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Designing Your Cash Flow for Success and Growth Five Core Financial Principles You Need to Know

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Designing Your Cash Flow for Success and Growth Five Core Financial Principles You Need to Know 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 advisory solutions. Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 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.
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