Many of you may not know this, but I recently had the privilege of writing the foreword to The Restaurant Prosperity Formula: What Successful Restaurateurs Do, a book by restaurant industry coach David Scott Peters. While I am a fan of David and consider him a friend and mentor, my reason for writing the foreword was more than just out of respect. I wrote it because I believe his formula, if implemented, is not just a game changer, but a LIFE changer for the business owner.
More than any time in recent history, we as business owners all need to revisit this prosperity formula. With the uncertainty of an economic change, now is NOT the time to sit back and hope that 2020 is as great as 2019. Now is the time to TAKE ACTION and follow a formula that is proven to ensure prosperity regardless of any economic change in the next 12 months.
While it is easy to doubt the claims of savings and changes due to a formula, I can tell you from my firsthand experience from working with David’s coaching clients that this is 100% true. Businesses that decided to implement his systems are able to adjust their costs in real time and fend off a change in customer behavior so that their take-home income and bottom line are unchanged. I have seen one client withstand a drop in topline sales of 20%, with an INCREASE in their take-home income. Why? Total commitment to TAKING ACTION and the prosperity formula.
Here are the two KEY take-aways that we all should follow from David’s prosperity formula:
Build your own roadmap
Many times, we as business owners forget to give ourselves and our organizations full credit. It is easy to think that a software or system saved us money. And when it doesn’t, we blame the software or system for not living up to its potential.
In truth, the software or system is the tool, but the business needs a roadmap that incorporates ALL areas of the operations.
This is where the prosperity formula begins. Ditching the excuses for why we aren’t where we want to be, and instead taking the time to visualize what we want our company to look like. As David says in his book, it all starts with culture. What does our company stand for? What are our company “non-negotiables?” And where do we want our company and our employees to be in the next five years.
This vision for our company and definition of company culture must take place BEFORE we dig into the details of the budget, or software tool to drill into cost saving areas.
This road map will be our benchmark in decision making for years to come. Should we cut advertising by $1,000? Not if our goal is to grow 20%? Should we hire a kitchen manager? Yes, but we must make sure the manager buys into our company culture, not just our menu. In order for us to follow our road map, we must define it.
The Restaurant Prosperity Formula gives great instructions on how to create your core values in chapter 3, and I encourage everyone to take some time to define your core values! It truly will impact your decision making.
The Restaurant Prosperity Formula
With the core values of your business in place, the next step is to take a look at the prosperity formula in detail. To look at the fundamentals of leadership, systems and training, accountability and the ability to Take Action every day. This starts with a budget.
Why is a budget so important? A budget is useful whether your business is profitable or not. Why? The budget is the foundation for your roadmap. The budget defines your roadmap in real dollars and encompasses all areas of your operations. The core values and outcomes above you set for your business will not happen unless you have a roadmap for how you want to get there. And the driving directions on your roadmap to success is your budget.
The key for us as entrepreneurs in budgeting is to know that every budget is different. Your budget should represent your goals. And will not always meet industry standards. Your budget may reflect your decision to pay managers a great salary so that they buy in and you are able to work less as the owner.
The key is that your budget should match your core values and vision for your organization. Line by line, expense item by expense item should be in line with your ultimate vision for your organization. Why? Because of the last piece of the equation. Take Action.
In truth, we can all have budgets. But it is the implementation and the drive to hold our organizations accountable to these budgets each month that makes the difference between success and failure.
Just this week I had a budget call with one of my favorite clients and from doing a budget-to-actual analysis for January, we discovered that cost of goods sold were significantly higher than budget. Before the call was over these awesome entrepreneurs were giving themselves marching orders.
“I’m going to go recount the walk in,” one owner said.
“I’ll go spot check portions,” the other said.
No anger. No blame. Just total commitment to taking action.
For this reason, I am so excited to be a part of David’s book. Accounting by nature is always looking backwards. And while it is great to have a filed tax return and reconciled bank accounts, I believe it is our understanding of the Restaurant Prosperity Formula and ability to be involved in its implementation that sets us apart as an organization. Whether you work with us or not, I encourage you to TAKE ACTION by reading The Restaurant Prosperity Formula: What Successful Restaurateurs Do by David Scott Peters.
And if you haven’t done so, create a budget for 2020!
Did you know The Largo Group can assist you in building a budget? Budgeting is included for existing clients. If you are not a client of The Largo Group, we can still help you build a budget – starting at $500/budget. Please contact us today to get started!
If you'd like to learn what successful restaurant owners know about accounting, download our free report, "How to Avoid the 5 Pitfalls of Restaurant Accounting." Be on your way to becoming an expert on your business's accounting and have confidence in your accounting decisions.
Author: Anne Gannon, founder and principal of The Largo Group.