6 Monthly Tasks to Uncover Hidden Costs and Boost Profits in Your Craft Beverage Business

Running a distillery, winery, or brewery can be a dream come true, but hidden costs can quickly erode your profits.

Whether you’re starting out or a mature business, every penny counts, and uncovering unnecessary expenses is key to maximising profitability.

I know time is often at a premium. While hours spent on in-depth cost and financial analysis will always reap rewards, even 20 minutes a month can make a difference. A simple, systematic approach will generate benefits that far outweigh the small time investment involved.

This guide outlines six essential tasks, one to focus on each month. Over the course of a year, you’ll complete each task twice. If you have the time, dedicating more than 20 minutes or revisiting tasks more frequently will deliver even greater benefits. These small, consistent actions will help you uncover hidden costs, keep your margins healthy, and set your business on a path to sustainable profitability.

Before you get started, download your free Business Expense Review spreadsheet here.

Task 1: Review Packaging Costs

Why Packaging Costs Are Least Questioned

Packaging is one of the largest expenses in craft beverage production, yet it’s often the least questioned. Businesses tend to reorder what they’ve bought before, see what they expect to see, and miss minor cost changes, surcharges, delivery fees, or opportunities to buy smarter.

What to Do in 20 Minutes

• Look at Recent Bills: Review bills from your packaging suppliers over the past few months.
• Spot Changes: Check for any price increases, new surcharges, or unexpected fees.
• Evaluate Quantities: Assess whether you’re ordering in amounts that qualify for the best pricing or discounts.

Actionable Tips

• Standardise Packaging: Using consistent bottle and carton sizes across products simplifies ordering and can reduce costs.
• Negotiate with Suppliers: Long-term relationships can be leveraged for better terms or discounts.
• Plan Your Orders: Avoid rush orders or small quantities that increase per unit costs.

Pro Tip

Packaging expenses go beyond materials. Reviewing your processes for efficiency can further cut costs and reduce waste.

Task 2: Audit Freight Expenses

Why Freight Costs Deserve Attention

Freight expenses can quickly add up, particularly for craft beverage businesses that rely on regular deliveries of materials and shipments to customers. These costs often fluctuate due to fuel surcharges, inefficiencies in shipping schedules, or under-optimised routes. Without regular review, you may be paying more than necessary.

What to Do in 20 Minutes

• Look at Recent Bills: Review your freight and shipping bills from the past few months.
• Identify Patterns: Note any recurring charges, unexpected fees, or price increases.
• Explore Cost-Saving Options: Consider how reviewing agreements or joining local groups could help reduce costs.

Actionable Tips

• Review Carrier Agreements: Ensure you’re getting competitive rates and inquire about potential discounts for loyal customers.
• Consider Alternative Carriers: Periodically shop around to compare services and rates from different providers.
• Check Out Local Freight Buying Groups: Associations or co-ops, such as local wine groups, often offer reduced shipping rates. Memberships of these associations can pay for themselves through lower freight costs.

Pro Tip

Ship customer orders less frequently to consolidate shipments and reduce picking, packing, and freight expenses. Remember to manage customer expectations by clearly explaining your shipping policy.

Task 3: Undertake an Expense Review

Why Expense Reviews Are Essential

Expenses can slowly creep up over time, leaving businesses with higher costs than they realise. Regularly reviewing your expenses helps identify unnecessary spending, hidden charges, or opportunities to negotiate better rates. It’s a straightforward way to free up cash flow and improve your bottom line.

What to Do in 20 Minutes

• Look at Recent Bills: Focus on one category of expenses, such as utilities, software subscriptions, or raw materials.
• Categorise Costs: Use the Business Expense Review spreadsheet to sort and categorise expenses.
• Spot Red Flags: Identify any recurring charges that don’t seem necessary or costs that have increased unexpectedly.

Actionable Tips

• Review Subscriptions and Services: Check for any underused software, memberships, or recurring charges and cancel what’s not essential.
• Track Trends: Compare expenses month to month to identify patterns and catch increases early.
• Negotiate Where Possible: Reach out to suppliers or service providers to renegotiate contracts or secure better terms.

Pro Tip

The Business Expense Review spreadsheet is your best tool for this task. Dedicate 20 minutes to one category of expenses each month, and over the year, you’ll uncover significant opportunities for savings.

Task 4: Check for Production Waste

Why Production Waste Impacts Profits

Waste in production doesn’t just cost you materials, it also adds up in time, energy, and lost opportunities. Identifying areas where waste occurs can reveal significant savings and improve efficiency.

What to Do in 20 Minutes

• Walk Through the Production Area: Observe your operations, from raw materials to packaging, and note where waste is generated.
• Speak to Your Team: Ask staff about pain points or bottlenecks that lead to unnecessary waste.
• Document Key Findings: Record what you see, such as incorrectly filled bottles, damaged packaging, or discarded raw materials.

Actionable Tips

• Recalibrate Equipment: Ensure machinery is set correctly to minimise material loss or incorrectly filled containers.
• Streamline Processes: Identify repetitive or redundant tasks that could be eliminated or automated.
• Train Staff: Regular training can reduce errors and encourage best practices in handling materials.

Pro Tip

For example, correctly calibrating equipment, or improved staff handling techniques could save thousands over a year.

Task 5: Evaluate Supplier Terms

Why Supplier Terms Impact Costs

Your agreements with suppliers can significantly affect your bottom line. Over time, pricing structures, service levels, and delivery terms may shift, leaving you paying more than necessary. Regularly reviewing supplier terms ensures you’re getting the best value for your money.

What to Do in 20 Minutes

• Look at Recent Bills: Focus on your top three suppliers and review their charges.
• Compare Against Market Rates: Research current market prices for similar services or materials.
• Identify Opportunities for Renegotiation: Highlight outdated pricing, unnecessary services, or opportunities to bundle orders for better rates.

Actionable Tips

• Renegotiate Contracts: Use your long-term relationship as leverage to negotiate better pricing or terms.
• Seek Competitive Quotes: Reach out to alternative suppliers to compare offers and ensure your current supplier remains competitive.
• Bundle Orders: Where possible, consolidate orders with a single supplier to qualify for volume discounts.

Pro Tip

Building strong relationships with your suppliers isn’t just about price. Open communication and loyalty can often lead to better service, flexibility, and even priority during busy periods.

Task 6: Break Down a Product’s Costs

Why Understanding Product Costs Matters

Knowing the true cost of producing each product is essential for maintaining healthy margins. Without a clear breakdown of costs, it’s easy to overlook where money is being lost or opportunities to improve profitability.

What to Do in 20 Minutes

• Pick One Product: Choose a product that represents a significant portion of your sales or one you suspect has tighter margins.
• Itemise the Costs: Break down the costs into categories such as raw materials, labour, packaging, and overheads.
• Identify Problem Areas: Look for costs that seem disproportionately high or areas where you can negotiate better rates or improve efficiency.

Actionable Tips

• • Review Raw Material Costs: Ensure you’re sourcing ingredients or materials at competitive rates.
  • Check Labour Inputs: Assess whether production time can be reduced through improved processes or equipment upgrades.

Conclusion

Why Small Actions Add Up

Reviewing your costs regularly is one of the simplest ways to protect your margins and grow your business. By dedicating just 20 minutes a month to one of the six tasks outlined, you’ll gain valuable insights into where your money is going and uncover opportunities to save.

A Simple System with Big Results

Each task in this guide is designed to be actionable, manageable, and effective. Over the course of the year, you’ll complete each task twice, ensuring no area of your business is overlooked. If you can invest more time or review tasks more frequently, the rewards will only multiply.

Next Steps

• Download the Business Expense Review spreadsheet here to start itemising your expenses today.
• Schedule a 20 minute session with yourself now and see how quickly the process becomes a valuable habit.
• Need help tackling your costs? Book a call with me to discuss how we can work together to increase the profitability of your business.

Small, consistent actions lead to big improvements in profitability. Start now and take control of your business’s financial health.