As a new business owner, it can be tough to figure out what you need to prioritize to generate revenue and profits. If you are a chef owning a restaurant for the first time, and with no business experience, this can be a lot harder.
Luckily, we have some tips for you to refer to when it comes to dealing with finances. So let’s dig in!
1. Product costing
This is essential because you cannot run a business in a sustainable manner without knowing what your products cost. You need a break down of what each product is made up of and how much it costs to get it from your suppliers. This includes material, labour and overheads.
With the information about costs, you need to find your breakeven point: where revenue covers all costs (Revenue – Costs = 0). This is the minimum revenue you need to run the business.
2. Maintain a record of expenses
This is a good practice that is easier said than done. All too often, we start the year enthusiastically, taking not of expenses and filing them meticulously to find ourselves a month later struggling to keep up with our expense records.
It is easier with some help. Apps like Expensify or Mint help you keep track of your accounts, expenses and income. If you are a small business owner, these apps are a good place to start.
Of course, as you grow bigger, you will have to move to accounting software that can keep up with the growth of your business.
3. Understand your seasonal cashflows
This is imperative if you own a retail store or a restaurant. It ties back to points one and two. During the year, your sales will not be static. It will depend on factors like when people get their wages or special festivals and holidays. Sales could change on a monthly, or quarterly basis.
Most seasonal changes are calculated quarterly. This is important to monitor because you will have to manage inventory accordingly. It also helps in setting prices based on expected demand.
4. Inventory management
Like we mentioned in the previous point, seasonality affects inventory. A small business owner should keep close track of inventory in relation to seasonality because inventory costs can run up to exorbitant amounts despite the fact that it can be managed.
TradeGecko is an app that can help you with that. The cool thing about this app is that it gives you real time data on your phone. You can access your inventory data from anywhere in the world with a few clicks.
Whether you are in Singapore, the Philippines or anywhere in the world, these tips are important to know as a business owner. Keep in mind that delegating traditional business practices to apps is a great idea because it frees up time for you to focus on your core business.
Also, keeping up with technology doesn’t just make you efficient, it prepares you for the inevitable conversion to tech-based apps that all business will have to make at some point.