Mike Michalowicz's Blog, page 45
August 27, 2019
What is Your Mission?
Our Mission is to eradicate entrepreneurial poverty.
Boom.
That’s our mission. That’s the clear and concise answer you get if you asked me or anyone on our team what our mission is.
A mission statement is more than an elevator pitch. It has to represent your business in an impactful manner – and the people behind it need to walk the walk.
Look around your business. Is your mission clear to your community? How do you share it? What is your messaging to those you serve and hope to serve? Know that mission and let those around you know it too!
The post What is Your Mission? appeared first on Mike Michalowicz.
August 23, 2019
Ports of Entry – What is Your First Impression?
Business relationships begin with first impressions. And first impressions are the longest lasting.
First impressions matter. Obviously, right? We think about our posture, what we’re wearing and how we speak. But do we always remember that in business, first impressions are the ports of entry for our clients?
What is the first thing you are showing your perspective clients about your business and what you can offer? Your point of entry may be a keynote speech, website design or voicemail. What are the ways that you utilize your points of entry to make the best first impression and stand out above the rest?
Think about it. What is the strongest representation of you and your business? That is what we should lead with when first meeting clients (and going forward as well, let’s not let ourselves go!). What are you presenting? Make sure it represents you well!
The post Ports of Entry – What is Your First Impression? appeared first on Mike Michalowicz.
August 21, 2019
It’s Not a Speech, It’s a Listen
Every speech you do – is a listen.
My friend and speaking coach John Bates and I had an opportunity to catch up during our recent trip to The Netherlands and this guy continues to inspire and motivate me.
John has been my speaking coach for eight years. I know, I make these keynote speeches look easy (wink, wink). But we all can use guidance from time to time – especially when we’re preparing to give a speech to hundreds to thousands of people to help eradicate entrepreneurial poverty!
During John’s keynote he reminded us of something incredibly important. The speeches we give? They’re actually a “listen”. Let that sink in. Speakers are just one person on stage, speaking to an audience of potentially thousands. So, who is doing more? The audience! Hopefully, they are picking up what I’m putting down, turning these keynotes from a talk to a listen. I know. Mind blown.
So remember, whether you are speaking to one client on the phone or a room full of entrepreneurs, this mindful approach can only elevate your business.
The post It’s Not a Speech, It’s a Listen appeared first on Mike Michalowicz.
August 20, 2019
Your Financial Foundation by Kasey Anton
It has been said that the restaurant business is a business of nickels and dimes – meaning that you really have to watch every single nickel and dime and hope you have a few left-over at the end of a period – called Profit. And I can tell you, from my experience working not only as a restaurateur but also by working in the numbers of so many businesses across so many industries, that this is very true.
Wine
There are so many moving parts to the financials of any restaurant that if you’re not keeping track, there’s going to be some leaks – usually quite a few. Take for example, your beverage costs. Wine costing is pretty easy as you generally just sell wine by the bottle or glass. Assuming you appropriately cost out your wine list, then you should be hitting your wine cost consistently every week or month – usually somewhere between 25% and 30%. If your wine cost comes in at 32% or higher, then you know there is an issue. Perhaps your staff is over-pouring the wine by the glass and you need to address that in a staff meeting. Or maybe your wine glasses are too large, and it makes sense to invest in smaller glasses? Or, maybe the bottle prices are creeping up on your invoices (very common) and you need to do some research and speak with your wine rep about some credits.
Non-Alcoholic Beverages
But another area that may not be so obvious is your non-alcoholic beverages. While this may not account for a large part of your overall sales, well, it’s still money, and it does add up. For example, soda, bottled water, and coffee, because they are fairly inexpensive to purchase, rarely have strong controls around them. However, if your soda and coffee costs are running over 15% or 20% – then there is an issue. Are servers and bartenders forgetting to charge customers for these items? Are you over-making coffee and pouring it down the drain at the end of a night? Are the staff over-doing it with what could be considered staff drinks? Addressing and fixing these small and seemingly innocuous tasks can really help keep the numbers strong.
How to Increase Your Profit
With so many moving parts, how do you keep it all straight? This is not a ‘one man’ job. It takes a village, as they say, and with so many things to watch over, you will need help. John Nicolopoulos, Partner at RMS US LLP, the 5th largest financial advisory firm in the US where he specializes in restaurants, says ‘Stay in Your Lane’. John offers that with increasing ‘margin pressure’ on restaurants every year, the restaurateur really must know their numbers. And that’s not to say that they should be the ones to produce their numbers. As a matter of fact, outsourcing accounting to a reliable, specialty bookkeeping or accounting firm is one of the best decisions a restaurateur can make. These independent firms know and understand restaurant accounting and will be able to present the important numbers, every week and/or month, to the owner in a way that the owner can understand and USE this important information in many ways to help the restaurant grow and be profitable.
Knowing your numbers, in-house controls, staff meetings and set protocols, and regular, physical inventories are a must. But there is another way to create a solid, profitable, foundation that also addresses the issues mentioned above (and others) in real time.
Profit First
Profit First is a cash management system that puts every dollar that comes into your restaurant to work.
Here’s How it Works
First step – open an ‘Income Bank Account’ where all of your sales deposits go. Then, open the following bank accounts that will organize, and give intention, to your money.
For example, if you know that you run a 30% labor cost, then $.30 on every dollar should be going to a Labor or ‘Payroll Bank Account’ that your payroll company pulls the payroll sweep from.
If you know your Food and Beverage costs run at about 32%, then you move $.32 of every dollar to a ‘Vendor – COGS’ bank account that you use to pay only your food and beverage vendors from.
If you know your meals/sales tax is 7%, then setup a ‘Sales Tax Account’ and move 7% over to this account and use it to pay your state sales or meals tax.
Once those direct or ‘Prime’ costs are put aside, then you’re left with your ‘Real Revenue’ balance. In my example of $1.00 above, that would be $.38. From this balance, you do the following.
1. Move a percentage to a ‘Profit Account’. (Usually somewhere between 5%-15%.)
2. Move a percentage to an ‘Owners Pay Account’. (Usually between 20% and 30%.)
3. Move a percentage to a ‘Tax Account’ used to pay the personal taxes of the Owner(s). (Usually 5% to 15%.)
4. Move the balance to an ‘Operating Expense Account’ (OPEX) which is used to cover all the overhead and other expenses. (Usually between 40% and 70%.)
Seems like too much work?
I guarantee you that it is not. The most amount of work is in setting up the accounts but that is a one and done type thing and chances are, you’re going to be setting up accounts for your restaurant anyway. In terms of allocating or transferring the Income to the other accounts mentioned, this entire process will take maybe 10 to 15 minutes a week or bi-weekly, once its setup – and it will be so well worth it!
Kasey’s Story
“In November of 1999, I opened my first restaurant in Boston. And for 7 years, we had quite the run but at the end of this run, there really wasn’t anything left. We consumed it all in one way or another. I know for a fact that if I had known about Profit First then, there would have been a much, much different outcome.”
How Profit First Can Help Your Business
Putting intention behind every dollar makes all the difference in the world. Having separate accounts for Labor/Payroll and COGS (Food & Bev Vendors) gives you a built-in budget on how to spend in these areas AND will immediately alert you if these costs are out of whack, i.e. not enough in the accounts to cover the bills/payroll, so that you can immediately make adjustments to fix. The other side of that is not knowing until your month-end financials are completed, showing your costs are too high. But by this point, you’ve either increased your payables beyond what they should be, increased your debt, or used up funds that should have been for Profit or Owners Pay or worse, Sales/Meals Tax (a slippery slope). Doing things this way creates an endless cycle of debt, getting behind with your vendors, not paying YOU, the Owner, which creates an entire host of other problems, and then not being a profitable business. And EVERY business needs Profit to survive.
Using Professional Assistance
Whatever you decide, whether to go ‘old school’ and wing it with one main account (not recommended), or you decide to do this right from the very beginning and use a cash management system that makes sense and works, just be sure to use an outside professional for your bookkeeping and accounting. With an industry as high energy and, often emotional, as the hospitality industry, having a completely neutral, unemotional, second set of eyes on your numbers can make all the difference.
If you’re interested in learning more, please check out our website at www.SparkBusinessConsulting.com where you can learn more about our services, Profit First, and our special Restaurant Bookkeeping Packages!
Special Thanks to our article contributor, John Nicolopoulos, Partner at RSM US LLP, the Fifth Largest Financial Advisory Firm in the US that specializes in Audit Tax and Consulting Services.
www.rsmus.com
About the Author
A former restaurateur turned bookkeeper turned Profit First Consultant, Author Kasey Anton is on a mission to help eradicate restaurateurial poverty. She and her amazing Team at Spark Business Consulting have been helping restaurants get started, get organized, and get profitable for the past 10 years and counting.
Favorite Quote? “People don’t care how much you know until they know how much you care. “ – Teddy Roosevelt
Website: Www.SparkBusinessConsulting.com
The post Your Financial Foundation by Kasey Anton appeared first on Mike Michalowicz.
Your Financial Foundation
It has been said that the restaurant business is a business of nickels and dimes – meaning that you really have to watch every single nickel and dime and hope you have a few left-over at the end of a period – called Profit. And I can tell you, from my experience working not only as a restaurateur but also by working in the numbers of so many businesses across so many industries, that this is very true.
Wine
There are so many moving parts to the financials of any restaurant that if you’re not keeping track, there’s going to be some leaks – usually quite a few. Take for example, your beverage costs. Wine costing is pretty easy as you generally just sell wine by the bottle or glass. Assuming you appropriately cost out your wine list, then you should be hitting your wine cost consistently every week or month – usually somewhere between 25% and 30%. If your wine cost comes in at 32% or higher, then you know there is an issue. Perhaps your staff is over-pouring the wine by the glass and you need to address that in a staff meeting. Or maybe your wine glasses are too large, and it makes sense to invest in smaller glasses? Or, maybe the bottle prices are creeping up on your invoices (very common) and you need to do some research and speak with your wine rep about some credits.
Non-Alcoholic Beverages
But another area that may not be so obvious is your non-alcoholic beverages. While this may not account for a large part of your overall sales, well, it’s still money, and it does add up. For example, soda, bottled water, and coffee, because they are fairly inexpensive to purchase, rarely have strong controls around them. However, if your soda and coffee costs are running over 15% or 20% – then there is an issue. Are servers and bartenders forgetting to charge customers for these items? Are you over-making coffee and pouring it down the drain at the end of a night? Are the staff over-doing it with what could be considered staff drinks? Addressing and fixing these small and seemingly innocuous tasks can really help keep the numbers strong.
How to Increase Your Profit
With so many moving parts, how do you keep it all straight? This is not a ‘one man’ job. It takes a village, as they say, and with so many things to watch over, you will need help. John Nicolopoulos, Partner at RMS US LLP, the 5th largest financial advisory firm in the US where he specializes in restaurants, says ‘Stay in Your Lane’. John offers that with increasing ‘margin pressure’ on restaurants every year, the restaurateur really must know their numbers. And that’s not to say that they should be the ones to produce their numbers. As a matter of fact, outsourcing accounting to a reliable, specialty bookkeeping or accounting firm is one of the best decisions a restaurateur can make. These independent firms know and understand restaurant accounting and will be able to present the important numbers, every week and/or month, to the owner in a way that the owner can understand and USE this important information in many ways to help the restaurant grow and be profitable.
Knowing your numbers, in-house controls, staff meetings and set protocols, and regular, physical inventories are a must. But there is another way to create a solid, profitable, foundation that also addresses the issues mentioned above (and others) in real time.
Profit First
Profit First is a cash management system that puts every dollar that comes into your restaurant to work.
Here’s How it Works
First step – open an ‘Income Bank Account’ where all of your sales deposits go. Then, open the following bank accounts that will organize, and give intention, to your money.
For example, if you know that you run a 30% labor cost, then $.30 on every dollar should be going to a Labor or ‘Payroll Bank Account’ that your payroll company pulls the payroll sweep from.
If you know your Food and Beverage costs run at about 32%, then you move $.32 of every dollar to a ‘Vendor – COGS’ bank account that you use to pay only your food and beverage vendors from.
If you know your meals/sales tax is 7%, then setup a ‘Sales Tax Account’ and move 7% over to this account and use it to pay your state sales or meals tax.
Once those direct or ‘Prime’ costs are put aside, then you’re left with your ‘Real Revenue’ balance. In my example of $1.00 above, that would be $.38. From this balance, you do the following.
1. Move a percentage to a ‘Profit Account’. (Usually somewhere between 5%-15%.)
2. Move a percentage to an ‘Owners Pay Account’. (Usually between 20% and 30%.)
3. Move a percentage to a ‘Tax Account’ used to pay the personal taxes of the Owner(s). (Usually 5% to 15%.)
4. Move the balance to an ‘Operating Expense Account’ (OPEX) which is used to cover all the overhead and other expenses. (Usually between 40% and 70%.)
Seems like too much work?
I guarantee you that it is not. The most amount of work is in setting up the accounts but that is a one and done type thing and chances are, you’re going to be setting up accounts for your restaurant anyway. In terms of allocating or transferring the Income to the other accounts mentioned, this entire process will take maybe 10 to 15 minutes a week or bi-weekly, once its setup – and it will be so well worth it!
Kasey’s Story
“In November of 1999, I opened my first restaurant in Boston. And for 7 years, we had quite the run but at the end of this run, there really wasn’t anything left. We consumed it all in one way or another. I know for a fact that if I had known about Profit First then, there would have been a much, much different outcome.”
How Profit First Can Help Your Business
Putting intention behind every dollar makes all the difference in the world. Having separate accounts for Labor/Payroll and COGS (Food & Bev Vendors) gives you a built-in budget on how to spend in these areas AND will immediately alert you if these costs are out of whack, i.e. not enough in the accounts to cover the bills/payroll, so that you can immediately make adjustments to fix. The other side of that is not knowing until your month-end financials are completed, showing your costs are too high. But by this point, you’ve either increased your payables beyond what they should be, increased your debt, or used up funds that should have been for Profit or Owners Pay or worse, Sales/Meals Tax (a slippery slope). Doing things this way creates an endless cycle of debt, getting behind with your vendors, not paying YOU, the Owner, which creates an entire host of other problems, and then not being a profitable business. And EVERY business needs Profit to survive.
Using Professional Assistance
Whatever you decide, whether to go ‘old school’ and wing it with one main account (not recommended), or you decide to do this right from the very beginning and use a cash management system that makes sense and works, just be sure to use an outside professional for your bookkeeping and accounting. With an industry as high energy and, often emotional, as the hospitality industry, having a completely neutral, unemotional, second set of eyes on your numbers can make all the difference.
If you’re interested in learning more, please check out our website at www.SparkBusinessConsulting.com where you can learn more about our services, Profit First, and our special Restaurant Bookkeeping Packages!
Special Thanks to our article contributor, John Nicolopoulos, Partner at RSM US LLP, the Fifth Largest Financial Advisory Firm in the US that specializes in Audit Tax and Consulting Services.
www.rsmus.com
About the Author
A former restaurateur turned bookkeeper turned Profit First Consultant, Author Kasey Anton is on a mission to help eradicate restaurateurial poverty. She and her amazing Team at Spark Business Consulting have been helping restaurants get started, get organized, and get profitable for the past 10 years and counting.
Favorite Quote? “People don’t care how much you know until they know how much you care. “ – Teddy Roosevelt
Website: Www.SparkBusinessConsulting.com
The post Your Financial Foundation appeared first on Mike Michalowicz.
August 18, 2019
How Do You Simplify Your Workflow?
When it comes to managing workflow we turn to databases and that’s great, but sometimes a simple, physical solution is just as good, if not better.
When I am in the office I’m needed for a myriad of things. And sometimes, having them placed before me is a foolproof way to get a quick task done!
I pass by Kelsey’s desk every day. (If you listen to the podcasts you know her, you love her, and probably for her awesome laugh). Along her desk are the “needs attention” items from our team. From signing books, to the amazing thank you cards we receive, to making sure a printed out itinerary goes in my bag, it’s all there. It is such a simple method, but it’s so effective and being effective is one of the main ingredients for the recipe to success.
Workflow can be overwhelming, but it doesn’t have to be. What are some of the ways you simplify challenging workflow in your office?
The post How Do You Simplify Your Workflow? appeared first on Mike Michalowicz.
August 14, 2019
What’s the Secret? What Makes Other Businesses Successful?
Ever wonder how other businesses do it? What drives their success? What’s their secret sauce? Financials aside, what makes them outstanding? Since the chances of you being a top secret super agent are slim, you may want to start with a little Communication 101.
Speak with people. In those precious few minutes we find for ourselves (like oh say, in the car en route to the hotel from the airport) we may not feel up for a chat. However, taking the time to start a conversation with new people is the best way to connect with others and discover a fresh perspective. Yes. Offline. I learned some secrets (some of which we have in common) during my chat with Erris, a driver with Blue Luxury. What makes their livery service the best?
They cornered a luxury market on the island: As the name suggests, they provide that sense of luxury which undoubtedly impresses and attracts repeat clients, and their drivers treat their clients like royalty. Example A: I got to cruise in this slick Tesla Model X. Not too shabby.
Higher standard of customer AND employee satisfaction: Teslas aside, what better way to boost customer service than to ensure employee satisfaction? We all know that happy employees equal well served clients. Erris said his manager provides a sense of ownership, which is incredibly empowering and motivating. From listening to employee suggestions for improvement to quarterly incentives – employees feel acknowledged and appreciated. That goes one heck of a long way.
Employee satisfaction also begins with a perfectly hand picked team. I see it proven daily with my own. Erris speaks so highly of his coworkers, I bet they are part of why he loves going to work. They share the same goals, humor and values which create an unstoppable team.
So I ask you, what do you implement within your business that makes you stand out? If you’re ever looking for ideas, simply speak to employees of other companies. You never know what you may learn to elevate the success of your business!
The post What’s the Secret? What Makes Other Businesses Successful? appeared first on Mike Michalowicz.
August 6, 2019
Crazy Ideas
It’s a reminder of how thinking outside of the box can truly enhance your business. I know I have asked you this recently and I will ask again – what makes you different? How are you standing out in your industry?
The post Crazy Ideas appeared first on Mike Michalowicz.
August 1, 2019
Real Revenue Adjustments and Profit First Accounts
A question that comes up for some readers is how to set up Profit First Accounts when you have a real revenue adjustment.
Not all companies require this, but if you do:
Money goes into your income account
Allocate money that is not recognized as real revenue that goes to materials and subs, and create/put it in a materials and subs account
The residual money in your income account is now your real revenue
Then you can complete the Profit First allocations based upon that
That’s the extra step that’s needed. Now go set up those accounts!
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July 27, 2019
Join Profit First Professionals MASTERY!
“The fastest path to mastery is to surround yourself with fellow masters” – Mike Michalowicz
Mastery members are the most elite of the Profit First Professionals – which is to say they are dedicated to mastering the Profit First System and providing it to their clients to deliver Profit First at the highest level.
Once a year we have a Mastery Meetup. Our members get together and share the best of themselves – which elevates everyone. Why? They’re getting the best in return!
We can’t have a meet up like this without a field trip! What better venue than a Savannah Bananas game!, If you haven’t heard of Savannah Bananas, they are a Coastal Plain League baseball team and happen to be one of the most profitable teams in the world. How? They’re different! And that difference has lead them to sell out every game in the last two seasons and land in a 78 game sell out streak. From dancing players and a break dancing coach as well as other innovative strategies, they have mastered their field. Literally.
Aside from the plain old good fun, we attended a Bananas game to witness what makes them different – what makes them masters, first hand. We gave members a behind the scenes look and the team divulged some amazing practices which we brought back and shared with our businesses.
I invite you to become a Master with us!
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