New Year’s Resolutions for Business: Five Cost-Saving Strategies for 2020
When you’re running a business, every dollar matters. The beginning of a new year is the perfect time to consider how you can save money. A great way to get started by setting clear and specific New Year’s resolutions for business.
The good news? Introducing cost-saving measures doesn’t mean you have to sacrifice offering an exceptional customer experience or stop providing high quality products and services. Instead, it can mean finding opportunities within your existing operating model to improve efficiencies.
Sometimes, cost-reducing measures require an initial investment at the outset, but over the long term, the savings can produce significant return on investment (ROI).
With the calendar turning over, right now is the ideal time to make specific New Year’s resolutions for your business. See where you can implement cost-saving strategies. Here are five ideas to get you started.
5 Cost-Saving New Year’s Resolutions for Business:
#1. Train Staff and Reduce Employee Turnover
The cost of hiring employees is high — depending on your industry, it costs an average of $4,000 to bring in someone new.
Training is often viewed as an expense that business owners want to keep down. In actuality, the real cost of not training your employees is much higher. Employees who don’t know how to properly use company resources or follow policies have a trickle-down effect on your customers and other employees.
For example, a food service worker who doesn’t know the proper processes may be costly for a business due to additional food waste or incorrect point of sale (POS) transactions. One 2019 study looking at quick service restaurant (QSR) drive-thrus found that brands are losing 29.4 seconds per transaction due to inaccurate orders, adding up to an average of over $52,000 thrown away annually per store.
The fact is, investing time and effort in training your staff so they can be as efficient as possible saves your business money in the long run. A productive employee is a profitable employee.
Employee training should be offered on a regular basis to keep everyone’s skills up to date and allow for continued growth and development. Training can be offered monthly or quarterly and focus on new systems or processes such as your POS, product information, improving sales or customer service skills, or on team building to enhance company culture.
Keep in mind that training doesn’t have to be long or complex. Even a short training session can have a big impact. Owner and Partner Fred Morgan at Fired Pie trains all new employees on a POS Hardware and has this to say about the experience: “The installation time and training with Revel is simple and fast. It’s a very easy transition and new employees get it within just a few minutes.”
Along with training, employee retention should be a 2020 goal. High-performing employees are valuable assets to your business.
Offer supplemental training so employees can take on additional responsibilities, enjoy greater job satisfaction, and stay on for the long-term. Show employees you’re willing to invest in them by discussing their career goals and opportunities for growth. Conversations like this will let them know you want them to be with your business for the long haul.
#2. Cut Food Costs
If your business is part of the foodservice industry, keeping inventory costs in check represents a big opportunity to save money.
Start with assessing your inventory control practices. Do you know exactly what inventory is coming in and out each day, what’s being thrown out as daily waste, or what’s going bad in the fridge because it’s not being used before it expires?
Your food costs are directly linked to your product inventory. Knowing these numbers is critical to determining where costs can be cut.
Items like fresh fish or meat from a butcher go bad quickly, but restaurants tend to over order to take advantage of bulk pricing. If much of this inventory is being thrown away due to spoilage, you should investigate options for how to increase shelf life. Separating, portioning and freezer packing some items may be one solution.
Another thing to consider when looking to cut food costs is fine-tuning your Periodic Automatic Replenishment (PAR) levels. If your PAR levels are accurate, you won’t end up throwing out a bunch of products that didn’t sell. Conversely, you’ll always have enough stock on hand for popular items.
Depending on which POS platform you use, you may be able to set your PAR per item and automate reordering, saving you time and money.
Also, prices for food can fluctuate. Make sure you regularly monitor food costs for changes. While a few cents on a single item may not seem like that much, when you multiply it by hundreds of items, it can quickly add up. At times, certain foods will see a spike in price due to shortages. Offering a flexible menu and having the option of temporarily removing items can help you mitigate those risks.
#3. Upgrade Your POS System
With major changes in consumer expectations — encompassing everything from multiple payment options and rewards programs to a smooth integration of food delivery — most businesses have a POS. However, when thinking about your New Year’s resolutions for business, consider what technology is the right solution. Not all platforms are created equal.
As an example, how your POS software integrates with your other software can make a massive difference in how much time is spent on the back end for tasks such as reconciling accounts. That time represents money.
If you’re not sure if you have the right POS in place, ask these questions:
- Does data from your payment system seamlessly integrate with your accounting software? Manual entry takes time and effort that could more effectively be used elsewhere in your business.
- Does your POS integrate with your customer relationship management (CRM) system to capture customer information? Does it provide customer insights that can be mined? If so, it can be used for future marketing opportunities.
If you determine your POS isn’t as effective as it could be, it may be time for a change. Don’t just consider what you need today, but what you (and your customers) may want for the future.
More and more businesses are moving towards mobile POS options. Cloud-based systems have many benefits and are offered on familiar platforms, like iPads, making it easier for customers to pay, giving you more flexibility (like operating a pop up shop at a festival), and allowing your staff to be more agile.
#4. Improve Tracking with Automation
Automation is critical to reducing business costs, as it can dramatically increase overall efficiency.
The perfect place to start with automation is with tasks that are repetitive on a daily, weekly, monthly or quarterly basis. By automating certain functions, you free up yourself and your employees to focus on other work. Automation can also have the added bonus of reducing your staffing needs, which helps to save money.
Additionally, automation can help reduce human error, which can cost your business both valuable time in fixing the error, and potentially money. Consider automating these areas:
Inventory tracking and ordering. Keep on top of inventory control and only order when necessary. This can be a huge money saver.
Marketing. Know who your best customers are and target them with upsell offers.
Invoice processing. Avoid late fees for your invoices and ensure vendors are paid on time, every time.
Time tracking and payroll. Messy time tracking can result in money lost due to loose procedures. Accurate time tracking means accurate payroll runs.
Reservations. Make it as simple as possible for customers to create reservations. Don’t worry about a missed phone call or human error.
Automated ordering kiosks. Speed up the ordering process and save on staffing costs.
Capacity and scheduling management. Let your software tell you when you need the most staffing and when you can be lean so you aren’t paying staff when it’s not necessary.
#5. Stick to Your Budget
If you want to find ways to hold on to more money, having a budget and sticking to it is essential. Managing to your budget enables you to reasonably predict your profit margins and make informed decisions throughout the year. It also enables you to be proactive instead of reactive.
Your budget should cover more than just money flow. All expenses and revenue should be accounted for line by line. Ideally, your budget should have an associated sales forecast to make planning quarterly or annually more realistic.
Money in your budget should be set aside for unforeseen circumstances, such as equipment repair, additional hiring, and increased utilities. You never know what may arise. Being prepared with an emergency fund will ensure the unexpected doesn’t wreak havoc on your budget.
Another important aspect of having a budget is that it enables you to track your performance against your goals. To ensure you’re on track with meeting the financial goals of the business, review your budget monthly to allow for adjustments. If costs in a particular area are too high, you can figure out how to bring costs back in line or make cuts elsewhere.
Make Your 2020 Resolutions
While it may not be feasible to implement all of these New Year’s resolutions for business at once, strategically choosing one or two to work towards this coming year will have a positive impact on your bottom line. Consider starting with some small, incremental changes that can be implemented quickly and then expand from there to find even more cost-saving measures.
Looking for a new POS platform that offers the latest technology, is easy to learn, and provides a multitude of features to help you better manage your business? Visit our iPad POS System to learn more about how Revel Systems can help.