Opening a Small Business - A balancing act...
So what do I mean - balance the needs of the customer - employee - and the owner? I will start with - if you fail to do this - it is just a question of time before you are out of business. Why - because if you tilt it in any one direction more than the others - either the customer - the employee - or the owner will not be satisfied - and if they are not satisfied - customers will not come - employees will find another job - owners will not continue investing time and money. It’s that simple - so let’s look at a simple example… Opening a Small Business - The customer… Let’s say you own a restaurant. You want to drive sales - but you still need to make a profit - so you price the menu where your food cost will be at or above 50% of your total expenses. In the simplest of terms - this means that you sell a hamburger for one dollar that cost you 50 cents. This means that you are pricing items/meals on your menu too low - but will seem like a great value to your customer - driving sales up. So you need to balance all three areas so that you can still make a profit - so either the employee is going to have to take a hit - or the owner/you. Opening a Small Business - The employee… So you decide it is going to be the employee - and the only way to lower your labor cost is to either lower wages or reduce hours. The problem is that you still have the same amount of work - and in some cases more - because you are serving more meals to more customers because of the menu pricing. You decided to reduce there schedule from 8 hours to 6 hours - and just ask everyone to work harder and faster to do the same amount of work they normally do in an 8 hour shift - and now do it in 6. Now the employee may put up with it for a short time - but guess what - they will have to adjust their life since they were use to getting a pay check for 8 hours a day - and now they have to live on 6 hours of pay. They will either have to cut their expenses - get a part time job - or they will quit you and go to work for someone else. While they are deciding to move on to a different job - they are very upset at you for cutting their hours and making them work harder - so guess what - their customer service goes into the toilet - and now your customers are upset also. Opening a Small Business - The owner… After reviewing this option - you decide that maybe you the owner should take the hit - so that the customer and the employee remain happy. Seems like the best choice at first. So you continue pricing the menu the same - you don’t cut hours or reduce pay rates. By doing this you see that now you are breaking even or losing a little money at the end of each month. Breaking even in this case means that you are neither losing money nor making money - but you are still getting up in the morning - putting in a 12 to 14 hour day - worrying about every nickel spent - dealing with all the things owners deal with - and at the end of the month - you get to load up your wallet or purse with nothing. Sounds great doesn’t it? How many days - months - years do you anticipate you the owner will keep this up before saying - I can make more money in interest doing nothing - than suffering in this way? Opening a Small Business - Balancing act… Staying in business requires that you handle the situation better all the way around - price your menu correctly - and serve what the customer wants - based on or around 30% food cost - pay your employees a fair wage based on the economy and geographical area you are in - and you the owner should expect to make a fair profit at the end of each month. Balance the needs of all three and you will be successful. Thank you! The information contained in any article provided by Good Leadership Skills on the website Leadership-Skills-for-Life.com, has not been prepared, endorsed, or reviewed by any form of licensed legal professional including but not limited to an attorney. Nothing on the Leadership-Skills-for-Life.com website should be taken as legal advice, but instead should act as a useful resource in providing general information that may be useful to members of the general public. All visitors are encouraged to consult with a licensed attorney/lawyer in all legal matters. You should not act, or refrain from acting, based upon any information on this web site. This information does not, and is not intended to, constitute legal advice.
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