Saturday, November 12, 2011

Five Ways to Simplify Your Life As a Small Business Owner

Most small business owners decided to start their own business because they believed it would allow them the freedom and flexibility to set their own schedule, make their own decisions, and only work as much as they wanted to. They might have thought that running a small business would give them more personal time and the opportunity to explore other activities outside of work. However, the nature of running a small business is such that most small business owners quickly discover that their business is controlling their entire life, and that they are working much harder than they ever did at any previous job. This is why it is always crucial for business owners take a step back and consider ways in which they can simplify their lives, practice better time management, and be more focused on the issues that are truly pressing at their business.
Here are five tips that will help you if you find yourself in this predicament:

1. Quit Sweating the Small Stuff
Don't let the minutia of owning and operating a business get in the way of you working effectively to achieve larger goals. While the small details of your business are certainly important, you can't let them hold you back from the more large-scale projects and tasks that you must accomplish. The lesson applies to perfectionists too: you will either have to let the small details and problems wait, or you will need to expand your staff to take care of them for you.

2. Set Concrete Goals
One way to deal with the issue of having too many projects to deal with at the same time is to set concrete goals and follow timetables. Once a week on Monday mornings, or every day - if necessary - write down a list of the goals you hope to accomplish that week or day. Keep your goals realistic.
Remember how much time you have and who is helping. No matter what issues may arise, ask yourself a few times every day, "Am I doing what I need to to accomplish my goals for the week?"

3. Stop Planning, Start Doing
There is at least one new study, blog entry, book, or Podcast published every week to help small business owners achieve success. Especially when it comes to small business marketing - a rapidly evolving and expanding field - it seems like there is way more information out there than any small business owner could feasibly comprehend and follow. This is why it is more important to take a look at what has actually worked to produce money for your business, and to use this knowledge as your own framework for success. You know your own business better than any author does, no matter how reputable they may be.

4. Allocate a Certain Amount of Time To Your Personal Life Every Week
No matter how pressing the issues confronting your business may be, there is nothing more important than your own health and happiness when it comes to running a business well. Balance is extremely important. If you are feeling overworked, exhausted, or overly stressed out, your emotions might begin to affect the way you work and the people with whom you work. There is nothing worse than snapping at a staff member or a customer because you aren't tending to your own well being. Give yourself a certain amount of time every week to spend with people you love, or doing the things you love, to help clear your head from all the work-related stress.

5. Make Your Workplace Your Happy Place
Regardless of how much you choose to follow the preceding four tips, the fact remains that, as a business owner, you will be spending a very large portion of your daily life in your workplace. This is why it is crucial to make sure that you enjoy your surroundings as much as possible. Hang up pictures of the people you love, bring some of your favorite or most sentimental pieces of art from home, or decorate in whatever other way makes you feel comfortable and at peace. Buy yourself a comfortable chair or invest in a nice sound system to play your favorite album (if the nature of your business permits it). Personalizing your work space and making it somewhere you like to spend your time will reflect in your work ethic and attitude more than you may realize.

Tuesday, November 8, 2011

Tracking Your Prime Cost? Good, Just Make Sure You're Calculating It Right

One of the most important and telling numbers of any restaurant is its Prime Cost.
Prime Cost is the total of food and beverage costs plus all payroll expenses including wages paid to management and staff and payroll taxes and related benefits.
Prime Cost is a key indicator of a restaurant's profit potential and how well management is managing the restaurant's biggest and most volatile costs.
Generally accepted industry rules of thumb tell us that in tableservice restaurants the goal should be to keep Prime Cost at or below 65% of sales. QSR or non-tableservice operations should aim for a Prime Cost is 60% of sales or less.
When Prime Cost exceeds these percentages by more than a point or two, it usually becomes a real challenge for any restaurant to make a sufficient bottom line profit regardless of the other expenses on their P&L.
Some independent operators may not be getting an accurate reading of their Prime Cost because of the way owner's compensation is handled.
When calculating Prime Cost, the owner's compensation should be included in management payroll only if the owner is actively working in the restaurant and the amount of compensation does not exceed 4% of sales.
If you own a restaurant but have a GM manage the daily operations, don't include your compensation when calculating Prime Cost
For owners who perform the duties of a GM and/or chef, first see if your salary exceeds 4% of sales. If it does not, don't do anything. If it does, take the amount that exceeds 4% of sales out of Prime Cost.
Reason for the 4% amount is this. In general, GMs or chefs are not paid more than 3%-4% of sales. When a restaurant is very profitable, working owners may pay themselves more or even much more than 4% of sales so including all of their compensation in Prime Cost can cause it to be artificially high in comparison to other restaurants.
If applicable, reclassifying some portion of owner's compensation out of Management Payroll should give you a better number for comparing your Prime Cost to industry averages and rules of thumb.

Have a profitable week!  Jim Laube & Joe Erickson