By: Raj Tulshan – Founder & Managing Member of Loan Mantra
Over the past two years the cost to run a business has risen sharply with inflation surging to over 13%. This squeeze leaves many business owners trying to operate more efficiently and find ways to do more with less — making every dollar count. A recent survey by Vistage reports that two-thirds of small business owners have either cut costs or plan to reduce spending in the near future. The majority, 67%, also plan to seek business funding over the next 12 months.
Finding and evaluating the best financing options can be confusing for business owners that are already short on time and money. Using a one-stop loan application portal to find the best suited options like the one at Loan Mantra is a way to access multiple commercial loan options in one place and avoid high-interest debt. In addition, here are some tips to keep profits on tap.
Monitor Cash Flow Closely: Cash or flow management is critical for beverage businesses, as even minor fluctuations can have a significant impact on financial stability. Keep a close eye on your cash flow by monitoring incoming and outgoing payments regularly. Implement invoicing strategies to encourage prompt payment from customers and consider offering discounts for early payment to improve cash flow. By staying proactive and vigilant, cash flow crunches can be avoided to maintain a healthier financial position in the long run.
Reduce Overhead Expenses: Examine overhead expenses carefully and look for opportunities to reduce costs wherever possible. This may involve renegotiating lease agreements, downsizing commercial space, installing lighting timers or switching utilities and service providers to save on electric bills, phone service and Wi-Fi. Encourage employees to adopt energy-saving practices, such as turning off lights and equipment when not in use to save money on lower utility bills. Have major systems inspected for water leaks and waste. Saving dollars on overhead expenses is one of the best ways to contribute to your bottom line.
Negotiate with Suppliers: Building strong relationships with your suppliers can pay large dividends when it comes to saving money. Don’t hesitate to negotiate for better prices or discounts, especially if you’ve been a loyal customer. Explore different vendors and compare prices to ensure you’re getting the best possible deal on supplies and materials. Additionally, consider joining co-ops or buying groups with other businesses to increase purchasing power and negotiate bulk discounts.
Invest in Human Capital: Thirty three percent of U.S. companies expect employee turnover to increase this year according to a recent poll, costing an average of $36,295 per employee. While it may seem counterintuitive to spend money on training, investing in your employees can yield significant long-term savings. Research from LinkedIn found that 94 percent of employees say they would stay at a company longer if it invested in helping them learn. Well-trained employees are more efficient and productive, leading to lower turnover rates and reduced recruitment costs. Provide ongoing training and professional development opportunities to help employees stay current with industry trends and best practices. By investing in your team, you can build a skilled workforce that drives business growth and profitability.
Get the “Lifetime” worth out of Equipment: I was talking to a friend about their recent doctor’s office visit. During the visit, my friend noticed that as the medical tech entered the room, they dragged a large unit behind them bumping into both doorposts and finally hitting a back wall. They noticed how this tech roughly handled expensive medical equipment. This illustrates an important point. If a company purchases equipment designed to last 10 years but it only lasts 5, it will need to be replaced before its “lifetime worth,” or it will need replacement 5 years earlier than expected. This can add up to thousands if not millions of dollars in unintended expenses.
Train to Remain: Make sure that employees are properly trained to use equipment safely to minimizes workplace hazards to avoid unfortunate events that could result in heavy losses. It is a good idea to periodically check on employees to see how costly business equipment is being used and reward or remediate actions if needed. And don’t forget machines need regular scheduled maintenance for cleaning and repairs. Getting a lifetime worth out of equipment contributes to automatic savings and impacts profit.
Moderate prices: The public has hit a tipping point where high prices are driving consumers away from fast and quick-serve restaurants to eat at home. Prices at quick serve establishments rose 5% in March over the same month in 2023 while grocery prices have increased more slowly, according to the Bureau of Labor Statistics. The take-away? If price increases are needed, avoid this kind of consumer sticker shock by moderately raising prices slowly over time.
Drink in new distribution sources: Beverages now influence where consumers are choosing to eat. The National Restaurant Association’s 2024 State of the Restaurant Industry report, says that alcoholic beverages no longer take a back seat as just a “compliment” to dinner but can influence consumer’s choice of one restaurant over another acting as a key driver to the establishment. Seven out of 10 consumers who drink beer, wine, or cocktails claim the availability of alcohol beverages would make them more likely to choose one restaurant over another. Alcohol brands can approach eateries, local restaurants or franchise chains to form partnerships to push sales.
Get ready to go: Half of full-service restaurants deliver alcoholic drinks with food orders and 96% say they’ll continue to if permitted to do so in their area. 93% restaurants also offer alcoholic drinks with pick-up orders, according to the same NRA report. For operators who serve alcohol, beer is the most common alcoholic beverage served with takeout or delivery orders, with 83% of restaurants offering it. Wine by the bottle is available at 65% of full-service restaurants that sell alcohol with takeout or delivery, and cocktails are at about 6 in 10 full-service restaurants selling alcohol to-go. Locally sourced beverages, such as craft beers, are also popular among Gen Zs and millennials, as are alcohol-to-go selections.
Fake it until you make it: The mocktails are coming! The popularity of no and low-alcoholic beverages are anticipated to grow to 4% share of the alcohol market by 2027. Non-alcoholic beverage sales increased by 32% as compared to the year before while total alcoholic beverage sales for the same period only increased by 1%. Non-alcoholic beer “dominates” the no-alcohol category over wine and spirits while non-alcoholic craft beer claims over a quarter (28%) of the non-alcoholic beer available. The demand is partly fueled by more health-conscious, younger consumers who are concerned about personal wellness, low carb/calorie offerings and choosing brands that are sustainable and environmentally friendly.
Saving money is a crucial aspect of managing business and implementing the right strategies can make all the difference. By investing in human capital, getting a lifetime worth in equipment, negotiating with suppliers, monitoring cash flow, reducing overhead expenses and expanding distribution channels, business owners can achieve greater financial stability and long-term success. With careful planning, smart decision-making and by making every dollar work harder, beverage businesses can thrive in today’s tough market and keep more profits on tap.
Raj Tulshan is the founder and managing member of Loan Mantra, a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to entrepreneurs, small and medium sized businesses. Connect with Raj and Team Loan Mantra at 1.855. 700.BLUE (2583) or info@loanmantra.com.
