If This Simple Cash Flow Analysis Doesn’t Make Perfect Sense To You You’re Business Is In Big Trouble!
So are you really in the mood to totally fry your brain? Meaning- you wanna go through some of those mind numbing P& L’s -that’s (profit & lost statements) that everyone’s so fond of!
Or maybe you prefer to spend an evening hashing over your (CFS’) Cash flow statements! Sounds like big fun right?
My friend all of these various cash flow analysis, do tell a story and offer a unique glimpse into the inner workings of the actual financial guts of your business or service.
They just do it from completely distinct perspectives! And that’s “why” you definitely need to pay close attention to the following eye opening cash flow analysis.
The Real Story An Accurate Interpretation Of The Cash Flow Analysis Tells About Your Business!
Have you ever noticed “how” misleading certain objects can be in the side view mirror of you car? Sometimes they’re actually much closer than they initially appear, correct?
Guess what? Lots of times, just depending on which perspective that you actually take, while reviewing your businesses CFS (cash flow statements), the exact same skewed conclusions can be reached. Case in point; this first cash flow analysis, comes courtesy of restaurant marketing/consultant expert Christopher Wells.
And he basically points “how” far too often, many otherwise savvy restaurant managers, “who” unfortunately have never ever actually owned their very own successful Mom & pop small restaurant, confuse “gross daily receipts coming in, with “what” their owners actually get to keep!
So when they finally decide to venture out on their own, they get greeted by a giant reality check, when the real world of restaurant ownership finances, collides with their skewed perception of it!
When The Real World Of Restaurant Cash Flow Analysis Finally Collides With The Fantasy World Of Just Managing A Restaurant For Somebody Else!
(Far Too Often That’s When You Know What Finally Hits The Fan!)
Say take a look at “what” Christopher likes to refer as the real “profit per dollar” earned analysis. (Of course your individual numbers may vary, but the overall general concept, is exactly the same!)
So let’s say your waiter or waitress just took an order for two dinners including desserts and drinks, and the grand total comes to $100 dollars. Now to the unsuspecting, they’re thinking, that’s proof positive, you can definitely afford to give certain staffers a much deserved raised!
But let’s not get too cocky just yet! Because there’s still the little matter of allocating (accounting for) certain built in expenses! Let’s say 30% of that one hundred dollars goes for food cost.
And another 28% goes for your labor. Now subtract that 12% for your rent/lease or mortgage on your building. Still another 8% goes towards your monthly hydro and or gas costs, because you gotta run those industrial ovens, do you not?
Now there’s the matter of your monthly loan payments, after all when you initially started this business, you weren’t ‘Richie Rich” now were you? Nope! So you needed a little help from your local banker!
And last (but certainly) not least, there’s that 9% that goes to “what” else? Why good old miscellaneous, of course! So after you do this sobering math, you quickly realize, there’s really only a real gross net (aka) before tax pre gross profit of just $3 dollars! Say what?
Or, that restaurant owner has a slim gross profit margin of just 3%!
Your Cash Flow Will Definitely Increase When You Consistently Implement The Right Market Tested Strategies Or Tactics!
Hold it! We’re not to the bad part yet! (Of course, this analysis would apply, if you only used one dollar for this particular example!) Meaning, at the end of it all, the restaurant owner would only have three cents (or 3%) of their gross left, before their uncle steps in to claim their piece of the ever shrinking pie!
Now here comes the kicker! One of your wait staff just accidentally broke one of your fancy six dollar wine glasses! Which means that $100 dollar food transaction, still left the owner $3 dollars in the hole!
If this incredibly simple (aka) basically watered down cash flow analysis of the all too typical day in the life of any serious entrepreneur! Doesn’t make total sense to you.
And you’re serious about actually running your own business or service, at some point. My friend, in all likelihood, your probably not going to make it! Any questions?
You Can And Definitely Should Grow Sales Consistently Without Relying Solely On Outrageously Expensive Methods!
Please list at least two simple spin off concepts (in the comments section below) that you can apply to your business, product or service in the next 30 days or less!
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