When people dream of starting their own business, sitting down and organising their finances is not normally a big part of the dream, if it enters into it at all. Nevertheless, it’s up there as one of, if not the, most important things you must do if your business is to survive and flourish.
Countless bars, restaurants, and coffee shops across the world find themselves closing their doors not long after opening due to disorganised finances. It may be dry, but spending time and investing in the organisation of your finances will not only improve the chances of your business’s success but make the whole ordeal smoother and your life less stressful.
Keep track of your day-to-day finances
It’s so important to have a process and keep on top of it every day. Hospitality businesses process hundreds of transactions each day. This means that to stay ahead of it you must tally your sales as frequently as every evening, otherwise, it’ll get out of hand. These reports should include daily sales, staff payroll, expenses, and customer rate. This may seem like a granular approach, but it’s essential for two reasons.
A certain coffee not selling as well as it used to? Perhaps it’s the recipe, or the staff who made it, or something about it has occurred on the news. You can find out why, and do something about it.
First, committing to making a report every day will create a history of sales. With this, you can spot trends and anomalies. A certain coffee not selling as well as it used to? Perhaps it’s the recipe, or the staff who made it, or something about it has occurred on the news. You can find out why, and do something about it.
Second, with the information, you can gain from these reports you can plan for the future. It can let you know how your business does at different times of the year. With this, you can develop a smart strategy for the next year. For example, if your business hasn’t done particularly well in the month of February, next year, go heavy on your marketing in January.
2. Invest in an EPOS system
This may sound like a lot of paperwork, but with today’s technology, you can get software that does this all for you. An EPOS, or Electronic Point of Sale system, does a huge range of things. But most importantly, it processes transactions, logs sales and keeps track of your stock. Gone are the days of logging in every sale and invoice by hand.
Most EPOS systems come on a touchscreen of some sort. Nobly POS, for example, uses the iPad as its core hardware. After that, all different kinds of hardware can be connected to it, including card machines, receipt printers, and cash drawers. All transactions that these appliances handle will then be sent to and stored, sometimes wirelessly, in your central back office.
As mentioned before, making financial reports gives you insights into how your business is doing and what can be changed to make its future brighter. A good EPOS system will not only store all your sales data but give you detailed and easy-to-read reports. It can identify trends and suggest changes for you to improve and streamline your business. It also takes care of your inventory. Wondering if you’re running low on white wine? Your EPOS can let you know the percentage of your stock and remind you when you should do an update.
With an EPOS, all your reports will be created and stored for you, leaving you more time to spend investing in your business and enjoying your life outside of it.
3. Accounting software
Another feature of an EPOS system is that it can integrate with accounting software. Accounting software has in some ways replaced the accountant, and it usually comes at a much cheaper price. It connects to your bank and gives you a feed, letting you see all your finances in one place with what’s coming in and what’s going out.
For a company that uses invoices, accounting software can process your invoices and then send them to your bank. Some software can even chase up unpaid invoices — all by themselves. With payroll features, accounting software can take the headache out of dealing with your staff’s finances. It can track their hours, sort wages, and pay money into their accounts.
4. Keep business and personal finances separate
At the very beginning of your venture, it may be tempting to have your business finances and personal finances in the same account. This may make life easier at first but down the line, it’s going to cause problems. You need to open a separate account with separate credit cards for your business.
If your finances are going in and out of the same account, it’ll make things like separating your personal and corporation tax more difficult. You may also find you’re more likely to pay for personal items out of your company fund, mark them down as expenses, plan to process them later and never do. This can lead to legal problems.
5. Pay yourself first
Many entrepreneurs throw themselves and their money wholeheartedly into their new business and don’t think about their own personal finances. Give yourself a certain percentage from the company’s income — say, 10% — and keep it at that set percentage.
Your own living expenses are a segment of your overheads. Setting this standard will allow you to see how much money your business will be making once you start profiting.
Having some personal money in the bank will also come in use later on. It doesn’t matter how much you plan for the future, when it comes to starting your own business you’ll find new and unexpected expenses hiding around every corner. Have some money stored away for these rainy day situations. Besides, you have bills to pay. And just because you’re working hard making your dream a reality doesn’t mean you shouldn’t have some money tucked away to enjoy yourself every now and again.