Getting Ready For Year EndNov 06, 2023
I so hard to believe that we are already in NOVEMBER. Really. In 2 months we will be saying goodbye to 2023, and stepping foot into a brand new year.
So the question is. Are you ready?
Do you have a plan for closing out 2023 and moving into 2024?
Or is this one of the things you WANT to be better at doing as an owner? And yet each year you find yourself battling with your CPA on March 10th to get your returns finalized before the March 15th deadline.
But what if I told you there was a better way? Over the next few weeks, our content will be focused on building you a game plan to close the year so that you are PROACTIVE. And ready to make the best decisions for you and your business BEFORE it's too late.
During this week’s podcast, we focused on the things we MUST do in the next few weeks in our operations to get ready for year-end. In truth, preparing for year-end in a restaurant involves various financial, operational, and compliance tasks.
Here are 3 areas to focus on NOW so that you are ready for the holiday season, and year-end without added stress.
- Assess where you are in your business performance for 2023. Using the October year-to-date as a baseline, review your profit and loss on a monthly basis for each month in 2023. In this exercise, we are focusing on both the performance, as well as identifying any questions or items that may not look accurate.
- See something - say something approach: Rather than be frustrated by numbers that don’t look correct. In this exercise, we want to find the WHY. Are the sales numbers off because our point-of-sale system is assuming tips are sales? Or is our bookkeeper unaware that we moved our catering sales to a different platform in 2023? Digging in on year-to-date NOW will help make sure these mistakes are fixed BEFORE we close the books i 2023. :
- Cash flow check: The ultimate check on our profit and loss as well as overall business performance is cash flow. In truth, while digging into the P&L is important, the MOST important exercise you can do for your business TODAY is assess your change in cash from January to October 2023. It is truly as simple as looking at your beginning cash balance on January 1, 2023, and comparing it to your ending cash balance on October 31, 2023.
While there are many reasons for this change in cash. It is critical to know the reality before we can set a target for the next two months.
The key question to this is what can you do differently NOW to improve your cash balance over the next two months?
- Conduct a thorough inventory count to accurately assess your food, beverage, and supply levels. So many times we wait for 12/31 to review our inventory balance. But in reality, our inventory balance has a direct impact on our weekly cash. If we have too much inventory in our bar area or dry storage, or we don’t have a solid internal control process to make sure that the inventory purchases are not being removed without being charged to customers, this area can and WILL cost us money. By reviewing our carrying inventory balance in real dollars on a monthly basis, we can make sure that we are strategic with our carrying inventory, and not leaving cash on the table.
- Accounts Payable: Well before year-end, it is important to review your accounts payable balances to ensure all bills and invoices are up to date. This is also an important element of cash flow, as we need to know the balance owed to vendors on a monthly basis. At y in hospitality, this becomes an even more important exercise, as so many times our purchases in December are paid in January, which is also usually the slowest month in our operations. Rather than waiting for the inevitable cash crunch to happen, we can be strategic with our payables and can plan for January well before it happens. But it starts with having a solid understanding of our accounts payable balances before year-end.
- Ensure all employee payroll records are accurate and up to date. Payroll is the one area that must be completely accurate and closed before 12/31. If we have new hires or employees with payroll questions or issues, we must make sure these are addressed and corrected before 12/31 so that the year-end reporting of our payroll is correct. From a control standpoint, it is also important for an owner to review the payroll details to make sure the hours reported and names are correct. Ideally, this is a check that should be performed monthly so that any errors are corrected in a timely manner.
- Vendor Contracts and Negotiations: Rather than complain about the inevitable sales drop off in January, once the holiday rush is behind us. We can use this time to make valuable decisions for our business. One of the most important things we can do during this time is review our vendor contracts and explore opportunities for cost savings through renegotiations or switching suppliers. So as you are reviewing your payables, and overall operational performance in 2023, it is a great time to take a look at the pricing agreements in place with your vendors and negotiate with your vendors on potential savings opportunities in 2024.
By following these steps, you can ensure that your restaurant is financially prepared, compliant, and ready to navigate the year-end successfully while setting the stage for a successful new year.
That being said, If you're unsure about any aspect of year-end preparations, consider reaching out to one of our next-level experts, to do so CLICK HERE.
We are here to help you ensure you are moving forward in 2024 ...