Issue link: http://winesandvines.uberflip.com/i/602988
30 WINES&VINES December 2015 BUSINESS is why it's that much more important to do so. They compare plan to actual monthly and do all planning work themselves. Bass notes that their business plan removes much of the stress. "When we plan well and understand the process, it takes the worry out. Cash is flowing in and out, but you know it's supposed to be doing that," she says. "I can't imagine having a business and not planning. It would be nerve wracking not to plan cash flow." Bass notes: "When you are starting, plan- ning is really important. A lot of people jump in because you can jump in for cheap—2 tons and a custom-crush agreement—but that doesn't look at bottling costs or product-mar- keting costs and margins by channel." She recommends some basic financial and cash- flow planning and benchmarking with other wineries. Bass says you will then "know what road you want to hop onto and go for it." The finance angle Jim Williams, co-owner of Carbonneau-Wil- liams, a CFO and accounting services firm, assumes you already have a vision of what you want to accomplish with your business. Your business plan is you writing out a realistic nar- rative of that vision. You are explaining how you intend to make and market the wine, how you compare to and differentiate from competi- tors. Williams wants you to "be honest with yourself about the hurdles you are facing. You need to be specific about how you are going to do what you plan to do." He believes a good business plan should answer "what will my cash needs be?" because cash flow is what makes or breaks all businesses. Jason Hinde, vice president at Exchange Bank and a veteran wine industry lender, pro- vided a banker's perspective to business plan- ning. Like Williams, he is most concerned with cash-flow management. "When I evaluate fi- nancial statements, the cash-flow statement is the most important one to me, and it's the one I focus on with my clients." He stressed that net income and EBITDA are not true cash flow, because they do not take into account changes in the balance sheet. Hinde recommends that financial projec- tions have three separate models: optimistic, realistic and downside scenarios. Planning this way allows you to stress your numbers and see how your cash flow is affected. If only a small stress is applied and your plan is in the red, chances are you don't have a good business plan. Finally, Hinde notes that without a business plan, you may be relying upon a "Field of Dreams" strategy of building it and hoping Shoeless Joe Jackson will appear. While it is a beautiful story, it's also a fictional one. A few businesses can attain success with that strategy, but most businesses need a plan. Andy Starr, founder of StarrGreen (starrgreen.com), is an entrepreneur, marketing manager and winemaker who provides strategy, management and business de- velopment consulting services. A resident of Napa Val- ley, Calif., he holds a bachelor's degree in fermentation science from the University of California, Davis, and an MBA from UCLA. He lectures about the importance of business plans at Napa Valley College. We've Got the Competition Beat by More Than a Foot! • Proprietary one-piece 59" dimples are larger than the rest of the industry • More effective heating and cooling at any level • Tanks from 250 gallons to 250,000 gallons • Reduce plumbing costs with greater dimple coverage • Westec's team is ready to help with your tank design or tank farm layout Industry Leading One-Piece 59" Dimple Jackets "Westec has custom-designed and built all of our tanks, catwalks and transfer lines for our specific needs. We value their craftsmanship, creativity, and expertise and highly recommend them as makers of premium wine tanks." – BECKY, PICKETT ROAD WINE COMPANY Call us today for more information and estimates. (707) 431-9342 | westectank.com C M Y CM MY CY CMY K westec_ad_winesandvines_dec2015.pdf 1 10/28/15 11:56 AM " When we plan well and understand the process, it takes the worry out. Cash is flowing in and out, but you know it's supposed to be doing that." —Phoebe Bass, Ceritas Wines