FORECASTING CASH FLOW NEEDS DURING TIMES OF TURBULENCE PRESENTED - PowerPoint PPT Presentation

FORECASTING CASH FLOW NEEDS DURING TIMES OF TURBULENCE PRESENTED BY AUDRA GAIZIUNAS OWNER, BREWED FOR HER LEDGER LLC BREWERS ASSOCIATION POWER HOUR APRIL 2020

THE PROCESS • Items you will need for cash flow forecasting: • Current balance sheet (as of 4/1/20 or today) • Current payroll schedule by position and pay rate • Amortization table for long-term debt (in Excel format, if possible) • 2020 budget by month (or 2019 P&L by month) • P&L results for Jan-Mar 2020 by month DISCLAIMER: Brewed For Her Ledger, LLC makes no warranty, expressed or implied, as to the results obtained from the use of this information. Brewed For Her Ledger, LLC shall have no liability for the accuracy of the information and cannot be held liable for any third-party claims or losses of any damages. Any reliance you place on such material is therefore strictly at your own risk.

THE STEPS 1. Export the 2020 budget from QBO, Xero, Obeer by month with total for the year. The categorizations are key. 1a. In absence of 2020 budget, export 2019 P&L by month. 2. Overwrite Jan, Feb, Mar 2020 budget numbers with actuals. 3. Run a sales report for at least two weeks since closure, then double it for a month's equivalent results. Input those figures for April, May, June 2020. 4. Estimate new revenue numbers for 90 days for all other categories. 5. Pull COGS percentages from Ekos, Vicinity, Obeer, and apply to new revenue figures in COVID section. 6. Review and revise operational expenses line by line. Some items will go away, while others are fixed. 7. Plot out your personnel plan for the closure using the personnel tab. 8. Evaluate results for the 90-day closure period, then as a whole for the rest of the year. 9. In the cash flow statement, cell E28, input all cash available in bank from all sources. Subtract outstanding checks and add deposits in transit. 10. Evaluate cash flow needs based on operational deficiencies as they flow through the rest of the year. 11. Create a debt schedule based on current debt obligations (A/P, current debt not eligible for deferral via negotiations and lending institution). 12. Calculate EIDL request amount. Decide whether or not to include PPP. 13. Create amortization table for EIDL loan in loan schedule tab. 14. Create projections for another 24 months to prove financial viability (months 13-36 or 13-40).

TAKING TIME FOR REVIEW AND REDESIGN • Be sure to use divisional accounting to track profitability by each arm of the brewery • Revise your COA • Are your current success metrics still relevant? • Understand your fixed overhead • Review POS entry as it relates to the accounts in your COA

EXAMPLE BREWING COMPANY INCOME STATEMENT JANUARY 1 – DECEMBER 31, 2018 Cost of Goods Sold Income Canning Contract 10,801.63 Gross Receipts Cost of Goods Sold Sales- Bar Bar 12,329.56 Sale Bar Non-Alc 4,917.24 Cost of Goods Sold- Beer Self Distribution Sales Bar Guest Beer 7,771.74 Kegged Beer 3,702.25 Packaged Beer 9,790.42 Sales Bar Liquor 45,054.19 Total Cost of Goods Sold- Beer Self Distribution $ 13,492.67 Sales Bar-Wine 11,209.18 Cost of Goods Sold- Beer to Wholesaler Total Sales- Bar $ 68,952.35 COGS- Bulk Beer 1,085.00 Sales- Beer Self Distribution COGS- Kegged Beer 2,276.04 COGS- Packaged Beer 23,930.79 Festival Beer 485.32 Total Cost of Goods Sold- Beer to Wholesaler $ 27,291.83 Kegged Beer 28,982.94 Inventory Variance- Raw Materials 19.99 Packaged Beer 31,046.04 Restaurant 41,876.87 Total Sales- Beer Self Distribution $ 60,514.30 Taproom Transfer 13,578.74 Sales- Beer to Wholesaler Total Cost of Goods Sold $ 108,589.66 Merchandise Cost Sales- Kegged Beer 6,488.24 Merchandise Purchases 3,427.36 Sales- Packaged Beer 46,724.98 Total Merchandise Cost $ 3,427.36 Total Sales- Beer to Wholesaler $ 53,213.22 Other Brewery Production Costs Sales- Merchandise Production Repairs and Maintenance 2,684.25 Production Salaries and Wages 32,332.71 Taproom Merchandise Sales 14,650.44 Production Supplies 60.00 Total Sales- Merchandise $ 14,650.44 Total Other Brewery Production Costs $ 35,076.96 Sales- POS to Wholesaler 0.00 Pilot Batches/Research & Development 1,723.32 Sales- Rentals/Special Events 25.00 Restaurant Salaries and Wages Sales- Restaurant 210,855.02 Back of House 69,968.42 Front of House 40,526.99 Sales- Taproom Beer 248,892.53 Total Restaurant Salaries and Wages $ 110,495.41 Total Gross Receipts $ 657,102.86 Taproom Event COGS 500.00 Taproom Discounts, Refunds, Comps -40,957.90 Total Cost of Goods Sold $ 270,614.34 Total Income $ 616,144.96 Gross Profit $ 345,530.62

BEST PRACTICES FOR SALES, GEN, ADMIN $ • Create a reconciliation schedule for all EIDL and PPP funds • Use a holding account if you have one • Weekly drawdowns with oversight sign-off • Focus on those activities that generate fastest cash inflows • Best practices for SG&A management • Refocus on efficiency • Tend to spend more on SG&A as we increase gross margin; understand why • Align overhead spend with future demand • Eliminate, automate, consolidate

THE BALANCE SHEET Key ratios to track (liquidity and efficiency) • Working Capital: Current assets – current liabilities • Current Ratio: Current assets / current liabilities • Quick Ratio: Current assets less inventory, prepaids / current liabilities • Inventory Turnover: COGS for year / average inventory for year • Days’ Sales in Inventory: 365 days in year / inventory turnover for year • Debt to Equity: Total liabilities / total stockholders’ equity

WORKING CAPITAL • Interest free with no conditions; the cheapest and fastest source of cash • Managing working capital • Manage inventory • Streamline and centralize ordering • Review pricing and contracts regularly • Optimize stock levels based on forecasted demand • Practice JIT (know your optimal reorder points and optimal order quantities) • Set KPIs by department; review monthly

CONTACT INFO Audra.Gaiziunas@gmail.com / 919-538-4404 Brewedforherledger.com