Writing an annual plan for a small brewery

An annual plan is a budget with a calendar

A brewery business plan argues that the business should exist. An annual plan says what it will do this year, month by month. It answers practical questions. How many litres of each beer will we sell in May? Do we have the tanks to brew them? What will the payroll be in December? When does the licence need renewing and when does the boiler get serviced?

For a small brewery or brewpub the whole plan can live in one spreadsheet with twelve month columns and a one page summary. Big documents do not get read. A sheet the team opens every month does.

Start from litres, by month

Everything else follows from volume. Take last year's sales by month for each beer, then adjust for what you know will change: a new beer, a price rise, a second outlet, a road being dug up outside.

In most of India the pattern is familiar. Beer sales climb with the heat from March to June, dip in the monsoon months and pick up again through the festive season and the December holidays. Hill towns and Goa have their own tourist calendars. Plan each beer separately. An IPA and a wheat beer may peak in summer while a stout sells best in winter.

Check the plan against your tanks

A sales plan that ignores tank space is a wish. Work out your real monthly capacity. Say you have six 1,000 litre fermenters and your ales need about three weeks in tank from brew day to ready beer. Each fermenter turns roughly 1.4 times a month, so six give you around 8,500 litres a month at most, before losses. Lagers that sit for four to six weeks cut that number sharply.

Compare that capacity with the summer peak. If May demand is 10,000 litres and your tanks make 8,500, you have to decide now: brew ahead and condition cold, add a fermenter, drop a slow beer in summer or accept running out. Making that choice in January is cheaper than making it in May.

Turn litres into money

Multiply litres by price for revenue, then build the costs line by line. Beer cost per litre covers malt, hops, yeast, water, energy, CO2 and packaging. Our guide to cost per litre shows how to build it. Add food cost if you run a kitchen. Then the fixed lines: rent, salaries, licence fees, insurance, maintenance, marketing and loan repayments.

The result is a monthly profit and loss forecast. Add a cash flow line under it, because profit and cash are not the same month. Duty paid on beer before it is sold, annual licence fees and a big malt order all hit cash before they hit profit.

Put the fixed dates in the calendar

A good annual plan has a second tab: the year's calendar. Fill it with everything that must happen on a date:

• Licence renewals and the documents each needs, with a reminder 60 days ahead.
• Monthly and annual excise and tax filings.
• Planned maintenance from your preventive maintenance plan: chiller service before summer, boiler inspection, pressure relief valve checks.
• New beer launches, working back six to eight weeks for recipe trials and label approvals where you package.
• Festivals, holidays, local events and dry days that change trade.

Plan the bad months too

Every annual plan should have a downside version. What happens to cash if summer sales come in 20% under plan? Which costs can you cut quickly and which are fixed for the year? Many small businesses aim to keep a cash buffer of around three months of fixed costs. Whatever figure you choose, write it down and plan to protect it.

Link the plan to your crisis plan for the risks that do not show up in a spreadsheet: a supplier failure, a flooded cellar, a licence delay.

Review it monthly, rewrite it quarterly

The plan earns its keep in the monthly review. Put actuals next to plan for litres, revenue, gross margin, staff cost and cash. Ask why each big gap happened and what you will do about it. Every quarter, roll the forecast forward with what you now know rather than defending a January guess.

Building a plan that ties litres, tanks and money together is the core skill of running a small brewery. It takes practice. Your first step: open a spreadsheet with twelve month columns and fill in a single row today, last year's litres sold by month.

Common questions

What is the difference between a business plan and an annual plan?

A business plan makes the case for the brewery and usually raises money. An annual plan sets out the next twelve months: litres, tank use, costs, cash and key dates.

How do I check my sales plan against brewery capacity?

Work out how often each fermenter turns per month from your tank times, multiply by tank volume and compare that with peak month demand.

How often should a brewery review its annual plan?

Compare actuals with plan every month and roll the forecast forward every quarter.