Post by Eeliffee Garcia

Are your business profits low? It is time to look into your accounting to evaluate performance.

There are two major business expenses that can dent your profits; inventory and payroll. Keeping adequate control of both expenses will keep your profits in good shape.

For a small business such as a retail shop or restaurant; their inventory includes all items that you purchase for resale. That includes all the shipping costs along with any other costs associated with the whole process of getting the items to your shelf or restaurant kitchen.

For example, in the restaurant business it is NOT easy to have adequate control over inventory without the use of technology. It is important for a restaurant to have some sort of inventory management/POS system that can count for every item of food before it is cooked, count plate portions and number of plates being made along with the selling price for each plate. This will generate reports that will allow the business owner and the accountant to make important business decisions. Without the use of technology or by not having a professional look at your numbers the restaurant could be losing money on wasted food and/or other inventory.

A good accountant or bookkeeper will help you analyze your transactions by creating financial statements and interpreting these statements to you which in turn will help you make vital decision for your company. There are formulas that are used to evaluate inventory and sales performance such as the Inventory Turnover Ratio or margin on sales. These analysis will help you better price your product/service, help you buy the best quantity of inventory, and help you reduce inventory costs. A business owner or manager must not forget that not only are inventory costs are important but that administrative and operation costs should also be considered when evaluating your business. You don’t want to have high inventory costs and high administrative/operating expenses. Speak with your accountant to discuss your inventory to see if there are any improvements to be made.

My advice for your small business is the following:

  1. Use technology to keep track of inventory.
  2. Count every item
  3. Don’t over or under stock
  4. Research different suppliers and negotiate price
  5. Train your employees well.


If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | | 956-466-4503 in Brownsville Texas.


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