Aim for the Sky
If you don't have a destination in mind, how will you know when you arrive?
No matter how big or small your winery, a budget can help bring clarity to your organization. A budget can help your team align around shared goals, make better decisions, and even innovate when they have the freedom to do so. But make sure to involve everyone who has an impact on your success. In addition to owners, representatives from farming, production and wine making, sales and marketing (national sales and direct to consumer), and accounting should all be included in planning. If you are a team of one, doing everything yourself, be sure to consider goals and requirements for each of these areas and then put your plan in writing.
The Process
It starts with a clear winery vision that everyone understands. Why does your winery exist? What do we believe? This should be something that your winery stands for over the long haul. From there, determine your strategic focus for the current year. What do you want to accomplish at a high level? When the year is over, what will you be celebrating?
Once they understand the goals, leaders can create their departmental plans by building up from key business drivers to resulting revenue if appropriate.
First review prior year results. Be sure to consider all three financial statements - the Income Statement, Balance Sheet and Statement of Cash Flow to get a complete picture of your results. Have a conversation about not only the challenges but also your accomplishments.
Discuss the following:
1. Were there current year expenses that won't be repeated next year?
2. Did you make capital investments (reflected on the balance sheet) in buildings, equipment, or furniture? Will these asset investments be repeated next year? Are there other capital investments needed to drive increased production? Is your software meeting your current needs?
3. What changes in the business are needed to meet desired current year sales, production, or operational goals? Will they require additional investments? Are you adding new SKUs or changing packaging or labels?
4. How will we help our staff add new skills in the coming year? Do we have people positioned for leadership? Are our current incentive plans and compensation structures rewarding the right behaviors based on current year goals? What KPIs (key performance indicators) should we monitor?
5. What changes are needed in procedures or processes to improve collections, inventory management, or other aspects of the business?
6. What should we stop doing?
Done correctly, the budget process can be a positive bottoms up experience that engages the team in a productive way and empowers them to contribute to your business success. Be sure to add the financial budget to your accounting software so you can compare actual results against your plan each month. And finally, don't forget to make revisions to the plan as circumstances warrant.