Designing Your Cash Flow for Success and Growth Five Core Financial Principles You Need to Know
American Distilling Institute Conference – April 1, 2014
NICK SHEPHERD, CPA KEVIN O’BRIEN, CPA CONGRATULATIONS FOR NOT BEING AN ARITHMOPHOBIAC
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 About Us
Nick Shepherd, Principal Kevin O’Brien, Director
Irvine & Company is the leading alcoholic beverage CPA firm in the Pacific Northwest. Representing over 200 alcoholic beverage and food clients from start-up to $100 million in sales, Irvine & Company provides innovative tax, accounting and
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 advisory solutions. 5 Core Principles
1. The Inventory Monster 2. Cash, Cash, and More Cash 3. Mr. Banker vs. Uncle Sam 4. Clean Records Save Lives! 5. Roadmap to Success, USA
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Principle #1: The Inventory Monster
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 The Inventory Monster
RECIPE FOR FAILURE:
NOT UNDERSTANDING YOUR INVENTORY COSTS
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 The Inventory Monster
What is your true cost per bottle?
What we see What we know Ingredients Ingredients Bottles Bottles Labels Labels Rent Labor Depreciation Supplies Etc.
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 The Inventory Monster
TO GROW, YOU MUST FEED THE MONSTER!
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Principle #2: Cash, Cash, and More Cash
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Cash, Cash, and More Cash
Three Avenues For Cash Profit
Equity Debt
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Cash, Cash, and More Cash
PROFITS
Think twice about that salary
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Cash, Cash, and More Cash
EQUITY
Friendly Capital Unrelated Capital You Venture Capital Your Friends Private Equity Rich Uncle Investment Club Crowdsourcing Other
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Cash, Cash, and More Cash
DEBT
BANK 3RD PARTY Term vs. Line of Get it in writing Credit Beware of debt-to- What are they equity loans looking for? DON’T BE AFRAID!
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Principle #3: Mr. Banker vs. Uncle Sam
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Mr. Banker vs. Uncle Sam
There really are two sets of books
There
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Mr. Banker vs. Uncle Sam
GAAP BOOKS TAX BOOKS Management IRS Bankers Investors
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Mr. Banker vs. Uncle Sam
TAX GAAP Revenue $800,000 $800,000 Direct Production ($36/case) 150,000 150,000 Indirect Production ($84/Bottle) 350,000 266,000 Selling 200,000 200,000 General & Administrative 100,000 100,000 Net Income $0 $84,000
Inventory (1,000 cases at $36/case) $36,000 Inventory (1,000 cases at $120/case) $120,000
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Principle #4: Clean Records Save Lives!
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Clean Records Save Lives!
Bad records can KILL a bank account!
Your mother isn’t a good bookkeeper
How much is sleep worth?
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Principle #5: Roadmap to Success, USA
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Roadmap to Success, USA
Can you answer these 3 questions?
1. What impact would expanding into nine new states have on your business? 2. How many cases do you expect to sell in 2014? 2015? 2016? 3. What is your exit strategy?
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Roadmap to Success, USA
STRATEGIC PLANNING IS WORTHLESS – UNLESS THERE IS STRATEGIC VISION
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 In Conclusion
Key takeaways: Growth requires personal sacrifice or favorable relationships with cash sources
The IRS and your banker speak different languages
You need to plan for success
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 Thank you!
www.irvinecpas.com
Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220