Is the dream of owning your restaurant or café causing stress when it comes to paying the bills?

Sometimes the difference between a successful business, and a struggling one, can be something as simple as how cashflow is managed.

Both businesses may provide great customer service and wonderful food. Both may provide a unique experience that makes customers keep coming back for more.

Yet - with the same opportunities available, one business struggles, while the other thrives.

There is a saying in business - “Cash is King” (or “Queen” if you prefer).

Your success will depend upon your ability to manage that cash.

Managing Expenses

Okay, this is going to sound so simple that you may even be shaking your head in disgust about now. (Read more about Deductible Expenses and Tax - What is and what isn’t)

When it comes to managing expenses though, what could you do differently?

Have you looked at your menu in depth? Sometimes simple changes to your menu can produce big differences in your cashflow. Don’t be afraid to drop items from the menu. Research shows that customers can sometimes be overwhelmed by too many choices.

Alternatively, swapping one item out of the menu, and replacing it with another, may eliminate an expensive, rarely used, ingredient.

Are you preparing menus based on the seasonal availability of foods? This can help with keeping expenses down.

Have you established good relationships with your vendors? Doing so can help with negotiating prices or terms, as well as ensuring that you will get good service from them.

Good Accounting Software

The ability to pay your bills when they fall due, can make a big difference to the terms you will get from vendors. Good accounting software, such as Xero, make it possible to easily track your creditors (accounts payable) and also to predict your cashflow needs going forward.

One of the areas that can be difficult for many small business owners, is not the question of whether there will be enough money in the bank account tomorrow, but whether there will be enough in a few weeks’ time, when all the bills “suddenly” fall due.

Good accounting software can help with planning your cash needs for the next month and beyond.

Build a Safety Net

Customers can be fickle. Sometimes, for no apparent reason, you may have a quiet week. Alternatively, for some equally strange reason, you may have a bumper week.

One of the things that will make a big difference, both to your cashflow needs, and also your stress levels, is a reserve of cash.

While many are tempted to use an overdraft facility, ultimately you pay for it with bank fees and interest. While these are tax deductible they are also a very real drain on cash that could be better used elsewhere.

Managing the cashflow of your restaurant, or café, may not be easy, but it is essential if you want to thrive. What are you going to do differently?

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