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[Rick Braa]Plan and Forecast
Acclaimed restaurant consultant Rick Braa took the time to host a comprehensive webinar on financial strategies and tips to make use of during the coronavirus crisis. In part four, he went over the importance of planning and forecasting your operations expenses.
He broke down these plans into three general goals, the first being to protect your cash reserves.
“Cash is king,” Braa said. Cash cannot be allowed to be drained out , so you need to forecast for the next three months, line-by-line, then estimate the following three — look as far as March.
“For the next three months you should be more detailed in your forecast,” Braa added. “You’ve got to protect cash. Back to making sure you’re making money before you pay rent.”
You should also adopt a forward-looking, offensive management style, Braa said, the key being to create results that you want, not simply letting them happen. This allows you, he noted, to dominate your costs while forecasting.
In that spirit, you should also run your business forward by anticipating expenditures and building a habit of forecasting. Braa said that all manner of strange happenings have occurred and can occur to operations big and small, from ice machines and walk-ins breaking down to computer failures. Forecasting allows you to set aside resources to deal with these unexpected expenditures.
Braa recommends a habit of forecasting by day and eventually by hours. Evaluate your hours, as they shift dramatically at times and there’s a lot of uncertainty about what the school season and winter will bring. There may be great opportunity ahead.
Discuss your forecasts with your team often. Do not build inventory, because nobody knows when the next shutdown may come, if it comes. Only order what you need, keeping in mind your vendor’s expenses and those expenses can go up.
“Be nimble and pivot,” Braa said. “If there are adjustments, make sure you use the work-share program for the state or furlough or reduce down to a limited service if you need to. Be nimble and pivot, that is the key to all of this.”
Planning and forecasting these potential pivots will be instrumental to your success. Make sure you have contingency plans.
Meet with your vendors, get an understanding of their capacity and what they see coming. Their forecasts can be among the most helpful things you can learn. There have been shortages of certain meat cuts and, if you have a good relationship with your vendors, you could pivot to different cuts of meat. Work with vendors in anticipation — because they know what’s coming, their supply chain is much further out. Working with them to make sure you’re covered is going to be key.