The craft brewery industry is hopping in Vancouver right now.
If you’re on the east side of the city you’ll find up to 20 brewhouses, so there’s plenty of potential when it comes to creating your own ale trail. It really doesn’t matter if you’re partial to lager, pale ale, or even stout – you’re sure to find a craft creation to quench your thirst wherever you are.
With flavourful beers and buzzing brewhouse vibes, these are the spots where Vancouverites want to be after work, on the weekend, or just stopping by to pick up a craft six-pack. But an increase in breweries means an increase in competition, and up-and-coming brewmasters need to bring their A-game.
However, knowing where to start can be a problem for most. That’s where Manning Elliott LLP, a CPA and business advisory firm with locations in Vancouver, Abbotsford, and Surrey comes in. The firm understands the financial and tax needs relevant to individuals and businesses in the craft brewery industry.
Daily Hive spoke to former brewery owner and partner at Manning Elliott, Jeffrey Hunt, CPA, CA, to find out what it takes to make it in the craft brewery industry.
Sure, anyone can try their hand at brewing beer but if you want to make a viable business out of it you need to have a true passion for the art of creating craft brews. According to Hunt, you need to know how to brew and also have a “keen business sense in terms of understanding what your costs and revenues are going to be, particularly around cash flows.”
It’s not always an easy business to cash-flow forecast as the inventory has to sit for so long, Hunt. “You need the passion, you need great product, you need a great atmosphere, and you also need to have an understanding of how the business will run.”
There are loads of cool local breweries in Vancouver. But Hunt believes those which are successful focus not just on the flavour of their beer (which is extremely important) but also focus on “all facets of their business from marketing to atmosphere, margins, how they’re going to move their product, and a keen focus on the financial metrics of it.” If you don’t have these key elements, then you have more of a “lifestyle business.”
And while Hunt says there are a lot of breweries out there that are lifestyle businesses, “an entrepreneur needs to focus on the business aspect – understanding where your highest margins are and building a business plan around that.”
You could start up your own craft brewery if you want to. And you can do it on the cheap, too. “If you’re going to get a brand new brewhouse there is a significant amount of capital involved. But there is a lot of used brewing equipment out there so you could do it on the cheap in terms of setting it up.”
Hunt believes the biggest challenge for a lot of smaller breweries is understanding the “cash-flow management in the cyclicality of the business.” The accounting specialist works with a lot of breweries and some struggle with capacity issues in terms of managing those rises and falls. “Sufficient capacity to meet demands when it’s busy, and having excess capacity when it’s not busy.”
You really don’t want to invest your time or money into a business if you jump in head-first. The reality of the matter is that planning is required in order for it to be successful. “Don’t go into this thinking ‘I’m going to make a ton of money’. It’s a tough business. Make sure you have a proper plan, talk to as many people in the industry as you can, build out realistic expectations of what your business will look like and stick to it.”
Hunt also thinks it’s important to monitor yourself and take corrective action if you can see yourself going off target. And go into it with your eyes wide open!
Many entrepreneurs start out thinking that they can manage all aspects of their business. But in reality, that’s usually not viable if you want to grow in the brewery industry. “I have the financial background on what it takes to run a brewery, understanding how the LDB works, how all the reporting that’s required needs to be done, as well as knowing how to forecast cash-flows for those times when it’s going to be tight, as well as the direct industry experience.”
Manning Elliott understands how breweries should run, what your margins should be based on where you are, they can help you try to run a more efficient brewery, understand what are good systems, and what software to use. “If you need a good marketer, we can help you there, if you need a good brewer, we can help you there, if you need a good accountant we are one. We can help in many different ways.”
“A craft brewery is a fun business to own, there’s no doubt about it.” But business is never all fun and games and it’s good to get help to ensure you succeed.
Manning Elliott LLP is one of the province’s largest independent regional accounting and business advisory firms with offices in downtown Vancouver (604-714-3600), Abbotsford (1-604-557-5750), and Surrey (604-538-1611). The firm has been around for more than 60 years and employs over 180 professionals and staff.