Tuesday, December 20, 2011

Sales Horror or Sales Hurrah?

Everyone in the hospitality industry works tirelessly throughout the holiday season: planning, cooking, trouble shooting, and managing hard-to-please clients. This is followed by a race to close the books before finally enjoying a well-deserved holiday break. Two scenarios are likely to follow:

Scenario 1: The Horror, the Horror!
  • Many hard-earned kudos and pats on the back for a job well done.
  • Down time from December 20th until a few days after New Year's.
  • A January filled with a belated office party, extra time chillin' in the break room, cleaning the file drawers, and posting pics of your holiday successes.
  • Snow day!  Stay home with hot chocolate and good movies.
  • A last minute getaway over Valentine's Day weekend.
  • Commerce hasn't stopped but you sure have....
  • No revenue in the sales pipeline.
Do the math. In this scenario, your company may have missed out on 2-3 months (that’s 15-20%) of the sales calendar! You missed the chance to beat the previous year’s numbers. You handed your competitors a big head start.

Small businesses must sell hard all year long and there is a way to do it:

Scenario 2: A Sales Hurrah!
  • Enjoy a much-needed rest and family festivities over the Christmas and New Year's weekends.  Even attach an extra day off on either end.
  • Consider the week between Christmas and New Year's a prime selling time.
  • Get on the phone and reach out to business owners (decision makers) directly. (Note: the executive staffs of many small businesses are in their offices during this week, working to get a jump start on the new year.  Therefore, they are accessible, have fewer pressing deadlines, and there are no gate keepers to hinder your sales efforts!)
  • Create aggressive sales activity quotas to kick off your new year.  Start a contest to reward the salesperson with the best first quarter sales.
  • Contact your holiday clients and ask for referrals.  Offer them an incentive program.
  • Anticipate the flood of bridal inquiries that arrive at the first of the year.
  • Host intimate open houses for new brides, planners, and key clients - now that the holiday hubbub has died down, they'll be happy for a night on the town.
  • Prepare your specialty menus and marketing plans for the Super Bowl, Valentine's Day, St. Patrick's Day, Easter, Passover, etc.
  • Network for success in February at the Catersource Conference.
  • Fill your sales pipeline.
Everyone in our industry knows to anticipate a robust fourth quarter but that’s no reason to snooze through the first couple months of the year. The smart approach is to ramp up sales throughout the first quarter. This will set a pace for the entire year and, rather than the horrifying loss of 2-3 months of sales time, you can be well on your way to a meaningful increase over last year’s numbers.

That’s definitely a reason to cheer “Hurrah!”

Tuesday, December 6, 2011

Now Say "Yes"

In my last post, I declared that we should say “No” to opportunities that will compromise our company’s vision, integrity, or profitability. This post inspired a big positive response from industry friends, but several asked how to best qualify when to say “Yes.”  It’s a great question!

There are many qualitative reasons to say “Yes” to an opportunity, but sound business decisions are always supported by accurate Pro formas and Profit & Loss statements. This holds true for everyone, including the creative thinker, the rainmaker (euphemism for the independent, fast-charging, commission-hungry, and client-pleasing sales person), and anyone inclined to impetuously sidestep standard cost accounting.  I confess: I was guilty of this approach for the better part of my career.

Such behavior is rarely intentional; it is simply a reflection of the uninformed or undisciplined mind. In managing Finesse Cuisine and working with consulting clients, I have found that one solution is to create a compensation plan that in part rewards everyone for achieving specific financial goals. An even more effective approach, however, is to educate your staff to understand events in financial terms and concepts.

Periodic companywide evaluations of real event P&L’s will help you decide when to say “No” and when to say “Yes.” Even hourly employees should get into the act. You may be surprised by the great suggestions your porter, dishwasher, or driver offer on ways to economize.  And they will feel great when they see how they add essential value to the company’s well being. When evaluating event Pro formas and P&L’s becomes an everyday exercise, everyone is empowered to justify activities and pricing to clients, managers, and colleagues alike. The added benefit is that your Accounting Department will be better able to forecast cash flow.

Just as professional athletes, artists, and musicians still practice basic fundamentals, you will find it helpful to regularly run through the following topics with your management: 
  • What is a business?
  • What is a Pro forma?
  •  What is a Profit & Loss Statement?
  • How do Expenses impact Contribution Margin?
  • What is the difference between Event Contribution Margin and Net Profit?
  • How can a P&L shape decision making?
  • What are your Company Fixed Costs?
Just like a basketball player practicing free throws or a jazz pianist running through scales, having these conversations reinforces the fundamentals of your company’s business.

It is the job of all managers to control and understand how costs affect them directly and why the P&L is essential.  Armed with financial understanding, you can evaluate each opportunity's value and potential risks.  Knowing all the right information helps you know when to discard the "Just Say No" rule and when to feel confident offering a wholehearted "Yes!"