Cost-saving StrategiesThink strategically!
Planning and implementing cost-saving strategies can seem easy enough, pinch a penny here, pinch a penny there… but what you end up doing is nickel and diming your business to death without considering the repercussions. This ends up leading to zero changes that truly impact the business and subsequent bottom line.
In addition, you get disgruntled staff and a generally poor environment to work in, which then means unhappy customers and ultimately lower sales, and so the cycle continues.
Think strategically! Cost-saving strategies should be initiatives looked at frequently, and given careful consideration when implemented. They should be planned for, but not implemented based upon panic or fear. What usually happens is a monthly financial statement comes out, or worse the annual statement has come out, and nothing has been reviewed since the prior year!
Many owners miss the opportunity to take things one step further.
Ownership reviews sales and expense categories to determine what’s working and what’s not working. While this traditional method works very well for labour as a percentage of sales, and a few other categories, many owners miss the opportunity to take things one step further. Items that get lumped into a statement, or don’t show up at all, need to be considered. What doesn’t show up on a statement you ask? Efficiencies! Processes! Staff retention strategies! By effectively managing your processes and looking at how things work, you will see cost-savings occur as a natural by-product.
Encourage Staff Feedback
Over and over again, owners miss streamlining and creating an opportunity to foster an engaging environment where all staff ideas are listened to and in fact welcomed. Most of your staff has brilliant ideas that lead to money-saving initiatives. They can clearly explain from an operational perspective what is and isn’t working in your business. That’s because they are there every day.
Each employee, whether in a pub or liquor store, has only one of two job roles in my opinion. They are either hired to make money (retail sales clerk, servers, bartenders, and marketers) or to save money (prep cooks, bussers, accountants, stockperson, and human resources). Regardless of official job title, pay scale or hierarchy in a company, each person is equal when looking at cost savings. Each employee has a unique perspective and opinion that can significantly impact a company’s performance.
We all see many articles geared towards our sales people, covering topics like how to get your staff motivated to do more and sell more. Many owners will review their monthly financials and make decisions to lower their controllable costs, like labour.
Then, if possible, they increase margins. We all know the drill. What seems to be missing from a lot of establishments I visit is the lack of questions being asked from ownership to their employees who are inside and active in their businesses every day. This includes those staff that work in the store or pub and those at head office.
Each employee has a unique perspective and opinion that can significantly impact a company’s performance.
I had the opportunity to work with a head office team that owned pubs and liquor stores. Ownership was looking at ways to grow their revenue and business. We sat down with various team members including their bookkeeper, because she kept inquiring about bank fees. Each time she questioned the owners about this, she was given a reasonable explanation that everyone has bank charges. The bookkeeper was doing her job, but ownership wasn’t really listening. The bookkeeper would record the charges as an expense and move on. Ownership didn’t notice how high the charges were because it was lumped in as bank fees and interest on a statement. Through the review process, we asked their team to come up with cost-saving strategies. The bank fees were something the bookkeeper was attuned to, so she took the opportunity again to ask more questions. It turns out the business was on a per transaction plan with the bank. All they had to do was increase their set monthly fee to their average transaction range. The overages of transactions were significantly reduced. This saved thousands of dollars to the company. The company now reviews transactions twice a year and holds their bank and payment providers accountable for their fees. Simple questions led to significant savings for this company.
Review Training Needs
Another great example from this company’s review was its retail store procedures. The person in charge of ordering didn’t know how to use the software within the till system correctly. Ownership couldn’t understand why the shelves were bare. Every week, orders would be placed and inventory would show up. Mark-up on product was fine and sales were average so everything appeared to be good enough from the owner’s perspective. However, when we looked at how the orders were being placed, it turned out that no analysis was being done of the prior week’s sales. Par levels within the store were also not being taken into account. It was a simple correction to make to staff training. By ensuring proper analysis was done and par levels were checked, the employee was happier because her job was much easier. Receiving inventory was streamlined and labour costs ultimately went down. An added bonus was the store was full of the correct inventory and sales ended up increasing. This was truly a win-win situation.
Teams that you create to operate and grow your business are your most important asset. They are the ones protecting your business investment. Engage them and ask questions on how the business can do better. Once all of the information is gathered, decisions become easier on how to effectively make change and grow your organization.