9 RUTHLESS WAYS TO SAVE IF THERE’S A MINIMUM WAGE HIKE
When Seattle raised its minimum wage to $15 per hour, it made national news because it’s the highest minimum wage in the country.
However, from a franchise’s perspective, the bigger takeaway might have been that the Seattle law considers a franchise part of a larger company, even if that individual franchise employs only a few people.
While companies with 500 or fewer workers will be given extra time to comply with the new minimum wage, an individual McDonald’s, for instance, that employs 25 people, will still be counted as part of the larger corporation.
The International Franchise Association filed a lawsuit opposing the law, but if a minimum wage hike comes to your town, and you’re part of a larger chain of franchises, it very well might pay off to have a number of different ways to save money, aside from controlling employees’ salaries.
Sometimes when you want to cut costs, you have to get tough. This is your business we’re talking about, after all. We understand that every franchise is different, and you may have some restrictions based on which franchise you own. At the same time, there may be more you can do to save money than you think.
With that in mind, consider these nine ruthless tactics (that don’t include laying people off) for saving money:
- Start Moving Online – Everything in today’s world can be stored and accessed online instantaneously – pay stubs, tax documents, internal memos, handbooks, you name it. As the owner of a small franchise, there’s just no need to spend extra cash on printing costs, unless you happen to know something like direct mail is effective. And more and more, people are used to viewing things on their computers, phones and tablets. Consider using an internal drive or Internet site – Dropbox, Google Drive or Microsoft’s OneDrive – for shared documents. For payroll and tax documents, use an online payroll service that stores and maintains everything for you. Same goes for accounting online.
- Trim Insurance Costs – This is obviously a significant cost for any small business. Whether it’s health insurance, workers’ comp, life, make sure you’re getting the best deal out there. Often a broker can help by presenting a number of different options you can compare and choose from.
- Kick the Tires on the Business Model – Everyone loves a good promotion (buy two, get the third one free, that kind of thing), but it may not be right for your business or necessary because of where you’re located, the type of customer you have, or any number of other factors. If your franchiser allows you to, test it. Offer a promotion for a month and then the following month see if your customers are willing to pay more for the same amount. If they are, there’s no reason to give them a discount. Some products people are willing to pay for at a premium (think Apple), others they demand a discount (J.C. Penney). Figure out where you fit in and don’t give anything away for less than what the market will pay.
- Get Internet Savvy, Fast – Some people are still uncomfortable with the digital revolution, but if you’re not taking advantage of it, it’s a missed opportunity. You can allow people to more easily find you online with some basic research on search engine optimization (SEO). People need to be able to find you on Google when they’re searching for something that’s exactly like what you’re offering. Certainly some time spent learning about SEO tactics for your website is far cheaper than pouring money into advertising.
- Be Smart About Advertising and Marketing – This is unfortunately an area that business owners sometimes dive into without understanding their objectives or what might help sales, and end up spending a lot of money with no return on investment. It may have seemed like a good idea to brand a thousand pens with the company logo, but what is that really doing for you? How much are you paying to advertise in the local newspaper or something bigger like a billboard? Could you reach the same amount or even more people by going on Facebook and spending a couple hundred dollars? The nice thing about online advertising, be it on Google Adwords, Bing AdCenter, Facebook or Twitter is that you can pay per click (so you don’t pay unless someone is coming to your website, liking your page or sharing your stuff). If it’s not working, you can turn it off. It’s quick, it’s easy and it’s relatively cheap. There’s also a great deal of targeting you can do, so you’re specifically hitting people in Houston who like cheeseburgers, for example.
- Don’t Be Afraid to Shop Around –Ask another owner of the franchise you’re in? If you’re paying more than them for goods and services used by your business, it’s time to go shopping. While you may be comfortable with your current vendors, you shouldn’t ignore better deals that might be out there. If you find them, it can also give you some leverage to negotiate with the current vendor.
- Treat your employees awesomely – This isn’t just some hokey, feel-good advice. It’s a reminder that paying your employers more doesn’t necessarily mean you’re going to lose money. The cost of high turnover can add up quickly and happy employees often equal happy customers. Treat your employees great, pay them well and keep them, and you could actually save a great deal.
- Do Your Research, And Then Some, on Expansion – If you were planning on expanding to a second or third franchise, be absolutely certain you have the revenue to support it. If the minimum wage goes up and puts a tighter squeeze on your finances, it might not be a good time. At the same time, if your industry is in a bit of a slowdown, it could be an opportunity worth seizing, so you’re ready to profit when things pick up. Just have your ducks in a row.
- Negotiate with the franchise company – Approach your franchise about any fees you pay them on a regular basis. Maybe you can renegotiate your lease or borrow signage from an old franchise no longer operating. Any way they can give you a break could help mitigate extraneous costs. They might not budge, but it’s up to you to investigate.