Pricing Your Restaurant Menu

Opening a new restaurant is definitely not child’s play. There is so much that needs to be done; developing a business plan, arranging the finance, acquiring a suitable location, setting up the kitchen, furnishing the premises, obtaining licenses, hiring and training the staff and so on. When all the founding steps have been taken, here comes the fun part of putting together the menu.

Compiling a menu is not just about what items your restaurant offers to the customers but at what price. Your pricing strategy has a long-term impact on your restaurant’s brand image as well as the sales revenue. A price is more than just a number. The same goes for existing restaurants as well. No matter how many years your restaurant has been in business, you need to evaluate the product pricing and the factors associated with it from time to time.
In this article, we aim to tell you about the factors that you should consider while you price your products.

Calculating the Food Cost

It is obvious that before you price any item on the menu, you need to know how much money went into preparing it. In general, it is widely acceptable for the restaurants to charge three or four times the food cost. Let’s take an example of the steak dinner.

A steak dinner typically comprises of a steak, a sauce, some bread, vegetables on the side like sautéed mushrooms, peas, and French beans or a side of fries and some salad.

The steak costs you £6 and the other items that come along with it account for £2, then the total meal costs you £8. The food cost should preferably be within the limit of 35% of the menu price. So, divide the food cost by 35% to arrive at the menu price of the steak meal.

Food cost * 100 = Menu Price
35
£8 * 100 = £22.86
35

You can price the steak meal at the minimum £22.86. As we mentioned earlier, the menu price is a little under three times the cost, which is acceptable. Furthermore, you could employ a psychological pricing tactic. Instead of pricing the steak meal at £23, you could go for £22.50 or £22.99. The customers perceive £22.50 and £22.99 as £22 and not £23, making it look like a good deal. You end up making almost a pound more on each steak meal without making the customer unhappy.

£22.99 for a steak meal sounds like a lot to you because you know it actually cost you only £8. But we are yet to consider the cost of labour involved, such as the chef, the servers, the bus boy and the cleaning staff. You need to pay these folks as well and it all needs to be covered through the menu price. You also need to take into account the overheads like gas, electricity, water etc. Besides, £22.99 for a steak dinner is just the minimum that you should charge. The pricing will vary with the following factors.

  • What model do you follow; table service or self-service?
  • How is the ambiance of the restaurant and if it is a casual dining or fine dining establishment?
  • Are your food offerings market-driven or demand-driven?
  • What is the location of your restaurant, downtown or uptown?
  • Who are your target customers? Are they residents, office goers, students, travelers, shoppers etc?
  • Do you have a medium of entertainment such as a live band?

These are some of the major factors to consider before assigning a price to the menu item. Also, involve the staff responsible for purchasing and inventory management in the process of determining the food cost.

Exercise Portion Control Measures

For your food cost to be the same for every order, you need to implement strict portion control. If you calculated the cost at £6 for a 6 oz. steak, all the other steaks that you prepare should weigh the same. Similarly, the quantity of accompaniments like sauce, salad, vegetables and bread should be the same as well. Instruct your chefs to measure each ingredient they use with the help of the measuring cups and scales.

Lastly, involve them in the exercise of portion control. They know the best because they are the ones who actually prepare the food and know precisely how much of what ingredient goes into making a particular dish.

Have an Extensive Menu

Along with the pricey items like steak and seafood, you could offer other less costly items like chicken preparations and pizzas. This will help balance your overall menu in case the cost of ingredients for the expensive dishes rises for a while. The sale of the less expensive items would offset the burden of the increased cost.

We hope this write-up gave you an insight into how important it is to put more thought into pricing the menu items. The price should not only cover the costs but also justify the quality of the food and the entire dining experience of the customers. We will be back with some more, interesting articles about restaurant operations. Stay tuned!

Restaurant Variance Analysis

Do you find your restaurant’s operating results unsatisfactory? Do the profits turn out to be diminished compared to what you had anticipated? It’s time you took a closer look at the operations scenario and figure out what’s making those numbers shrink. Variance analysis is one of the most powerful and practical tools at your disposal to investigate the deviations between the budgeted and actual results.

It goes without saying that restaurant owners prepare budgets from time to time for both the fixed costs and variable costs. The budgeted cost is then topped with a percentage markup to arrive at the selling price of the items on the menu. It is when the actual costs deviate from the budgeted that there is a variation between the budgeted and the actual profits. The variation could be either positive or negative. Let’s take a look at the following example.

Let us consider that your restaurant had expected to serve 1400 meals this week with an average bill of £30. That makes your budgeted sales £42,000. However, you ended up serving 1450 meals with an average bill of £32. Hence, you made an actual sale of £46,400. The difference between the actual sales and budgeted sales is called the variance. In this case, there is a positive revenue variance of £4,400 because the actual sales exceed the budgeted, which is a good sign.

The sales variance of £4,400 can be split into two parts; £1500 and £2,900 based on the idea of volume variance and price variance. The positive sales variance of £1500 is the result of the rise in volume by 50 meals at the rate of £30. On the other hand, the £2 increment in the anticipated average bill of £30 for all the 1450 meals resulted in the positive sales variance of £2900.

Similarly, if the actual sales fall short, there would be a negative sales variance, which could be a cause for concern if there is a major and consistent decline or stagnancy over a longer period. This is when you would need to analyze the variance. By that we mean, finding out what went wrong and why?

There could be several reasons the actual outcomes diverge from the anticipated ones. Particularly in the restaurant industry, one or more of the following factors are commonly responsible for the sales variance.
– Unforeseen fluctuations in the occupancy rate
– Varying bill sizes
– Deviation in the actual cost of labour from the budgeted affects both the cost variance and profit variance.
– Deviation in the actual procurement cost of ingredients from that budgeted affects both the cost variance and profit variance etc.

Whenever there is a negative sales variance, any increased costs can take up a major proportion of the sales revenue, thereby eating into the profits.

When do you analyze the variances?

The one very intriguing characteristic of variances is that not all of them are subject to examination. It depends on how significant or abnormal a variance is. For example, you accounted for cost of a specific quantity of the ingredients for the week to be £12,000. However, there was a rise in the prices of certain ingredients and you had to pay £13,000. The additions £1,000 spent on ingredients might not be as significant and hence, you might give it a pass.

However, if you continue to pay increased prices over the long run, you might need to analyze the variance in the cost of procurement. Renegotiating the prices of the commodities in question with your supplier would be the most sensible thing to do. If that doesn’t work out well, you could try looking for another supplier. However, make sure you do not compromise the quality of the ingredients. Some restaurateurs would also consider raising the prices of the specific items on the menu using the dearer ingredients.

Let’s not ignore the fact that the variance in the occupancy rate and cost of labour can occur alongside. The percentage aggregate variance could have a major impact on the profits. Therefore, it could be detrimental to your business to disregard a variance for analysis if you think its percentage is negligible.

So let’s face it, guesswork is risky. Conducting variance analysis on a regular basis is the practical and feasible method to prevent yourself from losing track of all the costs and deviations. We hope this write up helped you understand how vital the tool of variance analysis is when you want to establish the cause of discrepancies and implement corrective measures.

Previously we had shared an insightful write-up about efficient inventory management practices. In the upcoming article, we would discuss the winning strategies for pricing the items on your restaurant’s menu. Stay tuned!

Restaurant Inventory Management

In the current era of entrepreneurship, the food and beverage industry is making a lot of heads turn. Every so often we get to see a shiny, new restaurant opening its doors to the foodies in town. However, we all know that running a restaurant is not all unicorns and rainbows. It requires a strong business sense and consistent meticulousness to survive and grow.

Needless to say, the labour cost constitutes the major portion of the operating cost of a restaurant. The inventory cost sums up to be the second largest segment. The labour cost is a fixed cost. The cost of inventory is something that you can control to avoid wastages. Through this write-up, we aim to explain to you how crucial it is to have stringent inventory management policies in place, and how the implementation of these measures or the lack thereof can make or break your restaurant business.

Let’s take a look at some of the best restaurant inventory management practices that your business could embrace to minimize wastage and maximize profitability.

1. Prepare a Timetable

It is very important that you prepare a timetable for taking inventory and follow it consistently. For example, if you count your inventory on Mondays, stick to it. Fix a time for doing inventory to avoid any variations, like in the morning or at night. You cannot accomplish the task with precision if there is work in progress. Taking inventory before the restaurant opens or after it closes, are the best times to account for inventory. In addition, avoid doing the inventory when new stock is being delivered.

2. Set the Frequency

The frequency of doing inventory shall vary from one item to another, depending on their nature and frequency of ordering. The one thing that we can say with the utmost surety is that taking inventory only on a monthly basis is not good practice. In the restaurant industry, you often place orders on a weekly basis. Therefore, take weekly inventory of such items to keep a tab on their availability and rate of usage. Similarly, account for the items you order every day on a daily basis.

3. Follow the FIFO Method

FIFO stands for First In, First Out. It means using up the old stock before moving on to the new one. Most items in the restaurant storeroom are perishable. To avoid wastage, they must be used before they go bad. It also depends how well you forecast the demand of the items before you decide on the ordering quantity.

4. Systematic Arrangement

We cannot emphasize enough how crucial it is, the way you arrange items in your restaurant’s storeroom. The staff responsible for taking the inventory should be trained to follow the routine arrangement of the stock on the shelves to efficiently implement the FIFO technique. The older stock should occupy the front row on the shelves for being readily accessible. Once these items are used up, the next batch of inventory should be moved to the front, as we go. Do not forget to declutter your storeroom by taking the expired items off the shelves.

5. Make it a Two-Person Job

Assigning the responsibility of keeping track of the inventory to two employees is a great idea. The two in-charges could do the inventory separately and compare their results to see if there is any discrepancy. Having said that, it reduces the odds of you missing the inconsistencies, both current and probable.

6. Use Technology to Your Benefit

The market is flooded with a wide range of inventory management software. You could try them and find out which one fits your needs the best. Why we emphasize so much on accuracy is the fact that your inventory records have an impact on the Profit and Loss statement. Any incorrect details would skew the final picture of the profitability of your business, thereby jeopardizing it in the long run. The inventory count sheets you prepare using the program would not only help you track your stock levels but also reveal consumption trends of the various items across the timeline. The trend proves useful in forecasting the demand of such items to arrive at a precise ordering quantity.

7. Standardization is the Key

As highlighted earlier, the solution to a sound restaurant inventory management system is consistency, which comes from standardization. Standardize the units used for quantifying each item in stock, be it measure of weight or number of items. To reduce errors and increase the swiftness of the process, it is necessary that the same employees do the inventory every time.

We are sure that once you put these ideas into practice, a significant wave of positive change would come your way. You would notice reduced incidences of wastage, pilferage, and spoilage, which ultimately culminate into enhanced profitability. We hope you found this information practical and realistic. In our upcoming post about restaurant operations we would talk about variance analysis and product costing, stay tuned.

Virtual Bookkeeping

“Virtual bookkeeping services are scary. They will not work.”

It’s a common misconception of those who have not tried yet the various online accounting services. But as soon as they’ve signed up for a virtual small business accounting service, they soon realise the benefits of it.

How many times a day have you seen your staff bookkeeper spending his/her time at the water cooler or just chatting with co-workers?

When you opt for online accounting services, you can save money and time. And as a business owner, you know that time means money.

Many are still undecided about using it because it will mean outsourcing your accounting/financial statements.

But did you know that the most successful, profitable small businesses of today are using online outsourcing? Yes, they have embraced it so that they can spend their time differentiating their companies in the marketplace.

They are using online accounting as part of their long-standing sustainable business plan.  The owners of these businesses have more time improving the quality of their product/service and increasing their profits.

But how can virtual bookkeeping services save your small business?

Save overall cost

If you want to simplify your accounting, you should consider online accounting services.

How much are you paying your in-house bookkeeper? A virtual bookkeeper will cost less to hire.

How?

There is no need for you to run background checks, provide ongoing training, etc. The online small business accounting services will do that for you.

Generally, you will save in the region of 30-50 percent of the entire cost of hiring an in-house bookkeeper and using traditional accounting infrastructure. The savings will include the hours of time you and your partners spend on those activities.

Because online bookkeepers work remotely, you will not have to process their payroll taxes, pay holiday time or provide other benefits.

You will be surprised to know that most companies offering online accounting services have talented and experienced bookkeepers.

With that in mind, you are not only getting great value for your money but you will actually obtain a very experienced, talented, efficient team of bookkeepers that will help you with your small business. That is truly accounting simplified.

Flexible

In-house bookkeepers are talented. True. But they are not perfect individuals. They make mistakes in your financial reports.

And when they do, you will not see the inaccuracies right away. As soon as you notice the miscalculation, you would like them to amend the errors. But, what if they are on holiday? Sick leave?

Here is where an online small business accounting service comes into play. The virtual bookkeeping service provider have experienced, trained bookkeepers who can work, effortlessly, with your accounting reports.

Our accounting services at Sanay are flexible. You can contact our customer support any time you need support and your financial reports are available for viewing and editing 24/7 through the cloud.

Our virtual bookkeeping services fit easily work around your schedule.

You will have expertise on your side as the virtual bookkeepers have excellent knowledge in this industry. The nice thing is that you do not need to pay for them around the clock. When you start putting your books into the online accounting services with highly trained and skilled bookkeepers, your job as an owner will become a lot easier and more effective.

With that said, sick and holiday days will never be a problem to your small business.

Focus on improving your growing business

Hiring a virtual bookkeeper will boost your company’s productive time as you do not have to work on bookkeeping tasks all day. You can decide how much time a virtual bookkeeper will spend working with your financial reports.

This will lead to overall savings as online accounting services have fixed fees, dependent upon the transaction volume and the package you choose. This way, you will know the overall cost of the transaction before you even sign up, making it easier for you to stay on track with your budget.

As you let someone else handle the bookkeeping, you can more easily concentrate on running your business. Because you know that your bookkeeping is taken care of by a trusted service, like Sanay, you will focus your time on other important things to grow your business.

You will have the peace of mind that you need so you can gather resources in building your company, instead of looking into your accounting all day.

Outsourced accounting services will provide you with updated financial reports anytime you need to monitor your company’s financial health. Because they are up-to-date, you can stop spending money you don’t have or know when you can spend to take your company to the next level.

We understand the value of financial reports and statements in running a business. With the up-to-date financial reports that we send to you, you can effectively use them to know whether or not your business is running smoothly.

Through updated and accurate financial statements you can easily make key business decisions that can support your company’s growth.

Freeing up your time as the manager or owner of your business will give you the opportunity to handle other issues, other than problems related to bookkeeping. You can focus your attention on product development, marketing and selling.

Hire trained individuals

Again, this will mean savings.

With online accounting services, you won’t waste your time in hiring or interviewing individuals to perform the tasks.

As you hire traditional bookkeepers, you will have to spend time guiding them in the things that they must do. Most of the time, applicants don’t have all the qualifications or training that you want and need for your company.

When you consider virtual bookkeeping services, you are hiring someone with skills and years of experience. You will be working with people who are not limited by geography or skills. You can give them tasks that a regular bookkeeper may not be able to perform or accomplish.

When you do opt for trained traditional bookkeepers, their rates are expensive.

But with virtual bookkeeping services, you can have well-trained, skilled bookkeepers without additional cost. The rates are approximately 30 to 50 percent less than the rates you will have to pay for traditional bookkeepers.

This will lead to great savings for the entire cost of operating your small, medium or large business.

Obtain genuine opinion

How many times have you tried to ask your bookkeepers about the financial status of your business?

With a third-party involved, you get a genuine opinion of your business. Since the third-party does not engage in your company’s inner workings, it can give you better advice on how to improve your business. The recommendations it can offer will not be self-serving but for the benefit of your company as they are not influenced by a desire to improve their position within your organisation.

Because of that, you can now start to use your bookkeeping system to make key business decisions that can surely make a positive impact in your business.

Get hold of timely, updated financial reporting

As already mentioned, virtual bookkeeping services can provide updated financial reporting in real time.

Generally, bookkeeping or accounting is the first thing that usually takes a back seat. This is especially true when things start to pile up. The next thing you know, it’s tax season and you haven’t touched your books since the previous tax season.

Through online bookkeeping, accounting is simpler as you get financial reports virtually anytime.

So, what does this mean to your company?

Apart from the fact that an updated financial report can help in making key decisions, you can minimise your tax liability.

We all know that inaccurate books can result in various unpleasant results.

For instance, if your profit and loss report is erroneous, your company could end up paying more taxes. This would mean wasting your hard-earned money.

Then, on the other hand, if the report is understated, you would be underpaying in taxes and possibly inviting an investigation by the government.

If your company has accurate accounts that you can review before paying taxes then this will allow you to make important tax decisions before the tax season ends.

Better cash flow management

With an accurate bookkeeping system, you can easily look into your financials and evaluate whether or not you are making enough profits from your business. When you maintain a proper bookkeeping system, you can avoid a negative account balance and avoid fees adding up.

If this situation continues, bank fees and other charges can accrue, which may end up hurting your business financially.

Having a properly managed cash flow will also enable you to reduce your outstanding accounts receivable. With ineffective accounts receivable procedures, come shortages in cash flow. Even though you see excellent revenue figures, your cash could be all tied up in your accounts receivable, your bank balance may still suffer. You must convert receivables into cash.

You must also keep an eye on your accounts payable so that your company’s cash will not be paid to your suppliers before the required payment dates and so that you are taking advantage of any discounts available.

By closely monitoring both your payables and receivables, you can increase your cash flow making your operating activities easier.

Are they secure?

This is one of the issues raised by many managers/owners – how secure is a cloud accounting service?

Sanay partners with Xero to make sure that we can fulfil all of your accounting/bookkeeping needs. We are concerned about Internet security, too.

That is why we only use the highest level of security in protecting our clients’ financial reports. The cloud accounting software that we use implements the same security methods being utilised by popular, major UK banks. It is protected using 128-bit encryption, which is the highest level of Internet protection for all web browsers.

Yes, we are more secure than your physical office. Your in-house bookkeepers may lose their computer passwords. They may keep their records in an unlocked file, thereby, increasing the risk of unauthorised access to those records.

But through our secure environment, your financial records will be processed utilising the highest level of protection to make sure that they will not end up lying on other people’s desks.

Investing your money in the right place

As a business owner, it is essential that you put your money in the right place. This allows you to save more while you get the maximum value of your business.

One of the most tedious tasks in managing your business is bookkeeping. It can be time-consuming to manage and prepare your accounts. But it is an essential aspect in managing your business’ financial health.

You must not handle the bookkeeping tasks on your own, as it may only hamper the overall growth of your company. With virtual bookkeeping services, your company will become more financially organised.

Your small business will enjoy the monetary benefits of online bookkeeping services because you do not need to pay for the costly monthly salary of a traditional bookkeeper. The cost of appointing an online accounting service is cheaper than having an in-house bookkeeper.

The financial data of your company is essential in making financial forecasts and managing cash flow. As the owner of your small business, it will not be your job to look into and analyze balance sheets, profit and loss reports, etc. All you have to do is to know what they mean and how they can affect your business. From those pieces of information, you can, more easily, make financial decisions that can help you run your business smoothly.

When you use our accounting services at Sanay, you will spend less time analyzing your financial reports and more time making decisions that affect the growth of your company. With timely financial reporting, you can create forecasts and make financial plans. You will spend more time determining ways to increase your sales, instead of focusing on keeping track of your books.

Are you a small business struggling to get to the next level and deliver sustainable growth? Here are 10 keys to unlock your growth phase.

  1. Get a growth mind-set

It might sound obvious but you can only grow if you want to. Get a growth mind-set and change the status quo.  To grow, small businesses need to challenge their processes, look for opportunities to exploit existing resources and learn from mistakes. The growth mind-set comes from the top and the vision of the successful business needs to be shared by all. Make a conscious decision to grow, and sell your vision with its benefits to your staff. Go ahead have that first staff meeting. It is just the beginning, to quote Lao Tzu, “A journey of a thousand miles begins with a single step”.

  1. Have courage

In a recent TED talk in Vancouver, Simon Sinek stated that the only common trait amongst great leaders is courage. Growing a small business takes significant time commitment and financial resources, but above all it will certainly take courage. Courage to make that bold decision, lead from the front or implement a new key process, whichever it may be.

The key is to have conviction in your decisions, and stand by them. If it works out then great, if not then learn and move on without dwelling on it.

  1. Take advice, listen and lead

Ok, so this is 3 rolled into 1 but the point is that they’re interlinked. People don’t expect everyone to know everything, not even the Managing Director or the CEO. The important thing is to know who to ask when you don’t know the answer, to trust their judgement and lead people in such a way that they are inspired and driven by your vision.

“Working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business.”

You’re really only as good as your team. If you work on your own you may need to look to others for guidance or outsource just to lighten the workload but we’ll look at this a little further on.

  1. Be open to opportunity

This is important because the key is the skill to recognise opportunities and act on them quickly before they disappear. These opportunities could be income producing like a new potential customer, a new market segment or taking a loss leader for a new future source of income. Cost reduction opportunities could be a new low cost supplier, new more efficient premises or outsourcing services. Collaborating with outside parties to assist with your marketing or managing your bookkeeping and accounting can not only reduce your staffing costs but result in resources being redirected to income producing activities – these are also opportunities.

“The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.”

  1. Know your customers

Being in tune with your customers and what they want is crucial for business growth.  Knowing what they want or what they might want means that you can adapt to their needs.

Good relationships with customers are vital.  This value to enhance the customer experience needs to be shared top down in the business.

Customer knowledge is also about knowing how profitable your customer is to your business. You should not be afraid of increasing profitability, if necessary, by reducing service offering, finding more efficient ways of managing the current workload or increasing the prices.  If you can’t make a customer profitable you should consider letting them go.  Yes that’s right – letting a customer go if they are not profitable.  Don’t forget to consider other business they may bring.  If they are an unprofitable customer but still provide a number of good referrals or complimentary business they may not be that unprofitable.

  1. Focus spending

Realistic cost budgets are critical to financial planning and focusing expenditure.  Often during start-up or in times of rapid growth, a business can become a victim of its own success, struggling to pay bills before revenue has been collected.  Cash flow can become a very real problem and so it becomes especially important to control your limited resources and review spending in terms of return on investment.

Decisions should be framed by “will this spending improve/ increase revenue or reduce costs?” Consider the purchase of new capital equipment, will this save production costs?  Will it open up new markets?  Will it increase capacity without increasing floor space?  These are all valid questions when making decisions, for instance you may have to choose between buying new equipment or re-painting your building. I can imagine which of these options are likely to have the greatest return.  Bear in mind of course that some costs are necessary…insurances, taxes, certifications etc.

Sometimes these decisions are difficult especially with a limited budget. For example, deciding between customer satisfaction/retention or marketing to attract new customers; ideally you should be doing both. For a cash strapped business a short-term compromise would be developing sales and up-selling to existing customers.

HR costs also need to be budgeted. Should you hire, manage and motivate an in-house bookkeeper at a higher cost or outsource to a dedicated virtual bookkeeping organisation at a lower cost requiring less time commitment?  Both have benefits but which has the greater return on investment?  Which makes your bookkeeping simpler?

  1. Monitor cash flow…very carefully

This seems almost too obvious to include, but it can be the critical success factor for a business as it struggles to balance payments out with payments in.  Let’s look in more detail at some areas where gains can be made.

Accounts Payable.  Pay your suppliers as close to their due date as possible, negotiate extended credit terms with established suppliers, request electronic invoices to improve budget planning and control – these are all actions to improve your cash flow.  Occasionally suppliers offer discount incentives for early payment, you should weigh up the benefit of the reduced cost against the benefit of extended payment terms at a higher amount.

A word of caution, regularly not paying suppliers on time can lead to suppliers putting your account on credit hold or stop supplying you altogether.  This opens up many wider issues around your supply chain and can affect your reputation.

Accounts Receivable.  The starting point for managing accounts receivable (otherwise known as debtors), for credit sales, is to reduce the risk of default on invoice payment and check the credit history of the prospective customer.  If there is a history of non-payment then consider whether you need the sale more than the money in the bank.

Contrary to accounts payable, the aim is to expedite the payment of invoices, reduce payment terms if possible and minimise overdue payments.  Making it as easy as possible for customers to actually pay your invoices helps and there are a number of practical things that you can do to achieve this.  Contact us if you wish to discuss this further.

Inventory.  Try not to tie money up in too much stock, after all money sitting in a warehouse in the form of stock can’t be spent on things which will move the business forward.  Only enough inventory/stock necessary for firm orders (unless it’s standard and can be used across various product lines) should be kept on hand. This requires effective supply chain management. Investing large amounts of cash in holding large inventory increases the risk of obsolescence and theft. Moreover it can increase the costs associated with storing, managing and securing the inventory.

Managing cash flow can make or break a business.  An experienced bookkeeper should be able to assist with cash flow management.

  1. Outsource your support functions

Identify your core business.  Maybe you are in engineering, manufacturing, online retail, recruitment or medicine, the list is endless, the point is that your core business is what you provide your customers and it earns the revenue. Therefore all other functions are support functions.  Many small to mid-sized business owners keep all support functions in-house which can be time consuming to plan, learn and execute. Ultimately this detracts from the energy used to drive the core business forward and hinders growth.

Indeed managing these support functions in-house can save money but is this a false economy?  If in fact your customers get less attention, sales either don’t grow or are lost and the real cost to the business is the lost revenue. You could outsource to a service provider who would do the job quicker and more effectively because your support function is their core business.  This may be Customer Service, Graphic Design, Recruitment, Legal support, Marketing, IT, or Bookkeeping and Accounting.  Any of these areas are prime candidates for outsourcing.

Take Bookkeeping and Accounting as an example. The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.  It is not the same for an in-house bookkeeping system where increasing resources takes time and money.  Outsourced accounting not only gives a simpler bookkeeping system, it saves time and best, it presents valuable information and reporting in a manner that you may not previously have considered. Indeed working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business. Ultimately, it will take the headache of accounting away and give you more time to focus on growing your business.

  1. Embrace new technology

It was only the early 1990s when the World Wide Web found its way into wide stream usage, by 1995 there were an estimated 45 million users, just 0.8% of the world population. Today there are approximately 3 billion internet users, around 41% of the world population. Potential for further significant growth remains on the cards as the types of devices used to access the internet increase as users look for more convenience and mobility, moving from laptops to tablets and smartphones and now to smart watches. Cloud based technology, as a result, is gaining more users daily. The market is estimated to grow from around $58bn in 2013 to $191bn in 2020.  These are the high technological advances that have changed the way the world works and does business; not adopting this could leave you behind.

Advances in other areas are also more than noteworthy; consider nanotechnology, RFID’s, CNC machinery, robotics, automated production lines, predictive analytics.  More than enough for an entirely separate post.

It is fairly likely that most businesses have embraced some change in technology, with the more successful companies being either early adopters or in the early majority.  There are few businesses today that don’t have a PC or phones, have manual accounts or use steam to power machinery.

Identifying and adopting new and useful technology can help give your business a competitive advantage. It can reduce costs, production time and improve service delivery and the customer experience – all leading to a healthier business.

  1. Tie it all together

Do all of the above as part of a defined and deliberate strategy and give your business the best chance to grow to its true potential.

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