2017 New Laws in California Will Affect Small Businesses in Many Ways

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You may have made a few resolutions to start the New Year; California made a few laws – in fact, 898 new laws are going into effect in 2017, and some might affect small businesses in more ways than you might imagine.

Wages — and Equal Pay Protections — Rise

Employers are required to post the new California Minimum Wage Official Notice alerting workers that companies with more than 26 workers must pay at least $10.50 an hour. For companies with 25 or fewer workers, the new wage is $10 per hour. In many places around the state, though, the law surpassed. Several municipalities in Silicon Valley are instituting minimum wages closer to $13 an hour.

Other new legislation is aimed at ensuring people receive equal pay. Currently, employers cannot pay women lower rates than men for essentially the same work. The same protection is provided to people based on race and ethnicity.

Another new statue decreed that disparities in compensation could not be justified by prior wages, noting that lower prior wages might simply “reflect widespread, long-standing, gender-based wage disparities in the labor market.”

Parts of the Past Are Off-Limits In Hiring

Hiring and employment contracts are affected by new laws. Employers cannot ask job applicants to disclose their arrest or other interactions with juvenile court, and that information cannot be used as a factor in hiring someone.

There are also changes in how you can settle disputes with employees. If your small business employs some salespeople or other workers in the Golden State, take note of this. Employers cannot require an employee who primarily resides and works in California to agree to bring a claim or file a lawsuit in another state if the claim arises in California.

Blowing Smoke (Not)

California received a lot of hoopla for legalizing the recreational use of marijuana for people over age 21; however, another aspect of the law has received less attention: employers may still prohibit workers from inhaling on the job. They can also test workers for marijuana before they’re hired or anytime there’s a reasonable suspicion of impairment.

While grass got the green light, lawmakers broadened the prohibition of smoking in the workplace. They removed previous exemptions for bars, hotel lobbies, warehouse factories and several other areas.

While you might not be able to smoke ’em if you got ’em, you may be able to pour yourself a good still drink. Beauty salons and barbershops will be able to provide patrons with free beer or wine until 10 p.m. This was to cater to the growing trend of pampering customers while attending to their locks.

A Bathroom For Everyone

This just shows that everyone follows what Starbucks does. Any business or public place that offers single-user toilet facilities must make them all-gender. The move, applauded by advocates for women’s rights and the LGBT community, won’t be too costly to businesses. They’ll just need to change their signage, which should cost about $40 per bathroom.

The company medicine cabinet just got a boost, as well. Any business can stock EpiPens in case life-threatening allergic reactions need to be treated. Even as he signed the law, though, Gov. Jerry Brown chided the makers of the device for their “rapacious corporate behavior” in raising their prices.

Putting the Kibosh on Instagraming Drivers

If your workers drive on the job, they’re already banned from texting while driving, but even more stringent requirements are going into making the highways safer: Californians can no longer use handheld wireless phones or devices while driving, unless the equipment is mounted on the dashboard and doesn’t inhibit their view of the road. So check your directions and Facebook likes before you put the key in the ignition.

Be Happy If You Don’t Own Cows

Farmers have their own new challenges that other small businesses are probably glad they don’t have to deal with. Among the newly regulated activities are – no kidding – cow farts. The law reduces global warming when a cow produces methane by belching or passing gas. Farmers will need to employ devices like methane digesters, which capture methane from manure in large storage tanks and convert them into electricity.

As far as dealing with the cow belches – we’ll leave that to your imagination. Sometimes following the letter of the law isn’t pretty.

4 Must-Know Tips when Managing Restaurant Finances

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Part four in our four-part series with culinary consultant Jenny Dorsey on her best advice for your restaurant brand, menu, staff and finances when you’re owning and running a restaurant.

Now that you understand key components to your restaurant’s brand, menu, and staffing, we close with financial tips for restaurant owners. Keeping on top of your restaurant’s finances is the most important step to ensure your restaurant stays open. Dorsey suggests four key areas to focus on when managing your restaurant’s finances:

Track All Costs — Including Hidden Ones

As a restaurant owner, closely monitor a spreadsheet that captures your total revenue, line item costs and gross revenue. Before you even open a restaurant, you should have an estimate of what all these costs will be. Every month, you need to track how close your actual expenditures are to your estimates. This way you can unearth hidden costs that crop up as you manage your restaurant. Adjust your monthly budget accordingly, so you’re always on top of what money is going out and into your restaurant.

“What are your food costs and labor costs?” Dorsey asks. “These are two really big ones for restaurants, so you should be tracking these closely. What are your overhead costs every month? Rent, utility, Wi-Fi … You need to know what that number is too. Even if you don’t sell any food, you still have to pay those overhead bills, at minimum.”

Dorsey also recommends understanding what types of financial changes come with restaurant seasons. For example, if you are opening a patio and staffing it for the summer, track those costs in your spreadsheet. Be sure to track the seasonal overage for turning up the heat in the winter as well. Finally, Dorsey recommends watching how your food costs raise or lower based on buying food in small quantities or bulk. This is a hidden line item that can save (or cost) your restaurant a lot of money.

Understand How Sales & Net Income Affect Each Other

You might be able to increase sales by making changes, such as adjusting the menu. But if you’re also increasing your costs, then more revenue means nothing. Dorsey stresses that it’s important to understand how sales and net income work with each other. Ensure that while you’re increasing sales, you’re not also significantly increasing costs.

“A lot of people think sales equal net income,” Dorsey says. “Sales are sales, and net income is your sales minus your costs. So, even if you’re constantly increasing sales, if you’re also increasing your costs then you’re not making any money. If you’re going to invest in something for your restaurant that’s not going to bolster your sales or net income right away, that’s okay, but then you need to recognize that. For example interior design might not pay immediately, but you might have increased future sales after really good Yelp reviews about the ambiance of your restaurant. Think about bolstering your sales in a way that has your income in mind.”

Don’t Underestimate Your Required Working Capital

Dorsey says restaurant owners make a common financial mistake: not accounting for the working capital needed to run their restaurant. Once you know your monthly costs, keep two-to-three months of working capital saved in case there is a downturn.

“You don’t want to be living and running your business ‘paycheck to paycheck,'” Dorsey says. “Things usually domino, and it can be as simple as if you didn’t make enough money to pay your utility bill, then you incur a big late fee, which means you can’t pay something else on time, and bills begin to spiral out of control. You perpetually end up in this cycle of not being able to pay your restaurant’s bills on time.”

If you can’t save enough to get ahead for two to three months, another option is to obtain restaurant and food service financing from a trusted source such as Strategic

Funding. This can provide you with working capital you can use in case business declines for a couple months.

Know Your Resources for a Loan & Use Them Wisely

Dorsey says there are three main sources where restaurateurs obtain financing:

Friends and Family: Getting financing from friends and family can be great because they know you and terms can be generous. On the other hand, if things go awry your business finances will become entangled with personal relationships.

“You should have some sort of formal contract in place, even if it’s your mom and dad lending you money,” Dorsey says. “It’s best to have as much legal framework around this relationship in case anything goes south.”

Crowdfunding: Dorsey says the best time to use crowdfunding platforms is if you’re trying to raise funds for a restaurant product or if you’re raising money for a beloved neighborhood location. However, she stresses it’s important to understand the legal implications.

“The challenge with crowd is if someone gives you $5, they technically own a very small share in your company,” Dorsey says. “If you have 5,000 backers, then you have 5,001 shareholders in your company and they technically have a say in what you do with your restaurant, no matter how small their contributions are. Because of this, it’s important to make sure the legal framework is set out before crowdfunding. Alternatively, there’s some platforms that are non-equity based, but in that case your backers will still expect to receive something tangible in return for their contribution, so think wisely about what you’ll be offering them.”

Restaurant Business Loans: Dorsey says it’s important when obtaining restaurant financing to clearly understand how you can turn around the loan money and pay it back since you’re bound to terms. You can’t miss payments or float cash like you might be able to with friends and family.

“I think restaurant financing works especially well for owners with established restaurants or those very confident in their financial projections because you have a record of what that loan is going to get you,” Dorsey says. “For example, if you need $100K in financing to open a second location, you should know based on financials from your first location that you can expect to pay that back in X amount of months.”

Interested in obtaining operating funds for your restaurant? Visit Kapitus to learn more about how a restaurant loan could grow your restaurant this year. To find out more about how Jenny Dorsey can help your restaurant, visit JennyDorseyConsulting.com.

Share The Love: Valentine’s Day Marketing Ideas for Small Business

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The holidays are a great time for small businesses to offer specials and explore unique marketing promotions. Valentine’s Day is especially fun. It’s also a good opportunity to capture new business. According to the National Retail Federation, Valentine’s Day spending was estimated at $19.7 billion in 2016.

Even if your business isn’t in the floral or confections industries, you can incorporate Valentine’s Day into your marketing. Here are five ideas to get you started.

Sweet Deals

Even if your business isn’t associated with romance, Valentine’s Day is the perfect time to couple discounts around the number “2.” Promote a limited-time “2-for-1 Valentine’s Day Deal” to move stock sitting in your supply room or on inventory shelves. Or offer a “20-percent-off “discount for services booked during Valentine’s Day week. Whichever sweet deal you decide on, this is one way to capitalize on the Valentine’s Day theme in a business that isn’t usually associated with romance.

Valentine’s Day Gift Basket

Gifts go hand-in-hand with this holiday, so why not award a Valentine’s Day gift basket as a prize? For one month prior to Valentine’s Day, offer in-store customers a chance to win the basket. Display it in-store. Fill it with romantic items, such as heart-shaped chocolates, a bottle of wine, two wine glasses, assorted fruit, and/or flowers.

On your gift basket entries, include a line to collect email addresses to add to your email marketing list. You may even want to send out a thank-you email including a 10 percent discount for the recipient’s next in-store or online purchase.

Share The Love

A great way to reward your existing customers and gain new ones is to take part in a paired marketing promotion. Valentine’s Day is a particularly great time to “share the love.”

Make arrangements with another business owner to offer an in-store or online Valentine’s week coupon. It could be a discount or free gift from a neighboring small business, or another online business that has a similar target market to yours. At the same time, that other business will offer their own customers a coupon for a discount or free gift from your business. This is a winning marketing strategy for you and the other business. It’s also a nice Valentine’s Day gift for both sets of customers.

Social Media Sweethearts

Everyone loves a good love story! If your business has an active social media presence and you’re looking to build your following, invite followers to share their “love” stories on your social media pages. They could post romantic messages or their own romantic story along with a special hashtag. Try to incorporate your business’s name or a catchy Valentine-related phrase into the tag. Words to use may include: sweet, sweetheart, love, romance, cupid, Valentine, and heart. This helps build your online community, and shows that you value your followers as individuals as well as customers.

Love Our Charity

Valentine’s Day celebrates all kinds of love, not just the romantic kind. Host a fundraising event in-store, online or via social media to raise money for the charity your business loves. Invite your customers to contribute with the message “Love Our Charity.” This is also a good opportunity to get free local media coverage from your area radio stations, print newspapers, and TV stations.

Marketing for a small business doesn’t necessarily require a big budget. With a little creativity and holiday-linked campaigns and promotions tailored to your clientele and industry, businesses of all types can grab attention and cash in on Valentine’s Day spending.

How to Hire and Retain the Best Restaurant Staff

How to Hire and Retain the Best Restaurant Staff

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This is part three in our four-part series with culinary consultant Jenny Dorsey on her best advice on building a killer restaurant brand, unique menu, top-notch restaurant wait staff and a secure financial plan when owning a restaurant.

Now that you understand key components to your restaurant’s brand and menu, it’s time to look at hiring and retaining the best staff for your restaurant. Dorsey shares with us how to write the perfect job description, conduct a great interview, properly train your restaurant staff and then offer the right incentives to keep great employees in a competitive market.

Building Job Descriptions

When crafting job descriptions for your restaurant, you want to include two important items. One, very specific job duties and two, what the employee gains from working for you. Specific job duties are important because they set expectations. If you want to hire someone who will understand your wine selection, but also spend time cleaning wine glasses and the restaurant after their shift, you need to state this. Otherwise misaligned expectations will create unhappy employees.

It’s also important to get job descriptions right for legal reasons. Job descriptions and essential functions could effect a number of legal statues for your business, including the Americans with Disabilities Act (ADA), Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA) and more. Additionally, to find high-quality employees who believe in your restaurant and put in hard work, you need to highlight within the job description how you’ll invest in your new employee. Will you give them ownership and leadership opportunities? Will they get holidays off?

“You’re the owner, so of course you care about your restaurant,” Dorsey says. “If you give no one else ownership, no one will feel about your restaurant the way you do. If you really trust your employees, then you can expect something better from them. The latter is really hard for people, but it’s your choice.”

Interviewing Staff for the Right Qualities

After reviewing and selecting respondents to interview, it’s important to conduct interviews in-person, and not just over the phone. When you’re able to interview people in your restaurant, you can better understand if candidates fit into your restaurant concept, space and brand.

When interviewing your new candidates, there are three important characteristics to look for:

  • Punctuality;
  • Attention to detail
  • A hospitable attitude

 

“You can teach everyone technique, but you can’t teach them attitude,” Dorsey says. “You can teach your server to sell the beer, go and say hi or ask for water refills. But you can’t teach them HOW to do it. If they don’t generally understand what hospitality means and how that feels, then they’re never going to do it the right way. And no amount of money will make them more hospitable.”

Training Your Staff to Carry Out Your Concept

After you hire your new staff, the next important step is to focus on training your employees properly. Dorsey recommends to start training on the big ideas — be clear on your restaurant brand, concept, values and mission. If your employees understand the big picture ideas, then everything they do – from up-selling to greeting customers – will keep these key concepts in mind. However, it’s also important to train on job duties as well as the bigger picture. Make sure to hold consistent training sessions for your employees. Cover all the basics from menu changes and specials to the wine selection and closing duties.

“Training is hard and training people consistently is often overlooked,” Dorsey said. “Training is something that should be constant, you’re always training as a restaurant owner. You should always be learning and so should your staff.”

Keeping the Best Restaurant Employees

Once you have restaurant staff you love and have invested time into hiring and training, it’s time to keep them around. Giving employees ownership and genuinely listening to their concerns are two big areas tied to employee satisfaction. Dorsey recommends steps to ensure your employees have someone to talk to and know their concerns are being heard and worked on. Simple ways to do this are to offer peer-to-peer reviews, leave an anonymous suggestion box in the break room and/or hold regular feedback meetings. But, the number one way to retain quality employees is to pay them well.

“You need to pay for top-notch restaurant talent,” Dorsey says. “Your restaurant is going to have bad service and obviously unhappy employees if they’re not paid well. Take care of your employees and they will take care of you. It’s pretty simple.”

Advice to Develop & Improve Your Restaurant Menu

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To help you make the best decisions for your restaurant, we spoke with culinary consultant Jenny Dorsey on what it takes for a restaurant to have a killer brand, unique menu, top-notch support staff and a secure financial plan when owning a restaurant.

This is part two in a four-part series about restaurant management.

In part one of this four-part series, Dorsey gives us inside tips on what makes a high-quality restaurant brand. In this second part of the series, she shares her insights into developing and improving your restaurant menu.

First and foremost, your menu should reflect the brand you spent so much time refining.

“Be focused on what you’re doing,” Dorsey says. “What I see most frequently is menus are all over the place. Diners get confused and then they’re less attracted to dining at your restaurant. They don’t understand what you’re trying to be. With a million places to choose from in a city, people are not going to choose a restaurant that’s all over the place.”

It’s important to always keep in mind the concept you want to convey to your customers and the type of people who would dine there. If you want to be an authentic Thai restaurant, don’t include dishes that are commonly Americanized Thai, such as crab rangoon. If you want to be known for your killer sushi, don’t highlight chicken karaage and udon noodles on your menu. And if you want to feature Mediterranean dishes from Greece, don’t include a hamburger and grilled cheese sandwich.

Next to ensuring your menu meshes with the dining concept of your brand, the second most important factor in building a restaurant menu is pricing, which Dorsey calls both a science and an art.

Pricing a Restaurant Menu: The Science

Specific food costs and line item costs determine the menu. Dorsey says a general cost isn’t good enough. Be specific on food costs because your restaurant’s bottom line depends on them. In general, sit-down restaurants have a 30-35 percent raw food cost or lower.

Next, are line item costs. Determine which are high-margin items and highlight them on the menu in a way that attracts focus and sales. The high-selling, low-margin menu items might need tweaking to increase profits. On the other hand, you also want to find any low-margin, low-sales items on your menu. Decide if you should improve them or remove them.

“You have to dive deep and look at how your numbers play out,” Dorsey says. “Do some sensitivity analysis on how you think people will move with your menu and price changes. Know your itemized costs as well as how your customers react to certain price points. Also think about how you are going to make your splurge items work. Maybe you’ll take a small hit on margins, but it’ll be an amazing item that’ll be good PR, then it’s worth it.”

Pricing a Restaurant Menu: The Art

While food costs are the science of creating a great restaurant menu, there is also an art to it. Dorsey says to first create a menu only of food and line item costs. After, sit back and take an objective look at how your menu feels. Are the appetizers too pricey? Is there an entree that stands out in price, but doesn’t seem worth the cost? Would you sell more martinis if they were $9 instead of $15 a piece? You also want to compare your menu to your competition — do you want to undercut them and be slightly more affordable, or do you want to be slightly more expensive and come across as higher end than your competition?

Finally, Dorsey has a few tips for creating the perfect restaurant menu besides pricing. In general, she says skip photos on your menu because it sets up unrealistic expectations for your diners when the food doesn’t appear like the professional photo shoot. She also recommends including one dish for pescatarians, vegetarians and Gluten-free eaters. And she stresses that you cannot make sweeping price changes like increasing everything on your menu by $1 or whimsical menu changes based on gut feelings.

“All menu changes are based on data, not random changes,” Dorsey says. “If you’re a general manager, and you think the chicken dish is the best selling entree, you might be right or you might be wrong. Unless you can back it up with data, you shouldn’t make the change.”

To ensure you’re backing your menu changes up with data, make sure you analyze weekly food sales for at least a month after rolling out new menu changes. Understand the best sellers and low sellers, and anything that was numerously sent back to the kitchen. With an eye on data, food costs and your restaurant brand, you should be setup to create a menu that makes your restaurant a huge success.

5 Steps to Top-Notch Restaurant Branding

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Running a restaurant means every choice is critical — from decisions on location, branding, menu, decor and more, to even your personal time and finances. Since 60 percent of restaurants fail in the first month, it’s important to make calculated decisions that contribute to a booming restaurant, from inception to every year after. To help you make the best decisions for your restaurant, we spoke with culinary consultant Jenny Dorsey on what it takes for a restaurant to have a killer brand, unique menu, top-notch support staff and a secure financial plan.

In part one of this four-part series, Dorsey gives us inside tips on what makes a high-quality restaurant brand. You must reflect your brand across your logo, menu and location to your price point, marketing and service. No matter what stage you’re at, here are five key areas Dorsey recommends focusing on for your brand:

1. Target Market:

“People will say ‘Everyone is my customer!’ but not really,” Dorsey says. “If you’re a neighborhood restaurant, then you have to figure out when your neighborhood wants to eat and what they want to eat. If you’re an upscale restaurant, you have to be prepared for people who want to be treated a certain way.”

Of the five main categories of restaurants (quick-service, fast-casual, midrange, upscale or fine dining), it’s important to understand what type of restaurant you want to be. Fitting the right kind of restaurant to your market will depend on the type and number of customers in your area. Your local Chamber of Commerce may provide basic demographics (population, average incomes, etc.) to help businesses decide what is the best type of restaurant for your market.

2. Competition:

Dorsey stresses how important it is to understand who are your competitors.  Once you know who they are, both in your neighborhood and in your category, conduct the proper research. This research should include visiting the competition yourself.

“I always recommend doing literal field walks,” Dorsey says. “Go into your closest competitor. How does the food taste? What is the price point?  Is there great service? Ambiance? How many people are there? Go and talk to the owner — this is not an industry where people hate each other. They’ll likely tell you if they’re struggling.”

3. Financials:

Dorsey says a number of restaurateurs gloss over restaurant finances and don’t understand the exact line items that contribute to a budget. From her experience, running a restaurant is always more expensive than restaurateurs think. Therefore it’s important to set a budget for marketing your restaurant. She stresses there are areas to splurge on your brand and areas to save:

“Having a good website is critical. After that, every restaurant doesn’t need an intense social media presence. If you have the budget, great — but I wouldn’t put it above the servers, cooks: people who need to make really amazing food.”

4. Location:

Before looking at restaurant locations, Dorsey recommends deciding on very clear facility requirements and budget.

“Going back to your financials, you need to know exactly how much you can spend,” Dorsey says. “If it’s $7K, don’t go look at the $8K a month restaurant. It’s going to be a little bit more electricity, a little bit more gas, and then you’re going to have to make $1,500 more in sales a month to make that up. That could be the ‘make it and break it’ for your restaurant.”

5. Concept:

“Creating your restaurant brand and concept is not something you can do on a whim,” Dorsey says.

The concept can be the most important piece to get right when developing your restaurant brand. You need to bring something different to the table that creates a unique brand experience versus what is already in the market. Dorsey stresses this concept should not just be about the food; you need to think holistically about your restaurant brand. Clearly understand what your ambiance will be, why people will want to come hang out and what you’re adding to the restaurant’s neighborhood.

“It starts with having a very focused concept of what you want. You should be able to articulate that in a minute or less. That will be very helpful and should guide you in threading the branding pieces together across all key areas.”

Sharing these five key areas for establishing a strong restaurant brand, Dorsey hopes owners can avoid the biggest branding mistake she sees restaurants make:

“Don’t try to do too many things at once,” Dorsey says. “Be very clear about what you are and stick to it. I see some restaurant owners keep adding to the menu like it’s a grocery store. If you run a hamburger place and you decide to put a falafel on the menu then people say, ‘What do you do? What do you do well?’ As there are more and more restaurant options, people are getting really specific. They want to eat a certain thing and they want that thing to be really good instead of having a ton of mediocre options.”

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