This week, for a change, I thought why not write about business and make our editor Sylvia happy? There will be no mention of incompetent, lying, corrupt politicians, or even public-sector employee pension schemes. Instead, I’ll focus on how we should all
be more efficient to keep the above in the standard of living they have at our expense.
Always, when I write or speak about reducing or controlling costs, someone will confuse it with either reducing quality – which is never what I mean – or come up with that hoary old chestnut: “You can’t cut your way to success.”
Even in British Baker, I read that Greggs announced its profits were down and, while it is driving for growth, it is also taking action to reduce costs. After all, assuming it is constantly monitoring its costs and yet still finds it necessary to review them, why should we think that we are so efficient that we do not have to bother?
I can never see the point in expanding sales without a commensurate increase in profits. How often have we seen a fellow baker expand from, say, three shops to eight, and the next sad thing we read about is their demise?
There are often two main reasons why they fail: lack of control of costs and lack of adequate control systems. When you run a maximum of three shops, for example, you can keep most of what you need to know in your head – although even that I find risky. When the total number of shops gets larger, systems are not a luxury, they are a necessity. So many bakers say: “Oh I cannot be bothered with all that paperwork.” But the only answer is that, unless you’re a genius, you had better bother with it or you will simply not survive.
Our Scottish bakery friends appear to have mastered that and they keep going from strength to strength. They put in systems to watch over and control their growth.
The only danger is that, with the ability of computers to spew out paper endlessly, you’ll get too much information, most of which you cannot use. So I will list what financial elements I think are absolutely necessary to examine every week: bank balance, total creditors, debtors and sales.
With those four figures, you will always know where you are. After that, you can add on whatever other data you think you need and, every year, cull out whatever you have not really used.
Next, there are the figures I think I need, such as accurate production figures, to tell me how much per man hour was produced, the level of wage percentage, waste and the monthly stocktaking.
Last, but not least, I look at the wage percentage of every department of the business in detail to allow me to make accurate comparisons. Of course, there are other data that we keep, but space has run out and each bakery owner has to decide for him- or herself what they require.
Just think about it. If you work like the dickens to be rich, you will then be able to afford to sit on the veranda of an expensive care home, watching the healthy, but poor, people walk by.