1. Become the expert on every line item of your profit and loss (P & L) statement<\/strong> Achieving that requires taking a hard, systematic look at every line of your P & L statement. Review your cost structures as well as your revenue streams, and closely examine where profits are coming from and how tweaking expenses here and there could add to your bottom line. <\/p>\n One way to streamline this task is to develop teams to manage cash within their area of responsibility. This balances your P & L analysis and offers opportunities to balance operational expertise by selecting team members with skills you, as an operator, may lack. For example, if taxes have you furrowing your brow or the idea of bargaining over real estate makes you uncomfortable, you might look to fill one of your teams with someone with a strong accounting background and someone else great at negotiating.<\/p>\n 2. Understand your credit card processing cash flow<\/strong> Despite these concerns, if you still don\u2019t accept credit cards as a form of payment, you should consider doing so. Not accepting credit cards will significantly limit your pool of prospective customers and, in turn, cash flow.<\/p>\n If you are accepting credit cards, check your contract to see how quickly settlement occurs. This is when you get your money. If you don\u2019t get your money for several days, you lose the value of the cash flow. One place to start: understand who provides your utilities and ask if services are bundled or charged separately; find out which will provide the biggest boost to your bottom line. Also assess whether paying for your gas, electric and other services in advance can create more green. <\/p>\n Once those costs are in order, turn the same attention to your building and equipment. Set up a regular maintenance schedule with monthly action plans. Ask and get answers to questions like: Is your insulation sufficient to moderate your HVAC bills? How efficient is your air conditioning? Do leaky faucets drip pennies down the pipes? Go so far as to swap regular light bulbs for energy-efficient options and make sure your light switches and fuse boxes are in order.<\/p>\n 4. Develop mutually beneficial business relationships<\/strong> Also, be sure to look beyond hourly rates and scheduled hours. With the economics of staffing today, it\u2019s wise to consider a third-party staffing solution to help manage staffing costs and work on a retention strategy. They can boil out the cost of administration by efficiently acquiring, training, motivating and helping you retain employees. The costs of staff turnover and retraining are enormous, and they can take a big bite out of your profits. Spend some time evaluating providers to find one that\u2019s right for you.<\/p>\n 6. Create a culture of ownership<\/strong> As margin compression continues to impact operations, managing cash on a daily basis can help your business thrive\u2014without having to draw on reserves. Here are six smart strategies for approaching cash management: 1. Become the expert on every line item of your profit and loss (P & L) statement Restaurants Canada reports the average pretax […]<\/p>\n","protected":false},"author":19,"featured_media":4526,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[122,123,112,69,111,113],"tags":[],"class_list":["post-25863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-catering-small-business","category-hotels-hospitality","category-restaurant-bars","category-running-your-business","category-healthcare","category-university"],"acf":[],"yoast_head":"\n
\nRestaurants Canada reports the average pretax profit for an independent, full-service operator is now about 4.7%. With margins getting thinner due to increased labor costs, it\u2019s more important than ever to pay careful attention to cash management. Doug Owens, Gordon Food Service Commercial Segment Manager, adds \u201cYou have to be far more focused on your cash distribution. If you don\u2019t, the ebbs and flows in cash management can cause real challenges.\u201d<\/p>\n
\nMastercard\u2019s Cashless Journey Report (2013) showed cashless payments made up 90 percent of spending in Canada, a figure that includes debit and credit spending at restaurants. Accepting credit has been a sore spot for restaurants because of rising interchange fees, according to Restaurants Canada. The cost of consumer perks that come with premium cards is passed along to business owners through higher merchant fees. In many cases, when the merchant fee is added to a restaurant bill plus tax and tip, the credit card fee can exceed the profit earned by the restaurant. The government has negotiated a 10% reduction in Visa and MasterCard interchange fees, as well as Code of Conduct rules that bring in more choice and transparency for merchants. <\/p>\n
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\nAnother tip: Some processors offer customized services to certain businesses, including restaurants. That might considerably reduce administrative and operational \u201csoft costs\u201d\u2014yet another impact on cash flow. Read the fine print and compare any specialized services to the generic offering.
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\nAlso look for hidden costs, such as statement fees. These may be the cost of doing business with a creditor, but they can vary a lot. You don\u2019t want to pay extra each time you use a given option, Above all, read and understand the terms and conditions before you sign up.
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\n3. Conduct an operational checkup<\/strong>
\n\u201cHave you calibrated your ovens? Checked your meters? Those are simple things that often get forgotten because an operators\u2019 main focus is on satisfying customers,\u201d Owens explains. To uncover hidden costs and eek out additional savings, make it a priority to schedule and complete a \u201ccheckup\u201d for your operation.<\/p>\n
\nWork with your vendors to help them understand that their success is tied to yours. The goal is to make your cash flow proportional to your sales. Consider, for example, a 10-month lease. Many operators establish a 12-month lease with 12 equal payments. But through negotiating with your landlord, you could agree on higher payments for 10 months and no payments during your two slowest months, freeing up cash when you need it more. Apply this idea to your insurance carrier and other suppliers, servicers and vendors and you\u2019ll greatly aid your cash flow.
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\n5. Mind staffing costs<\/strong>
\nWriting an annual staffing plan can help you proactively manage this significant cost. Review slower seasons, dayparts and days of the week to see where labor can be reduced to improve your cash flow. <\/p>\n
\nIt\u2019s important your leadership team understands that cash management is critical to your operation and in their best interest. Clearly communicate that you expect your leaders to manage various vendor relationships with an eye toward cash control. Make sure they understand their responsibilities, including coming up with solutions to better manage cash. These leaders should include not only your in-house staffers who order the bulk of your supplies and equipment, but outside resources like your accountant and tax attorney. Get everyone thinking about cash management and you will save.
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\nUnderstanding all of the costs that drive your business is the first step toward managing cash flow. Developing a strategy and a process through proper team building and with the support of a third party solution will help you manage all of the touchpoints required to keep cash moving. Fostering expertise and a culture of ownership among your staff will ensure success.<\/p>\n","protected":false},"excerpt":{"rendered":"