That’s a title we can all get on with right? Who doesn’t want to save money in their business? Knowing where and how to save money is easier said than done but there are ways to save money that will be staring you in the face each and every day that you are in your bar.
Finding ways to save money is just as important as finding ways to make money. We are always looking for those new ways to bring in that extra bit of revenue in our businesses but not everybody puts that same level of thought and action into actually cutting costs in order to work efficiently.
When I say cutting costs I am talking about responsibly cutting costs. There is absolutely zero point in cutting a cost if it means that you are diluting the quality of your product and the experience that your customers have in your venue. Anything that you do to cut your costs needs to be well thought out and considered. There is no point in cutting a cost if it means that a reduction in turnover is a knock on reaction. That’s just false economy.
What we are here today is to discuss how to reduce your costs and to look at ways to work efficiently. Get these things right and you will be on to a winner. All of those new revenue generating ideas that you’re putting into practice, you will make a lot more on the bottom line if you’re not wasting money through inefficiencies and a poorly executed delivery of service.
Here are some easy ways to the question of how to save money in your business that you can start doing right now!
Easy right! We all understand this concept right? You’ve bought a product to sell. If you waste it, you can’t sell it! Do I need to go on? OK, let’s expand on this a little. When we say wastage in the context of bars, pubs and nightclubs we think about wasting drinks whether that is through spillages, over pouring or even just the classic example of a customer ordering a drink and then telling you that the drink you served them wasn’t what they ordered…you know what I’m talking about right? Frustrating!
You have to keep your wastage in check. You must set yourself and your staff some tolerances for what is an acceptable amount of wastage per day, week and month. If you don’t measure and benchmark your wastage then it can spiral out of control quicker than you will realise.
This isn’t an article about stock control but I will touch on the concept of daily stock checks or ‘line checks’ so that you can be identifying daily where you may have a wastage problem so that you can react upon it and get it under control. Managers should be aware of their losses daily including those losses caused by waste. I have always promoted an approach to wastage that is for staff to feel comfortable at highlighting wastage issues immediately. If the staff member doesn’t notify their supervisor or manager of wastage then it can easily go unrecorded. If the supervisor or manager doesn’t know that the staff member has had a wastage issue then they cannot help to rectify the issue through some spot training or extra help later on.
If a staff member spills 5% of 25ml shot of vodka every time they pour then how long before they’ve wasted an entire shot? Well, this is just simple mathematics…for every twenty pours they will waste an entire shot. How long before they’ve wasted an entire bottle? I’m sure you’re seeing how quickly this can escalate…and that’s only if you’ve got one staff member wasting 5%…
Reducing wastage comes from other areas than just spillages…what about date checking? Expired products cannot be sold, so, they’re now wasted! Faulty lines and equipment leaking your products…wastage.
Look around at all the places in your business where wastage could be occurring and check your systems and control measures. How are you recording wastage from spillages? How are you checking your equipment and how often? How regularly are you rotating your stock and checking dates? Ask yourself these questions and put the control measures in place and maximise on your stock and you’re beginning to answer the question of how to save money in your bar.
Get Better Prices for Your Goods and Services
It’s all starting to look pretty obvious isn’t it? It’s another concept that we all understand all too well. We do it every day in our personal lives but believe me, not every owner or manager is focused enough on getting the best prices for their goods for resales.
Negotiating better prices is a skill and not everybody is good at it…I’m not having a go here, it’s just the way it is. I’m not here to teach people negotiating skills (maybe in another article) so I’ll just get back to the main content. If you are not content with the prices that you’re getting from your suppliers then you have every right to discuss where reductions in cost price can be made. This is usually done on items that you sell at high volumes. These are where your suppliers are most likely to be more willing to make you a saving. And remember, don’t think of the reduction per unit as the saving. Think about the overall saving in bulk across a period of time. Small savings may seem worthless until you start to look at the big picture.
Speak to other suppliers, play them off each other. Get the best prices you can get through your suppliers and you’ve got another sure fire way for how to save money.
Test Your Marketing
I bet that this is the one that the majority of people will not be doing as effectively as they ought to be. But that’s ok, that’s the point of this article.
What does testing your marketing actually mean as a way for how to save money? Think about all of the marketing and promotion that you do in your business each and every day. Think about how much money you are spending on this. Then ask yourself, “How am I testing the return on investment for each piece of marketing and promotion?” If you can’t answer this fully then how are you rating your ROI (Return on Investment)? How are you judging the success of that particular promotion?
If you are testing your marketing and honing down on the most successful campaigns that you are putting out then you can begin to see what is working best and what maybe isn’t working at all. This could be anything from internet advertising through to posters and fliers. By rating the success of your marketing and only using what is working most efficiently in terms of ROI you will begin to save money. Obviously you will still be spending money on the marketing that is working but you will not be wasting any on the campaigns that do not see a return on investment. If a campaign is giving you a return then it could never be considered a waste of money.
Probably not your typical example of how to save money in your business but by doing these tests and ratings regularly on your marketing you will start to see results in both reducing costs on unproductive campaigns and also increased revenue through your successful campaigns.
Train Your Staff
There’s a number of posts on Your Bar Consultant that have covered different areas of staff training (see our blog page for these) but none of them spoke in terms of how training your staff will help you save money.
If you think about it, the better trained your staff are and the more valuable they become to you. The more valuable they are then it goes without saying that they will most likely be worthy of a higher salary of higher rate of pay. So how is this on our lists of tips for how to save money in your business?
Better trained staff will be more efficient. Simple as that. Here’s an easy example to get your head around the concept. If three poorly trained staff take one and a half hours to close down your bar at the end of the night then think to yourself just how much money would you save over a year if those same three staff were trained well and it only took one hour to close down after close. Three staff with a saving of thirty minutes a day each….that is a lot of thirty minutes over a year that you’ll be saving.
A lot of times you don’t have shave a lot off a cost for it to add up over a year. Let’s just say that thirty minutes of staffing would cost you £4.00 in wages per person (just as an example, indulge me)…well, three staff being paid for those thirty minutes would obviously be a £12.00 cost. Even if you only traded for three-hundred days in a year you would make a saving of £3,600 just by shaving thirty minutes off of the end of a shift by training your staff properly. Even if you added on the cost for delivering the training to them you’d still be saving thousands across the year.
When you start to analyse how much you spend on staffing and where better efficiency could be made through better training and control measures you will most likely be able to save yourself quite a lot of money!
I never said that these would be ground breaking but they are effective. They should be the things that all of the managers and owners out there should be doing already to reduce their costs. We all want to increase that bottom line don’t we? We want to be working efficiently so that all of the hard work that goes into bringing in that revenue isn’t just spent again through inefficiencies.
Identify all of the areas in your business where you could be spending too much money and ask yourself what are the control measures in place to minimise these costs. Get into the habit of looking at these regularly and start to keep hold of that income more and more.
If you have any other examples of easy ways to reduce costs in bars and other hospitality businesses then please do let us know in the comments below.
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