My pub business brings about Sh150,000 monthly but I’m unable to pay my bills or save

Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant

There are many reasons why businesses fail to realise their expected profits. This may be due to underestimating the expenses, lack of a clear distinction between personal and business money, internal fraud, inaccurate billing and sales collection and untracked credit sales.

To identify the problem and properly manage and grow your business, you need to keep timely and accurate records of your transactions. Since you are dealing with consumer goods, calculate your sales, expenses and profit at the end of each day.

If you do not have a process of managing your stock and recording all your sales, you need to set one up. You can do so by purchasing a Point of Sale (POS) system that handles your receipting, sales and stocks management. Ensure that what is in the system tallies with what is at hand. You can do this by having a daily count of physical stock to verify what is in your records. You also need to ensure that the sales indicated in your system tallies with the actual sales made (cash at hand, bank credits and mobile money receipts) for the day. In case of a discrepancy, you need to investigate and resolve it at the earliest instance.

Once you have verified that the records in your system agree with what you have in hand, you can apply the funds received. An easy way of managing your funds without misallocation is to have different bank accounts for your funds. You can then use percentages for allocating your sales.

For example, you could determine that 70 per cent of your sales goes to your stocks account for re-orders; 10 per cent to your fixed costs account for paying rent, salaries, electricity and other fixed expenses; five per cent goes to taxes and 15 per cent is profits. You can then open accounts for each expense line.

If, in a given day, you make sales of Sh60,000 for example, you will transfer Sh42,000 to your stocks account, Sh6,000 to your fixed costs account, Sh3,000 to your tax account and Sh9,000 to your profit account.

You can either fund your personal expenses from the profits account or better still, pay yourself a monthly salary. If you keep managing your funds this way every day, you will find that at the end of the month, you will have funds to pay for all your expenses and you some to save and invest from your profits account.

If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered here.