Few businesses experience the joy of uninterrupted, problem-free growth; most hit bumps in their journey.
Why is it that any two businesses in the same industry facing the same challenges can have completely different outcomes?
Why do some overcome challenges and others fail to fulfil their potential?
And what is the key to unlocking business growth?
Topics: How to grow a business
Saving money on marketing isn’t just about cutting the cost of a retainer or getting a new website cheaper.
Depending which study you read, marketers waste anywhere between 26% and 60% of marketing spend, and in our own experience of working with SMEs and larger businesses, up to 50% of marketing expenditure is wasted.
The key then is to identify and eliminate those areas of wasted marketing spend without impacting sales.
There are three key areas of waste:
Topics: How to grow a business
Big names like Jamie Oliver, Byron, Strada and more have closed restaurants in the past couple of years, and others have responded to the market with discounts, budget menus and other price-cutting measures.
However, when combined with cost pressures such as rising business rates, increases in the National Living Wage and the rise of high street rents, the pressure on margin is a recipe for disaster. Added to that food prices have risen (largely due to the falling pound), and Brexit still provides some uncertainty here in the UK.
All of these things are out of our control, but all of them impact ALL restaurants. So why do some fail, when others are expanding?
Traditionally, business leaders have looked at the trend in overall profit (or loss) for the group as a measure of success. Most will break this down by restaurant and/or geography to facilitate restructuring / growth decisions.
They will look at their profit margin compared with the competition and to improve margin, they will work the levers of increasing revenue and/or reducing the cost of goods sold.
But things have changed enormously in the past couple of years.
Disruption in the UK casual dining market from alternatives like Deliveroo, UberEats, Foodhalls, drive-throughs and others, plus the seemingly ever-increasing demands of a very fickle consumer means that this traditional approach to control simply doesn’t work.
Those who survive must differentiate themselves. They have to provide entertainment value, atmosphere and good food. And they have to do it more efficiently than the next person to sustain their place in a world of tight margins and fickle customers.
So rather than asking yourself "What is the root cause of the problem in our business? (Is it the theme, the menu, our cost base, our efficiency....), casual dining restaurants have to step back to discover the most profitable use for their resources.
The question should be "How do I work with what I have to make the most profit?"
We have a methodology for doing that...
"Enterprise Value" is a term that is used to value a business beyond it's market capitalisation. The usual definition is market capitalisation (share price multiplied by the number of outstanding shares) plus net debt.
But we think that enterprise value can and should be looked at in an entirely different way....
Companies that have surpassed the £20m turnover mark have already worked hard to structure their business in a way that maximises business growth and the value of their enterprise;
They’ve been focused on driving sales
They've negotiated costs to the best of their ability
They’ve reviewed and optimised their operational processes.
In short, they’ve already examined each area of the business.
Yet many CEO’s and investors that I speak to know that they could do even better. They’re just not sure how.