I stand in awe of the individuals I have met that established and operate a vineyard and a winery here in the County. They had a dream and the strength to carry it out.
Having a dream, a vision and passion are necessary ingredients of creation. They permit a dream to become reality. These visionaries have talents and energy that the rest of us can only dream about.
However, once the vision has become reality a different skill set may be required. The ship builder needs a captain to pilot the ship. The winemaker needs someone to sell their wine.
- Few of us are blessed with the ability to visualize the dream and then continue on to create an enterprise that is self-sustaining, grows over time and produces the financial and psychic satisfaction to reward the efforts that have been invested.
- Most of us are good at some things and less strong in other areas. So once the dream has become real we often need a team to help carry on and build a healthy and vibrant enterprise. The early building blocks of that team are the right kind of accountant and the right kind of banker. They will form the start of an advisory board to the CEO (that’s you).
- They will want to know whether the business is profitable. If not, when will it be?
- Can you explain your business plan?
- Are you covering your administrative costs and your financial expenses?
- What about cash flow forecasts?
To answer these questions we require a measurement system.
- The system must measure the cost per bottle and the gross profit on each bottle.
- The system must identify the direct production costs as well as the overhead.
- It must gather together the costs of labour, packaging, labelling, bottling etc. and then appropriately cost them for each bottle.
- The system must differentiate among the various products and allocate overhead correctly.
- The system must also correctly cost the inventory, and distinguish between raw materials, work in process and finished goods.
An accurate costing system allows the business to decide which wines to focus on, which to drop and which to expand. If you are losing on each bottle then increasing volume will ruin you that much quicker.
Giving life to a business and making great wine require passion. Keeping the dream alive requires understanding the customer, pricing the wine correctly, marketing and selling skills. It always requires having a measurement system to know whether you’re making money on the great wine you produce.