Designing Your 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, and

Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 advisory solutions. 5 Core Principles

1. The 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

Irvine & Company, LLC - 345 NE 102nd Ave - Portland, OR 97220 The Inventory Monster

What is your true per bottle?

What we see What we know Ingredients Ingredients Bottles Bottles Labels Labels Rent Labor 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 $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 $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 !

 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