Thriving During Difficult Times
As for many businesses, this is a tough time for a number of distilleries.
Restaurants and bars have very limited operations—if they’re opened at all—and large distributors simply aren’t buying the inventory they usually do.
Tasting rooms are closed. And employers worry about whether they need to lay off staff while being hyper-alert to their employees’ safety.
While big, well-known brands can probably weather the storm, many small craft distilleries are being hit hard. Pandemic circumstances favor established brands since potential customers aren’t browsing liquor store shelves or getting advice from bartenders about trying a new brand. And, smaller businesses of all kinds are less well equipped to handle economic uncertainty.
However, there’s no reason to throw in the towel (or start dumping barrels). You’ve made a big investment in your distillery’s equipment and perfecting the product. Now is the time to take some steps to protect that investment. Even if your distillery is lucky enough to not experience a big downturn just yet, it’s smart to prepare now in case you feel the pinch in the future. Below are a few suggestions of how to help survive and possibly thrive during these uncertain times.
Strategic Planning: It may seem very discouraging to think about the future and plan when some of the current markers are so daunting, but now could be a great time to pivot and engage in some creative strategic planning by revisiting the situation with a new lens. Bring a few trusted advisors into your circle to help with objectivity or consider creating a Board of Advisors task force. Challenge decisions that fall into the”‘we have always done it that way” category. Survey your workers for their ideas and then play through all scenarios, even ones that at first seem implausible.
Compliance Issues: The pandemic has created a host of new compliance issues, and it is important to ensure that compliance doesn’t lapse while business has slowed down. You may be focused on survival at this moment, but you don’t want to create more problems for yourself down the road. How do you handle furloughing or laying off employees? Or employees who are reluctant to come to work? How do you ensure safe working conditions? If you have applied for PPP funds, how do you comply with the requirements? If you have grants or loans, what kind of reporting requirements do you have? Be sure not to lose sight of compliance while dealing with other challenges.
Matching Records to Reality: Clean books allow for clearer and easier decision making. Every decision has profit and loss consequences, but how do you know which move is the right one to make? Does it make financial sense to produce hand sanitizer? There are many dimensions to track for every decision, including getting bills of materials or recipes properly set up as well as the cost of dumping, fulfillment, packaging, and storage. Which parts of your business do you start to revive and which parts would be best to shut down temporarily or permanently? The bottom line is that you need accurate information. It’s nearly impossible to make good decisions based on bad information. Also, ensure that you are managing your relationship with your bank and keeping them apprised of your financial position. They may be able to provide some assistance.
Need help thriving in difficult circumstances or seeing around corners? Contact DistilleryCFO. We can help with strategic planning, managing the complexities you are encountering or providing the critical ingredient to switching gears from surviving to thriving as we all make our way through these difficult times.