It’s very easy for restaurant owners and managers to get hyper-focused on day-to-day operations, keeping only the short-term budget of the business in sight. Granted, day-to-day financial operations are an important part of running your business. But success also comes from understanding the big picture plans of your business. After all, if you’re only looking down at your feet as you walk, how can you know where you’re going? You need to keep an eye on the path ahead for your restaurant budget to make sure you’re traveling in the right direction.
What are the elements that will guide you to a balanced restaurant budget? What tools already at your disposal will work as a roadmap for your restaurant budget, past managing everyday expenses?
Start with Your Business Plan
If you’re like a lot of restaurant owners, you might have fallen into a mindset of thinking your business plan is just a one-use document. You write your business plan, you pitch it to investors, and you get the funding you need, right?
But if leave your investors thinking your business plan’s role is over, you’re ignoring an important tool for the future of your business. A well-written business plan quantifiably sets out your goals and objectives for the first few years of your restaurant. By writing it, you’ve already set out a projection of your sales levels.
If you did your research well while writing it, the business plan can be a major part of that roadmap for you as a now established business owner. It’s up to you to regularly sit down with your managers and take the time to go back over your business plan and evaluate your current state with those future projections. You might need to make changes to get you back on track with where you wanted to be at this point in the plan and beyond.
How Your Business Plan Impacts Your Restaurant Budget
That said, you should also start looking for how to improve and expand on what you had strategized for the restaurant while making the business plan. Things rarely go exactly to plan in the restaurant industry.
What you estimated for future growth in your original business plan might not apply now that you’ve been in business for a while. It’s possible that you simply outgrow the original financial benchmarks of the plan. You might have opportunities for additional capital expenditure that you hadn’t anticipated while writing the plan. You shouldn’t hold yourself back from being more ambitious than the plan initially called for if you have the capital to back that up.
Every few months, you and your managing partners or upper-level managers need to be having a meeting devoted to evaluating the business’ growth based on your business plan. You should be firming up those estimates beyond your initial restaurant budget, fine tuning your ongoing goals based on how your recent months and years have gone.
Evaluate your business plan and ask yourself: what still applies to your business as it is now? What parts of the plans don’t apply anymore and how should you adjust your restaurant budget and strategies going forward? That’s how you put yourself into a position to succeed and grow.
Consider Your Profit and Loss
Another helpful guide as you plan your restaurant budget going forward is your profit and loss statement. After all, your restaurant profit and loss statement is essentially your income statement. Restaurants use it to review their revenue and expense on a regular basis, and in doing so can get a rough idea of the financial health of the restaurant.
But your P&L statement also gives you insight into how your restaurant has done financially over any period of time. This means you can analyze your growth in specific periods of the restaurant’s life and see if your restaurant is increasing growth now, starting to mature, or remaining consistent.
It’s a good idea to sit down with your managers once every month or so to review your P&L statement, making sure the numbers fit with your overall business goals, as laid out by your business plan.
What it comes down to is feeding your restaurant’s growth. Explore where to use your available cash to invest the most effectively back into your business. Make sure the success you’re having now with day-to-day finances is used to feed your restaurant in a way that stimulates growth. By continuously re-investing in your business, you ultimately expand your restaurant budget for the long run.
Want to take an in-depth look at overall cash flow? Download our free eBook “What’s Eating into Your Restaurant Profit?” today!