Monthly Archives: September 2013

Credit Card Split Funding Advantage

As alternative financing options proliferate, payback in the form of credit card split funding is still the way to go for a variety of reasons. The most compelling are:

• No risk of overdraft

• Payback ebbs and flows with business swings

• It’s the best leverage of future sales for merchants that process cards.

There has recently been much buzz about ACH funding platforms. The buzz seems to ignore the pitfalls of ACH funding:

• There is always a risk of overdraft,

• There are no adjustments for sales swings.

• Funding amounts are limited by stricter underwriting requirements.

It can sometimes be tough to manage all of your once-monthly fixed payments such as rent, vehicles, or suppliers. Stop and imagine adding 22 more such fixed payments. The beauty of credit card repayment is that a few NSF’s will not disqualify funding, and moreover, merchants need not worry about sales slumps as repayment flows with sales volume.

Starting at the Core: The Importance of Core Values

Starting at the Core:

The Importance of Core Values

The other night at one of our restaurants a young family had just come to the end of an enjoyable dinner experience for their family.  The server had done a fantastic job.  All food arrived on time and all orders were exactly the way they had been placed; even the complicated vegetarian order from the family’s young teenage daughter.  Adorable girl.  The family had praised their server and their experience to the manager at a point close to the end of the meal.  The manager could tell that this was a genuinely enjoyable evening and that dining out as a family wasn’t a weekly event for this family, but possibly more of a monthly or bi-monthly occurrence.  The server was of the personality that truly enjoyed delivering a memorable experience, so it was good to receive the positive feedback.  All roads were pointing to the creation of a great memory for the family.  At the conclusion of the meal the server dropped the check and said that she would be happy to take care of it whenever they were ready.  Moments later she returned and could see dollar bills poking their way out of the check presenter.  The server informed the guests that she would return in just a few moments with their change.  The content family let her know that no change was needed and they all exchanged big smiles and gratitude for the experience.  Upon returning to the server station, the server began counting the money that was left for the tab and found that a $100 bill was stuck to one of the $20 dollar bills.  Without the inclusion of the extra $100 the tab had been covered and a very generous tip was left.  The server instantly knew that the stuck $100 bill was not intentional.  She was instantly faced with a moral dilemma … to return the money, or to keep it?  Who would ever know?  Only she knew that a mistake had been made.  Moments later the server catches the still smiling family as they are walking out the door and hands them the $100 bill.         

We all want to believe that our restaurants are built of teams that all possess a great set of internal values that drive their decision making.  But how do you really know whether the values you want to believe exist within your restaurant are actually there?  The only way to know for sure is to put them there.

One important fact to remember is that our restaurants are entities of their own.  And like any entity, they have their own unique and individual purpose.  That purpose is driven by a set of core values, in the same way that any individual’s purpose is driven by a set of morals or values.  But we, as the business owners and leaders, have to define those values and then ensure that the values are not simply known by the teams that run the restaurants, but that they are living and breathing day by day.

Often, restaurant owners will try and retro in a set of business values based on the characteristics of the individuals that they select to their management team(s).  Essentially, the values and culture are determined by the values and culture set forth by the GM’s unique personal values. For example, if the GM is always 30 minutes early to work, then punctuality could become a de facto core value.  Whereas punctuality is not a bad thing, it may not be a true driver of the business or as strong as Integrity, Commitment or Passion in terms of deep and meaningful core values.  And then what happens when the GM moves on to another opportunity? A new GM arrives that believes coming in 15 minutes early for a shift is more than sufficient.  Now culture confusion sets in because the values of the restaurant were tied up in the exiting GM’s characteristics.  They were not clearly defined and attached to the restaurant. Therefore, the restaurant’s values begin to shift with the passing of each leadership team.  The long term result of this is often cultural paralysis that leads to high turnover and eventually a fractured and unidentifiable brand in your marketplace.

Successful restaurant owners will begin with their brand’s visual identity to the public (both potential team members and guests) in mind, and then work backwards.  They relate their restaurant entity to themselves.  They ask themselves, “If the restaurant was a standalone person, how would it want to be viewed?  How would it want others to perceive it?  Would it want the world to see it as honest?  Consistent?  Reliable?  Passionate?  Committed to excellence?  What makes it a brand people will believe in?  Why would a guest return, and moreover, why would they recommend it to someone else?”

From there, 3-5 core values are established that clearly define the restaurant’s purpose.  These core values are then etched in stone for the life of the restaurant.  They become the foundation for the culture that will grow to support that unique and individual purpose.   All managers will be recruited and hired based on their alignment to these core values.  The best fit managers will be those who already embody the same values in their own personal lives.  This makes value alignment much easier.  All of their future decision making for the restaurant will then pass through the filter of the restaurant’s core values.

Now a team of 3-5 leaders (managers) will develop a “culture-fit” hiring process that empowers them to recruit and hire staff members that also embody the same values as the restaurant.  Once a full staff is aboard, and all have taken up the cause of the restaurant as their own; over time, through constant reinforcement of the core values, a sustainable culture which is rooted in those simple, yet powerful values will be what defines the restaurant’s brand out in the market.  If successfully executed, what emerges is a customer base that is grounded by the same values. People who believe in the same set of values traditionally support each other.  Alignment now exists from the founders of the restaurant brand, all the way through the business, to the guests dining at each table.

If your ultimate goal is for your restaurant to be known as a reliable place which guests can trust to deliver a consistent experience every visit, and prompt them to share their experience with their friends and family, generation after generation, then you have to start at the core.

If you would like more information on Restaurant Consulting Services provided by Caprock, please feel free to email Zach Hopkins at zhopkins@caprockservices.com.

5 Tax Tips For Small Business Owners

When it comes to taxes, very few people are excited about paying them. From the rates, to the paperwork to the time and hassle, it is simply not something most of us like to deal with. For the small business owner the issues are multiplied. In addition to personal income tax, a business owner is faced with filing and paying income taxes, sales taxes, and payroll taxes for the business.

Unfortunately, failure to properly manage taxes has been a downfall for too many small business owners. From failing to file all necessary returns, failure to file returns properly, and failure to make prompt payments, many business owners find themselves in positions which put not only their business’s financial health, but also their personal financial health at risk. And while we all know taxes are unavoidable, too many business owners procrastinate and delay addressing problems while still manageable. They wait too long and the situation becomes dire.

But there are many things business owners can do to make it easier to manage their taxes.

1)      Utilize a payroll service

Most small business owners didn’t go in to business hoping for an opportunity to do accounting, let alone payroll accounting. Additionally, withholding taxes is one area in which the law will allow the Internal Revenue Service to pierce the corporate veil and pursue the business owner for any unpaid liabilities. A qualified payroll service will not only free up the business owner to spend time on their core business, they will ensure that returns are filed promptly and payments made when due. Because the payroll service will take the necessary taxes when taking the funds to pay employees, the business owner knows the funds have been set aside without having to do so themselves. In the event of an error, a qualified payroll service is responsible for correcting the issues with the agency involved.

2)      Escrow your tax payments

One of the simplest things a business can do to ensure tax compliance is to escrow funds for payment. By simply setting up bank accounts outside the main operating accounts to hold the funds, a disciplined business owner can avoid coming up short when it is time to make a deposit. One strategy is to escrow payroll taxes as employees are paid and to escrow sales and liquor taxes on a weekly basis. By segregating the funds a business owner can better manage their day to day cash flow while also preparing for future obligations.

3)      File returns promptly

Many times when a business owner is concerned they will not be able to pay taxes due they simply fail to file the return. This only makes a bad situation worse. By failing to file not only will the unpaid taxes accrue interest, but also penalties will be added to the balance. The amount that is eventually paid will be much larger, and this larger balance can increase the priority level at the agency.

4)      Don’t ignore tax notices

When your business receives a notice from any taxing agency it is important to deal with the situation promptly. A business owner who is working with the agency to resolve an issue is more likely to reach an amicable solution than one who fails to open a dialog. By nipping the problem in the bud it may be possible to avoid liens and levies, as well as to implement a payment plan that is achievable.  On the contrary, ignoring the notices may increase the likelihood of more aggressive actions and necessitate a plan with large, hard to make payments.

5)      Get help

Regardless of the situation, when the problems escalate it is best to have someone with experience to help you work through them. Ideally, it is best to use an individual or firm that specializes in resolving tax issues. While it may be tempting to go it alone or stick with your accountant, there is value in working with someone who deals with the agencies, the legal issues, and the necessary documentation on a daily basis. Tax resolution is a very specialized area, and just as one wouldn’t want a General Practitioner to perform open heart surgery, it may be best to utilize an expert to help you evaluate the issues and come to a resolution.

Taxes can be one of the least enjoyable aspects of being a small business owner, but managing taxes properly is a key to running a successful and healthy business. Whether you are paying sales and use tax, liquor tax, withholding taxes, or income taxes, failure to manage the process and payments can ruin any small business, and often results in serious consequences for the business owner. Utilizing these 5 tactics can assist you in keeping your business healthy, and reducing your tax related stress.

But My Agent is a Good Customer

We hear this statement from restaurateurs every day. While patronizing our clients is very important, we do that not because they are clients, but because they provide an extraordinary dining experience.

For the most part, the restaurant industry has narrow margins (10% to 15% is average). Below are the primary costs and optimal percentage of total sales that most profitable restaurants strive to maintain:

• Prime Costs          (Food and Payroll) 60% to 65% of total sales
• Management Salaries         10% or less of total sales
• Occupancy         10% or less (rent, CAM, Insurance, and taxes)

Let’s look at Occupancy costs since that includes the cost of insurance for the business. Those are the costs most business owners find the least “interesting,” however, a shift in just a few percentage points can quickly rock your profitability up or down.

Here is a real example of a recent situation we had in our agency. The owner of a fine dining restaurant in our city was contacted to discuss the insurance on his business. He said he would allow us to “bid” his insurance even though his current agent is a friend and a “good customer.” While meeting with him we did a risk assessment and gathered all of his insurance policies so that our team could review his current coverage. The following was the result:

• Double coverage that was costing him $3,500 per year
• Grossly under insured limits on Employment Liability protection
• Inaccurate sales figures
• Inadequate property protection
• No risk management training of his management team for Employment Liability
• No training of his management team for emergency situations
• No procedures in place for reporting and capturing incident reports for potential lawsuits
• Insurance cost savings of 17% or about $13,000 annually

Now my question to him is, “Did you hire the best insurance agent your money can buy?” If your typical profit margin is 10% is your current agent spending more than $130,000 per year in your restaurant? Can you afford to keep your “friend” as your agent?

If you would like us to review your current insurance program to see if your “agent friend” is doing the best for you, please contact us at 214-216-0225 or email Mona Carpenter at mcarpenter@innovativenationalrisk.com