Monthly Archives: September 2012

5 Fibs Business Owners Tell Themselves

Yes, I said it.  Many business owners are completely deceiving themselves.  Maybe not intentionally.  But, read this with an open mind and ask yourself, “Have I ever said this?”

Fib #1 – My Customers LOVE my Restaurant/Store/product/service.

This is what I call THE BIG ONE.  Why?  Because you know it is not true if your sales are not consistently going up by at least 15% to 20% (or more).    The simplest way that I discover this with potential clients is to ask them how many customers rave about their food and/or service; but do not come back for 6 months.  That means they only LIKE you; because, if they REALLY LOVED you, they would buy from you a lot more often.

So, if you are not getting as many repeat customers as you would like:  do some research, study your customers, and then create a little Love-Connection with your customers by targeting what they REALLY want.

Fib #2 – I’m as Profitable as I can be, given my sales

EVERY SINGLE P&L I have ever seen (hundreds of them) has, upon analysis with a well-trained eye, thousands of dollars of poorly spent cash.   Perhaps it is in poorly spent marketing dollars; or just “accepting” that your Cost of Goods Sold is a certain percentage because “that’s what it has always been.”     Maybe it is because you are not negotiating or bidding out supplies (are you still buying your office coffee from Office Max?).   Meanwhile, you could have spent that money on employee incentives, bonuses, or (be wild) paying YOURSELF.

This is why one of the first things I like to do with new clients is ask to see their P&L, and then understand how much they control their margins.  While you will never “save yourself to prosperity,” you should have tight control of your expenses.

Fib #3 – I Care about my Employees

If you say, “That’s not a lie, I really DO care!”; then you will be able to say “yes” to all of the following:

– Your employees get paid a base, plus a variable bonus (Tips do NOT count); so that they can tie their effort to the overall success of the business;

– You ALWAYS get rid of employees who have bad attitudes if they continue it after you have coached them to change; so that the rest of the team does not have morale problems knowing that you have a “double standard.”

– You hold regular weekly/monthly/annual meetings, and encourage feedback and ideas on how to improve the experience for the customer; since it is your customers’ purchased that keep your team members employed.

– You have a SYSTEM to encourage teamwork and cooperation among your employees; so that they enjoy working together and feel like part of a TEAM.

– You have clear Training Manuals and Processes; so that employees do not feel “thrown to the wolves” when they start a new job.

For those of you for whom all of the above are true, we’ll change this to “4 Fibs….”

Fib #4 –   I believe in my Offering

If this were REALLY the case, then you would be doing everything you could to get it in the hands of as many people as possible.    And, for THAT to be true, you would need to be as creative as possible in your marketing and promotions; instead of relying on Word of Mouth, or Groupons, or pictures of your food on Facebook.     There are usually dozens of ways to promote Restaurants, for example; but most owners are spending far less than they should to grow their businesses, and doing far too much discounting.

If you TRULY believed in your product, you would spend more because you knew that would help more people know about you, and discount less because you believe in the value of your offering.

Yes, I know that you may not have time to learn about unique and creative marketing tactics; but that’s why there are people like me, who have experience and constantly study it.

Fib #5 – These challenges are a “temporary problem” that will “go away when _____ happens”

If you have owned a business for more than 6 months, you know that while you are waiting for the smoke to clear from one challenge, another one always pops up.   I was talking to a Restaurant Owner the other day who gave me this exact story; but I could see in her eyes that this was nothing more than a “wish.”   The only way things will get better is taking MASSIVE, EDUCATED, GOAL ORIENTED ACTION.   Taking action is good; but not understanding why you should do one thing vs another, while lacking a clear definition of success is like trying to play Quarterback in the NFL by just throwing the ball blindfolded:  the odds are very slim that you will throw it in the right place, even if you put an enormous amount of effort into it.

I would love to hear your feedback on this.  What other prevarications do business owners tell themselves?

5 Things Most Business Owners Rarely Do…But Should

How many of you as Entrepreneurs/business owners recognize this as your typical day (having worked with a LOT of you, this is what I hear quite a bit)

Basically, most business owners are moving as fast as they can trying to get customers so they can stay afloat.  The idea of having excess working capital is a wish…a dream.  You tell yourself that, “when things get better,” you will be able to create the systems and processes that you know are important (but you are too busy to work on right now).  This may surprise you, but I even get THIS as an objection:

“When things get better, I’ll be able to work with you, Roger.”  As if a world-class athlete would say, “When I get into the Olympics, I’ll work with a trainer.”  What do you think the odds are that they will get INTO the Olympics? (hint:  pretty close to Zero).

So, I am going to break it to you gently (or, not so gently):  THAT DAY WILL NEVER COME AS LONG AS YOU KEEP DOING THE SAME THING OVER AND OVER!

It’s time for you to draw a line in the sand and at least do these 5 things. 

1.  Forecast Sales

Be specific.  Start with what you want to sell in a year, both in dollars and number of customers; break it down to quarterly, monthly, weekly, daily (and even hourly for some of you) targets.   But make this more than a numbers exercise.  Who is buying?  When are they buying?  Why are they buying what they buy, with the frequency they buy it?  ETC. ETC.

I love a quote I heard from Bob Burg (from one of HIS mentors) that said “If you miss the target, it’s not the target’s fault.”  But, if you don’t even know where the target is; you don’t even have a CHANCE of hitting it.

2.  Spend enough on targeted Marketing.

When you learn to forecast sales well; you will realize that you need to be more methodical in your marketing; instead of the blind chase most of your competitors (and maybe you) are doing.

Consider any great athlete.  If they want to be a champion, how likely is that to happen if they were just randomly running around every day for 20 or 30 minutes; hoping that…somehow..their excercise will be enough to help them be better than their competition?

Yet, I was sitting with a Restaurant Owner the other day who was complaining that “marketing never works.”  When I asked what he did, and who he was targeting; he said he had bought newspaper ads (yikes..for a restaurant?) and said he wanted to target people who wanted “great food and great service.”  (for my regular readers, you know how I feel about THAT one).

Even worse, most business owners not only do not have enough process around their marketing; they underspend.   Just to MAINTAIN your business, you should be spending AT LEAST 5% of your revenue on marketing.  To grow, you might invest 10% or even 15%.  Yes, if you do the math, that may seem like a LOT.   But, the 8, 10, or 12 hours of training by a champion athlete also seems like a lot to the 3rd place finisher.   As long as you underspend and lack focus, you WILL be the one in 3rd place; struggling to get ahead, and often wondering why your competitor gets “the lucky breaks.”

By the way, I would 100% recommend that, before you increase your spending or try targeting; do your research and learn what works, what does not, and how to test for maximum effectiveness (or, find someone who specializes in marketing, so that your learning curve is not so steep).

3. Analyze and ACTIVELY MANAGE your Costs, especially Cost of Goods Sold and Labor

This is much more than just knowing your product costs and “beating up” on your vendors to get the lowest price; while paying your team members as little as possible.  It involves incorporating your marketing, product sales strategy, and operations strategy into a cohesive plan to ensure that you are making money.  Since I work with Restaurants, my experience is that most of them throw their menu together with no strategy or understanding to how it affects either their food cost or labor expense.  So, when they are not making any money; they THINK it is just because “sales need to be higher.”

Even if you are selling mufflers, though, the concept of this integration is the same.  Sales cures a lot of ills..but it won’t fix anything if your cost to deliver more product is more than the revenue.     Or, if your marketing gets more customers, but they all come when you are at capacity already; so you cannot serve them well when they DO come (which can be bad).

4.  Recognize Positive Actions by at least half your Team – EVERY DAY

If I had a Dime for every business owner who wonders where all of the “hard workers” have gone….I’d have a lot of dimes.

Seriously, maybe the problem is not in their motivation, but in the fact that many business owners have the attitude that their “employees are lucky to have a job.”  Well, maybe they are; but what are you doing to make sure they are motivated to care as much about the business as you would like?

If all you do is continue to point out their errors and faults; eventually you build it into their heads that they need to work on “avoiding errors.”  Can you see what they are now focused on?  Errors.

Now, I am not saying you should celebrate mediocrity; but set a goal every day to find positive actions by your team and recognize them.  Guess what you do then?  You will create in them a focus on doing positive actions.  Then, even when you need to point out opportunities for improvement, your team is going to be more accepting.

5.  Get  HELP!

If things are not working as well as you had hoped, get help.  Stop doing your own website, creating coupons and offering deals when you do not understand how these impact your business and your brand, hiring people without a profiling system, etc. etc.

I talk to restaurant owners every day who, with very little experience in the business, have put down half of a million dollars of their savings in a building and equipment (because someone said they were great cooks); yet have let their nephew do their website, have designed their own menus, and let the Groupon people talk them into money-losing online deals.    Then, they cannot afford to get help because by the time they realize that they should get help; they have burned through all of their working capital and are funding a burning building out of their own pockets.  It’s painful to watch.

If you do these 5 things, I can guarantee that, in the very near future,  your business will be 100% better than it is now.  You will have more sales, more cash flow, a more motivated team, and a business that you feel GREAT about.

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Please comment below: are you doing all 5 of these?  If not, which ARE you doing, and how will you begin doing the others (PS.  if #5 is on your “to do” list, email me at Roger@RestaurantSuccessGuru.com for some ideas.  If I’m not the right one to help you, because of my Restaurant owner focus; I have an extensive list of contacts to find just the right person for you)