How to create a financial forecast for a distillery?

Developing and maintaining an up-to-date financial forecast for your distillery is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a distillery financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for a distillery?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your distillery and ensure that it can be financially viable in the years to come.
A financial plan for a distillery enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date distillery forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your distillery's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

What information is used as input to build a distillery financial forecast?
A distillery's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing distillery, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a distillery startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the distillery running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your distillery's financial forecast.
The sales forecast for a distillery
From experience, it usually makes sense to start your distillery's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your distillery (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your distillery's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Seasonal Demand: Depending on the time of year, the demand for certain types of spirits may increase or decrease, affecting the average price and number of transactions. For example, during the holiday season, there may be a higher demand for specialty spirits, leading to a potential increase in prices and transactions.
- Availability of Ingredients: The cost and availability of ingredients used in the production of spirits can impact the average price and number of transactions. If there is a shortage of a key ingredient, the cost of production may increase, leading to higher prices for consumers.
- Competition: The presence of other distilleries in the market can affect the average price and number of transactions for your business. If there are many competitors offering similar products, you may need to adjust your prices to remain competitive and attract customers.
- Economic Conditions: The state of the economy can also impact the average price and number of transactions for your distillery. During times of economic downturn, consumers may be more price-sensitive and may opt for lower-priced spirits, leading to a decrease in average price and transactions.
- Regulations and Taxes: Changes in regulations and taxes related to the production and sale of spirits can also affect your business's average price and number of transactions. For example, an increase in taxes on alcohol may result in higher prices for consumers, potentially leading to a decrease in transactions.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

The operating expenses for a distillery
The next step is to estimate the costs you’ll have to incur to operate your distillery.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your distillery's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for all of your employees, including distillers, bottlers, and administrative staff.
- Accountancy Fees: As a distillery, you will need to keep detailed financial records and file taxes. You may need to hire an accountant to help you with these tasks.
- Insurance Costs: Operating a distillery comes with inherent risks, so it's important to have insurance coverage for your building, equipment, and liability.
- Software Licenses: To streamline your operations and track inventory, you may need to invest in specialized software for your distillery.
- Banking Fees: You will likely have frequent transactions and deposits, so it's important to budget for bank fees and charges.
- Raw Materials: This includes grains, yeast, and other ingredients needed for production.
- Packaging Materials: In addition to the bottles, you will need to budget for labels, caps, and other packaging materials.
- Utilities: Running a distillery requires a significant amount of energy, so be prepared for high utility costs.
- Marketing and Advertising: To promote your brand and products, you may need to budget for marketing materials, events, and advertising campaigns.
- Licenses and Permits: As a regulated industry, you will need to obtain various licenses and permits to operate your distillery.
- Maintenance and Repairs: Equipment and facilities may require regular maintenance and occasional repairs, so it's important to budget for these costs.
- Distribution Costs: If you plan to distribute your products, you will need to budget for shipping, storage, and other distribution costs.
- Tasting Room Expenses: If you have a tasting room or visitor center, you will need to budget for staff, supplies, and other expenses related to hosting guests.
- Legal Fees: As a business owner, you may need to consult with lawyers for various legal matters, so it's important to budget for these expenses.
- Training and Education: It's important to invest in ongoing training and education for your staff to maintain high-quality production and operations.
This list is not exhaustive by any means, and will need to be tailored to your distillery's specific circumstances.
What investments are needed to start or grow a distillery?
Creating and expanding a distillery also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a distillery could include elements such as:
- Distilling Equipment: This includes items such as stills, fermenters, mash tuns, and boilers. These are essential for the distillation process and can be a significant investment for a distillery.
- Barrels: Barrels are used to age spirits and can be a significant expense for a distillery. They come in various sizes and types, such as oak or sherry barrels, and can add unique flavors to the spirits.
- Bottling and Labeling Equipment: As a distillery grows, it may become more cost-effective to invest in bottling and labeling equipment. This can help increase production and reduce labor costs for manual bottling and labeling.
- Warehouse Space: As a distillery produces and ages more spirits, they may need to invest in additional warehouse space to store the barrels. This can also include costs for climate control and security measures.
- Tasting Room: Many distilleries have a tasting room for visitors to sample and purchase their spirits. This can include expenses for furniture, decor, and possibly a bar area.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your distillery.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

The financing plan of your distillery
The next step in the creation of your financial forecast for your distillery is to think about how you might finance your business.
You will have to assess how much capital will come from shareholders (equity) and how much can be secured through banks.
Bank loans will have to be modelled so that you can separate the interest expenses from the repayments of principal, and include all this data in your forecast.
Issuing share capital and obtaining a bank loan are two of the most common ways that entrepreneurs finance their businesses.
What tables compose the financial plan for a distillery?
Now let's have a look at the main output tables of your distillery's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your distillery is likely to be in the years to come.

For your distillery to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established distilleries, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your distillery's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.

The cash flow forecast
Your distillery's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.

It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the distillery:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your distillery's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your distillery's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Which tool should you use to create your distillery's financial forecast?
Using the right tool or solution will make the creation of your distillery's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your distillery's projections
The modern and easiest way is to use an online financial forecasting tool such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast, and recalibrate your forecast as the year goes by
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
- It’s cost-efficient and much cheaper than using an accountant or consultant (see below)
If you are interested in this type of solution, you can try our projection software for free by signing up here.
Calling in a financial consultant or chartered accountant
Enlisting the help of a consultant or accountant is also a good way to obtain a professional distillery financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your distillery's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free distillery financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your distillery's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially for this.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Use our financial forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.

Takeaways
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your distillery.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a distillery. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Also on The Business Plan Shop
- Example of financial projections
- How to create a sales forecast for a business?
- Sample financial forecast for business idea
Know someone who runs or wants to start a distillery? Share our financial projection guide with them!