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On Managing a Business

Where’s my Crystal Ball?

  • February 1, 2016
On Managing a Business crystal ball

Many years ago, when I was still involved in direct selling I had a very simple measure as to whether or not I was having a good or bad year. If by the end of June, my diary was falling apart, I was having a good year. When I moved into training salespeople, at the beginning of many courses I used to ask them all to reach into their inside pockets and pull out their diaries. I was constantly surprised, even in Q3 and Q4, how pristine their diaries were!

In the restaurant business, it was always traditional for every establishment to have a big book into which bookings were written so that when customers would arrive for their meal, the head waiter could simply look into the big book and tick off the name of the customer in order to indicate that they had arrived and the table would be allocated.

Just as I had done with my trainee salespeople, I like to judge a restaurant by its booking ledger in order to tell me how busy it is, in spite of what the management tells me.

Luckily, even in these modern days of state-of-the-art EPOS systems, many restaurants still use a booking ledger. Nothing wrong with that! Many restaurants wouldn’t be the same without a dog-eared old ledger sitting on the counter.

If you are a restauranteur and you are still very keen on your ledger, it is highly recommended that you run a parallel system. That is to say you can have the comfort of your ledger – like a well worn executive teddy bear but at the same time you should be adding your clients to your EPOS system. There will inevitably come a time however when you are weaned off your booking ledger and move onto purely electronic booking.

So why should you have a serious attempt at actually using your EPOS for booking purposes? Well, for a start, you can begin developing a proper management information system which is not only going to tell you how you have done in the previous year but you will be able to predict how you are going to do in the following year – using FACTS.

In far too many instances, business projections, just like the cash flow projections that you show your bank manager tend to owe more to fiction rather than hard-nosed management information.

Just like my sales people with their pristine diaries in the second half of the year, your January 1st prediction for the full year would have been positive – because as usual: “THIS is going to be THE year!”

That’s can be a big problem for many restaurants because their predictions for the year are based in hope rather than data. That is why you do need to use your EPOS system to the fullest and begin to rely on your history as a predictor of the future, rather than vague dreams of success.

It’s no good simply to ‘know’ that you are going to have a good year, especially if the previous year was bad because the evidence suggests that you are going to have another bad year – if in fact you have bothered to use evidence.

If you harness your EPOS system properly, you will quickly be able to analyse your busiest days, your busiest months and even your best performing waiters – but only if you not only acquire an EPOS system could but actually use it to its fullest potential! And if you move onto proper electronic booking, you will be able to see who came, when and how often and even what they had to eat.

Without proper management information, your sales forecasting can be far too subjective, especially when it is based on desperation and hope rather than something such as the highly efficient forecasting analytics of your EPOS system.

Your advertising and other promotions, your staff, your previous performance, your inventory, your chef’s previous record, any future competitions, discounts, plus factors outside of your control such as the economy, meteorological conditions and even roadworks, proposed parking restrictions and other restaurants in the vicinity will all affect your sales.

That is why you do need to get away from the all-too-common “We should be okay, let’s see how it goes… we did 50K last year so we should do a bit more this year” forecast.

If you want to maximise profitability by deciding how much stock you need to keep or possibly how many extra staff you need or how many you need to fire, you need proper sales forecasts. It is only that way that you can fully optimise your business and even when things aren’t going as well as you thought they might, you will know that you could not have done any better.

You don’t need a crystal ball, you need an EPOS System that you USE!

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