Here’s the fourth installment of my series, “Where’s My Money Going?” In this series, I methodically searched my artisan food business, the Noe Valley Bakery” to find a “money leak” we had, and I spent the last three posts patching them up and increasing profits. I documented my process so you can join me in examining your own business and keep more of your profits in your pocket.
In the first installment, I focused on comparing two months—one with profits, and one without. In the second installment, I taught you how to use subcategories on your P&L to create reports that give you more information when there is a problem. In the third installment, I showed you how taking a monthly inventory makes your Cost of Sales super accurate and focuses you on the expenses categories with real problems. In this installment, I will tell you the results of all our efforts over the last few months – hint…they are GOOD!
Results are in:
Our growth has been two-fold: our topline revenue is increasing while our bottom line profits have grown. During this period of laser focus, we have had consistent success—even in January (which historically in the food business is a “skinny month”)! With our plan in place, we had specific goals we needed to hit and with the entire team focused on those goals, we made money in a historically down time. We have adjusted our spending habits, we are watching our waste and we are scheduling our employees wisely. In addition to have more sales, all of these adjustments have helped us keep more of our profits.
My whole team is focused on the bottom line profits.
We scheduled our management meetings for 2016 and that alone has really brought us together as a team. We meet twice a month — one meeting focused on management and operations, and the other focused on the previous month’s financial report. We talk about future growth ideas, and where we might like to go (product ideas, etc.). We talk about the plan for the next month around hitting the numbers in the budget, for example, “Easter is coming, to hit our March revenue goals we need to sell XX number of Easter cookies.” Now my management staff has actionable to-dos week over week, and they’re more connected with the heart of the business, because they’re empowered to financially contribute as well as creatively contribute.
We have a clear path to making higher profits every single month (with action steps).
Historically, food businesses have up and down months, but with our plan we’re gaining consistently. Simply knowing that the entire team will look at the monthly financial report under a microscope means that we are constantly making small decisions in the day-to-day that really add up to have big impact on our profits. We notice our buying and spending habits. We are watching our employee schedule very closely and making sure we don’t waste a dollar. We have been implementing new systems that will save us time and money into the future. And since we’ve involved and empowered our management team, it’s a collaborative savings with a great culture behind it. Aside from making us more money, and helping us keep more of that money, these practices have brought us closer together as a team — which is really the perfect cherry on this financial sundae.
Here are some of the specific things we learned (and you can watch out for):
We were over-ordering like crazy! Before we started our monthly meetings, our stock room in the back was packed full of packaging, ingredients and supplies. We had excess that we couldn’t use fast enough. Now that we’re doing inventory every single month, our stock room is clean and airy, and we can make adjustments to what we’re ordering.
We’re better leaders.
We were trusting that our managers were doing everything 110% — but now that we’re drilling down into the details, we’re informed and therefore being better leaders for our team. Now that we have more insights we can be better bosses. That’s what my whole mission is about with Launch — taking the data to create compelling stories. We then use those stories to be strong leaders who help our teams know what to do to contribute to success.
Our managers are happier.
This equation definitely works both ways. When we are better leaders, our managers are happier and more engaged. There has definitely been a shift around our all of our attitudes. When problems arise, we work together to find solutions rather than working with friction and stress.
What are the next steps for me?
I am going to create a financial incentive plan for my managers. I am going to set my budget for the year and give them financial incentives for hitting the targeted cost percentages. That way, when they increase the profits at the bakery, they will make more money. We all will share in the success! Stay tuned in the blog for the details as I set that in place.