How to Boost Your Bottom Line: What Your Accountant Wishes You Knew

Listen to CPA, Maria Pearman, dive into the tools needed to understand your sales data.


This is the third of a 3-part series focused on increasing revenue for your craft brewery. The What Your Accountant Wishes You Knew webinar will give you the tools needed to understand your sales data. Maria Pearman, with Perkins & Co., will provide insights while helping you and your team better understand how to increase your bottom line.

Watch Webinar Here:


Andrew:  Welcome to the third part of a four-part series on How to Boost Your Bottom Line presented by Perkins & Co, Craft Beer Professionals, Craft Peak, and Arryved POS. We’re excited to have you join for What Your Accountant Wishes You Knew. A few reminders before we get started, if you have any questions please drop them right in the Q&A area. Maria will be glad to take them at the end, and heads up, there may be too many questions for our team to answer during the session but we’ll make sure someone reaches out to answer post webinar. We are recording this webinar, it will be sent to your email this week so be on the lookout! 

Maria Pearman is a Certified Public Accountant who provides accounting expertise and a deep operational knowledge to the beverage alcohol industry. She has also taught finance and accounting for craft beverage at the University of Vermont, Portland State University, and through The Distilled Spirits Council of the U.S. Her book, Small Brewery Finance : Accounting Principles and Planning for the Craft Brewer was published by the brewers association in 2019 and is right behind me on my shelf. Highly recommended! 

Maria’s specialties include finance managerial accounting, budgeting tax accounting, tax planning, and provisions business strategy brewery-specific production planning and ERP software. She earned her BA from the College of Charleston in her home state of South Carolina. She currently resides in Bend, Oregon. Maria, it’s all you now.

Maria: Thanks Andrew! Really good to be with you all. This topic is What Your Accountant Wishes You Knew. I’ve worked with well over a hundred beverage alcohol companies over the last few years and I tried to boil this topic down into the top things I think are key takeaways. So, in David Letterman style we’re going to go through our top list—and if you don’t get that reference, I guess I’m dating myself! Let’s go through this rapid fire style starting with number 10:

#10: It’s better to maximize sales in your own backyard than to open up territories far away.

So many people get caught up in chasing revenue and looking for growth in that top line. If that top line means your brewery in Des Moines is trying to sell beer in Los Angeles, well that can be a losing proPOSition. It is so much more expensive to open up another territory that’s far away. 

The way the industry is changing, people are really dialed in to hyper local and every region seems to have its own bevy of craft options. If you are a craft option and you’re trying to come in from hundreds of miles away, that’s very difficult to really make a presence in a different market. You need boots on the ground in your second location in the form of a sales person and that’s expensive. People are expensive. If you have any opportunity to just mine your own backyard or your own small region for more sales first, I definitely recommend doing that before you go further afield. 

#9: Merchandise is your friend!

I think a lot of us have learned this over the last few months: merchandise is great because the margin on it is about percent. You should buy for one, sell for two. And it doesn’t require any labor to produce. You’re buying a good and you’re reselling a good so it’s simple. You’re not subject to the three tier system for this line of sales so you can easily sell direct to your consumer and there’s nobody in the middle who is taking a portion of the sale. That’s assuming that you’re selling goods either online or through your retail locations and bonus for you if people are already in your taproom. The people are already invested and interested in your brand; you’ve got a captive audience with no other competing merchandise around so maximize the opportunity for taproom sales with merchandise. 

Think about the experience of your patrons as they walk through the taproom. Do you have your merchandise set up so that people have to walk by it in order to get to the counter? Is your to-go beer in a refrigerator right by the register? All of these are simple things but so effective.

In this COVID era where everywhere across the country is in different phases of lockdown, perhaps you might experience indoor dining is restricted and outdoor is a little more lenient. Get a little cooler on wheels and have some of your beer to go out there so that people can just easily grab and go instead of having to go inside to do it. So, merchandise and beer to go are both highly lucrative in terms of margin and I encourage you to mine that for all it’s worth.

#8: Use the data in your POS to maximize taproom sales.

Most POS systems have helpful reporting features that allow you to slice data in multiple ways. With this, you can check out which days and times are most popular, and then use this information to help drive sales to those slower parts of the day. If you see 3% less revenue on Tuesdays from 4 to 7pm versus Thursdays from 4 to 7pm, are there incentives that you can offer to get butts in seats during that slow time? The data will help tell you where you need to push your marketing dollars and efforts. 

When you swipe credit cards for sales, you can utilize information about credit card zip codes to find out where your customers are coming from. Are they in the neighborhood? Are they coming from out of town? All of this is really helpful in terms of how you speak to your audience and how you market yourself. Mine through the data and make it inform your managerial decisions. 

Another way that you might utilize this is if you’re thinking about opening up an additional taproom. Maybe there’s a way you can use this information to see where people are coming from. If they’re coming from across town, that tells you there’s a demand from people that live in another region and it can help point you in the right geographic direction for additional retail outlets.

#7: You don’t have to keep all of your data in QuickBooks or whatever accounting system you’re using.

I’m an accounting professional and I work primarily in this realm with my clients. I often encounter people who think they need to set up their chart of accounts so they can see all the detail in their financial reports. While I understand where that’s coming from—and it’s admirable to some degree—it can also lead to really unwieldy financial reports. Very long, very detailed reports. Sometimes you get paralyzed by too much detail available to you. I encourage you to keep the chart of accounts in your accounting software simple and if you want to see something like your product mix, then go to your POS software. Or if you want to see information about points of distribution, you can get a lot of other information from your production software, your inventory management software, or sales software for example. 

Keep QuickBooks simple and in terms of revenue. Maybe you’re just looking at package goods sales, draft sales, and merch sales. Keep it simple. Keep it streamlined and remember you can utilize other areas of your data to get the detail you want. 

#6: KPIs are extremely helpful. 

I think of Key Performance Indicators as shorthand for your financial reports. I don’t want to discount the value of full financial reports, whether it’s balance sheet income statements and statement of cash flows, those are very important and you should go through them thoroughly at least once a month. But your Key Performance Indicators are great because they can tell you how things are looking at a glance. It gives you a shorthand into what those financial statements would tell you. 

Some of my favorite KPIs are listed here: Current Ratio, Debt to Equity, Days Sales Inventory, Weeks of Cash on Hand, Revenue per Labor Dollar, Revenue per Square foot. (this is for your retail locations gross margin and I’ve got in parentheses by division so you want to have your wholesale gross margin and your tap reverse margin separated out because those are two different business models.) Gross Margin, EBITDA, and of course, Net Income. 

If you have any questions about what those mean and what they measure you can contact me afterwards. But I  want you to have a quick list of those things I highly recommend to keep your finger on the pulse of your business. 

#5: The way you talk about your finances should reflect your audience. 

There’s a time and a place for high level data, and a time and place for detailed data. 

I want to give you an example here: Let’s say you are presenting your financials to your leadership team. Your leadership team might include your Sales Director, Production Director, CEO, CFO or equivalent, Marketing Director, Taproom Manager, etc. These people are not living in the numbers—the way an accountant lives in numbers—in their day-to-day lives. For a lot of people, this is boring stuff! So, how can you take very detailed important financial information and boil it down in a way that will resonate with an audience who doesn’t natively speak that language? 

This is an example of how I like to present financials to non-native accounting speakers, as I like to call it, so you’re just looking at very key points. You know we’ve got COGS, we definitely need to know what COGS are in terms of their percentage of revenue and we need to know what we’re doing in terms of how much we’re spending on sales, marketing, and general administrative, and what type of EBITDA we’re hitting. 

Another thing that’s important here is not only the percentage of revenue, but looking at budget versus actual and the difference between the two. You see here in these columns, I’ve got the first leftmost set of columns for one particular month. The middle set of columns is looking at year-to-date figures. The third set of columns is fiscal year forecast. This fiscal year forecast in the column is the actual numbers year-to-date. In this case, it would be actuals January through August, plus your budgeted September through December versus the budget which is just going to be total budgeted numbers for all months of the year. This tells you if we stay on track to our budget from now to the end of the year, this is how we’re going to end up. All three of those are quite helpful and it gives your non-natively speaking audience a way to connect with the numbers without all the detail.

Now, if you are coaching one of those leaders individually because you are in charge of the accounting department in your company, ideally you’re having monthly one-on-one meetings with each department leader for an in-depth go through the accounts that are relevant to them. That is when it’s important to go through the detail. But when you’re as a group and you want to talk about the performance of a company as a whole, I think staying a little more high level is really going to drive home the points that you want to get across in a more effective fashion. 

#4: Attach margin to everything you sell. 

I don’t believe in lost leaders. If you’re selling something, you better have margin attached to it. Margin is revenue minus cost of goods sold. I’m talking about attached margin to everything in terms of a per-SKU basis. This is not simply looking at packaged beer margin and draft beer margin, this is looking at what is the margin on my 4 packs,  6 packs, and 12 packs of my pilsner. It’s critically important to review margin by SKU on a monthly basis. 

Before a beer is brought to market you should put it through a vetting process. That vetting process would be a checklist where there’s a section for production, sales, marketing, and accounting. From a financial perspective, the cost of a test batch should be calculated and if it doesn’t meet those minimum profitability requirements, it doesn’t go to market. It’s not only important to vet a new beer before you put it on the shelf but it’s also equally important to review its profitability month by month to make sure you’re staying on track.

#3: Open book management pays dividends.

Open book management is the practice of sharing financial data with your team and leadership should have a full view of financials. That means nothing is redacted in your financials. Everything is open and you’re reviewing it together on a monthly basis. Now as you go deeper down into the org chart, that access will decrease, but even your lowest level employees should have visibility into the revenue and the margin—that is revenue minus cost of goods sold—and the net income, as well as the actual position versus the budgeted results. This is critically important to get all of your team members invested and rowing in the same direction. It gives them insight into the financial goals as a company, how are you performing, and it helps them start to think in terms of what day-to-day adjustments will help get closer to the goal. If that’s uncomfortable to show your team just strict dollar amounts, you can always put this in percentages instead of dollar amounts. 

#2: Budgeting is the best management tool that exists.

I highly recommend going through the budgeting process because it helps to crystallize your goals. It forces companies to make sure that their vision and their larger goals are still appropriate for them. 

Usually you’ll do your budgeting process right around October. You’re getting ready for Q4, you’re setting yourself up for the next year, and so it makes you double check your vision and recalibrate if necessary. You know specifically in this year where we may be thought that COVID was done and now we’re back in round two of it so maybe your vision and your goals are shifting again. It’s a way to reset and every department head should be involved in this process. By getting your department heads involved, it’s a great way to create alignment with your team. After the budget is set, you’re going to look at your financials from an actual basis and start to compare them to what your budgeted result was. That is where the gold is every month. You’re looking at the variance from the actual budget and then making decisions on how you can adjust your operations to get closer to gold. Budgeting best thing that a company can do.

#1: Cash flow is more important than profit.

Use a cash flow forecast. Cash flow is something that affects businesses of all industries of all sizes of all phases of their corporate life cycle. It never ceases in its importance and it’s the lifeblood of an organization. I’ll give you an example: Sometimes you might be tempted to get into a raw materials contract because you can get a lower price on your goods if you buy in bulk. But that may put you in a cash crunch when you buy those materials and you could be in a bad position, cash wise. I encourage you to make sure that cash flow is protected first and then start to think about profit. 

Those are my top things that I want to convey to you all. I hope it’s been helpful and if you have any questions or want to talk further around any of them, shoot me an email. I’m also happy to take any questions that have come up right now.

Andrew: Hey everybody thanks, again for tuning in. Tons of fantastic information. Thank you, Maria! I always love a good top 10 list. And for everyone who’s still tuned in, shoot those questions, put them in the Q&A section. We’d love to have Maria answer them for you today.