Where can you find this money? Trust me, it’s there. You must look for it. I could write a book on this topic, but for now let’s look at some obvious places.
Money hidden on the table
Most of us are “People Pleasers” and not the best at negotiating with our clients. If you haven’t taken a class or read a book on negotiating, you are not getting the most money for your products and services. I know you’re busy, but we all need to take some time away from working in our business and work on our business. I can tell you, good negotiating skills will add dollars to your top and bottom lines.
Do your homework on your clients before they come in. Social media is loaded with useful information about their backgrounds, likes, dislikes, friends, and mutual friends. This goes a long way toward closing the deal. Coming into a client meeting unprepared will more likely than not leave all money on the table.
At the dinner table, during tastings, are you offering upsells? An appetizer course, an upgraded entrée, a welcome drink, a coffee cart … there’s extra money there waiting for you.
Money hidden in your purchasing system
Do you have a prime vendor agreement? These are pricing mechanisms that distributors offer to caterers for the items they frequently buy. Generally, the distributor seeks to obtain a high percentage of the caterer’s purchasing power in exchange for preferred pricing.
Remember too that your price is determined by delivery frequency, timely bill payment, and product mix. Most distributors have minimum orders, so during your slow season—don't build up your order amount to get it delivered, hop in your catering truck and head out to your wholesaler's warehouse and pick it up yourself. You will generally save about 20% before the expenses of driving there and back.
If you’re the owner or manager, never, never, never let the same person purchase and receive. Thousands of restaurant owners and caterers have been swindled out of millions and millions of dollars. Picture this, the person who orders signs for merchandise that is not received and then gets a kickback from the supplier. This one is a no-brainer.
Money hidden in your books
Rule number one: Never, never, never let the same person keep the books and handle the cash, the credit cards, and the bank account unless it’s yourself, the owner. Even partners have been known to cheat! Cash handlers can alter the books and add to their own personal bank accounts, not yours.
Have you checked your credit card processing charges lately? I hope by now all of you have put in place a system to recover the cost of credit card processing. If you haven’t, there’s a simple way. Simply state something like this on your invoice:
"Prices quoted are discounted by 5% for payment by check, wire transfer, or cash. If you prefer to use a credit card, we will add 5% to your invoice."
And lastly for this article, have you checked your advance deposit schedule lately? Whatever your policy is for advance deposits, think about changing it to draw in more money sooner. Cash is king.
I hope you will join me at Catersource in Las Vegas this February for my panel discussion on how to find more money hidden in your business.
Bill Hansen is the CEO, Bill Hansen Catering and Event Production, Miami, FL
See Bill Hansen at #Catersource 2018 in Las Vegas!
Bill Hansen will present two "Proven Ways" panel discussions, with three small, medium, and large catering companies represented. He'll also be available for "Candid Conversation." Click here to view his sessions!