By Will Paustian, CFP®
Having a successful career as an owner or executive of a microbrewery, winery, or distillery is a great accomplishment. You have created a brand, worked hard to get where you are, and devoted much of your time and energy to improving your business. That often means that aspects of your personal life can be neglected, including your financial planning. Every career brings its own set of challenges, and understanding those challenges is the first step to overcoming them. Here are 6 financial planning obstacles owners of microbreweries, wineries, and distilleries often experience and what you can do to avoid them.
1. Strategic Planning
One of the biggest financial planning challenges facing business owners and executives in the microbrewery industry is finding the time for strategic planning. Between running and growing your business, there’s not much time left to think about things like succession planning, management and personnel planning, and financing.
Unfortunately, failing to plan can lead to major consequences down the road. For instance, a business without a succession plan can be forced to dissolve upon the death or incapacitation of the owner. Similarly, a business without a clear organizational structure and qualified management personnel can fall victim to inefficiencies and lost profit.
These challenges can be avoided by taking the time to invest in the framework of the business. Having solid processes, procedures, and a strong management team is just as important as having a top-selling product. At JGP, we can help you develop a strategic plan and put it into action, saving you time and energy so you can get back to growing your business.
2. Regulatory & Tax Planning
Regulatory and tax planning are other areas that many executives in the wine, distillery, and microbrewery industries struggle to navigate. You are an expert in your field and passionate about the company you started, but chances are you aren’t as passionate about the nuances of tax law or how to best leverage certain tax strategies to minimize what you owe each year. That lack of knowledge could cost you more than you know.
In order to keep as much of your hard-earned money in your pockets as possible, you’ll need to maximize tax deductions, minimize your taxes now and in retirement, and have a tax-efficient succession plan in place.
JGP works to coordinate your plan with your team of financial professionals, including your personal and professional CPA, bookkeeper, and attorneys. We will operate as the quarterback of this team to ensure that everyone is on the same page. We also cultivate strategic connections in the industry so that you are always up to date on the latest regulatory updates and changes. This will keep you ahead of the curve and allow your plan to adapt as necessary to provide financial confidence at every stage in your business life cycle.
3. Planning & Saving for Retirement
Planning and saving for retirement can be difficult enough when you are an employee earning W-2 income; it can be even more challenging when you are the one running the company. Whether your personal wealth is wrapped up in the equity of the business, or you just haven’t found the time to figure out a retirement plan, this can be one of the most challenging aspects of owning and running a successful business.
Retirement may seem like a long way off, but one day you will want to slow down and enjoy the fruits of your labor. Planning early and adjusting as needed is the best strategy, especially for business owners who have a lot of their net worth tied up in their companies. Don’t put retirement planning off until it’s too late. At JGP, we can help you create a sound retirement plan and diversify your net worth so it isn’t all tied up in one place.
4. Evaluating Financing Opportunities
If evaluating financing options for your business sounds like the last thing you want to do, you’re not alone. We’ve found that many of our clients in the microbrewery, winery, and distillery industries would much rather create new and exciting beverages than review the best way to structure financing for their business.
Financing is not your area of expertise, but it is one of ours. Whether it be evaluating an investment in your operation, or comparing interest rates and fees to determine which financing opportunity is the best for you and your company, we are here to help.
5. Wealth Tied Up in Equity of Business
As mentioned, it’s quite common for many business owners to have significant personal wealth tied up in the equity of their business. While this level of dedication is often necessary to get a business off the ground, once you have reached a certain level of growth, it’s important to reevaluate how much of your personal finances should be tied to the business.
Finding and implementing the right business structure is a key step that can provide financial flexibility and liquidity for business owners. It will help ensure that both you and your business thrive and that your personal finances are not over-leveraged or exposed to too much risk. Just as investments need to be properly diversified, so too do the funding sources of your business. Do not rely solely on your personal finances to keep the business afloat when there are other opportunities available.
6. Scaling for Growth or Preparing for an Exit
This is one of the hardest parts of planning for a business, yet it is also the one that significantly increases the value if done properly. Whether you are looking to scale for growth or prepare for an exit, every business owner needs a business development plan and a succession strategy.
A well-thought-out business development plan can mean the difference between a thriving business and one that barely makes ends meet. Similarly, it can mean the difference between a smooth operation and one that struggles to keep up with demand. Scaling for growth doesn’t happen overnight, so it’s important to develop this plan early on and revise it as necessary.
Additionally, it’s critical that you consider how and when you may want to exit your business and make necessary preparations and process improvements so that you receive the highest price possible. Having a strategic transition plan will make your company more appealing to buyers who want assurance that it will continue to thrive without you. Even if you’re passing the business to family members, you need a plan in place to ensure that it continues to prosper and all family members are treated equitably.
Are You Facing These Financial Challenges?
If you are an owner or executive for an established microbrewery, winery, or distillery facing these challenges, we would love to hear from you! At JGP Wealth Management, we have the tools and expertise to help you find solutions tailored to your business’s unique financial needs. To learn more about how we can help, reach out to me at firstname.lastname@example.org or 503-446-6450.
Will Paustian is a financial advisor at JGP Wealth Management, an independent, fee-based financial advisory firm in Portland, Oregon. Since joining the JGP family in 2020, Will has played an integral role in the firm by combining his knowledge of the financial world with a strong and dedicated work ethic in order to help our clients achieve their financial goals. Will is known for his commitment to walking our clients through everything they face in their financial lives, celebrating their victories along the way. He specializes in serving executives and entrepreneurs, specifically in the food and beverage industry and business owners planning to pursue an exit, tailoring his solutions to fit their unique financial challenges and opportunities.
Will graduated from the University of Oregon’s Robert D. Clark Honors College with a bachelor’s degree in finance and entrepreneurship, minoring in economics and is a CERTIFIED FINANCIAL PLANNER™ professional. He was awarded the Stamps Leadership Scholarship and served as a student trustee on the University Board of Trustees. He also spent time abroad in the UK studying behavioral economics at the University of Oxford. When not in the office with clients, Will enjoys a wide variety of activities, from hiking and fishing to cycling and traveling. He, along with his family, enjoys the sights and sounds of Oregon, cheering on the Oregon Ducks and the Portland Trailblazers and exploring the unique restaurants and businesses around the Portland area. To learn more about Will, connect with him on LinkedIn.