By the time you read this, you’ll probably have done a lot of catering business in 2016. My first bit of advice is to enjoy the business you’ve done thus far and prepare for a huge year moving forward.
But I truly believe there is never a bad time for a catering evaluation. Sometime before the end of the first quarter, take a look at where your business stands. Did you have a good year in 2015? How is 2016 going so far? Are you optimistic about this year’s prospects? Do you still like what you are doing? This is a great time for a thorough company analysis as you try to put yourself in the best position for 2016 success. Following are some things you should consider:
Costs
I’ve always said that one of the first things entrepreneurs learn is that everyone wants your money. The minute you get your website up and open the door you are contacted by accountants, lawyers, trash services, laundry services, Internet marketers, linen companies, and more. Some of these purveyors will win your business and every month you’ll send money to them. Now is the time to make sure that these costs are not excessive.
The multiplier
What I call “the multiplier” is sort of like what my parents called “the magic of compounding interest.” Look at the cost of a plastic tray, for example, count how many you use per day, multiply that by the business days in the year, multiply that by the cost of a single tray, and you will know how much money you have spent on trays. Therefore, 12 trays per day x 250 days @ $1.95 per tray = $5,850. If you can figure out a way to use four less trays per day, you will have $1950 more in your checking account next year at this time.
Categories
While some of your costs may be fixed—like rent and car payments, for example—many are controllable. We’ve already done the math, and I’m sure you now understand the concept. Simply, attention to detail in all areas will provide you with more cash at the end of the year. Look at payroll, linen, trash removal, accounting fees, of course food and any other P&L line item you think can have a significant impact. If you do $600,000 per year, even a one percent savings somewhere will translate into $6,000. Then, if you were short in 2015, maybe this year instead of being $10,000 short, you will find that you have another $10,000 in your account.
Be careful
Remember, however, that in the past I have warned you about balance. I am not suggesting that you throw away your apron, move totally out of the kitchen and begin to micro-manage your staff’s every move. You do need to take some time, however, to look at your costs and make adjustments where necessary.
Michael Rosman is a member of the Catersource consulting team. If you would like information about him coming to your business to address your specific needs, please email Carl Sacks at [email protected]. His book, Lessons Learned From Our Mistakes – and other war stories from the catering battlefield is available through the Catersource store. You can visit Michael’s website at www.TheCorporateCaterer.com email [email protected].
