Dante’s Inferno – Business Fixes to Put Out the Fire

Afraid to Start a New Business

Where last we left off with Dante, we were discussing the ways in which his business needed repairs, outlining all of the issues that his restaurant had. Now we will look at the business fixes that helped Dante revive his restaurant and get back to growing at a successful rate. Hopefully they will help you as well. 

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Our Business Fixes for Dante

HRA ChangesAfter diving deeply into the problems of Dante’s restaurant, we came back to him with a plan. The great news was Dante’s food wasn’t the issue. Since Dante’s financial situation was a stumbling block for additional financing, we needed a plan that could be implemented cost-effectively. Fixing a business isn’t the hardest job in the world, but it takes time and skills so we wanted to start Dante off right.

The Turnaround plan

We recommended that Dante fix his business in a few key areas:

His talent 

Conduct a top-to-bottom review of his servers outlining the specific expectations of the role. After secret dining a few nights, we had some immediate recommendations. 

    • Implement a consistent hiring process, plus a performance evaluation for servers at 1 mo., 3 mos., and 6 mos., immediately 
His product 
    • Keep the existing menu but add either a creative special or a creative evening to keep his current customers while attracting new ones. No need to fix something that isn’t broken in your business
His pricing 
    • Change the pricing on a few of the menu items, cut back a few hours, and clear a few tables. 
His Marketing 
    • Stop advertising and offer discounts for Yelp! and Google reviews. 
    • Consider using alternative forms of marketing that can be done inside the business, like through social media 

The Price Tag

This cost next to nothing to implement. There was extra management time required for the reviews, but knowing they would be reviewed by customers, immediately improved service. Unfortunately, time is an important resource, but in the end Dante made out well.

The Results

It took a few months, but Dante was able to turn his business around. 

I can’t thank ProStrategix enough. I really didn’t know what to expect. They explained everything to me so I could understand why the recommendations were important. I honestly didn’t think these small changes could have such an impact. 

Dante is still in business and doing well. He took our business fixes to heart and has been able to thrive since. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Dante’s Inferno – The Restaurant Issues Causing Problems

When last we left Dante, we were discussing the situation was that left him needing to fight to stay in business. Now, we will look at what caused these problems, and how we can fix them before it’s too late next time. For Dante, his restaurant’s issues were the difference between success and failure, and we wanted to help him fight back. 

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Dante's Restaurant Issues

Start with the customers – they drive sales

e-commerce failures

The first place we started was to look at his customer base. We started by talking to them. We talked to the regulars, and we talked to the past reviewers. And we really wanted to know why they came back — and if they weren’t coming, why not? 

We learned a lot. For his regulars, it was a comfortable routine. They didn’t mind if the service wasn’t the best. The loved Dante’s food and enjoyed the experience. For the reviewers, they loved the experience, but the truth was that they felt that there wasn’t anything new. It was “been there, done that”.

To keep customers, you need to do more than satisfy them

It’s a common misconception that satisfying your customers is enough. And, that’s the first mistake that was hurting Dante. People are emotional creatures. We are driven by our emotions. The people who stayed were emotionally attached. Those who wanted a more varied experience were not. Unfortunately, his regular customers were not enough to keep the business afloat.

People are the most valuble asset

The second area we explored was his team. The restaurant business is rife with turnover issues. It’s the nature of the game. Dante was a chef, not an HR manager so his hiring and screening practices were not consistent. Therefore, the servers he hired were inconsistent. This led to varying degrees of service and varying degrees of satisfaction. Dante’s food was excellent. So, the first time you go, you might forgive the service because the food was great. The second time it happens. You aren’t likely to come back.

Pricing needs to include both fixed AND variable costs

The next place we looked was at his operations. One of the most common mistakes that restaurants make is not accounting for overhead in the menu pricing. Dante was a master at knowing what was popular, and he knew the cost of his ingredients to the penny. What he didn’t factor in was the cost to prepare, serve, and the other fixed costs of the business. Why would he, when his restaurant had other issues to think about? After doing all the math, we found that a few of his most popular items were his least profitable. Plus, we also learned that we could cut some costs by optimizing his hours of operation to better match peak demand. 

Spending on what matters most

Finally, we looked at where he was investing. Dante was spending on advertising, but it wasn’t working. Why? We asked some of the people who saw his advertising, why they weren’t interested in coming. The major reason was his Yelp! and Google reviews were old. Since they didn’t see anything recent, they didn’t think it was good and didn’t trust the star ratings. Dante didn’t know how much these reviews were driving demand so he was spending on the wrong tactic. 

A one star review can be very bad for business

Next Time...

We’ve gone through the problems. We’ve explained the situation. Tomorrow, learn how we fixed Dante’s restaurant issues and put his business on the right path once again.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Dante’s Inferno – A Restaurant Trying to Stay in Business

We are going to do something a little different with our posts for you. Across the next three days, we want to show you a longer story with a lot to learn from. This is the story of “Dante,” a client of ours who ran a restaurant. Nearly 700,000 restaurants exist in the U.S., but the number of privately-owned ones by small business owners dropped off in the past few years. There are a multitude of reasons, but at the top of the list a lack of understanding of some critical business fundamentals and access to financing. Trying to stay in business isn’t easy, but we wanted to help Dante as best as we can.

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

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Dante's Struggle to Stay in Business

A Great Start

When we met Dante, he owned a struggling small upscale dining establishment in Manhattan. During his first few years, Dante has had great success with his restaurant. He had a good location. He had solid reviews. His cuisine was new, and the design of his restaurant was appropriate for his target. But then…

Then People Stopped Coming

When we came in, that initial picture had changed. During his second year of operation, he noticed that he had more tables open than usual. He thought he would change up the menu, spend some money on advertising, and push for more Yelp! And Google reviews. 

After 6 months of this, he started to become increasingly concerned. People had simply stopped coming as often. He didn’t know why. The lack of customers was putting a financial strain on the business. He was late paying some suppliers so his business credit has taken a hit. There were unfortunate problems beneath the surface of the company that Dante couldn’t identify. A friend recommended that he talk to us to help stay in business.

Dante's Worries

In our initial interview, Dante said:

I started my business to follow my dream. The business started out fine, but lately, we haven’t been doing that well. Sales are falling and bills are getting harder to pay. I’m spending so much time thinking about the business that it’s not as fun as it used to be. I’m beginning to wonder if I made the right choice. 

Dante was worried about how he was going to stay in business. He had all the normal concerns. He was worried that the risks they took were the wrong ones. Dante blamed himself for how the business was going. He was anxious about what people would think if it didn’t work out. He was worried about living paycheck to paycheck in order to keep himself afloat. 

Next Time...

How to Help Dante

With companies in trouble, the first step we take is to analyze their business model. In other words, we looked at how he made or lost money, and what the biggest mistakes were behind the scenes. 

Next time, learn how Dante stayed in business and learn about what you can do to prevent yourself from the same problems he faced.  

Will 401ks Become Easier for Small Business to Offer?

401ks: not as easy to access as you might hope

401ks are some of the most important retirement plans that are available to employees in 2019. And there is an important question to ask: are 401ks going to be able to be offered by small business owners easily in the near future? 

The answer is… maybe. It’s not simple, and as far as we can tell, it’s not cheap ⁠— especially if you have fewer than 20 employees. 

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

The New U.S. Department of Labor 401k Rule

What is it?

Well, it broadened the definition of employer associations. On paper, the rule makes it easier for small businesses to group together to offer 401(k) retirement plans. This is done through what is called an Association Retirement Plan, ARP for short. Wow, that sounds great, you may say. But, how are we going to group together? Who’s going to foot the bill or do the work? Ah, and there’s the rub. Like most of the proposals from this Administration, it’s big on words but benefits only a few.

What does it mean to us?

Let me share our story. Like most small businesses, we want to offer healthcare and retirement benefits to our employees, but we can’t afford it. When we heard about this rule, we were encouraged. We thought, awesome, great, let’s check this out. We researched the NYC area for business groups and open plans, thinking surely someone is going to jump on this. What did we find?  

Zilch!  

Yep, nothing. We found myriad Professional Employer Organizations. But they’ve been around for years, as has the Chamber of Commerce. So, we were left with the same choices that we had before.

Professional Employer Organizations (PEO)

What are they?

“Professional Employment Organizations generally contract with employers to handle administrative employment responsibilities, such as payroll and tax withholdings, workers' compensation insurance, and other benefits.”

Jackson Lewis

PEOs have had a somewhat rocky history. While there are plenty of reputable ones. There were laws passed in several states in the early 2000s due to charges of impropriety. At least in New York State, you need to be registered with the State and comply with state regulations, such as requiring yearly financial audits, etc. While under this new rule, small businesses can technically create these groups, the overhead and the expense of running and maintaining one is significant. So, no real win there.

What does it mean to you?

If you want to offer healthcare, retirement, and other benefits, you can contract with a PEO. They do offer premiums that are better than you can get on the open market, but they generally charge about $1,000 – $2,000 per employee for their services. It does take the headache of complying with payroll taxes, withholding, etc., so for some, it may be worth it. One might expect premium costs to go down if more people enroll, but as of yet, we’ve not seen it.

Here’s  brief video on what PEOs are and how they can help you

So, Will the Changes Help Us?

The sad truth is nearly 40 million employees, or roughly, 25% of the total workforce lack workplace retirement benefits. One would think that this executive order and subsequent rule would help. However, in the harsh spotlight of reality, that seems unlikely. While the option exists, the cost remains prohibitive. Going to a PEO was an option before as it will be after the rule takes place. It would seem that they, not us, are the real winners in this case. Again, this is no different from the myriad of actions by this political administration(like Tax Cuts), that sounded great but only benefited a few.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Half of Small Business Owners Worry About Money. Why?

If you worry about money, your business may suffer

Business owners come to us often with a fear that a lot of people have: do I have enough money? Either living paycheck to paycheck or having to take out loans, businesses worry about the amounts of money they have on hand.

A recent study from DaySmart Software reported the #1 worry for US small business owners is making enough money. We’ve highlighted this topic before in our post, “How Not to Live Paycheck to Paycheck when Running a Successful Small Business”. We’ve discussed how to manage costs and not waste money, but thought that we would speak about it again. Because to us, it is clear that this is keeping small business owners up at night.

Money worries can cripple businesses

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Using Technology to Manage Day to Day Tasks Seems to Help

Being worried about money can hurt small businesses

Going digital vs. manual is one approach offered to quash your money worries. Remember, this research was sponsored by a software company, but the general technology trends are arguably valid. The adoption of software to help with business management tended to do better than those that did not. Some of the reasons offered were reducing manual labor over paperwork, increased customer satisfaction, and more time.

In Which Technologies Are Business Owners Investing?

The simple answer is operations. The second is in marketing. The final is in digital security. All three are sound investments. Simplifying operations by using a simple POS system is much better than manually managing a cash drawer. Automating invoicing and accounting makes a ton of sense. Automating social media is another way to save time and money. Even automating some marketing functions such as e-mail drip campaigns and the like are also time savers. As we mentioned before, security threats are real and are focusing more on small businesses where hackers believe security is laxer.

What’s Holding Business Owners Back From Their Money Worries?

The main barriers to faster adoption are money, lack of expertise, confusion over the right tools, and security threats. Just Google one of these services and it’s clear why business owners are confused. There are a dizzying array of options. The key takeaway from this survey is that business owners are worried about money. Technology can help alleviate that worry somewhat, but we need help to know what would work best to keep on growing as a company.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

4 Key Small Business Issues in 2019

Business Issues 2019

We are nearly ¾ of the way through the year, and while the first half of the year was a good year with a healthy economy and high growth, the back half appears to be becoming one of increasing instability. It has been a long year of lots of changes to the political landscape, and your small business may be facing some issues that are really based on how 2019 has been going so far. What are the four key issues facing small businesses in 2019? Well, it’s a mix of managing growth, costs, your rainy-day fund, and staffing.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

1. Unemployment Remains Low… For Now

The economy is still growing so people are needed. It now becomes a question of how you can use your team effectively and efficiently. If it weren’t for the clouds of uncertainty on the horizon, we recommend continuing to hire so not to hamper your growth. Our best focus now would be to figure out how to retain our current workforces. It is significantly less expensive and less disruptive to retain an employee than to hire a new one. Until these uncertainty clouds pass, it may be better to focus on increasing worker productivity than expansion.

2. Regulations Are on the Horizon

While we may depart from others on this point, that not all government regulation is bad, full stop. However, we must also recognize the fact that they do tend to affect us as small business owner disproportionately.

Federal regulations … are growing and have a disproportionate impact on small business and free enterprise in America. Federal regulations alone are estimated to cost the American economy as much as $1.9 trillion a year in direct costs, lost productivity, and higher prices. The costs to smaller businesses with 50 employees or fewer are nearly 20% higher than the average for all firms.

U.S. Chamber of Commerce Foundation Tweet

This isn’t the end of the world, but to keep your small business alive in 2019 you’re going to need to be smart about how you go about your financial saving, especially for remaining strong in the long term.

3. Minimum Wage Hikes Impact Everyone

Again, we may differ from others, but a living wage is important for retention. You cannot make the argument on retaining employees and still push for low wages. The two don’t work. Many of the ‘pundits’ pay lip service to retention but shout over minimum wage hikes. Look, labor cost are real expenses. We get it. But, there are no two ways around it. But, you can’t have happy and engaged employees, who are struggling to pay the rent. The minimum wage will likely increase. We argue that we should plan for it.

It may be true that, as the Congressional Budget Office projects, that a federal wage hike to $15/hr could put “nearly 1.3 million U.S. citizens out of a job, reduce business income, and raise prices as businesses would be forced to pass on higher labor costs”. In also equally true, that the current workforce making minimum wage, being trained by us and gaining experience, will leave us for hiring paying wages. Thus, leaving us to foot the bill for additional recruitment, for lost productivity, and for training costs. The small business world of 2019 is one that requires different ways of going about our understanding of wages and the economy.

4. Raising Productivity Requires New Ideas

We agree with the pundits that the government could do more for both workers and small business by providing training incentives and programs that by raising the minimum wage. This helps both parties. It has the net effect of raising wage because of increased skill sets. Also, it has the benefit of increasing productivity, which would offset the increased labor costs. Instead of trade wars, lower interest rates, and higher minimum wage, this would be a much better use of government stimulus and resources.

Conquering 2019’s Small Business Issues

We do face an uncertain the next twelve months. Hopefully, after the election in 2020, we may return to some sense of stability and predictability. However, until then, we need to be ready for almost anything. Making smart choices in people, productivity, and cash management, we should be able to ride out the storm.

How Small Businesses Can Struggle in This Economy

struggling business economy

Small business struggle in a strong economy for two simple reasons: talent and time. Not time in the sense of hours in the day, but burnout. Low employment numbers mean small businesses have to think about recruiting talent differently than in the past. And added to that, burnout is real and can make you far less productive than you want to be. Regardless of economic conditions, the rate of which small businesses close is remarkably consistent, and you can read on to see the signs to be aware of.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Let’s Start at the Beginning

To appreciate what’s going on today, we have to start at the beginning of this 10-year business cycle. In 2009, we were just beginning to emerge from the most disastrous economic crisis to hit the country since the Great Depression. As a result, small businesses were struggling, and there was a significant drop-off in small business creation. Some major stumbling blocks included access to capital, decreased profits, and a reduced ability to hire. In fact, it was the first time in a long time when small businesses were employing less than ½ of the total U.S. workforce.

That’s a nice history lesson, but it misses some important facts. Fewer businesses were started during the period between 2009-12. Given that the rate of businesses closing is typically constant, fast-forward 3-7 years after the recession and we’re left with a gap. So, there was a lag in the tightening of the labor market. Now, the gap has closed and the competition over workers has increased.

Health Care and the Affordable Care Act

So much has been written about the ACA or ObamaCare. But, the truth is we will never know its true impact because it never was fully implemented. From its inception, significant roadblocks and intentional sabotage makes any clear read impossible. What is true is that the cost of employer-sponsored health care has dramatically increased, peaking in 2017. Because of all the smokescreens and gaslighting from all the vested interests, we still don’t have a clear picture as to why. We only know that the cost of offering benefits has increased the cost of hiring new employees. Hopefully, HRA changes will help alleviate

Hopefully, HRA changes will help alleviate some pressure, but providing health care to our workers is still a major issue. On the campaign trail, several proposals are on the table. Whether or not they have a chance of seeing the light of day will depend heavily on the 2020 election.

Burnout

Burnout is a very real and very constant reality that most small businesses struggle with at some point. But, is exiting the right solution? Perhaps for some, it is. But, we would challenge that perspective for all. Selling your business is an option. However, to do that, the business needs to be structured so it can function without the owner. If the owner is the business, then our options are limited. It requires us to stop thinking like we’re a mom-and-pop shop. Instead, we need to think as if we were a small corporation with systems, process, and structure. These entities can exist long after the owner decides to exit.

Possible Solutions to Help

Let’s look at three possible solutions that may help small businesses struggle in a strong economy.

Talent

If we can break out of our conventional thinking, there are several ways small businesses can be creative when offering packages to new hires. Yes, people are motived by money. But, they are motivated more by feeling valued.

Healthcare

When it comes to health care, there is no simple solution. Since conditions vary widely from state to state, the right solution for your business will require some research. The options to consider SHOP, group policies from a private provider, or adopt the HRA approach.

Burnout

We are less likely to burn out if we have a clear exit strategy. We know what we want the business to be. In addition, we structure it so it can eventually run without us as owners. It’s easier to value a business like this. It’s easier to sell it. Most importantly, it easier to leave when you’re ready.

struggling paycheck to paycheck

How to Handle the Small Business Economy

Small businesses are subject to the whims of the economy. The relationship, however, isn’t always clear. The economy being on the rise doesn’t necessarily mean that small businesses feel the benefit. However, knowing what to do to prepare for an economic boom can keep your business afloat and above the competition.

5 Shocking Mistakes Killing Your Growth

killing-your-growth

After helping numerous companies, we at ProStrategix uncovered 5 common but unfortunate mistakes that may be killing your growth. 

Feeling like your business isn’t going the right way? ProStrategix can help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

You are just satisfying your customers, not fulfilling them

It’s a common misconception that satisfying your customers is enough. And, that’s the first mistake that can be killing your growth. People are emotional creatures.  As much as we like to believe we make fact-based decisions, we don’t.  We are driven by our emotions. Hence, it’s important to understand the emotional needs and emotional state of your customers.

  • What’s driving them to come to you? 
  • Are they stressed?
  • Worried about something? 
  • Hoping for a better outcome?

Whatever it is, you want to make sure that you leave them in a better emotional state than they were before.  So, if you do that consistently, you’ll have a customer for life.

Not having the right team in place might be killing your growth

After a few years in the business, growth can’t happen if you don’t have people there to handle the demand.  Making hiring decisions are one of the most challenging, but most important decisions a small business can make. 

herefore, it’s important to be honest with yourself about where your gaps lie.  Small business owners typically wear multiple hats. It is scary to take on the expense of hiring new people.  However, having the wrong people in the wrong place can severely kill your growth.

Unaware of what really drives your demand

Very few small business owners have a deep understanding of their business model. This is a common mistake that can be killing your growth.

That’s why knowing your business model is key. It is often overlooked by business owners because there are so may pressing, immediate needs. However, it is important to know what factors drive your sales so that you can proactively plan for the demand.  If you can predict your demand, you can ensure that you have the right team in place to handle it. Thus, you can invest wisely to accelerate your growth.

Unsure of where your inefficiencies lie

Inefficiencies can crop up in the most unexpected places. So, if you are not actively looking for them, this can be mistake killing your growth.

It’s worth repeating, knowing your business model is key.  It’s not just important to know how you drive sales, but also the cost it takes to service it.  If it costs you more to service new demand, accelerating growth can lead to decreasing profits.

If you are not investing wisely, you may be killing your growth.

The final mistake that people make is not investing wisely. If you don’t know where your inefficiencies lie or what’s driving your growth, how can you invest in the right places? 

Investing wisely in people, business processes, and business systems can ensure that you have the right people in the right roles at the right time.  It can also ensure that you are efficiently driving demand so that accelerating growth leads to accelerating profits.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

How to Survive the 3-Year Itch

3 year itch

Did you know that twice the number of business fail or go out of business in their 3rd to 7th year in business than do in the first 2 years? It’s because of the 3-Year Itch.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Just like in marriages, business owners seem to hit an ‘itch’.  It just happens a bit sooner.  Instead of the 7-year, you have the 3-year itch.    The US Bureau of Labor Statistics publishes the survival rate of businesses, and its data shows remarkable consistency.   Regardless of economic conditions, roughly the same percentage of businesses exit between the 3rd and 7th year of existence.  Why?

The 3-year itch comes down to basic human nature.  Just like in a marriage, it generally boils down to 4 key factors

  1. Feeling overwhelmed
  2. Feeling unrewarded
  3. Hidden money problems
  4. Failure to communicate or delegate

Most business owners start a business because they love what they do, not because they love running a business.  It’s easy to feel overwhelmed by everything that needs to be done.  The love of what you do can keep you going for a year or two, but after a while, it takes its toll. Then, 3-year itch starts.

What are the symptoms?

That feeling of being overwhelmed can lead to feeling unrewarded.  Business owners with partners or employees can also have difficulty in communicating or delegating.  Without good communication, it’s more likely that problems will be hidden, which can become a crisis due to inattention.

How can you survive the 3-Year Itch?

  1. Be honest with yourself about what you know and where you need help
  2. Have an impartial party analyze your business and business model to ensure that no one person is carrying too much of the load
  3. Have an impartial party review your business processes to ensure transparent and timely communication
  4. Know which parts of your business are most sensitive and/or carry the most risk

If you find yourself facing the 3-Year Itch, ProStrategix can help

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.