Solomon Bruce Consulting Blog

Wednesday, February 24, 2010

Dollars walking out the door? Do you see them leaving?

Last week I was away at a client engagement.  I stayed at a motel that had a coffee shop/restaurant/bar co-located with it.  On the first morning of the engagement, the waitress offered me a second glass of orange juice.  I said, "Sure, I would love to have another glass of OJ!"  When the bill came, amazingly, the second glass of orange juice was not charged.
  That evening, I stepped into the bar to see who was around!  I met a former student who was in town for business.  We sat and had an adult beverage, and he elected to eat dinner.  At the end of the evening, he picked up the tab and said, "They did not charge us for the second adult beverages!"
   Now, as a professional consultant, my antennae perk up high.  Do we have a problem here?  Is the corporate culture one of "giving" away product?  Do we have extra product in which to give away?  Do we have a staff training issue?  Is the staff giving away product in expectation of a greater tip for themselves?  These are all questions that a professional consultant is interested in knowing.
    Interestingly, the meeting that I attended for our engagement was also attended by the owner of the motel.  I asked her if this is common practice in her business.  Well, you probably know the answer-- NO, it was not a common practice in her business, or so she thought!
    Sadly, it appeared to me that giving product (and PROFIT) away is a common practice in her business, she just did not know it.  Now, I don't find it uncommon to "give" something away occasionally, especially in the hospitality industry.  However, I find this experience probably not a mere coincidence.  It appeared to me that to have "FREE" product "GIVEN" away in the same day by two different staff suggests that perhaps the business has a problem.
    Do you know if any of your dollars are walking out the door?  More importantly, do you know how many dollars are walking in the door and remaining in the business?
    If you cannot answer definitively or clearly on any of these questions, this is the time to engage a professional operations management consultant to help you and your firm regain profitability.  As the owner of the business, you establish the corporate culture in which the business operates.  As I have mentioned in many previous posts, you must be actively involved in all facets of your business each and every day.  This includes knowing what is going on all the time.
    There are very definitely times when "giving" something away makes great business sense and is the right thing to do.  However, those expenses should be carefully and fully documented in the budget and used for marketing and resolving customer challenges.
    Pay real close attention to what is happening in your business.  Interestingly, nobody in this motel knew me, who I was, what I did or where I was from.  This is all the better.  You know, if they are giving "PROFIT" to me, they are giving "PROFIT" to many others as well.  This is a matter that is well worth watching, especially if cash flow appears to be tight or profit appears to be less than it should be.
    With our turbulent economic conditions, paying attention to where the dollars are going every day is something that you, the owner, needs to pay attention to.  If you don't pay attention to the dollars, the dollars will find a way out the door and not into your pocket--where they should be!


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