If you are running a restaurant, it is possible to assume that you are making profits if you can hardly meet your customers’ demand. You can sell every meal on the menu and use all perishable ingredients daily and still make a loss. The only way to determine if you are running a healthy business or not is to monitor your accounting books regularly. Watch out for the following accounting mistakes that may lead to losses in your business.
1. Checking Accounting Books on a Monthly Basis
Most restaurant owners check their financial statements at the end of the month, and this is one of the worst mistakes they can make as far as accounting goes. The strategy seems right on paper, especially when financial records are reconciled consistently every month. If you are using this strategy in your business, you are using the wrong figures to measure its profitability. Each month has a different number of weekdays and weekends. For instance, July may have more Sundays than August yet both months have the same number of days. The best method to use is a 4-week accounting period, which has an equal number of weekdays and weekends. This method enables you to compare the profits and losses accurately across years.
2. Taking a Monthly Inventory
Taking inventory on a monthly basis is very common in restaurants. It may seem tedious to take inventory weekly but that is the only way you can track your stock accurately. If you overestimated the perishable ingredients, they will have been disposed of by the end of the month. A weekly inventory helps you to track each item before any surplus items are disposed of. New England College offers online courses that can help you improve your inventory management skills. Many restaurant owners delegate the accounting function and use financial statements without asking critical questions. You cannot rely on your accountant’s figures throughout the year, which brings us to another common mistake.
3. Hiring the Wrong Accountant
Accountants are trained to work in different fields. However, this does not mean that every graduate in the accounting field is fit to work in your business. You need an accountant who specializes or has vast experience in the restaurant business. Every business has unique operations and systems. A restaurant runs differently from an electronics shop or a hospital. Ask the right question when hiring an accountant. If you already have one, offer specialized training on how the hospitality industry works. It helps to enrol your employees in online courses to improve their effectiveness. Some of the New England College online courses can help your accounting staff to improve their competence and efficiency in handling your financial statements.
If you have been making any of the mistakes outlined above, it is not too late to make changes. Building a successful business is a learning process. Correct each mistake one at a time and communicate the need for change clearly to your staff members.