higher on the list if it wasn’t for the fact that #1 makes the beer. Quality just got real folks. My emphasis comes from breweries who have over-expanded, need to get more volume to market, and quality is ignored. It’s dangerous.
- Risk – You took the biggest risk by opening this business. It doesn’t end there. Risk assessment is an on-going task for business owners. Bank debt, equipment down time, customer service, when to hire, are a few risk that come to mind. Remember, you are not alone on this one, every successful business owner examines their risk.
I have a challenge for you
This week I want you to do 2 things for me. Take out a sheet of paper or in your notebook write down the following:
- Take note of your tangible value. Write down each of the items I listed above. Next, put a dollar value next to each item.
- Write down the 3 mismanagement areas I have identified which I see in breweries. Next to each, I want you to grade each one with the following:
Don’t overthink it, be honest, no one but you will see these. Keep them in a safe place and trust me on this, we will put these to use throughout the year.
2018 = Disciplined Profits…Period
*Look for an explanation to this in a future post.