The Other End of Year Party
Many of us in the Hospo game have never had any formal training in the world of finance. However, once your venue doors are open you quickly learn how important it is.
The 31st March is a stressful time in NZ as is the 30th June for Australia. Around this time you get “the call” from your accountant asking for the box of receipts, stock count, records of expenses, outstanding invoices… and the list goes on.
And it’s extra stressful because you are probably about to find out that you have a tax bill to pay. An amount you probably have no idea what it will total to nor are you likely to have the cash ready and waiting to go.
Being ready for End of Year process is best started in April the previous year. I learnt this the hard way at 22 when I got my first tax bill. It was not for a number of years did I truly appreciate what it means to plan, ask for help and get the support I needed to make better decisions.
That being said, here are a few lessons I learnt along with some tips from the seasoned pros…
1 ) Get them done!
During the first few years I didn’t see the point in calling my accountant to chase up the End of Year reports (basically because I didn’t want to know about that tax bill). But if there’s one thing we all know it’s that the ‘tax man’ doesn’t forget and loves to charge extra for keeping them waiting.
I can’t stress enough - get them completed as quickly as possible so you know where you’re at. It gives you the chance to start planning for the upcoming year, know what your tax bill is looking like and most importantly - what cash in the bank is yours to spend.
2 ) Financial planning day.
Still, to this day, I find this challenging.
Trying to make a plan around what your “End of Year Financial Report” says is no easy task. This can be due to how costs have been associated with “odd” cost accounts, losses and creative accounting. This is why it is crucial you find an accountant who explains the jargon and helps you understand where (and when) you need to focus on growth, save on costs, lock away savings for tax and when in the year are you in the best position to be spending.
A key trick for me was drafting out my:
“Big event” income and costs
Annual maintenance plans
Booking a research trip; a chance to be inspired by other hospo businesses
Once you have these extra expenses planned out, you are in a much better position to know what you need to save, the targets you need to hit or how to rearrange those events to coincide with good bank balances.
3) Reviewing & reporting progress
From the past few years running posBoss, I have been asked by a number of clients to help with their reporting. We all know it’s important to review how our business is going, keep an eye on cash ups, challenge variances and generally decide if we are doing better or worse than last week/month.
What has surprised me the most when I do help people is that when I ask why they need specific reports, the answer I commonly get is “so I can report”.
If you have a plan for the year and defined targets you need to hit, then reporting has a simple but very effective purpose. You are now tracking your progress based on your goals/targets.
What I suggest is - at the end of each month take the time to review and compare how your sales were to what you wanted them to be.
Make simple notes about the month - Big event, special parties, pop-ups, etc. These notes will help you with planning next year’s targets and give you a much better understanding of last year’s trends. Hopefully you will now have a better reason to spend time on reports than just so you can report 😉
As the general manager of a site that was in a different city than where the owners were based I was given really clear monthly targets, which we broke down & reported on weekly. This meant the owners had immediate feedback on how well things were going, based on achievable and shared goals, while my team and I were able to celebrate when we were doing well, or make adjustments quickly wherever needed to stay on track. - Tricia, posBoss Customer Success Manager & ex-Matterhorn, Foxglove & Snapdragon manager.
4 ) Consistent Help
This should come as no surprise, but getting help from your accountant once a year is not going to help you get anywhere. Combining today’s technologies like posBoss and Xero means you are in a much better position to personally review how your business is going on a more consistent basis than the once a year meeting. However, as we are not all trained in the world of accounting, it pays to book in a catch up every 3 months with a numbers guru, so you start to look at your financials through a different lens.
Sure, you know if your staff costs are high or you possibly spent too much on stock; the point of the guru is to identify other costs that may need a rethink - rent, Credit Card transaction fees, entertainment costs, holiday pay liability & more.
Your accountant has visibility into the back of many different hospitality businesses and as such, they bring a unique perspective on costs, margins and ratios, and any links between these. Chewing and reviewing the fat regularly provides you with more opportunities to improve and the accountability drives a proactive environment for you and your staff. - Cameron Goldsmid @ Outside Accounting
Months can roll past quickly in the hospo industry and we are not exactly in the game of ‘making it rain’. The more time you spend on planning your financials the better the chance you have of being less anxious about how the year is tracking and more able to react at the right times and support your team to hit financial targets as well as those Facebook and Instagram post likes.
Find a person you trust, who knows their way around accounting, and start buying them lunch. Upgrade your till software to a system that gives you sales numbers when you need them - like posBoss - and upgrade your accounting package to something that easily tracks spending - like Xero - to be in control of your business.
Finally, don’t forget to celebrate the year. Why be surrounded by good food and beverages if we never take the time to truly enjoy it ourselves.
If you want to have a chat about how to start making a plan for you business, please do not hesitate to get in touch with the posBoss team. We have all been owners, managers or accountants in our previous lives before working at posBoss and are happy to share our knowledge.