From Vineyards to Value—Transforming Advisory Services with Wine Industry Insights

When was the last time you started a client meeting without diving straight into their financial statements? If you're like most financial professionals, the answer is probably "never." But Geni Whitehouse, a consultant at BDCo with decades of experience working with Napa Valley wineries, believes this traditional approach might be holding back your advisory practice.

"I don't start by looking at the financials, even though that's what we're trained to do," Geni explains. "Instead, I step back and ask, 'Why are you in this business? What are your goals?'"

In a recent episode of the Best Metrics podcast, Geni shared insights on how the wine industry's complexities are reshaping advisory services. With its blend of manufacturing, farming, retail, and hospitality, the wine industry is a case study for why traditional, compliance-focused approaches often miss the mark. By jumping straight to the numbers, advisors risk overlooking crucial context about client goals, operational challenges, and industry-specific metrics that can transform mere number-crunching into actionable insights.

Shifting Focus: Understanding Client Goals Before Financials

The conventional approach tells us to analyze balance sheets, income statements, and financial ratios immediately. However, Geni discovered that this approach can cause advisors to miss the bigger picture and deliver less value.

Consider how different business goals demand different metrics. "I have a client whose winery is just a small fraction of their overall business," Geni says. "Their focus isn't necessarily on short-term profitability but on long-term asset value and equity growth." If an advisor fixates on short-term metrics, they might miss what truly matters to the client.

To address this, Geni employs a "Scope Grid" methodology that examines five key areas: financials, customers, operations, people, and end goals. This structured approach ensures advisors understand the full context before offering solutions and acknowledges that financial issues are often rooted in other business areas.

"We spend a lot of time onboarding a prospective client," she notes. "By understanding their goals upfront, we're better positioned to leverage financial information to achieve those goals." This shift helps clients better understand their business, increases the advisor's value, and fosters stronger relationships.

Navigating Complexity: Mastering Industry-Specific Operations

Surface-level financial knowledge isn't enough in complex industries like wineries and vineyards. A single winery might manage manufacturing, farming, multi-channel selling, compliance requirements, and hospitality operations—all using basic accounting tools like QuickBooks.

"Think about a bottle of wine," Geni explains. "It has a vintage, a brand label, a specific number of cases, an appellation—the place it was grown. There are so many dimensions to track." This complexity creates unique challenges for accounting and reporting.

For example, when a winery sells the same product through both retail and wholesale channels, basic accounting software can't handle multi-level pricing. The common workaround is to create duplicate SKUs for the same product, but this complicates inventory tracking.

Understanding these operational complexities isn't just about solving technical issues; it's about recognizing how operational constraints impact business decisions. "Many Napa wineries are estate wineries, meaning they grow their own grapes," Geni points out. "But often, they also purchase grapes for certain varietals. This hybrid model requires advisors to understand not just the numbers but the strategic implications of different operational approaches."

For advisors aiming to provide real value in complex industries, mastering these intricacies is as essential as understanding financial statements because it allows advisors to help clients develop meaningful metrics that reflect their business realities.

Creating Value: Developing Meaningful, Customized Metrics

Traditional financial analysis often examines financial statements in isolation, but Geni believes it’s important to understand the relationships between different metrics in financial statements.

"One of the biggest challenges for wineries is comparing sales growth to inventory growth," she says. "If sales are growing slower than inventory, or if sales are declining while inventory is increasing, that's a cash flow problem." This kind of cross-statement analysis reveals critical insights that might be missed otherwise.

Geni looks for gross margins of 50% or higher for estate wineries, but the real value comes from understanding how different sales channels affect these margins. "The higher the percentage of direct-to-consumer sales, the higher the margins," she notes. This insight helps advisors guide clients in making strategic decisions about distribution channels.

Developing metrics that align with operational realities and business objectives is crucial. When a winery client gauges their business health by their bank account balance, it signals a need for better cash flow forecasting tools and metrics.

By combining deep industry knowledge with financial expertise, advisors can create customized metrics that provide clients with actionable insights, transforming the advisory relationship from compliance-focused to value-driven.

Transforming the Advisory Role

The wine industry’s complexity offers valuable lessons for advisory services across all sectors. Advisors can enhance their value by starting with client goals, mastering industry-specific operations, and developing meaningful metrics.

As Geni demonstrates, this transformation isn't just about changing processes; it's about reimagining the advisory relationship. When advisors understand their clients' businesses as deeply as the clients do, they evolve from mere number crunchers to trusted strategic partners.

Listen to the full conversation with Geni Whitehouse on the Best Metrics podcast to learn more about transforming your advisory practice and hear detailed examples of these approaches in action.