Primary Blog/Use Case/Waterfall chart to visualize Profit Loss

Waterfall chart to visualize Profit Loss

It's budgeting season again, and for craft breweries, that means planning out the finances for the next year or two. I want to introduce a data visualization technique called a ‘waterfall chart’ with can help you digest the dry data of a spreadsheet. Think of it as a clear, visual snapshot of where your money will come and go over the next few years.

In our example, we’re going to leave it pretty high level, but you can see how this type of chart can help with:

Seeing the Big Picture: A waterfall chart takes your starting revenue and walks you through all the ups and downs of your costs and earnings, step by step. This makes it easier to see how everything from taproom sales to operating expenses adds up to your final income.

Understanding Sales: You can see how much money your taproom makes compared to your sales elsewhere. This can help you figure out if it's time to push more volume into distribution or boost your on-site events.

Spotting Cost Patterns: The chart shows each expense group clearly, helping you decide where to spend and where to save. For example, if you see your sales and marketing expenses shooting up quicker than sales, you might look to dial that back down to a more sustainable level.

Comparing Year to Year: The chart breaks down your money year by year. This is great for spotting trends and making sure your budget keeps up with your brewery's growth plans.

In our specific example we can quickly gain a few insights:

- In total, we sell a similar amount out of both the taproom and through distribution, but the growth rate of taproom is much higher.

- Our COGS eats into about 50% of our total revenue.

- Operating expenses jump up in year three, we should make sure there is a strategic reason for that.

In short, using a waterfall chart for your budgeting can help you get a firm grip on your finances, show you where your brewery might be headed profit-wise, and help you strategically plan for the future.

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