Unbiased operators get a failing grade on an enormous difficulty: They don’t have readable monetary statements. For the second, I received’t even contemplate the issue of getting data too late to be of any actual assist.
Some operators simply depend on their accountants to work up the figures and settle for what they’re given. Now CPAs are good individuals, however they’re into numbers, not operations. So long as the numbers steadiness and are saved in accordance with commonplace accounting rules, their work is finished. They aren’t entrepreneurs and (bless their hearts) seldom contemplate whether or not the numbers they supply are useful.
Working example: A P&L assertion ought to checklist percentages in addition to greenback quantities, however too many of those paperwork use gross receipts (gross sales plus gross sales tax) because the divisor when computing their expense percentages. This skews the chances and offers a 6- to 8-percent false sense of safety.
The subsequent most typical error is that meals price percentages must be meals used divided by meals gross sales, not divided by whole gross sales. Equally, when you function a bar, bar price ratio must be to bar gross sales, to not whole gross sales. Some accountants simply do what’s best for them. It goes on and on. When you’ve got by no means taken a fundamental accounting course, it’s time you probably did that. Then remember to use an accountant who understands the restaurant trade, not simply accounting practices. Lastly, insist that you just get numbers in a format that can will let you shortly perceive what is going on in your small business.
Positive, it could take a bit additional effort to coach your self sufficient to understand how the numbers go collectively and what they imply. Bear in mind: EO’s make pizza CEO’s become profitable. ?
Massive Dave Ostrander owned a extremely profitable unbiased pizzeria earlier than changing into a guide, speaker and internationally sought-after coach. He’s a month-to-month contributor to Pizza Right now and leads seminars on operational matters for the household of Pizza Expo tradeshows.
