Assessing the financial health of your business is an essential part of being a restaurant owner.
These common accounting mistakes can undermine the success of your restaurant and prevent you from moving forward with your plans for growth.
Keeping an organized accounting system is the only way to have a clear idea of how cash is flowing through your business.
It doesn’t matter whether you use an old-fashioned ledger or the latest software; you need some kind of system in place where transaction information is recorded on a daily basis.
The amount of inventory you purchase doesn’t automatically equate to the amount you use. Failure to keep track of how much inventory you go through on a monthly basis means that you have no idea what your actual food and beverage expenses are.
Relying on sales data doesn’t account for loss from mistakes or accidents, and replenishing without accurate numbers has the potential to lead to overstock and food waste.
When you designed your menu, the process should have included an assessment of the ingredients involved in every dish and the total cost for each based on the actual amounts of food used.
This can be a tedious process, but there’s no other way to effectively understand how much to charge for menu items. This ties closely with inventory tracking in that it can show you which dishes are the most profitable and which are leaving you with leftover food more often than not.
The restaurant business is subject to seasonal fluctuations that you should be familiar with. If you don’t have predictions of how cash flow changes from month to month, you’ll never be able to budget for slow times or get ready to handle a sudden influx of patrons.
If this is an issue for you, consider applying for a Bridge Loan to help bridge the gap between your slow and busy seasons.
Simply recording income and expense information isn’t enough to show you how well your restaurant is doing.
You need to regularly give yourself a visual of financial health markers by taking advantage of the reporting tools available through the many software applications made specifically for small business finance management.
Interpreting data this way makes it easier to see where money is going and where you might need to make changes to support continued financial health.
Since cash flow and sales are always fluctuating, you need to continually pay attention to and reassess the financial state of your restaurant.
Establish a set schedule for all of your financial duties, and ensure that you stay on top of it to maintain an up-to-date picture of how well your business is operating.
If you would like to talk to a business consultant about obtaining a bridge loan or business line of credit please contact us today!