We are all looking for ways to cut or reduce expenses without losing revenue or impacting the customer experience. Increasing your bottom line is pretty simple, yet not always easy. You either have to increase revenue or cut expenses. Here are a few ideas…

1.             Spend More to Save – I know this goes against instincts, but it is often very effective. I was watching a Bar Rescue show the other day, and the host showed a company that was using 1.75-liter bottles because they were about 20% cheaper than the actual cost. He showed that because of the size and inconsistency of the pour, they were over-pouring by about 30%, so they were losing 10% by purchasing the cheaper products. This is the same in our industry in many places, including labor. Some employees will cost you 20% more but will be 40% more efficient. This is a savings that is hard to see without evaluating all of your expenses. Don’t always look for the cheapest product or service; look for the most effective and efficient product that either makes you more money or saves you more money. Look at the value versus the cost. And don’t forget that time also has a cost to it. Value YOUR time as well as company time. Something that took me several years to figure out was running a business just because I could do some things, but that didn’t mean that I should be doing that. It’s way too easy to find yourself working in your business instead of on your business.

2.             External Audit – Again, this is spending money you may feel you don’t have, but it can save you more money than it actually costs you. An outside source that will come in and look at your business with a fresh set of eyes will see many things that you don’t even see anymore. You are too close to your business to be able to focus on some of the little things that will make or save you money. I recommend budgeting for this and having an audit conducted on an annual or bi-annual basis. Much like a good accountant, an audit from an outside source can be valuable and worth more than it costs. I have seen examples where, before implementing this program, the numbers were pretty flat. After the audit, I saw upward trends at double-digit increases.   

3.             Renegotiate Your Contracts – This means shopping around and ensuring you get the best deal. Once you shop around, either go with the better deal or ask your current vendor to offer you a better deal. You should be doing this across the board. You will find many savings here—food vendors, beverage vendors, merchant service processors, utilities, insurance, and rent. If you are not good at negotiating, hire someone to do this. Again, make sure you are also considering the value over the cost. I’m not saying always to buy the cheapest thing, but it can never hurt to ask your vendors if they can sharpen their pencils.  

4.             Barter/Trade – You can do this when negotiating with your vendors, advertising, or anyone else who wants your money. You have a product/service that people want. Many areas even have a barter network. This is a great source. Use your barter network for advertising, printing, and even prizes for your staff incentive programs.

5.             Labor – Labor is a significant expense for any center, but we are afraid to cut it here because we don’t want a negative impact on the customer. As I mentioned before, cutting labor isn’t always the answer. You need the most efficient, adequate staff possible, which may mean spending more to save more. Training your staff is an expense that will save you money. This will ensure your staff is effective and productive when cutting costs. This is something you should be spending money on.

6.             Reduce Turnover – Turnover is a costly expense. Most HR consulting firms estimate that it costs $3,500-$4,500 to replace an hourly employee. That is a significant number. To reduce turnover, you need systems to keep your good staff happy. For each employee, what will make them happy in their job may be very different, and it’s your job to figure out what that is. Having good incentive programs and a good work culture are essential. Little things like breaks and music at work play into a fun work culture that will lead to higher employee satisfaction and lower turnover. Some of the things that polls have shown are most important to employee satisfaction are

• Enjoying what they are doing
• A good work/life balance
• Feeling connected to the organization
• Feeling like they are making a difference
• Rewards/Recognition
• A Positive Work Environment

You will notice that more money should be added to that list. That’s not as important to today’s workforce as it used to be. While fair compensation is crucial for employees, it’s clear that even the fattest paycheck won’t detoxify a workplace plagued by toxicity and a bad vibe.

7.             Create a Budget—This isn’t Congress! In real life, we must create a budget, follow it, and evaluate it. As scary and boring as this may seem, you can find lots of savings by doing this. It can be more fun if you make it a personal challenge to save money. Like a Where’s Waldo of your financials…can you find places to save money?

8.             Look for Losses – I know this seems basic, but money is walking out your door because of your processes or lack thereof. Your annual external audit should find these. Embrace technology to help create processes that will save you money. Implement an inventory control system that includes weekly inventory. If you wait and only do a monthly inventory, it’s too late by the time you catch losses, and you may have lost a lot. I remember a seminar where someone said, “If you don’t think your staff is stealing from you, you are ignorant.”  As you read this, you see that someone is stealing from you. Maybe it’s not an item they are stealing, but rather stealing time by standing around while on the clock. Perhaps it’s using the wrong portions in the kitchen. Maybe it’s not even intentional. It’s hard to catch these things unless you have the proper processes. The right process will not only help catch these things but also help prevent them.

9.             Incentivize Your Supervisors – This is a great way to have extra eyes on your side. It’s like bribery, but incentivize sounds like a better word. Set labor goals for your floor supervisors and reward them if they meet or exceed the goal. It’s only human nature to think, “What’s in it for me?”  As a floor supervisor, the more staff they have, the less work everyone has to do.   When you are slow, the supervisor needs an incentive to send extra staff home and save you on labor. You can also do this with theft. Offer your staff a reward if they the company money via theft or anything else.

10.          Ask Your Staff and Vendors – Often, staff and vendors know of ways you can save money. All you have to do is ASK! Yep, that’s right, step down off the boss pedestal, humble yourself, admit that some 18-year-old may have some knowledge or ideas that you don’t, and ask for help. Life experiences haven’t yet corrupted young people, and they may have ideas and suggestions you haven’t considered. They have an easier time thinking outside the box than many older people believe inside. Be open to these ideas (as hair-brained as they may seem) and try new things. It’ll be fun. Also, vendors have many other clients and may have solutions they have seen work elsewhere, which can help you learn from others’ mistakes.

11.          Replace the Bottom 10% – If you could take the bottom 10% of your games and get games that produce results like the top 10%, you would be happy, right? So do this. Do this with everything: menu items, arcade games, attractions, and even staff. The bottom 10% is dragging you down. Help the bottom 10% find a different home that is not YOUR business.

12.          Plan to Invest in Your Future – Pick your head up from the daily operations, grind, and look into your crystal ball. What will your place look like in 5 years? This business is ever-changing, and our customer base is so connected with technology and a short attention span that you must keep re-inventing and growing, or you will be left behind. Don’t wait until you look around and realize that you are left behind with current technology, and customers view your place as dated or old—plan to be on the cutting edge or at least close to it. Planning will save you a lot of money in the long run. If you plan to maintain your car by changing the oil, you will be less likely to blow up your engine and need a costly repair. Plan to keep your center and plan to improve it, and you will be less likely to spend money chasing problems.   

In conclusion, navigating the maze of business expenses requires creativity, strategy, and an eye for efficiency. Whether optimizing your purchasing decisions, seeking external perspectives through audits, renegotiating contracts, embracing the power of bartering, investing in staff training, fostering a positive work environment, or staying vigilant against losses, every step toward financial stability is a step toward sustainable growth. Remember, it’s not just about slashing costs; it’s about making intelligent investments while ensuring every dollar spent contributes to the success of your business. By implementing these practical tips and having a mindset of continual improvement, you’ll not only streamline operations but also lay a solid foundation for long-term prosperity in an ever-evolving business landscape.

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