From left to right: Doug Bailey, Mandy Ostergren and James Ostergren, founders of Edgebrook Cider.
Can you tell me about your business?
Edgebrook Cider is based in Hawkes Bay and we make authentic, 100 per cent juice, English-style ciders. We started the business in 2013, and there are three of us involved: husband and wife James and Mandy Ostergren and me. Edgebrook Orchard is our family orchard, which was established about 75 years ago, so I handle the apple growing side of the business, as well as the accounting and some of the marketing. James is the cider maker, and Mandy looks after customer service and logistics.
I actually work full time as a commercial accountant, and James does the same as a winemaker, so Edgebrook is what occupies our lunchtimes, evenings and weekends.
Given you're running your business alongside a day job, what are some of the things you've done to make handling the end of your financial year easier?
We have quite a simple business in that there's really only wholesale and retail sales as income, then there's just the cost of sales associated with that, and a few admin costs. Essentially we pay for the stuff to make cider and then we sell the cider, so things are fairly straightforward.
But one thing we have done, which is a little unusual, is make our end of financial year 30 November. When you start a business you get 31 March as your default, but the IRD is fairly open to changing that as long as you can justify it.
What factors influenced you choosing that date?
We did that so our financial year end is pretty much at the end of our natural cycle in the business. We harvest and purchase fruit in March or April to make cider in autumn. It then matures through the winter, we bottle it in spring and release it in early summer. So by 30 November we have pretty much got all of the next year's stock ready to go and have hopefully pretty much sold all of our current year's stock.
Plan for the financial year end. That might mean planning for production to be halted if necessary so you can do an accurate stock count, or chasing up all your debtors so they're cleaned up and you've got a good picture at year end.
What kinds of systems or processes do you keep running throughout the year to make the end of financial year run smoothly?
The big issue for us is stock. All our bottled stock sits at WineWorks in Hawkes Bay and they have an automated inventory system. So they'll tell us what bottled stock and dry goods we have there, and we reconcile that with what we think that should be and that's pretty much our biggest balance sheet item taken care of.
Do you use one of the online accounting systems?
No, we don't; you'd be horrified to know I just use Excel! We're fairly new so our transactions are quite small. Excel costs nothing for us to run, so for now we'll stick with that. But we will probably look in the next year at going with an automated system that has good control of inventory and also debtors and creditors.
What's your biggest challenge in terms of dealing with the end of financial year?
Mainly it's just finding time. To have good control over a business you need good reporting and our reports get done when I can get them done! So that can be a bit difficult when you're fitting it in as a spare-time job.
What advice would you have for other small business owners wanting to reduce their end of financial year stress?
The most important thing is to have some financial knowhow. I think a lot of people in smaller businesses can be very skilled in their particular trade, but often they don't have very good financial literacy. So if there's no one in your company who has that, then I'd say get the right people on board to help you out.
The other thing is to plan for the financial year end. That might mean planning for production to be halted if necessary so you can do an accurate stock count, or chasing up all your debtors so they're cleaned up and you've got a good picture at year end. A checklist and some procedures around year end are a good idea, too, because if you go beyond your cut-off point and try to do these things retrospectively it becomes a lot harder.
For more insights on how to handle the end of the financial year, you can also check out some tips shared with Your Business from Scott Gardiner, sales manager of MYOB New Zealand's business division, and Grant Anderson, Xero's head of accounting.