Why A Good Budget is Crucial
Keeping a detailed and thorough budget is key to maintaining your company’s profitability. A restaurant’s budget acts as a fluid roadmap and guide, giving you a true north income to move your company forward towards.
A well forecasted budget considers potential problems or expenses and plans to move around them. It also helps you trim down waste and over-spending and keeps you mindful of your business’s financial health.
Instead of reacting defensively restaurants that embrace budgeting are responsive and dynamic. They move with trends, using detailed tracking to consistently improve and hone their budget over the course of the year.
Setting Financial Goals:
The main goal of a great budget is to set financial goals that your company can meet over the course of the year. As with most things in life, to plan you need to properly understand your past. At DineStrategy we’ve been preparing budgets through many economic booms and busts. Through it all we’ve learned key features in a budget to track and focus points that are especially important in this upcoming year:
An essential part of planning your financial goals is to ensure you have enough liquidity to handle anything that comes your way. When planning out your cash flow it is crucial to take a conversative approach to make sure you don’t run out of cash. This is help you to understand where your cash should be at any point in time during the year. This information allows you to make changes or adjustments throughout the year.
A good budget needs to prepare for uncontrollable problems that might arise. Food prices are soaring in 2022 and in order to properly prepare for 2023 we need to understand commodity pricing. You want to make sure you have a sound forecast, understanding how these prices are going to change over the course of the next year and how that effects your COGS.
Minimum Wage Increases
There have been big changes to minimum wage in the past year. And saying that wages have fluctuated within the restaurant industry is a gross understatement. It is important to have a good understanding of the fluctuations in wage prices you can expect. To do this it is important to act conservatively making sure you are holding enough cash on hand to properly pay your employees.
To build a sturdy budget it is essential to understand past income from all your different revenue streams. From in-store purchases to online purchases to tracking new customers to dealing with third party or subscriptions there are multiple different revenue streams coming into your company.
Each revenue stream acts differently, so it is important to break down and give each the attention that they deserve. Feel free to reach out to someone on our team if you have any questions about this.
New Store Openings
Any sort of remodeling or new store opening needs to be planned for in your budget. New store openings are often complicated and delayed so you will also need to provide an adequate cushion to ensure your company has enough capital on hand to handle any problems that might arise. .
Tax Planning for the End of 2022:
It is also the time of year when you want to understand where you will be at the end of 2022. It’s important to understand any key decisions that need to be taken to minimize your liability should be identified now and adequately planned for.
Your client accountant will be reaching out to you about budgets.