Mike Michalowicz's Blog, page 48

Seal Training

The foundation of our physical and mental health is exercise. I run not because I love it, but to stay in shape and bring my A game in the rest of my life – including my business.

One day I learned a little lesson that can be applied to running our businesses. I was running through Coronado and saw a group of women gathered near the waterfront – and it looked as if they were looking at me. Man, I must have been bringing it! No Mike. As I turned around I saw another group – The Navy SEALS.

Many of us are health conscious, but the SEALS? Pretty tough to beat. They ran by me, their steps in unison, drawing cheers from the women watching. I kept running, but man, talk about setting the bar high.

There’s a business lesson here. As an entrepreneur, there may be others working better or harder. One of the ways to continue to better yourself and your business is to train. Build healthy, simple habits to increase your health as well as your profitability.

It doesn’t have to be complicated. Remember to check out www.Mikemichalowcz.com for more tools to keep entrepreneurship simple.

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R&D – What’s Your Competition Doing, Anyway?

How do you stay above the fray in your industry?

One answer? R&D – Research and development, otherwise known as rip off and duplicate. Ok not exactly, but what lessons can you learn from how other businesses operate?

A critical device to stay ahead of your competition is to observe how they succeed, as well as fail. What do they do that is remarkable and truly effective? What are some pitfalls? Learn from them and utilize those strategies in your business – in an integral way, of course.

What kind of R&D are you doing? Research how your competition is performing and what their strengths are. Check out their websites, attend their conferences, speak with them. A fresh, innovative and competitive approach can only empower your business.

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Reset Your Mindset

Health, wealth, love and happiness. This is my morning mantra.

I share this with you because as entrepreneurs, we are always on the go. But there has to be a balance. We need to have some moments to get centered, reset our minds and get laser focused on where we want to put forth our energy.

I find the most successful entrepreneurs serve others and the world. I’ve also noticed one of the tools used in that success is practicing a ritual to begin their days. Maybe yours is meditation, exercise or even journaling. Whatever it may be, a morning ritual gives you an opportunity to set your intention for the day, and that my friends, can create a very powerful impact on you and your business.

While traveling in India, I discovered (ok I didn’t discover them but it was new to me) singing bowls, which are traditionally used in meditation and personal spirituality. I brought a few home for me and those close to me and began to use it as a tool to meditate. Now I don’t know about you, but mediation can be tricky for me. It’s human nature for stillness to feel challenging. At times it’s downright impossible to shut off our monkey brains, feelings and the rotation of to do lists. When you strike the singing bowl, it feels like a call to pause. The beautiful sound of the singing bowl somehow clears the air, sending out the vibration of the bowl, along with your attention – and intention, out into the world.

So again, health, wealth, love and happiness. This is the intention I set. I say this for myself, my wife and children, extended family, business partners, my colleagues, community – really, the whole world. Including you. Even if subconscious, your intentions you set will manifest throughout the day.

How do you start your day? Consider resetting your mindset to have the most positive impact in your life.

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Recognizing Your Clients and Members

While I was in the green room with CEO Warrior I saw these amazing belts that are given out to their members. Some people even become members for life!

So it got me thinking – how do you make your clients feel recognized?

Client recognition goes a heck of a long way. Universally, it’s nice to do nice things. We do it here as well. From birthdays to life events, we try to acknowledge milestones in our clients’ and coworkers’ lives.The benefits are awesome all around.

TPsych 101 again – recognition promotes a sense of well being to the client as well as the business providing that recognition. Now we’re all smiling.

Secondly, clients see you care beyond the dollar. Going that extra mile creates a unique culture of appreciation, trust and loyalty that strengthens client relationships. This can facilitate clients communicating more with you, therefore allowing you to serve their needs better. Win win!

 

So think of some actions to take to grow your business relationships through a simple act of recognition. It takes just a little time, for a great reward.

 

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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!

 

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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!

 

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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.

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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

www.cafcoconstruction.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.

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?

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