Why proper planning is important for a new business to survive

Accountants Ballarat & Bookkeepers Ballarat

Our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855

For people who want to start a hospitality business, it can be easy and convenient to just buy an existing business.  However, problems often arise when you purchase a fully-functioning food business. With awareness and proper planning, you can avoid many of these problems. 

xero accounting sunbury
Pixabay

If you want to buy an existing business, you need to check the following:

  • The last 3 years of financial statements;
  • Gross profits on food and beverages;
  • Wages as a % of revenue;
  • The average EBITD calculations (Earnings Before Interest Tax & Depreciation);
  • Licenses to make you they are in place such as liquor, food and health & safety;
  • Risk and ROI (Return on Investment); and
  • Potential handover timeframe from the previous owner to you.

Cashflow is king and while a considerable amount of money will come in, a considerable amount of money will go out as well; not just on the profit and loss statement either, but in new renovations, loan repayments and tax office payments. 

Many expenses are totally predictable, including rent, utilities, staff costs and purchases.  It is a clever idea to start planning these costs by using forecasts even before opening.  The ideal tool to do this is a cashflow forecast.  If you invest in educating yourself, the return will pay dividends later.

Accountants Ballarat & Bookkeepers Ballarat

Our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855

The most common cause of new business failures is not having adequate cash to meet expenses in the first 6 to 12 months of the business opening.  Before opening, you should forecast your cashflow needs and seek preliminary legal and accounting advice. 

It is also best to research on:

  1. tenancy or lease matters
  2. stamp duty and lease agreement
  3. statutory requirements, such as licenses and insurance.

It’s also good to forecast telephone and internet installation, power connection and bond, equipment, fixtures and fittings, signage and initial marketing, staffing and wages, and initial stock purchase.

You can visit your prospective site and take foot traffic numbers and passing cars.  Market research is very important.  Speaking with existing business owners about their issues will also be helpful.  Due Diligence is a very important part of buying a business. 

You also need to check if the location is suitable to your target demographic and understand how the traffic will drive customers to your business.

Planning will give you the chance to predict potential opportunities and cash traps and experts will be able to help you find solutions. It is important for your accountant to check your forecast, so you can compare information and predict possible problems.

Make sure your plans are all drawn up, outlining equipment, plumbing, lighting, ventilation and electrical plans.  It will save you from potential changes in design and construction and overspending.  Study the under-slab drainage, grease trap and three-phase power.  You should have enough cash for your predicted costs plus 20-30% extra to allow for adjustments.

Before starting construction work, seek for local authority approval from the health department, building department and plumbing department.  The council needs to inspect the construction and issue certificates as well.  Use a hospitality designer or architect and it will be well worth it.

Consult the experts about business planning.  Click here to speak to Sky Accountants who specialise in the hospitality industry.  Sky Accountants Sunbury are big believers in the use of professional tools to manage your business.   The right tools can streamline your processes so that the business is best placed to trade profitably.   

You can click here to speak to a businessaccounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.

Business Accountants Ballarat | Ballarat Accountants | Ballarat Accounting Firms | Ballarat Bookkeeping Firms | Ballarat Bookkeepers | Restaurant Accountants in Ballarat | Accountants for Manufacturing Business in Ballarat | Farm Accountants in Ballarat | Accountants for Medical Professionals in Ballarat | Accountants for Tradies in Ballarat | Company Accountants in Ballarat | Company Bookkeepers in Ballarat | Casino Accountants in Ballarat | Spa Accountants in Ballarat | Cafe Accountants in Ballarat | Hotel Accountants in Ballarat | Accountants for Builders in Ballarat | Ballarat SMSF Accountants | Xero Accountants Ballarat | Ballarat Mortgage Broker | Ballarat Financial Advisers

Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Business Accountants Melbourne | Melbourne Accountants | Melbourne Accounting Firms | Melbourne Bookkeepers | Melbourne Bookkeeping Firms | Restaurant Accountants in Melbourne | Accountants for Manufacturing Business in Melbourne | Farm Accountants in Melbourne | Accountants for Medical Professionals in Melbourne | Accountants for Tradies in Melbourne | Company Accountants in Melbourne | Company Bookkeepers in Melbourne | Casino Accountants in Melbourne | Spa Accountants in Melbourne | Cafe Accountants in Melbourne | Hotel Accountants in Melbourne | Accountants for Builders in Melbourne| Melbourne SMSF Accountants | Xero Accountants Melbourne | Melbourne Mortgage Brokers | Melbourne Financial Advisers

 

Business Accountants Sunbury | Sunbury Accountants | Sunbury Accounting Firms | Sunbury Bookkeeping Firms | Sunbury Bookkeepers | Restaurant Accountants in Sunbury | Accountants for Manufacturing Business in Sunbury | Farm Accountants in Sunbury | Accountants for Medical Professionals in Sunbury | Accountants for Tradies in Sunbury | Company Accountants in Sunbury | Company Bookkeepers in Sunbury | Casino Accountants in Sunbury | Spa Accountants in Sunbury | Cafe Accountants in Sunbury | Hotel Accountants in Sunbury | Accountants for Builders in Sunbury | Sunbury SMSF Accountants | Xero Accountants Sunbury | Sunbury Mortgage Brokers | Sunbury Financial Advisers

 

Business Accountants Gisborne | Gisborne Accountants | Gisborne Accounting Firms | Gisborne Bookkeeping Firms | Gisborne Bookkeepers | Restaurant Accountants in Gisborne | Accountants for Manufacturing Business in Gisborne | Farm Accountants in Gisborne | Accountants for Medical Professionals in Gisborne | Accountants for Tradies in Gisborne | Company Accountants in Gisborne | Company Bookkeepers in Gisborne | Casino Accountants in Gisborne | Spa Accountants in Gisborne | Cafe Accountants in Gisborne | Hotel Accountants in Gisborne | Accountants for Builders in Gisborne | Gisborne SMSF Accountants | Xero Accountants Gisborne | Gisborne Mortgage Brokers | Gisborne Financial Advisers

Phone: 03 97444522
Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia
Gisborne Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437

Disclaimer

Like this? Share it...

Related Reading

Leave a Reply

Your email address will not be published. Required fields are marked *

For security, use of Google's reCAPTCHA service is required which is subject to the Google Privacy Policy and Terms of Use.

I agree to these terms.