Few of us like to think about bookkeeping and accounting. Without it though, you’ll find yourself in the dark about how your winery is performing.
Bookkeeping is the backbone of all businesses. To know what’s happening at the most basic financial level, you’ll need to have a great bookkeeping system.
Today, learn why bookkeeping is essential for a small business and how it prepares your business for continued success.
Understand the Who, What, and Why
Accurate and timely bookkeeping lets you know who owes you money, who you owe money to, and how much you own.
Your bookkeeping will allow you to know:
1. Who owes you money,
2. What they owe you, and
3. Why they owe you.
You’ll have receivables if you’re making sales on account. And without good bookkeeping, you won’t know whether you’ve been paid for all of your sales.
Keeping on top of your receivables will help you maintain your cash flow and avoid charging late fees and chasing collections.
Tracking the who, what, and why with bookkeeping helps you with payables too.
You want to know who you owe money to and how much you owe them. Paying your vendors and suppliers on time avoids paying late fees and helps to maintain a strong working relationship. Plus, these vendors could provide trade references when you’re applying for credit with another supplier or a loan from a lender.
Great bookkeeping lets you know how much equity you have in your business.
Your equity is more than just the cash you invest. It’s also the assets, liabilities, and accumulated profits of the business. Equity calculations are important when applying for loans or taking on new investors. If you don’t know how much equity you have in your business, a lender or an investor won’t be comfortable giving you money.
Improve budgeting and planning
Proper bookkeeping is essential for budgeting and cash flow management.
When you keep track of your receivables, you can manage your cash flow better. You want to ensure that money is flowing in on a consistent basis to offset the money that goes out each month. If you let several customers become past due, you’ll need to use other resources, like delaying payments to suppliers or using your own capital, to make up for the cash shortfall.
Keeping on top of your bookkeeping and cash flow will let you budget effectively. Budgeting is an essential process for anyone in the beverage industry. It allows you to allocate money to processes critical for your business’s success and prioritize spending.
Without a solid budget, you will feel like you’re just running in a circle, never knowing if you’re meeting your goals. Investing a little bit of your time now to get your bookkeeping in line to prepare your budget will free up your time and energy.
Elevate analysis and decision making
Great bookkeeping will produce essential reports you’ll need to make decisions for your business.
Although you may be in the winery industry for your love of wine, you’re also in business to make money. You’ll need an income statement, also called a profit and loss statement, to know whether you’re turning a profit. The income statement will show you profit margins and where you’re spending money on overhead expenses.
With a current income statement, you’ll be able to make decisions on whether it’s necessary to cut costs or if you need to grow your sales revenue.
The income statement receives most of the attention of business owners, but the balance sheet is just as important. Here you’ll be able to see everything you own and owe in one place.
This is where you’ll see if you’ve kept on top of collecting on your receivables and how much inventory you have on hand. The balance sheet is also where you’ll see your equity amount.
Streamline Tax Planning and Prep
Do you find yourself scrambling each year to get your company’s financial affairs in order for your tax preparer? Although some last-minute calculations for things like depreciation are common, most of your financial information should be up-to-date at year-end.
Your bookkeeping is essential to preparing your financials for tax time. It will ensure you receive the maximum deductions and credits.
And when your books are organized, you’ll likely receive fewer questions from your tax professional.
Access to accurate financial data will put you on the path to success. And if you need help with your bookkeeping needs, start by asking us how we can help.At Protea, our dedicated and experienced staff are industry experts in the winery industry. Let us help with the day-to-day finances so you can get back to making great wine. Our team works hard to make sure you’re positioned on the right path. Reach out today for an evaluation to learn what Protea can do for your winery.
The primary goal of many wineries is to develop, cultivate and produce products that promote repeat business and retain customers. Wineries exist to satisfy customers’ needs through products or services and it’s important for a winery to retain these customers. Since we operate in a competitive business environment, it is important to identify how we can increase customer retention levels.
Let us first define customer retention:
Customer retention is a combination of intentional repurchase behaviour and psychological attachment of a customer to a particular product or service (Al-Hawari 2005:231; Peelen 2005:239; Godson 2009:72; Cant & van Heerden 2010:444). McManus and Guilding (2008:779) also define customer retention as an attitude where a customer’s attachment to a product, service, brand or company is developed. According to Zhang, Dixit and Friedmann (2010:128), customer retention is the likelihood of a customer choosing a particular brand with reference to his/her past purchases.
Why is customer retention important?
Retaining existing customers is cheaper than acquiring new customers.
By retaining customers it allows a winery to generate more profits with each additional year of the customer-relationship. Research has shown that 12 – 15% of customers are loyal to a single retailer, but these customers represent 55 – 70% of total sales, and the only way to increase customer retention is to increase customer satisfaction. Satisfied customers have the tendency to return to the same store and they end up buying the same product.
What happens when customers are dissatisfied? The negative aspect of customer dissatisfaction is that customers lower their expectations when buying from the same winery or stop buying from the winery completely. Conversely, customers that are satisfied have the tendency to return and possibly refer new customers to your winery. As a result, the winery increases its customer retention and lowers customer acquisition costs, which in turn increases the profit of the business. One of the focal points of a winery should be on customer satisfaction as it can possibly yield greater profitability than customer acquisition strategies.
The question then remains, how to satisfy customers and develop a winning customer retention strategy?
Provide quality products
Quality is more than just producing a quality product. The quality of a product should be customer-driven. What is the customer looking for exactly and how do they define quality? It all comes down to how the customer experiences the product. It is important to note that the higher the quality of the product, the more likely a customer will be satisfied. Quality is also not something that you can improve overnight. Take for example the comparison of wine produced in the early 19th century to today’s wine. The use of modern-day technology, a variety of cultivars, viticulture, and overall winemaking experience allows us to produce outstanding quality wine. It takes time to design and build a quality product from the ground up.
Customer service is intricately associated with good quality products. It is important to respond timely to the disgruntled customer and resolve their issue promptly. Customer service is one variable that you can easily control and oversee. Implement standardized service response systems that can deal with inquiries and complaints promptly. These response systems and remedial actions are vital to realize increased levels of customer satisfaction. Your ultimate goal should be to decrease your customer service queries, this in turn evidences that you are producing a quality product. An investment in quality and perfecting your product will reduce your need to deal with customer complaints.
Training and preparation are key
“He who fails to plan is planning to fail!” – Sir Winston Churchill.
It is important to train employees and convey to them that customers are the ultimate judge of quality. Provide employees with a detailed guideline and proper training on how to deal with disgruntled customers. This is especially important as these employees will be representing the brand and they have a big influence on how a customer can perceive the brand. It is important to listen to what the customer is complaining about and utilize this information constructively to improve the overall quality of your product.
Build a relationship of trust with the customer
When a customer trusts the product, the quality, and the brand, they tend to share their experience with family and friends. A case study by Nielsen found that 92 percent of people trust recommendations from friends and family above all other forms of advertising when making a purchase decision. Therefore, nothing comes close to the influence of word of mouth, and satisfied customers share their positive experience with more than five to ten people. Customers need to be able to trust what they buy. By building trust you are providing your customers with something of value which leads to a positive trend towards brand awareness. The winery sales team needs to be thinking about how to deepen the relationship with their customers, especially when they are not in buying mode.
Use automation to your advantage
There is no doubt that technology is there to help us. Try to make use of automated marketing software to engage, re-engage, and keep your customers up to date on what’s happening with your winery and products. Specifically, success stories at wineries have been reported using Customer Relationships Management (CRM) software such as Salesforce, Hubspot, Commerce7, WineDirect, and eCellar. All these CRM systems complement a full marketing methodology for wineries. Make sure to use standardized email newsletters, event notifications, gated content, promotional emails, abandoned shopping cart reminders, and survey emails. Marketing automation will keep you one step ahead of your competitors by communicating more effectively and efficiently with your customers.
Use social media to your advantage
Social media can power your brand forward but can also be detrimental to your brand. Use social media to research your target audience, analyze your competitors, create engaging content, generate website traffic and grow your audience. Make use of customer reviews online and utilize this space to promptly deal with issues customers may have. By promoting brand awareness online, you create credibility and build trust with customers based on your online activity.
By implementing the above strategies, a winery can increase customer satisfaction, leading to an increase in customer retention. In today’s fast paced competitive market, the wine industry needs to focus their efforts on retaining customers and realise the importance thereof.
Al-Hawari, M. 2005. The effect of automated service quality on bank financial performance and the mediating role of customer retention. Journal of Financial Services Marketing, 10(3):228-243.
Cant, M. & van Heerden, C. 2010. Marketing management. Cape Town: Juta.
Godson, M. 2009. Relationship marketing. New York: Oxford.
Magatef, S. & Tomalieh, E. 2015. The Impact of Customer Loyalty Programs on Customer Retention. International Journal of Business and Social Science, 8(1):81.
McManus, L. & Guilding, C. 2008. Exploring the potential of customer accounting: A synthesis of the accounting and marketing literatures. Journal of Marketing Management, 24(7/8):771-795.
Peelen, E. 2005. Customer relationship management. Essex: Pearson.
Zhang, J.Q., Dixit, A. & Friedmann, R. 2010. Customer loyalty and lifetime value: An empirical investigation of consumer packaged goods. Journal of Marketing Theory & Practice, 18(2):127-139.