Reduce Payroll Processing Costs
With so many staff on weekly cash wages in hospitality, the administrative costs are high. Persuade your staff to change on to fortnightly or, even better, four-weekly payroll. You'll have to introduce it slowly, but once implemented it'll save the payroll preparation. You should also consider paying salaries directly into your staff's bank accounts.
www.kingstonsmith.co.uk
Fill out Fewer VAT returns
Depending on the size of your business, it's possible to save on the administrative costs of preparing quarterly VAT returns. Consider changing to the annual accounting system where you complete just one annual VAT return with nine interim payments. This is suitable for businesses with a turnover of less than £660,000 (VAT exclusive).
Some smaller traders - those with turnover of less than £150,000 - can make three interim payments instead of nine. And if your taxable turnover is less than £150,000, you may apply to use the flat-rate scheme in which the VAT payable is a percentage of your turnover. For pubs the rate is 5.5% of turnover. As a small business you can use the annual accounting scheme and the flat-rate scheme together. This would mean a considerable time saving as you'll no longer have to prepare VAT returns on a quarterly basis.
Businesses should be aware that the flat-rate scheme isn't intended to reduce your VAT liability, but that may be an added bonus.
www.kingstonsmith.co.uk
Refinance
If you've successfully owned a business for a couple of years, your bank - or another bank - may look more favourably on you now you've proved yourself, and be prepared to negotiate a better interest rate on your loan. If you're currently tied into a 15- or even 10-year loan, and this is hurting your cash-flow, refinance to 25 or maybe even 30 years to spread the load. You can always overpay later to clear the loan faster.
www.acorn-loans.com
Move your mortgage to reduce banking charges
Move your mortgage away from the high-street banks, which tie you into banking with them as well. This will allow you to negotiate your current account charges and save thousands a year in bank charges, cash-handling charges and supplies of change.
Paul Thompson, of Acorn Commercial Finance, says it's not unusual for high-street banks to charge the average hospitality business up to 4,000 a year for bank charges, including cash-handling charges of 1.5%. He recommends switching to Alliance & Leicester, which offers a free business current account with no standing fee, and cash-handling at 0.2%. Remember also that banks don't like cash. If you bank your cash every day, then withdraw cash for your weekly wages, you'll be paying handling charges for each transaction. You'll save money if you organise your cash requirements from your takings before you bank.
www.acorn-loans.com
www.alliance-leicester.co.uk
Microbrewery Tax Relief
In last year's Budget, the chancellor announced that he was extending the tax relief scheme for small breweries to include those that brew up to six million litres every year. While this was intended for stand-alone brewers, there's also an opportunity for microbreweries. According to Alistair Hook, brewmaster at the Greenwich Union pub, a microbrewery is viable for any small pub group or restaurant which serves about 1,000 barrels of beer alone. With the tax relief, he reckons this could add as much as 100,000 to your bottom line.
The start-up capital needed is about 100,000 for a small brewery - the Greenwich Union has invested nearer £1.5m - but you'll definitely also need a bit of enterprise, training and passion. The tax relief should allow you to reinvest in training and possibly new equipment, and when your own beer starts flowing, the satisfaction will be priceless.
WoodChip-burning Boilers
With fossil fuel and energy costs rising, one way to save money is to switch all your domestic heating to a woodchip-burning boiler. Felicity and Mark Cunliffe-Lister knew this was an option when they saw all the unused timber on the 200-acre estate where their hotel - Swinton Park - is situated. Start-up costs are expensive - about 180,000 for the size of boiler the couple needed to heat the 30-bedroom castle. However, half the cost was paid through grants from their local regional development agency, and a capital start-up grant to the installation company, Wood Energy. The other 90,000 is being paid by the Cunliffe-Listers, but through an interest-free loan from the Carbon Trust.
According to calculations, the boiler will have paid for itself within five years. Thereafter, it will save the hotel 18,000 in annual fuel costs.
- The Carbon Trust 0800 585794
- Wood Energy 01398 351349
Keep suppliers competitive
Oliver Smith, head chef at the Roof Gardens in Kensington, London, says: "Always use more than one supplier for each of the main items you use and let them know they've got competition. Where possible, get suppliers to fix prices for a certain amount of time, whether that be for a few days, a week or a month, whatever suits you, so that your costings will stay true, and you know where you stand."
www.roofgardens.com
Keep stock levels low
Dawn Davis, head sommelier at the Ledbury restaurant, west London, uses Fourth Hospitality's online stock control and purchasing system. She says: "It saves about 10 hours a week because we don't have to fill faxes in when we're ordering. If for example we're losing wine, we can track where almost every glass has gone through the system. Stock control is easy because all the figures are there up to the minute, whereas if you do it manually it takes so much more time and energy. It saves us money in the long term because it enables us to keep stock levels low as well."
Low stock levels make economic sense because your capital isn't tied up and you don't need to carry out time-consuming stock checks.
www.fourthhospitality.com
Voice over IP
An increasing number of hospitality businesses are using a technology called Voice over IP (VoIP), which allows calls between offices to circumnavigate the standard telephone networks by directing voice traffic via a virtual private network (VPN) internet connection. In short, this means calls become free of charge and the only cost is the leasing of the VPN line.
Although IP handsets required to make and receive VoIP calls are more expensive than traditional phones, the long-term savings can be substantial. Technology firm Siemens calculates the average business can reduce its annual phone bill by 31% through IP trunking. Many regular consumers have already cottoned on to this and have signed up to companies such as Skype and Net2Phone to make cheap international phone calls over their broadband connections. Google recently announced it's to launch a VoIP service, which might be the catalyst for the technology to go mainstream.
www.voip.org.uk
Open-source software
A quiet revolution is going on in software development, which may mean reduced software costs for companies. It's called open-source software, which means the code is open for anyone to add to and improve. This is a radical departure from the big software companies like Microsoft, where the source code is kept secret.
Savings from open-source software will come as businesses won't have to pay a licence fee to use it. Established IT companies such as IBM and HP are offering these services, and the National Computing Centre says more than half of companies in the UK will adopt some kind of open-source software in the next five years.
www.opensource.org
Learnpurple/CatererSearch Masterclass offer
We've designed a series of 90-minute Masterclasses. Using accelerated learning techniques, we provide a wealth of learning in less than two hours at a fraction of the price of a full-day course. All Masterclass seminars take place at the Strand Academy, Strand Palace hotel in London, starting at 8.30am (refreshments served from 8am) and finishing at 10am. Places cost 75 plus VAT. If you send two people you get a third place free.
Upcoming are 30 September - Group Presentations to Win Business; 19 October - Introduction to Modern Leadership.
Free business benchmarking
Caterer and Hotelkeeper has teamed up with the Best Practice Forum (BPF) to offer our readers free access to an online "benchmarking" tool, which enables operators to check their business's performance against that of similar operations. The aim of this free, sector-specific service is to help hospitality operators identify areas of the business they need to improve on to increase efficiency and boost profits. Interested parties should request a business profile form by e-mailing ifap@halm.co.uk, clearly quoting the Caterer offer.
www.bestpracticeforum.org
Save money with online food hygiene training
Ensure your people are safe to work with food, thus avoiding heavy fines for non-compliance and save money on training by doing it online. The Learnpurple/CatererSearch food hygiene course can be completed online in less than three hours, leading to a certificate approved by the Royal Institute of Public Health. Cost is 25 plus VAT per person.
Kitchen tips for reducing costs
Buying wisely is widely viewed as the single route to saving money in the kitchen. But it's not. Energy efficiency and staff play an equally important role.
- Break the habit of turning every cooking appliance on at the start of the shift and leaving on until the end. Only turn them on when needed. This will also reduce air circulation cost.
- Keep fridge doors closed as much as possible and don't put them close to direct heat. Don't slam doors on ovens or fridges.
- Check the operating temperature of your freezers. Are they lower than they need to be? Lifting the temperature by 1°C from, say -22°C to -21°C, will save 3-5% in running costs. But make sure any such change doesn't compromise food safety.
- Improve your kitchen's ventilation. Lowering the ambient temperature in the kitchen will provide greater energy savings than any current technology can.
- Always fit water treatment to any equipment that takes water from the mains to avoid furring up water pipes.
- Get rid of all food waste before loading up dishwashers to avoid clogging up filters and wash jets.
- A servicing contract is wiser than calling an engineer only when equipment breaks down. Preventive maintenance saves money in the long run.
Source: CESA, the Equipment Suppliers Association, www.cesa.org.uk