The UK craft brewing scene has been a hotbed of innovation and growth for years. However, recent challenges have put increasing pressure on small craft breweries. At Starfish, we’re here to help brewers overcome these hurdles. So how can smart accounting practices make a difference? Really understanding your numbers and using best-in-class software solutions like Xero and Breww, can help your brewery thrive.
1. Rising Production Costs
Inflation and supply chain disruptions have significantly increased costs. From raw materials like hops and barley to energy and packaging, everything is getting more expensive. This squeeze on margins is a major concern for craft brewers.
What can you do?
- Bulk Purchasing: Join forces with other local breweries to buy raw materials in bulk.
- Energy Efficiency: Invest in energy-efficient equipment and practices. Simple changes, like switching to LED lighting or changing brewing schedules to off-peak energy times, can reduce your utility bills.
- Inventory Management: Breww’s inventory management features help you keep a close eye on stock levels. This reduces waste and ties up less of your cash in stock.
How Starfish Accounting can help:
- Cost Analysis: We’ll use Xero to pull together a detailed analysis of your costs. This gives you a clear picture of where your money is going and helps identify areas for potential savings.
- Identify Funding: Investing in equipment sounds unrealistic when you are trying to reduce costs, however there are some really good options out there to fund those big purchases. We can put you in contact with funding specialists, and help you to pull together the information needed.
2. Regulatory Pressures
Navigating the complex web of health and safety guidelines, environmental regulations, and tax changes can be overwhelming for small breweries.
What can you do?
- Stay Informed: Make sure you keep an eye on the latest regulations affecting your industry – subscribe to industry newsletters and join trade associations.
- Automate Compliance: Tools like Breww can generate the reports needed for various regulatory bodies, saving you time and reducing the risk of error.
How Starfish Accounting can help:
- Management Information: We’ll set up custom codes in Xero to keep an eye on beer duty and other compliance-related expenses.
- Software Integration: We can help to integrate your brewery management software with Xero to make sure everything is joined up.
3. Changing Consumer Habits
The shift towards low-alcohol options and sustainable products requires breweries to adapt quickly.
What can you do?
- Expand your Product Range: If you haven’t already then think about introducing low-alcohol or non-alcoholic beers to your lineup. This can attract a broader customer base and tap into new markets.
- Sustainability: Check out switching to more sustainable brewing practices, such as using renewable energy sources or recycling water. Shout about any changes in your marketing to appeal to environmentally conscious consumers.
- Build a Community: Your local community can make the difference in making or breaking your business. Turn them into your biggest fans through events and offers.
How Starfish Accounting can help:
- Product Line Analysis: A combination of Breww’s production data and Xero’s financial reporting means we can help you analyse the profitability of different product lines. Make decisions on which products to focus on or discontinue based on up to date, reliable data.
- Sustainability: Did you know we have completed our B Corp impact assessment? As well as working on our own sustainability we are pulling together a service to help our clients to track and improve their own sustainability metrics.
4. Cash Flow Management
Maintaining healthy cash flow is crucial, especially given the seasonal nature of the brewing business and the up front production costs.
What can you do?
- Review Payment Terms: Negotiate flexible payment terms with your suppliers. Longer payment terms can give you a bit of breathing room, but if you are feeling a bit more flush prompt payment discounts will improve your profits.
- Diversify: Check out new revenue streams, such as hosting events, offering brewery tours, or selling branded merch. These can prop up your sales even during slower months.
- Chase your Debtors: Keep a close eye on any customers who owe you money. Set credit limits so you stop selling if the amount owed is too high, and build a process to chase overdue receivables frequently.
How Starfish Accounting can help:
- Cash Flow Forecasting: Information is power. If you know you are about to hit a dip in your cash flow it gives you a chance to do something about it. We can work with you to create a budget for the year, and expand that out to track your likely money in the bank.
- Funding: Although interest rates are higher there are still lots of options out there to borrow. We can help you to figure out the best approach for your business and make sure your management information is ready to provide to potential lenders.
- Credit Control: Hate chasing people who owe you money? We can take that off your plate. From building a process to implementing software to take on some of the work, through to making calls on your behalf. Protect your relationship with your customers and let us get the money in faster.
5. Strategic Planning and Growth
In a competitive market, having a clear strategy and the ability to adapt quickly is essential.
What can you do?
- Business Planning: Surprisingly few businesses have an up to date business plan. Make sure you have a clear business plan that outlines your goals, strategies, and financial projections.
- Work On the Business: Not in the business. You’ll have heard this before, but what does it actually mean? You need to free up your time to do the things that only you can do. From contacting possible new customers to investigating exporting to a new market, from agreeing a marketing strategy to developing the team, there will be a long list of really important things that will push your business forwards.
How Starfish Accounting can help:
- Accountability: We can hold you to account and help you to focus on specific goals for the next quarter.
- Scenario Planning: We can help you to create various financial scenarios, helping you prepare for different market conditions, and run the numbers so you can predict the impact of hiring a new employee, investing in new equipment, or starting to work with a new customer.
- Scalable Systems: As your brewery grows, we’ll ensure your financial systems scale with you. Xero and Breww are cloud-based solutions that can accommodate your expanding needs.
How do you get started?
The UK craft brewing industry faces significant challenges, but the right financial strategies and tools can make a huge difference. From cost management and credit control to strategic planning and cash flow forecasting, Starfish is here to help your brewery not just survive, but thrive. Ready to take your brewery’s financial management to the next level? Contact us today to learn how we can help you brew up success in today’s competitive market. Let’s raise a glass to your brewery’s bright future!
