Cash In, Cash Out
Sound familiar?
- Profitable on paper and out of cash by the middle of the month.
- Shop money and household money sit in one place, so real profit is unknown.
- Doesn't know how much must be sold each day to break even.
- Takes profit whenever the account looks full rather than on a schedule.
After reading, you can
Help an owner read the shop's finances with four numbers.
Each chapter answers one question
Chapter 1: Does a small shop really need financial statements?
Which four numbers must I know by the fifth of every month?
You do not need full financial statements; you need four correct numbers, read regularly.
Chapter 2: How can a profitable shop still run out of cash?
If I made a profit this month but still ran out of cash, where did the money go?
Restaurants die from running out of cash, not from running out of profit.
Chapter 3: Is the money in the till mine, or the shop's?
How much am I paying myself, and on which line does it sit?
An owner who withdraws money at will has found the fastest way never to know whether the restaurant is profitable.
Chapter 4: Busy today, but busy enough to break even?
How much must my restaurant sell each day to cover costs?
Knowing how much you must sell each day to break even makes every decision during the day easier.
Chapter 5: Why is borrowing when the shop is short so risky?
If I borrow, which cash flow will repay it?
Borrowing to fix something broken is dangerous; borrowing to multiply something that works is different.