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!
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!
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