Scenario example: Building cash by building EBIT (a cash flow surrogate).

Hank Salvo, Managing Director.


Scenarios_to_grow_EBIT_400pxA 100,000 case winery owned by a first generation (G1) founder plans to sell his business to his kids. To achieve their objectives, the family business must grow to accommodate more second generation (G2) owners and generate more cash for buying out G1 ownership. Assuming this winery’s leadership is maximizing wine quality in order to secure higher ratings and price growth, we laid out two scenarios below, using the first column to represent current performance.

Scenario 1 shows case volume built out to 140,000 cases. In this scenario cash (EBIT – Earnings Before Interest & Taxes) grows from $2 to $3.4 million. Scenario 2 shows growth in case volume to only 120,000 cases, but shifts distribution mix to focus resources on more sales through the direct channels. This scenario actually grows cash more dramatically (raising EBIT from $2 to $5.6 million).

Scenario 2 shows growth in case volume to only 120,000 cases, but shifts distribution mix to focus resources on more sales through the direct channels. This scenario actually grows cash more dramatically (raising EBIT from $2 to $5.6 million).

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ABOUT THE AUTHOR. Deborah Steinthal is Founder and Managing Director of Scion Advisors, a leading boutique, strategy consulting firm serving the U.S. wine industry. With a proven approach enabling business owners to position for profitable growth or for exit, she has worked alongside over 130 winery owners and CEOs; and has moderated over 80 Winery CEO Roundtables involving more than 50 top wine industry CEOs for over a decade. Deborah’s expertise is in the area of business growth strategy, family business transformation, and board and leadership development.

Based out of McMinnville, OR; born in Lima, Peru; raised in Belgium and Germany; Deborah has lived, worked and travelled globally. She is broadly published in the national business press, an invited speaker, panelist and widely quoted for research on key practices, such as such as How to Build a Pull Brand, Digital Commerce and Family Business Transition.

For more information call Deborah Steinthal at 707.246.6830.

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Among her clients: Cristom Vineyards, Adelsheim Vineyard, Willakenzie, Elizabeth Chambers Cellar, Patz & Hall Winery, Benziger Family Vineyards, Calera Wine Company, Delicato Family VIneyards, Cakebread, Spottswoode, Gundlach Bundschu, Luna Vineyards, Clos Du Val, Quail’s Gate Winery, Wente, J. Lohr, Choice Lunch,
 Cowgirl Creamery, 
Easton Malloy 
(producers of Peppermint Bark for Williams-Sonoma)
, and McEvoy Ranch.

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