In any business, keeping track of cash flow is incredibly important. In the restaurant business, it’s especially important. Understanding cash flow can be done even if you’re new to the business. Here are some steps to remember:
-Watch the cash you take in versus the cash going out. You know the bills you need to pay, like bank loans and rent, so know when those bills come up as well as other bills come up, you can make projections to make sure you’re paying those bills on time. Keep daily business reviews and don’t slack on them as they are the key to your success.
-Food suppliers occasionally offer credit to established restaurants that allow them to pay for deliveries a week or so after it is made. It sounds tempting, but it’s often better to make a habit of paying for deliveries when they arrive as some suppliers offer a discount for paying on arrival, which may be better for you in the long run.
-Just like any business, things can happen that are unexpected. Keep emergency cash on hand in case something goes horribly wrong and needs to be repaired or replaced.
-It may be tempting to get lots of product to be prepared for anything, but this is not wise. Food spoils, so having too much when it’s not moving out is basically throwing away money. You would be wise to only order enough food and liquor as you need it.
These steps are simple, but they can save your restaurant lots of money. A common denominator in failing businesses is too much going out versus coming in, so be aware of this and you should be happy, successful, and profitable.
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