Best Practices
Survival Tip #1: To Stay in the Game, You MUST Have Cash
When your cash flow becomes low or turns negative, your survival depends on how quickly and effectively you address the problem. Most restaurants are in this situation today. Preparing a Cash Flow Plan is no longer optional. It's essential!
In addition to extreme cost-cutting, you need to know what your cash position and short-term outlook is for cash coming into your business and the payments you MUST make to remain open or in a position to re-open.
If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.
- Jack Welch
One of the most important survival tools you can have right now is a short term, 12-week cash flow plan based on the best information you have. Will it be 100% accurate? NO, but it will be 1,000 times better than not having anything. Plus, as new information comes in, you'll want to update your plan reflecting changing circumstances.
Here are a few of the top reasons you need to prepare a cash flow plan and why you should make it your top priority and do it NOW!
- It will help you think strategically (and allow you to be less reactive)
- It will help you see the financial reality of your situation
- It will help prevent a cash "crisis" by giving you time and options on how to respond
- Your banker, landlord, vendors and investors want (need) to know you have a plan (or at least working on it)
Below are some excellent sources for quickly learning how to create a Cash Flow Plan that include resources and tools you can use to do it --
-
Managing Cash Flow in this Uncertain Time
This free 4-week mastermind series is presented by our friends David Scott Peters, author of The Restaurant Prosperity Formula and Anne Gannon, CPA and founder of The Largo Group accounting firm.
-
Financial Strategies for Restaurants with Empty Dining Rooms
Cash is king in the restaurant business. Today, there is precious little of it without the revenue your dining-room provides. The RTS experts below use spreadsheets to show how small- and medium-sized restaurants can strategically manage their cash flow to survive the impact of Covid-19.
