It is true, running a winery or vineyard is more than just making great wine. It is running a business. Between harvest timing, bottling schedules, tasting room sales, and distributor payments, money flows in and out on different cycles. Some owners rely on gut feel to gauge when cash will be tight or when sales will pick up. Intuition is valuable, but on its own, it can leave a winery exposed.
To limit this exposure, financial tools can help. Those tools, budgets, forecasts, and cash flow reports support and challenge instincts honed over years in the industry. Used together, these tools help you:
These tools don’t replace your operational knowledge; they sharpen it. They provide a more analytical “gut check” by validating details while still supporting the big picture.
What Is a Budget?
Definition
A budget is the plan you set at the beginning of a period, often annually. It outlines overall expectations and goals.
Purpose
A budget is your roadmap. It sets targets for sales, production costs, payroll, overhead, and more.
Use in Wineries
Budgets help you plan revenue versus expenses and keep spending aligned with revenue goals.
When to Use
At the start of a fiscal year or when planning a new project such as opening a tasting room. Budgets can also be prepared for longer-life projects, such as a particular vintage or SKU.
Example
You budget $500,000 in tasting room sales and $200,000 for production costs. This gives you a benchmark to measure actual results against the plan, helping you spot unexpected variances and evaluate whether you’re on track to meet income targets.
What Is a Forecast?
Think of the budget as your original plan, and the forecast as your updated plan based on what’s actually happening.
Definition
A forecast is a forward-looking estimate based on historical data and current trends. Unlike a budget, it changes as reality unfolds.
Purpose
It’s your best guess of what will happen over a shorter timeframe, such as monthly or quarterly. Forecasts are updated as the year develops.
Use in Wineries
Forecasts help you adjust for actual results compared to what you expected when the budget was created. They answer the question of how actual results affect the remainder of the year. Forecasts can identify when changes to the original plan are needed.
When to Use
Throughout the year, as actual results become known.
Example
If tasting room traffic is stronger than expected, you update your forecast to show $600,000 in sales instead of the $500,000 budgeted. You may also need to adjust related expenses, such as wages.
What Is Cash Flow?
You can be profitable on paper and still run out of cash. Cash flow explains why.
Definition
Cash flow tracks when cash actually comes in and goes out. It’s not focused on paper profit; it’s about whether you’ll have cash in the bank to pay bills when they come due.
Purpose
Cash flow reports show whether you’ll have enough liquidity to cover expenses at specific intervals.
Use in Wineries
Cash flow is critical for managing seasonal swings. You may sell wine in bulk once a year, but pay for vineyard labor monthly.
When to Use
Always. Cash flow should be monitored regularly, often weekly or monthly.
Example
Even if your forecast shows $600,000 in sales, cash flow may reveal that most of that revenue will arrive around wine club shipments, leaving you short of cash in other months.
How They Work Together
In simple terms, the budget sets the plan, the forecast updates the plan, and cash flow tells you whether the plan actually works in real life.
This is where the three tools connect and reinforce each other.
Budget to Forecast
The budget sets the plan. A yearly budget is allocated to monthly or quarterly periods to form the initial forecast. As each month closes, you compare actual results to the plan. If tasting room sales exceed expectations or distributor payments are delayed, you adjust the forecast.
Forecast to Cash Flow
Forecasts are updated with actual results throughout the year. Cash flow translates those numbers into the timing of payments.
Budget to Cash Flow
A budget evaluates whether your overall plan makes sense. Cash flow tests whether it’s feasible given the timing of cash.
Why This Matters for Wineries
Seasonality
Wine businesses are highly seasonal in terms of revenue, expenses, and cash flows.
Decision Making
Should we expand production, hire staff, or invest in equipment. These tools show whether those decisions are financially realistic in practice.
Peace of Mind
Instead of relying solely on gut feel, you gain structured insight into risks and opportunities.
Practical Tips
• Start simple with a basic monthly budget and cash flow spreadsheet
• Update forecasts monthly or quarterly
• Focus on timing before committing to large expenses
• Use the tools together
Closing Thought
As a winery or vineyard owner, you already know your business inside and out. Budgets, forecasts, and cash flow reports don’t replace your intuition; they sharpen it.
At Protea Financial, we routinely prepare these reports and help wineries use them to look further into the future with greater certainty. Reach out to us if we can be of assistance.
