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[Part 3] What To Do When Your Restaurant Business Runs out of Cash

[Part 3] What To Do When Your Restaurant Business Runs out of Cash

As small business owners it’s important to monitor the cash flow of your restaurant business.

Without money, you can’t pay your staff, suppliers, bills, stocking on inventory and more. Basically, you’ll be unable to keep your restaurant business running.

Cashflow issues are not exclusive to failing businesses. It usually happens when a business takes on more costs than they can manage which results in over-expenditure. There’s only so much that bank loans and credit lines can help you cover your losses.

So just what can you do to make sure that your restaurant business doesn’t run out of cash to support your business?

We’ve got you covered with these 4 tips that are sure to help you monitor your businesses cash flow so that you’ll always have reserves!

1. Decrease Your Overheads

If your restaurant sales are not meeting your expenses, you should start cutting from your payroll, inventory and other areas. Determine which items on your menu aren’t selling and strip them from the menu. Doing this will help you eliminate the amount of inventory you keep. If some days are slow, reduce the number of staffs on the floor and kitchen.

Be proactive about asking for help. If you have trouble meeting the month’s mortgage, call your bank and politely ask for an extension. They may be willing to help you make ends meet, as they

2. Determine A Weekly Cash Projection [restrict]

Things like rent, sales taxes and payrolls can make cashflow seem inconsistent, so it is useful to know what you can expect before any problems arise. A surprise cash shortage can really give you a hard time.

Estimate both your weekly cash inflows and outflows. Your inflows, things like sales, cash and credit card receipts, should be under your attention. Your outflows, payrolls, occupancy costs, sales and liquor taxes, etc, should also be calculated side-by-side.

There is no accurate way to predict what will happen, but it is helpful to understand your everyday expenses so that your finances can be kept under control.

3. Ramp Up Your Ad Game

Wait, if a restaurant is already suffering from a lack of cashflow, then why focus on advertising? This is very possible with little to no money. Social media sites like Facebook and Instagram offer opportunities for you to advertise your restaurant from as low as RM9.00.

With that said, you could start creating restaurant promos, like early bird offers or special discounts to help attract more customers. Despite any cashflow problems, you should try not to cut budgets on advertising. As the saying goes, you’ve gotta spend money to make money.

4. Raise Your Prices

Setting your prices too low may have been the main thing that led to your cashflow problems. Perhaps you didn’t realize what all your costs would come up to. You may have expenses that were unplanned for, like employee payroll taxes.

If you are still charging the same prices you did from 4 to 5 years ago, then you need to raise your prices. A small business cannot operate on such a low margin. By raising your prices, you will have more incoming cash that will help you overcome your cashflow issues.

Actionable Takeaway:

The restaurant business requires a keen eye for detail, especially with your budget. You should always know how much money you are bringing in and how much is going out at all times. Cashflow problems can happen, but taking note of your budget and expenses will minimize the risk of running out of cash.

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