Monthly Archives: September 2015

Why Counting Your Chickens Before They Hatch Is A Good Idea

September, 2015

Counting Your Chickens Before They Hatch“Counting your chickens before they hatch” is an idiom that’s thrown around a lot in day to day conversation. Little do people realise its relevance to business strategy. In a nutshell, it means to ‘plan how you’re going to utilize the good results of something, before those results have actually occurred.’

A University study was done in July this year on the failure rate across multiple business industries and the attributed reasons leading to them failing. The number one cause of failure for 46% of those businesses surveyed, was found to be incompetence as a result of lack of planning. This figure certainly should be ringing some alarm bells. (1)

In the graph below you will notice that 55% of service businesses were still operating after four years. Whilst this isn’t the highest statistic, it certainly sheds some light on how easy it is to steer your business down the wrong avenue if your susceptible to leaving your business ‘planning’ to the last minute.

Any uncertainty about your business should be backed up with data and statistics that help you to define and measure what it is you’re uncertain about. As a result, this enables you to make more accurate decisions; and managerial decision making can then utilise this statistical insight to steer your business in the right direction.

You should be making basic plans in advance all the time. Reviewing and refining them on a regular basis will ensure you are as prepared as possible for future success.

If you haven’t already you should be thinking about investing in business planning software. goRoster gives you access to all your past roster data and financial information in order to help you streamline those important business plans. Check out some of the financial features goRoster has to offer over on the features page. 

(1) Business Failure Rate By Industry – www.statisbrain.com/startup-failure-by-industry

4 Key Metrics For Successful Hospitality Business – Part 4

September, 2015

Metric #4 – Wage Cost vs Turnover

The final metric in our series is the Wage Cost vs Turnover which is often expressed as a percentage (the Wage Cost Percentage).

photo-1431499012454-31a9601150c9Most hospitality operators are aware of this measure and, more often than not do take note of it, although this is more commonly examined after the game has been played.

We’ve spoken previously about how important we think it is to examine the Wage Cost Percentage not only after a week has been worked (a lag measure) but also before the rostered week has begun (a forward measure).

However no matter how you arrive at your number, there is one vital factor that we often find some operators fail to understand;

What happens when your Wage Cost Percentage is too low?

Whilst it’s a fantastic achievement to get your costs down, the fact is that if your wage costs are far below industry norms it likely means that your business is providing bad service.  In many cases very low wage cost percentages can indicate that your staff are simply not able to cope with the workload.  It also means that some of your customers may not return.

So we recommend working hard on planning and efficiencies to keep your Wage Cost Percentage down low… but not too low!

4 Key Metrics For Successful Hospitality Businesses – Part 3

September, 2015

4 Key Metrics For Successful Hospitality Businesses Metric #3 – Estimates vs Actuals

You’ve got your plan in place.  You’ve checked the weather, looked at the odds of the local team smashing the visitors and even dropped into your local competitors and checked their latest offering.  In fact you’ve never been more convinced that an outstanding weekend of massive fiscal success lies ahead.

Yet come Monday the anticipation of triumph has waned.  The turnover figures bring you back to earth with a shuddering thump. What went wrong?  After all that planning effort why are we out of pocket by so much?

Estimating turnover is one of the most difficult things to master when running a Hospitality business.  In our last post we discussed some of the many things to consider when estimating your own numbers.  Experience has shown us that, even with the best possible laid plans, sometimes it just goes completely wrong.  Why?  Because many of the contributing factors are completely beyond your control.

The trick to mitigating these situations is simple; Good old fashion diligence.

As a hospitality operator you must measure and understand what caused the difference.  Knowing what went wrong and why will only serve you well for future planning.  Failure to measure and acknowledge why your plans went awry will only lay the groundwork for further future failures and financial difficulty.

Estimate. Execute. Measure. Repeat.

If you missed out on reading Metrics #1 and #2, pop on over to the business section of the blog now and take a read.

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