1. Have a forecast of cash flow – First and foremost, have a plan in place. The cash flow forecast will give you a lot of warning before money goes out, so you can better manage your cash flow. Using the cash flow forecast, you’ll know when cash comes in and out, so you know when you can let yourself be stretched and when it’s time to be frugal. Forecasting your cash flow will also allow you to create seasonal budgets that are very important for restaurants.
2. Use your forecast to set up seasonal budgets – Annual budgets are not always the most efficient for businesses in the restaurant sector. The seasonal nature of business makes budgeting a necessity on a more frequent basis. Using the cash flow forecast as a guide, it is easier to budget several months ahead of the seasonal upswing.
3. Streamline the overheads – If you find yourself in frequent cash flow difficulties, it may be time to consider reducing overhead costs. This includes , among other things, payroll , inventory and utilities. By adopting flexible work, you can further reduce overheads. This allows you to have fewer people in slower times, but more people in busy periods to help maximize sales.
4. Don’t count on credit – Credit is useful to get any business off the ground, but it’s dangerous if it’s going to be a crutch. When paying back debt becomes the largest part of your overheads, it can cause a restaurant to fall into a spiral that leads to a closure, so be careful!
5. Sort your books – Many small restaurant businesses have dropped their accounting to the side of the road. It’s just natural. If you’re in the kitchen or serving your customers all day, you rarely have time to do the books. Ignoring your books means that bills are not being paid and invoices are not being chased. That leaves you out of pocket in both directions.
6. Don’t keep all of your eggs in one basket – As the owner of the restaurant, one of your lifelines is a reliable vendor who delivers orders on time , every time. If delivery is not delivered, it costs money, it costs business, it costs reputation.
7. Anticipate the issues before they happen – In addition to your own cash flow forecast, keep an eye on other things happening around you that might affect your restaurant.
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