@bbqcravings/ @businessfevern
www.bbqcravings.com/ www.businessfeverng.com
So on today’s topic, I’m going to talk about Numbers. As much as you are creative with running your business; the health of the business only depends on how well you know your numbers. You can almost think you can outsource it, which is okay but you have to have a SOUND understanding.
Podcast Key Note
I once hired an Accountant with ICAN certifications and all, I realized that the kind of numbers he was focusing on did not really give me the details I needed to understand my business better, it did not give me a clear picture that would have helped me in building strategies for my business.
I usually use benchmarks from McDonalds, Burger King and other Quick Service Restaurant (QSR) to have an idea of what the industry expectations can be. Even if we have different conditions and business models, I find it has helped me a lot to try and match those numbers.
On a daily basis, I look at KPIs – Key Performance Indicator. I look at the sales and see if there are any variances – sales KPI include All POS transactions, Cash and Transfers. This is compiled daily for a whole monthly in excel file.. You will notice trends and also be able to see patterns this way.
Bank Reconciliations – I do bank reconciliation on weekly basis. I want to make sure the entire sales revenue hits the bank. You know, we’ve had challenging cases where MR. X says he will do a transfer but he didn’t and sometimes, declined POS payments that debits customers account but doesn’t reflect in ours. So, bank reconciliation helps us see that and when the bank says this customer has been wrongfully debited and they want a refund, I can comfortably say yes, go ahead.
It’s good to have details of how all the Monies are coming in. Now, the bank gives you option of how to breakdown daily sales per transaction. For example, let me pick a Wednesday – say I have 20K in POS sales; if I run the POS transaction at end of sales for the day for UBA bank, it’s going to give me the total sales of 20K and it’s going to give me a break down of individual transactions sales that adds up to give 20K. So, you have to be that detailed.
I also look at daily Deliveries as well. My deliveries are divided into 3 zones so we want to have an idea where our customers are coming from. The way this works is that it gives you direction in terms of where your customers mostly are and it tells you where to you can focus on promotions and marketing.
Bank Reconciliation
Now for bank reconciliation, I do mine weekly because you have a lot of transactions coming in daily and so it’s easier to go through 25 transactions weekly than 100 monthly. Now, all the sales you are making is it hitting the bank? If it’s not hitting the bank, what is the difference and where did it go to? So bank reconciliation helps you solve this and ensures that most of the sales revenue hits the bank. If it doesn’t, I want to know what happened – maybe someone made a transfer and it hasn’t hit the bank.
Income Statement
I look at my income statement on monthly basis and that’s pretty much the entire revenue minus expenses and what you have left. This is important because there are business ratios you can pull from it. It helps you analyze your expenses and overhead. So, when you have the breakdown of your income statement, you can start seeing where you are bleeding; you will be surprise how much expenses you have that you are not really tracking.
Inventory Control
The interviews and research I have done, they recommend that businesses should run Inventory Turnover of between 6 & 8 time per month for Fast Casual Restaurants and obviously, we have the Nigerian factor tied to that. (Listen to the podcast for more on inventory recommended turnover)
So the idea is that you only keep stock that you need immediately or in the near future and you are not tying money down in buying too much inventory. For us, we go to major market twice a month for mostly dry items and packaging materials. Most things we buy weekly and the fresh products we buy every 2-3 days.
Inventory control helps reduce theft, stocked item misuse, storage issues curtailed, and improves stock taking.
Key Takeaway Points on Knowing your Numbers:
- The health of your business depends on how well you know your numbers
- Master your numbers, look at your daily sales and expenses
- Do weekly Bank Reconciliation, Cash Flow Statements and Monthly Income Statement
- Invest in a good POS systems. A good one tracks your Sales, Inventory and helps with Accounting
- Daily sales KPIs to look at are – Cash Sales, Customer Count, Delivery Count, Stock Levels & Updates and expenses
- Bank Reconciliation helps you track all payments that should have hit your Bank Accounts from Cash Sales to Card Payments to Transfers
- Inventory Turnover helps you keep track of stocks purchased and stocks consumed within a set period, This lets you know if you are buying too much stock at a time
Thank you for reading and you should listen to the Podcast for more….
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