If you’ve got the shop swept up, it’s time to look at your business plan.
I’ll say two things:
(1) Sales. Unless a lineup of buyers is waiting with handfuls of money, eager to hand it over, selling is going to be difficult. This applies equally to the multimillionaire semi-retiree and the bootstrap cellar rat.
(2) Once the business is operating, the aforementioned plan is useless. Including whatever you schemed in #1.
On the first point, you’re probably enamoured by your idea, and excited to produce and create, so you can't be convinced the challenge is moving bottles off the shelf. Sales and Marketing is 80% of the business. Period.
On the second, if we are talking about a small business in a competitive market, it’s rare that success happens when a great idea finds the market. More important than a plan is bringing energy, money, and a varied skill set. And then getting lucky.
It also helps if you’re unhinged enough to pile on the work hours.
So why does succeeding at small business have to be that difficult?
The quick answer is that beneath the surface the competition is fierce, with factory producers having the upper hand on neighbourhood garages.
Here’s a snapshot of what it’s like.
Garage wineries and factory wineries share the same regulatory playing field. Both pay the same fixed amounts to register a wine, licence a facility, get local permits for a space, or belong to an organization. Whether you sell 500k of wine, or 500,000k, you get the same bill.
Also, factory wineries pay a lot less for all inputs because they buy in scale. Labels, bottles, closures, packaging, etc cost less as you buy more.
These numbers are no surprise. A business plan for a 3,000 case winery versus a 30,000 case winery reveals the benefit of going large.
What gets missed is the cost of being small in a complex playing field.
The people making and changing the rules generally work for a large institution, and because they operate in that context, they imagine a large institution on the receiving end of their policies. And it works because the biggest customers of the rule-makers are generally the big players.
Unless you run a small business, where the effect is felt differently.
When the rules change (about taxation, reporting, etc), the large businesses handle it one way. They alert their accounting, legal, and HR departments, who work together to bring the business into compliance. Let’s say it costs them 100 hours for a typical compliance blip. Or maybe less, because the big players are often connected to the drafting of the policy.
Compare this to a small business, where the owner gets the same email on Monday morning, and does a quick estimation of the damage.
While the large multimillion dollar corp safely budgets 100 hours, the business owner guesses that the change will cost anywhere between 20 and 200 hours. Additionally, it triggers a cascade of longer term consequences.
It’s magician work handling these uncertainties, not suited for someone who just likes doing the job right.
In the best case, the owner makes a few calls and hires out the bulk and sees only an additional 20 hours of work that week, and the budget holds steady.
In the worst case, there’s not money to pay professionals, and the owner has to find time for an additional 60 hours of work over the next two weeks. Or maybe it’s 120. And has to hope that the budget holds. You see where I’m going with this.
The disruptions to the business plan can be as small as an unexpected audit, and as large as a pandemic.
The difficulty is compounded because at the start of a business’ life, when the major challenges happen, the owner has yet to develop the specific talents. And is overworked.
But it has to happen, and when it does there's satisfaction in seeing something beautiful grow. The sooner you put the seed in the ground, the sooner it breaks out of the soil.
See you next Friday,
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