In a previous article, we talked about the prospect of starting a food business. We know that the food truck industry is booming, and the restaurant industry, in general, is growing at a steady pace. There are plenty of opportunities to shine as a new food business. The fact that customers are eager to try new dishes makes starting a new food truck or restaurant that much more appealing.
Before you jump head first into the restaurant business, however, you have to understand the business side of this industry. Having great recipes alone is not enough. You have to make sure that the business is run properly. To help you tackle this particular challenge, we are going to take a look at the top five finance tips to keep in mind as a food business owner.
Cash Flow Is Key
In simple terms, cash flow is the flow of cash coming into your business and out to vendors. For your new food truck or restaurant to stay healthy business-wise, you need to maintain healthy cash flow. This means bringing in more money than you need to spend. This is a big challenge when you are just getting started, but it gets easier as you attract more customers.
Timing is also important. There is no point in having a lot of customers if all of your vendor invoices are due on the same day; you may still find yourself short of cash to get those invoices paid. Ideally, you want to schedule payments for vendors in the most flexible way possible, so you don’t end up straining your cash flow from the start.
As an added measure, make sure you know the financing options you can use to fill gaps in your cash flow. If you are running the new restaurant business while keeping your full-time job, you can use payday loans to handle the gaps in your cash flow; if you want to learn more about this financing option, check this out.
Save Money Every Day
You will find yourself with plenty of expenses to handle when you are just starting the restaurant business. This is not uncommon; your business is only starting, and you still make big purchases along the way. Similar to the cash flow of your business, big expenses will eventually die down. You just have to make sure that your new restaurant can remain healthy financially until they do.
After getting the restaurant business going, you need to immediately switch to saving mode. You’ll start finding new ways to save money on everyday expenses. The more you save, the lower your overhead cost will be, and the more flexible you are as a business.
No amount is too small to save. Using the 10% discount offered by your supplier for early payment or taking advantage of coupons when buying cookware or other items are the kind of steps you need to be taking in order to save. Even simple things like turning the lights off if they are not in use or conserving energy by using high-quality stoves will help you save.
The next big hurdle to overcome is staff management. Managing staff in a restaurant business is a challenge. You want to have enough staff to handle the customers and provide good services, but you don’t want to spend more on payroll without real benefits to the business. Staying lean, especially in today’s market, is still the way to go.
Food trucks don’t normally have a lot of staff, so you can remain lean for as long as possible. A restaurant, on the other hand, requires more attention. If you can work to support the business, do so and save money on one extra employee.
Time management is the key here. Rather than overstaffing, work with your employees on a timetable that suits everyone. A lot of employees – especially the ones worth keeping – are more than happy to support the new business’s effort to stay lean. After all, they make more in tips when there are fewer employees in a shift.
Do Daily Review
When you are new to the restaurant business, staying on top of things becomes crucially important. The way to do that is by maintaining a clear view of the entire business. There are several ways to achieve this too.
You can use a good restaurant management software to make managing things easier. Since many solutions now run in the cloud, you can keep an eye on the business remotely. A cloud restaurant management solution can also integrate with everything in your workflow, creating a more seamless process that is easy to manage.
Manual reviews are also handy, especially if you can do them on a daily basis. Get together with all employees at the end of the day and do a thorough review of the business for that day. Listen to insights from employees, pay attention to their inputs, and find ways to improve your new restaurant business from the information you gather during the review process.
Aim for Long-Term Growth
I know how tempting it is to start expanding, recruiting more employees, and adding new dishes to the menu, especially when you have a lot of customers. I know, because I’ve been there too. In today’s market, however, having an extensive menu with more than 20 dishes isn’t necessary; it is actually something you want to avoid when you are starting small.
Keep things simple, stick to dishes that customers really love, and find ways to optimize your inventory. Rather than serving five dishes that use different ingredients, it is much more efficient to serve 10 dishes that use similar groups of ingredients. The latter lets you buy ingredients and process them in bulk, which also leads to more savings.
Aim for long-term growth. Now that you have these top five tips on how to keep your restaurant business finance healthy, you have what you need to push forward and grow steadily. As long as you stay lean and maintain healthy cash flow, you will have no trouble delivering the best dishes – and services – to your customers every time.