The bottom line of effective financial management is simple. ARE YOU MAKING a profit at the end of the month. Job is done or not! SIMPLE!
Ask yourself, “ am I doing everything that I can to ensure that my business is successful?”
Systems, controls, and procedures are the names of the game. My granny used to say if you look after the pennies the pounds take care of themselves. First of all, you need to establish what the breakeven of your restaurant is.
The Break-even point means that once you have reached the number of sales of which the profit generated from those sales is equal to your expenses you have reached your break-even point. This means nobody will come knocking on your door for unpaid bills. It also means that you have not made any money for pizza to take home unless you have calculated a small salary for yourself.
The Magic word is sales. If you do not generate enough sales you do not even have the opportunity to break even, either you will be putting your hard-earned savings into your business or you will be going out of business pretty soon. Marketing and sales go hand in hand, my suggestion is that you kick off with a S.W.O.T. Analysis. Do introspection and be brutally honest with yourself. Acknowledge your shortcomings and build structures and controls around these assisting you going forward. Establish who you want to reach through your marketing. Establish who these prospective clients are. Analyze their habits, when, and how they shop and eat. Build your strategy around the information that you gather. There is a myriad of platforms and marketing methods that you can use firstly use the four walls that are surrounding you and then build your network outward.
Once you have taken care of your marketing strategy and people begin to visit your business, ensure not to miss the ball, carry the clients on your hands. Now that the sales are happening and the engine is starting to work, the heat is building up in the kitchen we can start by counting the pennies. After establishing your break even you have a budgeted forecast of what each expense category should be and what you should not exceed unless your sales targets are exceeded.
Implement an efficient bookkeeping system. Do not attempt to run separate systems for facets of your business. Ensure that you keep a daily register of all income and cash expenses. In the same system list all unpaid expenses that need to be paid either weekly, bi-weekly, or monthly.
Check on all your reports daily:
- Sales achieved vs Budgeted sales
- Cash up balances
- Credit and debit card payments banked
- Do not run tabs or sell to clients on account
- Expenses tracked against your budgeted categories
- Stock movement
- Stock variances
- Labor schedules achieved vs Budgeted labor
Now that you are keeping your fingers on the cash movement, income, and expenditure you will soon become aware of patterns in the flow of your business which will make planning your financial strategy so much easier going forward.
Be ruthless on the processes around accounting. There is no worse surprise than unpaid bills falling from the sky at a time when you do not need that kind of surprise. Ensure that you implement standard operating procedures [SOP’S] for the movement of all accounting documentation. From receiving, checking in deliveries, ticking the items on the invoice, making notes of problems regarding the items delivered, signing the invoice. Now once the invoice is processed a new SOP begins, is it paid cash or is it to be paid on account at a later stage.
This is the beginning and you have the end in sight. The end is once you have SOP’S implemented throughout your business controlling all your systems and procedures for every category of your business.