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  • Business Plan Expense Assumptions

    Hi,

    I'm working on my brewery business plan and had a question. In working my financial numbers, I feel pretty comfortable with estimating direct costs (ingredients, direct labor/utilities, packaging, etc.) to get my gross margin. Where I'm shooting in the dark is in estimating indirect expenses, such as advertising/marketing, SG&A, operating expenses, and R&D in order to calculate my net margin. I started out with estimating these as percentages of revenue, but my ad/marketing number got very big by year 5 based on my growth (roughly $350,000 by Year 5 - this seemed large to me, but I'd like to know what others think). Below, in parentheses, are the numbers I currently have plugged into my model and I'm looking for a gut check on whether these seem reasonable or totally out of whack.

    Advertising/marketing (10%)
    SG&A (5%)
    Operating (10%)
    R&D (1%)

    I am assuming SG&A and operating encompass indirect utilities (building heating/electric), sanitation chemicals/water/labor, maintenance, materials receiving/handling, and legal/licensing fees, but I'm not sure which should go into SG&A and which should go into operating. Is there a rule of thumb or historical industry benchmarks used to estimate these expenses? A secondary question is whether there are other major expense line items I should be including in SG&A and operating, and which expenses should go into each.

    For reference, I'll be starting a 30-barrel microbrewery/taproom in a large Midwestern metropolis, with immediate plans for a taproom and on-premise distribution and long-term plans for off-premise distribution.

    Thanks in advance!

  • #2
    I have 8 different excel spreadsheets for a 30 bbl system done by a beer industry accountant with accurate estimates for all costs, startup expenses, sales etc... . What's SG&A? Never heard that one.

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    • #3
      SG&A stands for Selling, General & Administrative. Various definitions of SG&A I have seen include anything from salaries, advertising, rent, anything related to "selling product" and anything related to the general operation of the company (overhead). "Selling product" and "general operation" seem to be vague catch-alls and I'm afraid I'm double-counting things because I've broken out salaries/wages, advertising/marketing, and rent as separate line items.

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      • #4
        This would not be how a proper pro forma would be laid out. Email me. Lsbbrew@gmail.com.com

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