Running a food business can be a challenging endeavour, and one of the most significant obstacles that business owners face is managing their finances effectively. Without proper financial management, a food business can easily fall into financial trouble, which can lead to significant losses and, in some cases, even bankruptcy.
Fortunately, there are several ways that food business owners can avoid financial trouble and gain control over their money in 2023. In this article, we will discuss five effective strategies that can help you manage your finances and run your business successfully.
According to a survey conducted by the National Restaurant Association in 2021, 90% of restaurant operators reported that their total sales volume in 2020 was lower than it was in 2019, with the average decline being 34%.
Additionally, 37% of restaurant operators reported that their current level of debt is unsustainable. These figures highlight the significant financial challenges that many food businesses are facing due to the COVID-19 pandemic. However, even before the pandemic, the food service industry had a high rate of failure.
In a study by Cornell University, it was found that 30% of new restaurants fail within their first year of operation, and 60% fail within their first three years. This underscores the importance of effective financial management in the food business industry to ensure long-term success
According to a report by UKHospitality, a trade body for the UK’s hospitality sector, the COVID-19 pandemic has had a devastating impact on the UK’s food and drink industry. The report found that:
These figures highlight the significant financial impact that the COVID-19 pandemic has had on the UK’s food and drink industry. However, even before the pandemic, the UK food and drink industry faced financial challenges.
According to a study by the Institute of Chartered Accountants in England and Wales, 20% of UK food and drink businesses were at risk of insolvency in 2019 due to factors such as rising costs, competition, and regulatory pressures. Effective financial management is crucial for UK food businesses to survive in a competitive and challenging market.
One of the most effective ways to manage your finances effectively is to hire a finance controller. A finance controller is responsible for overseeing all financial operations of your business, including budgeting, accounting, and financial reporting.
Having a finance controller on your team can provide many benefits. For instance, they can help you create a realistic business budget, ensure that your financial records are accurate and up-to-date, and help you make informed financial decisions that can benefit your business in the long run.
Moreover, a finance controller can also help you identify areas where you can cut costs and increase profits. By analysing your financial records and identifying areas of inefficiency, they can help you implement strategies to reduce expenses and maximise revenue.
Implementing a food ordering system can be an effective way to streamline your food business operations and improve your financial management. A food ordering system allows customers to order food online, which can reduce wait times and improve the customer experience.
Moreover, a food ordering system can also help you manage your inventory more effectively. By tracking the number of orders and the ingredients required for each dish, you can better manage your inventory and avoid waste.
Furthermore, a food ordering system can help you generate valuable insights into your business. By analysing customer data, you can identify popular menu items, customer preferences, and other trends that can help you make informed business decisions.
An order management system can help you manage your food orders more effectively and improve your financial management. An order management system allows you to track and manage orders from multiple channels, including online and in-person orders.
By using an order management system, you can ensure that all orders are processed promptly and accurately, which can improve the customer experience and reduce the likelihood of errors or delays.
Moreover, an order management system can help you optimise your order fulfilment process. By tracking the time it takes to fulfil each order, you can identify bottlenecks and inefficiencies and implement strategies to improve your order fulfilment process.
Creating a business budget is an essential step in managing your finances effectively. A business budget is a plan that outlines your expected revenue and expenses for a specific period, typically one year.
Creating a business budget can provide many benefits. For instance, it can help you plan your finances more effectively, identify areas where you can cut costs, and ensure that you have enough funds to cover your expenses.
Moreover, a business budget can also help you make informed business decisions. By comparing your actual revenue and expenses to your budgeted amounts, you can identify areas where you need to make adjustments and implement strategies to improve your financial performance.
Improving your finance management skills can help you avoid financial trouble and gain control over your money in 2023. There are several ways that you can improve your finance management skills, including:
Implementing these strategies can provide many benefits for food businesses. For instance, hiring a finance controller can help you improve your financial management and make informed business decisions.
Implementing a food ordering system and an order management system can help you streamline your operations, improve the customer experience, and reduce waste. Creating a business budget can help you plan your finances more effectively and ensure that you have enough funds to cover your expenses.
Finally, improving your finance management skills can help you stay on top of your finances, identify areas of inefficiency, and make informed financial decisions that can benefit your business in the long run.
By implementing these strategies, food businesses can improve their financial performance, increase their profitability, and achieve their business goals.
Managing finances effectively is a critical aspect of running a successful food business. By implementing the strategies outlined in this article, you can avoid financial trouble and gain control over your money in 2023. Whether you choose to hire a finance controller, implement a food ordering system, or improve your finance management skills, taking proactive steps to manage your finances can help you achieve your business goals and thrive in a competitive marketplace.