Oft times in the wine business, the jump from home winemaker to winery owner happens overnight. You wake up one morning and decide, “Today I will start a winery.” Sometimes, this is drawn from a love of wine and a slow accumulation of bottles over the years, coupled with a lot of extra cash. Other times your spouse says to you, “We can’t afford for you to keep making all this wine just for our friends. Either you find a way to sell it or you find yourself another hobby.” So you figure, “A lot of people have small wineries…boutique wineries are hot… and my wine’s pretty good. How hard can it be?” You go out that day, apply for a bond and contract for 10 tons of fruit.
If you have a small winery this may sound familiar. But, there is a crucial piece missing in the story – the part where you plan your business.
All too often people start wineries only to find two or three years down the road that they’ve run out of funds and sales are not what they expected. They skipped that daunting task of writing a business plan – hoping to make it up as they go along. The problem is that the winery business is extremely capital intensive with expenses coming one to two years before sales. The market is brand-focused. How you design and market your brand has a large impact both on what outlets you can use for sales and what prices you can charge. How do you direct your resources to best sell your wine? To top it all off, government regulation can be daunting.
Well, the good news is that it is never too late to plan for the future and there are people who can help. One of the reasons we started winery business consulting is because we’ve seen both the make-it-up-as-you-go-along method and the start-with-a-strong-plan method. The fact is that when you start with a strong plan there are fewer surprises. You know what it will cost, when it will cost and when you can expect to see returns. You can plan your production and inventory before you sign a long-term grape contract. Then, when things change – as they always do – you can adjust with confidence.
If you haven’t yet made a business plan, this is a good time to start. If writing a plan is just too daunting, give us a call.
I found your thoughts on the idea of planning to go in the wine business very interesting. I like the idea of having some solid planning up front. It is so easy to rush into a venture and then find out that the money runs out before the profits come in. I will be following your site and may contact you in the near future.