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When Is an Investment an Expense?

High tech and low tech answers follow:

Spring has sprung. Fall has fallen. Winter stunk and we’re mad as hell. Right? Is it time to invest in your business now? Put some money and effort in, and get a big return, OK? That is always the challenge, and often, because the investment is a poor one, it turns out to be just an expense.

  1. You INVESTED in a website. The really good ones cost a lot of money, but you got a really good deal from the kid who works for you, the kids with that start up business, that company that took forever and your site that no one really looks at … that sir and madam is an expense. An investment is a website that you pay for once, and it just keeps working for you. Easy to maintain. Easy to update with new specials, upcoming events, and links to your Facebook and Twitter accounts. It just keeps making money, and that is what I call an investment.
  2. You INVESTED in a new manager. The really good ones were asking a lot of salary, but you got a really good deal promoting that head waiter, or assistant manager who has had six jobs in five years. You were going to train her to do it your way, and you would save $10,000 a year, right? That usually turns out to be an expensive expense. Same as hiring journeyman cooks in your kitchen. The investment comes from a manager who knows how to train a staff to upsell. A manager who has a keen eye for customer responses and is responsive. The investment of $10,000 additional salary per year will likely improve your bottom line by double, triple that and much more. Just as a couple of dollars an hour extra for an experienced and stable line cook will lead to lower food costs, better quality food coming from your kitchen, and the combination of that manager and those cooks will lead to better service and customer satisfaction. Every single time. Think there are shortcuts? Nope, just expenses.
  3. You INVESTED in a good POS system a few years ago (you knew I would go there, right?). A few years later, it is becoming an expense. Upgrades, maintenance, service calls, and it is getting to be downright slow. Sounds expensive and painful, and it is. Technology moves quickly and new technology provides tools to savvy operators which leave the old POS systems in a trail of dust. Dust makes you cough. Time to get rid of the dust, catch up to, and pass by the young whipper snappers who use and utilize the latest technology tools to grow their business and their bottom lines. Do not be afraid of being SOLD something EXPENSIVE. Talk to your POS company instead, as a business partner who has your best interests in mind. Most of them really do. Put down your guard and hear about what is available today that will help you grow. That will help you have more personal time. That will help you make more money, more easily. Online Ordering, Customer Databases, Loyalty Programs, email campaigns, Cloud analytics, Automatic alerts, etc., etc., and … you know, right?

Your competition is moving along and quite successfully deploying INVESTMENT strategies, and continuing in many ways to invest in their businesses. You see it every day. Do not delay. It is not a choice, it is mandatory. It is not an EXPENSE. It is an INVESTMENT.

Let me know where and when I can help, and enjoy the weather and your thriving business!

About the Author

Henry Pertman is Director, Hospitality Consulting at CohnReznick, located in the firm’s Baltimore, Md. office. 410-783-4900, henry.pertman@cohnreznick.com.

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