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Managing Your Food Business's Finances

Managing your business finances might just be the hardest part of running a restaurant or bar – but it's also the task that can make the difference between success and failure. From securing loans and creating cash-flow projections to bookkeeping and taxes, maintaining your finances may begin to feel like a juggling act!

Take heart in the fact that you don't have to be a financial wizard or have an accounting degree to keep your business on track. But there are some basic components that you should be aware of so you can plan and invest wisely.

We'll discuss some financial considerations here, but know that this isn't a comprehensive guide. For specific information about managing your business's finances, consult your business advisor, accountant, or attorney.

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Financial Considerations for Food Services Business Owners

Financial Considerations for Food Services Business Owners

The following components are essential to the financial stability and fortitude of your food business. Be sure to…

  1. Create cash-flow projections. For new business owners, creating cash-flow projections can be a bit perplexing. In essence, a cash-flow projection is a formula that measures your estimated revenue after expenses (total revenue – total expenses = projected cash flow). Even experienced businesses can have a hard time making these projections because no one can accurately say what the future holds. Still, this is a necessary part of financial planning so you can properly account for marketing, inventory, and personnel expenses. For more about cash-flow projections, read SBA.gov's article, "Managing Small Business Cash Flow – Answers to 10 Commonly Asked Questions."
  2. Keep accurate bookkeeping and accounting records. Sure, you can always hire an accountant to handle your books. But the more you know about keeping accurate financial records, the less you have to rely on (and pay for!) outside help. Your books help you monitor the revenue flowing in and out of your business and they can help you survive an IRS audit. To learn about bookkeeping basics, read Score.org's article, "The 10 Bookkeeping Basics You Can't Ignore."
  3. Measure your marketing ROI. Keep track of the revenue your marketing efforts are pulling in so you know how to invest your dollars in the future. You can do this by tracking ads, using Google Analytics, leveraging CMR platforms, utilizing unique promo codes, and using social media tracking tools.
  4. Develop loan proposals. Getting a loan requires a lot of planning, including creating loan proposals and financial statements. Your accountant can help you navigate the ins and outs of securing the funding you need to keep your business running. You can also learn more about your loan and funding options on the SBA's page, "Explore Loans, Grants & Funding."
  5. Learn about savings, investment, and retirement opportunities. Once you have money in the bank, you'll want to explore options for maximizing your profits. Look for savings and retirement accounts that generate interest so you can start setting aside money for your future.
  6. Understand how startup funding works. All the funding you secure in your first 3 to 5 years as a business owner counts as your startup funding. For a visual breakdown of where these funds come from and what you give up in exchange for this funding, check out the infographic, "How Startup Funding Works," by FundersandFounders.com.
  7. Know how you pay your employees. Though payroll may seem as simple as writing a check, it can get complicated pretty fast. Will you use automatic deposits or checks? What about insurance benefits? Taxes? Retirement fund financing? You can easily hire an accountant to do this, but if money is tight starting out, you'll be thankful you taught yourself how to stay on top of payroll.
  8. Invest in your business. A savvy business owner knows when to invest both outside their business and when to pour their money back into their business. This may include upgrading your equipment, implementing new point of sale systems, or securing the small business insurance that can ensure your company survives an unexpected hit.
  9. Pay your quarterly employment taxes. As a small-business owner, you'll be required to pay quarterly employment taxes to both your state and federal government. To learn more about your tax obligations, check out this crash course by the IRS: "Small Business Taxes: The Virtual Workshop."
Small Business Insurance and Maximizing Your ROI

Small Business Insurance and Maximizing Your ROI

Small business insurance isn't an expense – it's an investment in the financial wellbeing of your business. Say, for example…

  • Your kitchen catches fire and destroys hundreds of thousands of dollars' worth of equipment.
  • Someone trips down the steps on their way into your underground bar. They could sue you for medical damages.
  • Your server serves a patron one too many margaritas – and that patron drives drunk and kills a pedestrian. Again, your business could be sued for liability.

Any of these situations (and countless others) could leave your business in financial ruin.

To protect the revenue that your restaurant, bar, or catering business generates, you need a risk management plan that can account for these unexpected and costly events. Insureon's licensed agents already know the risks your business may face and can help you determine which policies fit your needs.

Ready to get started? Simply apply online to compare small business insurance quotes from insureon.

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