Monthly Archives: November 2014
Right right I know there is no business like show business, but show business and food go hand in hand. Just look at all the reality shows based off of food and restaurants and now everyone is a celebrity chef.
It is a very interesting crossroads at my life right now. In the past month I have decided to help a friend open a restaurant and within a short time after that (in the spring when it is warm) send a food truck out into the big world. I am doing what I do best, and that is researching like crazy how to get both of them off the ground and flying efficiently as possible.
Think about all the rules and regulations you have to follow for starting a business. All the tax, banking, insurance, accounting and other business related things. Then add all the extra stuff the food industry requires such as food and drink licensing, food safety training, food storage, and other food related things. Now try to start a restaurant and a food truck almost simultaneously. Could I have picked a harder option?
It will certainly be one big learning experience no matter what happens, but with all the up front preparation and investment I think it will be hard for it to fail.
For one, vendors are very accommodating because their business is competitive too and they want your business no matter what it costs them. It is a good environment to make a win-win situation for both parties involved. Besides commercial kitchen equipment everything is readily available at a good price. You can always buy food for retail at a grocery store in a pinch. Even kitchen equipment is a one time buy in which you can spend time searching for the right piece at the right price.
The markup on food is huge and it has to be. Most of your costs revolve around employee wages and food costs. The combined total of these two things are called the Prime Cost and should not exceed 70% of total revenue. They should average between 62-68% of total revenue. Rent costs are the next biggest and should not cost more than 8% with an average of 6-7% considered normal. If you own the building then this includes the taxes, insurance, etc.
I stumbled across this article entitled 10 Restaurant Financial Red Flags that has some helpful information when it comes to analyzing a restaurant’s financials.
In spending time on research I keep coming across random but fun and interesting things about food. Here are a few…
How many times can I reuse fry oil? – I thought it had to be replaced every day, but evidently not. Lots of cool science here.
Induction Cooking: Induction Cookware – I kind of knew about this already but discovering the specifics was fun. I also learned about 18/10 stainless steel here.
Have you heard of the Quesarito??? Neither did I till I read this.
Finally I leave you with this inspiring video from the National Restaurant Association…
Best Back Office Software for Small Businesses (Accounting, Payroll, Benefits, Email Marketing and More)
Ever since Square came onto the playing field a few years ago everyone has been developing great apps to help small businesses get up and running. Many new business owners have no idea where to start and often feel like they need to spend money on expensive advisers such as accountants and lawyers to get anything going. As time goes on SaaS (Software as a Service) just keeps getting better and better.
Credit Card Processing
Square started in 2009 and pretty much led the pack as far as a startup company that was helping small businesses. It was an easy way for cash only businesses to be able to allow customers to use credit cards without going through the hassle and complexity of typical merchant processing solutions. I was really amazed the first time I saw a food trucker swipe my card through their phone. Pure Crazy. Pure Awesomeness. Growth Hackers has a great write up about the value proposition of the company and why Square grew so fast.
The advantages to online accounting are many, but perhaps the most important reason to have online accounting is backup and disaster recovery. If all your books are on a desktop computer and you don’t back them up anywhere you could be in a world of hurt after something happens. If everything is online you just log on to a new computer and get going again.
Quickbooks is of course the golden standard for small business accounting, but many new players are coming into the field including Xero, their closest competitor as far as market share goes.
I think Expensify is the best thing out there since sliced bread. It was just a matter of time before someone said, “Hey, we can take pictures of our receipts with our phones, and use technology to scan them into a database and forget about all that dumb manual entry stuff.” In my previous business I spent a lot of time sending my accountant pictures of my receipts, and I am not actually completely sure whether he used this or manually entered it. I imagine he did it manually. For $5 a month this is a complete no brainer must have.
I am currently helping someone start up a restaurant and one of things she was most worried about was doing payroll. She found service to do it for $65/month which involved sending paperwork and other essentials to this company. I advised her by saying that payroll is fairly easy and we should do it ourselves because it is a very critical aspect of the business to keep an eye on.
Well here I go surfing the internet and find a great little company called ZenPayroll that would require about the same amount of work or less to outsource it and it only costs $25/month. Plus the cool thing is that employees can “onboard” themselves. This means instead of having them fill out paperwork and then reentering all their info they just go online in the first place to enter their information. Genius! Let’s go paperless baby!
With the new Affordable Health Care Act everyone is scrambling to get in line with the new laws and regulations. Many companies are deciding not to hire simply to stay below the threshold that requires you to pay health insurance for your employees. Along comes a company called Zenefits that makes the whole benefits sign up pain and hassle free and does it completely free because their benefit providers pay them commissions to keep the lights on. I think it is a win, win, win situation for everyone and worth checking out.
CRM (Customer Relation Management)
If you have clients, you need a good CRM system. End of story. I used to have a manila folder system that worked well for me, but I had a limited number of potential clients (schools), and I used calendar reminders to follow up. I guarantee you my lack of a decent CRM program caused many opportunities to fall through the cracks. I read on Forbes that having a CRM increases sales by 29%. This probably is completely random statistic but I am sure the better organized you are the better.
Surprisngly there are about a billion CRM solutions out because presumbly everyone thinks they can build and awesome database. Well most people are completely wrong. I searched around and can’t really recommend any particular one, but Capterra came up with 9 cheap and easy to use CRM solutions that can work for you.
Social Media Analytics
The only reason I found out about SumAll is because they have Square integration. That is pretty important if you are running Square. If not, the service is still free to connect social media analyatics with your sales number.
Like CRM, there are a ton of options when it comes to managing your social media. Hootsuite is free and is probably the best one to use if you are just getting started. You can see all of your feeds and post to all of your social networks at once. But the real magic happens when you setup your software to automate you posts.
I save this one for last because it might be the most important thing you can do for your business. If you aren’t capturing emails of customers these days then you simply aren’t doing the business the way you should. All I hear from the marketing gurus online is that email marketing is where the money is it. And you know what? It is very true.
At the end of the day a customer might need contacted or touched in some way a total of 7 times on average before they buy from you. This is new customer acquisition but the same goes for encouraging repeat sales. Good copy makes people buy, and you can never get that copy in front of people without an email list. Speaking of copywriting, if you have no clue what it is, then stop everything you are doing right now and google it! It is that important!
Again, there are many programs out there to setup email campaigns but Aweber seems to be the best overall pick of the bunch. It helps that they are one of the oldest of the bunch as well.
I have spent a lot of time trying to find out more about Marcus Lemonis’ personal story. Finally I found a speech he gave to an Inc 5000 conference. They titled it…
The key question I wanted answered was how did he even start Camping World. The usual snippet story is that he was an orphan from Lebanon who became the son of someone who was in the car business. His extended family owned a rather big car business, and that Lee Iaccoca was a family friend. Presumably this story makes it sound like his family helped him out a ton.
Listening to him tell his story you quickly realize that his family only indirectly was responsible for his success. The real story is that he ran for a Democratic office when he came back from college and his grandfather was a Republican so for embarrassing the family he fired him and wished him luck.
He eventually did lose the election but someone told him that if he ever wanted a job he should give him a call. That person I believe was Wayne Huizenga, owner of AutoNation. If it wasn’t Wayne himself, he eventually connected with Wayne.
They eventually asked him if he wanted a promotion and he said yes, of course. They requested that he help them buy his grandfather’s car business. He eventually pulled it off, and was additionally told to fire all the slackers. He pulled that off too and eventually let slip in his story that he made it to a point where he was pulling in $900k a year in the car business!
Wikipedia puts it this way…
“Starting in 1997, Lemonis held several sales and managerial roles for AutoNation. From June 2001 to February 2003 he served as CEO of Holiday RV Superstores Inc. Following that, he co-founded a company called FreedomRoads and began acquiring RV dealerships. In 2006, the company merged with Camping World with Lemonis as CEO, then in 2011, merged with Good Sam Enterprises, Lemonis again at the helm. Lemonis attributes Camping World and Good Sam’s success to the three P’s: people, process and product.” Source: Wikipedia)
2003 to 2005 was a very intense period for Marcus. He pooled his own money with some other investors to start the company Freedom Roads, Inc., then used $400 million in bank loans to speed up acquisition and consolidation…
“So, in 2003, Mr. Lemonis pooled his money with funds from several investors and started buying up dealerships, consolidating them under one banner — a practice he says helped “legitimize” the industry.
The idea was to make RV lots look more like car dealerships, such as Florida-based AutoNation, where he worked from 1997 to 2001, rising to regional manager in charge of 65 stores in 11 states by age 27.
Using multiple bank loans, Freedom Roads spent $400 million in June to expand inventory at all its dealerships and push the company to the $2-billion mark in annual sales. It’s now at $1.4 billion.” (Source)
Pretty much the main conclusion I can come to is that the old sayings go with business. “It’s not what you know, its who you know.” “It takes money to make money”. My own saying is,… “If you wanna play with the big boys, you gotta join the big boys club.”
Marcus certainly learned many lessons on the road to success. His success at AutoNation bred more success and each experience helped feed the next. The key in his life was getting noticed by the right people. Some would call him lucky, but he himself says that he is simply blessed.