Two tips for growing sales and profit

I was chatting with Tuihana Café Foodstore owner Nathan Dunn a short while ago. Tuihana is a café based at the city end of Dominion Rd in Auckland, and in its fourth year in business. The café wasn’t doing well when Nathan bought it, but through hard work, he has had the incredibly satisfying job of turning it all around.

I had asked Nathan if he had any tips on improving café results, Nathan responded with two areas cafes can improve. Increasing sales and profit margin. Though his comments are based on a food based business, I’m sure his advice on sales and profit are relevant for any business.

What Nathan advises is:

  1. Be a better marketer

We use a whole raft of different things to promote the business. Every morning our staff Instagram, Tweet and Facebook one item from the café. We also send monthly newsletter updates to our customers. Added into this mix we have a few other online advertising spots, as well as sponsorships of a couple of local primary schools.

  1. Use cloud accounting software

We use Xero http://www.xero.com and find their daily bank feeds have been a major boon to our business. Bank feeds allow a café to quickly and accurately code transactions; run weekly profit and loss statements to see how you are tracking. Café’s are notoriously bad at invoicing, however cloud accounting software makes it as easy as a few clicks to send an invoice electronically. Ditto for sending statements to slow payers, a simple click. Does the trick. Just this alone does wonders for cash flow.

Profit margins are razor thin in hospitality, so it’s very important to identify problems early on so they can be fixed quickly. You may have too much wastage, or food priced incorrectly, so it’s far too late to do all these at the end of the financial year. (Debbie here, since my conversation with Nathan, Xero actually launched a business performance dashboard watch here 2min 47 seconds (https://vimeo.com/111510948)

By being able to do weekly and even daily profit and loss statements, you can see how you’re doing in real-time and make any tweaks you may need to. It’s also important to do comparisons from previous periods (such as the previous month, or even previous years) to make sure you’re still growing.

It’s not enough just to see money in the bank; this can give you a false sense of security.

An additional point is how easy it is for you to do a large portion of your own accounting with cloud software. This is important for two reasons. First again it’s easy and not time intensive, if I can do it, you can do it. This is a significant cost saving as we didn’t have to hire another person to do our daily books. More importantly though, if you have someone doing your books, you lose control. Focus. You won’t know what is going on financially in your business. Complete visibility over your financials keeps you in front of problems so you know where and when to tweak.