In sports, without a scoreboard, you don’t know if you’re winning or losing. The same holds true for measuring the financial results of your taproom. You need a scorecard to keep track. In this article we’ll walk through the steps of creating a financial scorecard for your taproom so that you can measure and improve sales and profitability. It’s not difficult, and it can transform your taproom financial results.
What is the point of the scorecard?
The purpose of a scorecard is to show the goal or goals you most want to accomplish. It can be as flexible as you like. It can present financial or non-financial numbers. It is designed to capture and quantify your most important numbers.
The scorecard should:
- Keep the goals front and center every day
- Be only one page (or one number) so that it’s easy to see how you’re doing at a glance
- Use numbers — key metrics — to communicate the goal
First, measure the most important thing(s)
Deep inside, we all know what the most important thing really is. Whether it is in our taproom business or in our life, we know what it is. The problem is that we forget. The most important thing is remembering the most important thing. The scorecard helps you identify what is most important and remember it every day. It is a simple tactic, but very effective if you follow it. The scorecard provides focus on how you’re doing in accomplishing what’s most important.
How to figure out the most important thing
If you are struggling to figure out what is most important, try a few focusing questions:
- What keeps you up at night?
- What is the biggest opportunity to take advantage of?
- What is the biggest problem you need to fix?
Here’s my story … cash keeps me up at night. More specifically, running out of cash keeps me up. So, I designed a one-page scorecard to monitor our business cash position every day. It shows the bank balances, borrowing balances, upcoming spending and expected receipts. It shows borrowing ability and future cash needed to fund growth. My cash scorecard helps me sleep better at night because I know I’m focusing on my most important thing.
Figure out what your One Thing is, measure it and put it on a scorecard.
The process to communicate + educate
The scorecard alone won’t achieve the goal. You need to take action to get things done. Often, you need action by your managers and employees — your team. The process below is an effective way to communicate anything you like, and it works well with the taproom scorecard:
- Know the score. To know the score, you have to SHOW the score. Don’t play hide and seek with your scorecard or bury it in a desk drawer. Share it with those that can help you win.
- Educate your team. Teach your managers and employees how the scorecard works and how they can make a difference. People want to contribute, teach them how.
- Set a goal to improve. Use your past performance + set a goal to do better.
- Monitor the score, track progress. Provide regular updates or people lose interest.
- Celebrate the win. Free beer works well when you hit the goal!
Taken together, the five steps presented above are an effective method to make sure you get the most out of your taproom scorecard and achieve your goals.
A quick note about rules of thumb and industry averages. Everyone loves these, but they are just interesting distractions. Is average your goal? No, greatness is your goal. Most industry averages are a watered-down collection of taprooms and breweries that bear no relation to yours. The market is different, the customer base is different, products, prices and philosophies are different. Benchmark against yourself: Measure your past performance + set a goal to improve.
Use process + outcome metrics
We are a results-oriented society. This is America after all. We like to get stuff done. However, it is useful to focus on the process of getting stuff done in addition to the results or the outcome. The idea here is to use process and outcome metrics on the scorecard. Process means the action taken, or steps that need to be followed. We can’t always control the outcome, but we can control actions, effort, following a prescribed routine.
For example: Teach your taproom staff to ask for the sale and offer an item to upsell. Teach them to ask for the customer’s email so you can tell them about new beers or special releases. Send out marketing emails and make social media posts on a regular basis. These are things you do to drive sales, increase profits or achieve the most important thing.
Outcome means the actual results. The outcome is a by-product of actions. If you’re not getting the results you want, experiment with the actions. Consider measuring both process and outcome goals on your scorecard. We all measure the result, but sometimes we need to measure (and reward) the process to get there.
There are different scorecards for different needs. For example, if you want to increase taproom sales, the scorecard will show key metrics to achieve that goal. If you want to improve the customer experience and satisfaction, you can create metrics to support that goal as well. Below, are four types of taproom scorecards. We’ll dig into the sales focused scorecard next.
- Sales focused scorecard
- Key metric scorecard
- Financial scorecard
- The one thing scorecard
Be sure to check out the new online course, How to Boost Taproom Profits, to get the Excel Templates for each of these Scorecards.
The sales focused scorecard
As the name implies, the sales focused scorecard is laser focused on key metrics to support sales. Typical key metrics to support sales:
- Total sales $ / by day / week / month
- Sales by category / product / service
- Sales per bbl
- Customers per day / week / month
- Average ring per customer
The screenshot below shows an example of the sales focused scoreboard:
The Actual June 2017 column presents the results from the same month last year. The Trend June 2018 column presents where we are currently, and how sales are trending. The June 2018 Goal shows what we want to achieve. In summary, the scorecard shows the type of metric to measure. It shows where we’ve been (past results), where are now (current results), and where we want to be (the goal). Below is another sales focused scorecard. This example presents details on the categories of products offered in the taproom, and the goals for each.
Wrap up + action items
The taproom scorecard is a powerful tool to help you increase the sales and profitability of your taproom. It measures the most important thing, the most important goal(s), and keeps it in front of your team every day. To get started with your taproom scorecard, determine your most important thing. Maybe it’s growing sales, profitability, or customer satisfaction. Whatever is most important, get it on the scorecard, and set a goal to achieve it.
Engage your team in the game of reaching the goal. To know the score (and win the game) you need to SHOW the score. Don’t play hide and seek with your sweet scorecard. Share it with your team so that they can help reach the taproom goals. Need more of this type of information? Check out the new online course: How to Build Taproom Profits. It’s chock full of scoreboard models, Excel downloads and step-by-step instructions to build your own taproom scoreboard.
You’ve got the intel, and you’ve got the taproom, get out there and build an awesome scorecard today.
Kary Shumway is the founder of Beer Business Finance and Craft Brewery Finance, online resources for beer industry professionals. Shumway has worked in the beer industry for more than 20 years as a certified public accountant, chief financial officer for a beer distributor, and currently as CFO for Wormtown Brewery in Worcester, Mass. Craft Brewery Finance publishes a weekly beer industry finance newsletter, offers guide books on topics such as cash flow planning and basic budgeting, and an online course to improve taproom profits. The newsletter with a free four-week trial, industry guides and resources are all available at www.CraftBreweryFinance.com.