Cutting the Wrong Expenses

I can’t tell you how many times I’ve received emails over the years from food business owners or startups (restaurants, bakeries, whatever) that go something like this (this is an actual email I received, and it’s not uncommon to receive emails like this. I’ve redacted not relevant portions):

I just can’t afford another bill. But [Recipe Cost Calculator] seems to be exactly what I need right now. […] I suck at mathematics, 😩.  […]  So I will just muddle through with what I know.

These types of emails are painful, and for several reasons:

1. The business owner is struggling

Empathy is not usually the attribute you think about when you think “guy who runs a software company.” But I think of Recipe Cost Calculator as “The tech business that cares about your food business.” There are several reasons for that, but primarily, it’s that helping people (with pretty much anything) has always been one of the things I’ve enjoyed most.

Also, I built and ran a food business with my wife for over a decade, so I know how much work it is. I’ve watched people do it well; I’ve watched people do it poorly. I’ve seen people be wildly successful, and I’ve seen people lose everything (some more than once).

2. The business owner isn’t able to see the underlying problem

This business owner might have an expense problem, and almost certainly, the expense problem is not the most important or the most urgent. But it’s often hard to see the forest through the trees.

As a business owner in Canada, where our lovely mobile phone oligopoly gouges us incessantly on the price of mobile phone plans, this particular expense is one that I love to use as an example because it’s one that I’ve spent far too much time on, personally:

“If only I could knock $50/month off my cell phone plan, that would be a massive win.”

But it turns out I can be an idiot sometimes. Realistically, it would probably take the same amount of time for me to figure out how to add $500/month in revenue (by building a new feature, calling some potential customers, writing a blog post, or following up with former customers) as it would for me to cut a $50/month expense. But those things are harder to do, they’re often less comfortable, and they often ask us to do things that are not in our list of strengths.

Expenses are easy to be preoccupied with, and they often provide us with what we perceive to be the “lowest hanging fruit” to help us feel good about creating a “win.”

The problem is that slashing your phone bill by $20/month or cutting out the $29/month tool that could help you save your business will not relieve your ongoing problem. The frog-in-the-pot-of-soon-to-be-boiling-water problem is almost certainly a revenue problem. It’s an “I don’t have enough customers” problem or an “I’m not charging enough” problem. Recipe Cost Calculator can help you get your pricing right and help make sure you’re charging enough, but we can’t conjure customers for you (and I haven’t found that any of our competitors can, either).

The business owner can’t (or won’t, or is unable to) prioritize

One tool I’ve found incredibly valuable for myself when trying to determine what I should be working on (or what problems I need to solve) is the Eisenhower Matrix.

Hundreds of people have written about this, but you don’t have all day (and neither do I), so let me sum it up.

Imagine you have four quadrants (see the image below), and each quadrant represents:

1. Important and Urgent
2. Important but Not Urgent
3. Not Important but Urgent
4. Not Important and Not Urgent

Often, the hardest quadrant to dedicate time to is quadrant two: Important but Not Urgent. New revenue is important, but it’s not urgent (or maybe not yet, but it soon will be). It’s way easier to spend some time in quadrant four wondering if you can find a cheaper cell phone plan or some other way to save a small, fixed amount of money every month, believing that what you are doing is important and helpful. But no amount of cutting $20/month of a fixed expense from your business will make up for the fact that you need to grow your revenue by 20% for it to be sustainable.

So let’s look at some examples of Important but Not Urgent that you might want to start looking at for your business (not all examples will apply to all food businesses, but I’d encourage you to think this through for your particular situation).

1. Talk to 10 customers in your restaurant and ask them how their meal was, what brought them in, and what would bring them back.
2. Bring your product to 10 new stores that align with your brand
3. Think of and implement three small ways you can immediately improve customer experience
4. Develop a customer loyalty program
5. Think about five ways you are currently being reactive and figure out how to become proactive about those things instead.

These are just examples and might not fit your business or your goals, but I’d encourage you to ask yourself: “Which important but not urgent tasks am I putting off that would make a significant difference to my business.”

Remember, your most urgent problem is probably not an expense problem; it’s probably a revenue problem.

This relates back to our post about “failing fast”. Believe me, if you suck at math (as my customer above claimed) and you aren’t sure if your business is going to succeed, you want the answer to that question Right. F*cking. Now. (pardon my language).

There’s some debate as to whether this quote actually belongs to Einstein, but it’s poignant: “Insanity is doing the same thing over and over again and expecting different results.”

If what you’re doing isn’t working. Change what you’re doing. Let Recipe Cost Calculator help.