There are some ways to ensure that you keep high cash flow in your restaurant.
The goal of a successful business is inevitably to maximize the profit. Business owners – not to mention restaurant owners for their dynamic business – should have full understandings about cash flow. To simply put it, cash flow means the amount of cash inflow (cash coming in to the business) minus cash outflow (cash coming out of the business) for daily, weekly, or monthly basis. To keep them high, here we elaborate some basic helps for your business.
Planning Cash Flow
Lorri Mealey, a restauranting expert, suggests that business owners on knowing what they owe for short time, for instance, a week. From there on, think about the bills that coming up after such as location rent or loans from bank. Add those two then compare them to your forecasted sale. There you have your cash flow estimation as a plan for your business.
Tage Tracy, co-author of Cash Flow for Dummies, said that the proper planning is the essentials or business growth and management. It measures the capability to obtain profit and acts as limits to avoid unneeded expense.
Calculating Cash Flow
To make cash flow estimation, business owners need keeping up with their daily business review. They can easily track it from the POS system, so that having one can be beneficial for business. If the business still does not use POS system, business owners can track them manually depend on their needs.
Bryan Keythman from Demand Media elaborates the cash flow components in simple ways. The inflows include cash from the customers, money from selling the assets, and loaned or obtained from the financial sources. The outflows include the operating costs, money to buy assets, and cash paid to financing sources such as bank or investors.
Tracy wrote in his book that business owners can leverage their expenditures and payment as long as the revenue and expenses is matched. The right amount of leverage results in enhanced cash flows.
When it comes to the suppliers, they often offer credits varied from time credits to money credits. According to Mealey, we cannot really rely on their offer. Using credits should not be a habit as it can lead to bad cash flow. Some suppliers also offer discount for accounts paid right on delivery. However, this can actually help if there will be large orders that demand to buy ingredients before they are paid 100%.
The last but not least, business owners should manage staffs payroll right. To give excellent service, a restaurant should have the right amount of well-trained staff. Nevertheless, overstaffing is also not profitable.
Save and Focus on the Money
Business owners should have adequate money as investment to develop the restaurant when there are growing opportunities. Besides, the money is also important when there are unexpected expenses such as broken equipment. When they have to survive difficult times, the cash can help a lot as well. That is why saving money is as important as getting profits.
There are many ways, even simplest steps, to save money. One can use energy-saving equipment and light-bulbs as well as saves water with installing low flow faucet and toilets. Cutting the usage of disposable plates and cups and invest in glassware can be profitable as well. Business owners are also suggested to keep inventory low and trim down the menu that are not selling to low down the expenses.