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Managing the Business

To have financial success in business it is essential to have a clear understanding of the financial requirements and expected returns of your business.

Before you venture into a new wine business it is also recommended that you have written goals that meet both your personal and financial goals.

Starting a wine business in Queensland

Running an business requires specialised skills. Not only do you have to be good at what you do, you also have to become aware of your legal, regulatory, financial and marketing obligations and capabilities.

Some of the main reasons why businesses may limit their chances of success include a failure to seek specialist advice, poor cash flow management, records keeping, sales and marketing problems and a lack of managerial skills and experience.

The decision to go into business is a very important step, yet many people end up as small business owners through emotion rather than logic.

One of the most common reasons for starting a Vineyard appears to be “Lifestyle”.

The amount of time, money and work required to successfully establish and operate a vineyard and winery is significant and needs to recognised early. Before you start or purchase a vineyard or winery it is extremely important that you thoroughly research your personal, financial, legal, tax and time requirements of successfully running the business.

Ask yourself:

Am I going into this business for the right reasons?
Do I have clear expectations and goals?
Do I have the necessary skills?
Do I know how much money to make it successful?
Do I have the time required to build the business?
Am I going to operate a cellar door?
If so am I prepared to open 7 days a week?
Who and where is going to make the wine or grow the grapes?
Do I know who my potential customers and competitors?
And most importantly can I afford to start and maintain the business during the set up years?

If you are unsure of your motives, financial status or management experience, the Department of State Development's Your First Step Kit can guide you through the process of establishing your own business. The program is self-paced and includes a video, workbook, publications and optional group information sessions. Please note it doesn’t have a wine focus rather a business focus.

It will also help you look at the personal, legal and financial requirements of running a small business. The “You’re First Step” Kit retails for approximately $40.00

WHAT IS A BUSINESS PLAN?

A business plan detailing a simple step by step action plan is recommended for all businesses.
It will allow you to monitor your progress and if necessary correct your direction at any time. A business without a plan is unlikely to be successful and achieve the financial goals you expect.

In summary

A business plan will increase your profit
A business plan saves you time, work and stress
A business plan will impress financiers and investors
And most importantly it allows you to plan and set priorities, your direction and speed.

Finance lenders will often require a comprehensive business plan be developed prior to approving funds.

WHO CAN DO THE BUSINESS PLAN?

You have two main options if you want to develop a business plan:

Do it yourself – Invest the time and effort
Hire a consultant - Invest money and some time.

If you engage the services of a consultant it is imperative that you work with the consultant. Share your knowledge and experience. The business plan sets the direction of your business, a business plan is a vital tool that will assist you manage your business. It will not be of any benefit if it is not constantly used, reviewed and updated. It is a tool and once written should not be forgotten.

BUSINESS PLAN STRUCTURE

Once completed the business plan will answer the 3 vital questions.

Where are we now?
Where do we want to be?
How do we get there?

A business plan is usually structured the following way.

1/ EXECUTIVE SUMMARY

This should be the first section of your business plan and the last one you complete.
It should be a summary of the key points of your business plan – one page only.

2/ THE BUSINESS PROFILE

Describe the Concept, Products and Services
List Qualifications and Skills of owners and staff
Including Trading Name and Legal Structure
Description of property location of premises

3/ A SWOT ANALYSIS

A SWOT is an honest summary of the Businesses Strengths, Weaknesses, Opportunities and Threats. It is usually constructed on a chart.

A SWOT analysis is an important tool that will assist you plan. EG: Once you identify opportunities you can then develop strategies to target and achieve them.

4/ THE MARKET ANALYSIS

Provide information about the states wine industry, current trends and market demands.
Include market size, growth trends, customer demographics, macro/micro maps & photos.
Describe your competition, competitive advantages and unique selling points.
Undertake some market testing and analyse results.

5/ THE MARKETING PLAN

Describe your target audience
Describe your sales mix. EG revenue mix of cellar door, direct marketing, wholesale, export
Describe pricing strategies
Describe brand and marketing strategies
Discuss sales and distribution techniques.
Describe your key sales advantage.
Details planned advertising and promotional activities.

Once the above information has been developed you can complete a Marketing Action Plan, detailing what, when and how the above will be achieved.

6/ THE OPERATING PLAN

Detail current status of operations, planned developments, location, equipment, vehicles etc.
Describe production and purchasing processes.
Staffing and training issues.

7/ MANAGEMENT AND PERSONAL PLAN

Reviews personnel functions,
Staff requirements or future staff requirements
Define who will be responsible for what
Do you have the skills required?
Detail skill development and training requirements.
You may include Job descriptions, any policies.

8/ THE FINANCIAL PLAN

Detail establishment costs, sources of funds and personal financial status.
Complete proposed Profit and Loss Statement,
Complete Cash flow Forecast,
Refer to marketing plan for Wholesale / Retail / Export sales mix and pricing.
List any future capital requirements

9/ THE ACTION PLANS

This identifies the activities and tasks needed to achieve your goals.
It details the resources needed and the personnel whom are responsible for the tasks with timeliness

Step 1 - List Goals
   Prepare a list of specific statements about what you want to achieve.
Step 2 – List Objectives
   Prepare a list of measurable targets that will help you reach each goal
Step 3 – Formulate Strategies
   Prepare a list of strategies that will help you meet the above objectives.
Step 4 – Action Strategies
Prepare a detailed list of what you intend to do to achieve the above strategies

TAX CONSIDERATIONS

The Australian Taxation office regularly updates Australia’s taxation legislation. For current information on the Wine Equalisation Tax or assistance with this topic contact the Wine Equalisation tax Team in Adelaide on (08) 8208 1387 or (08) 8208 1388.

The GST is a detailed set of rules. It is recommended that you consult your accountant before you commence business.

For a details on depreciation costs and other business related TAX issues contact the Australian Taxation Department on 132478 or consulate their web site www.ato.gov.au

Last updated 22 June 2005.