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Productivity / Business Productivity

Five things a small family business can learn from a kitchen nightmare

Imagine your small family business was a cafe or restaurant and Gordon Ramsay dropped by to check out how you were running the show - what would he say? Most likely one (or all!) of these five things.

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One of my favourite TV shows of late has been Gordon Ramsay’s Kitchen Nightmares and the spin off series Hotel Rescue. Both series are certainly great entertainment (provided you don’t mind the occasional burst of foul language)!

For those of you who haven’t seen the show, each episode follows the script of highlighting a poorly performing restaurant or hotel. Gordon comes in, checks the place out, and then seeks to turn the small family business around by working on various aspects of the business. Gordon has the runs on the board as a chef and restaurant owner, not to mention a successful media career as well, so eventually most of the business owners come around to Gordon’s ideas and changes.

And generally speaking, Gordon’s ideas and advice fall into one (or all!) of the five categories below:

1. Family and business don’t always mix.

Many of the businesses featured on the show are family run affairs with husband, wife and adult children involved. Quite often the source of conflict revolves around the father as head of the family also acting as head of the business. You cannot run a small family business the same way you run a family. Each person needs a carefully defined role within the business as a point of focus. If the father isn’t a chef, but loves interacting with customers then he needs to stay out of the kitchen and not get involved in the menu.

The head of any business should always have regular face-to-face experiences with paying customers to ensure feedback is received and acted upon. They do not need to be hands-on in every aspect of the business, just where they can make the most difference to the success of the business.

"Your job is to the manage the business as a whole, not to stand over the kitchen staff or to tell everyone that if it’s not done your way it’s wrong."

2. The customer isn’t always right, but they should always come first.

Argue with a customer and you can almost guarantee they won’t be back. In fact, in the digital world we live in, arguing with a customer can quickly end up online and spread through social media or the local community. Which means how you deal with customers that raise issues – real or perceived – is critical.

Resolving the matter so the customer is content is far more important than proving yourself to be right all the time.

3. Feedback is only useful if its acted on.

Feedback can come from many sources including customers, staff and suppliers. Learning to listen and take in the feedback is the key to having a small business that is able to evolve as needed to meet the market conditions and customer’s needs. Once feedback is received the hard part starts. Courage is needed to change. We all like to develop routines and patterns for ourselves to alleviate the stress of constant change management but the truth is, change is good.

Watch your customers carefully and learn from them. Learn from their buying habits, their return rates, their spend per customer and so forth. Your staff are also an important source of feedback (if you need more proof of this then check out another reality show Undercover Boss, the show is a hit and for good reason).

Get out of your office, interact with your staff and develop an open honest relationship. If staff do not feel secure in their job or are intimidated by you, then you won’t get any feedback from them. There’s another lesson right there, if your staff aren’t giving you feedback that can be acted upon, then that in itself is feedback. In this case no news, is definitely not good news.

4. Learn to read the warning signs before they smack you in the head.

All of the businesses featured on the show are in dire straits and months away from running out of cash and closing. Learning to read the warning signs earlier can create opportunities to turn businesses around, or even shut them down more quickly to prevent losses from accumulating.

Declining customer numbers and regular customers that no longer return are an obvious non-financial sign that something is wrong. From a financial perspective cash flow is the key to any small business. Struggling to pay your bills on a regular basis, constantly seeking extensions from suppliers (including the ATO!) and using credit to operate on a day-to-day basis are all signs that the business is no longer self-sufficient.

Staff turnover can also be a warning sign – disgruntled staff working at the coalface often see the writing on the wall before the owners do and quickly jump ship. Always be on the lookout for ways to innovate and grow your business, don’t just go with the flow, but learn to steer your own ship. If you don’t, you will invariably end up at the mercy of the creditors and banks.

Making slight adjustments to the course of a sailing ship is much easier than doing nothing for hours on end and then trying to do a complete 180 and turn into the wind!

5. Employ the right staff and listen to them.

Family businesses can, and do, succeed. Like every other business, all roles within the business need to be clearly identified and have a staff member allocated to them. Sadly, many family businesses end up with everyone involved in everything and this just doesn’t work. Segregate your key business functions and employ staff that are experienced in such roles.

As a business owner you don’t need to know how to do everything and nor should you. Your job is to the manage the business as a whole, not to stand over the kitchen staff or to tell everyone that if it’s not done your way it’s wrong. Allow your staff to be innovative and encourage them to do so in their chosen roles, your business will benefit.

John Corias

is a senior partner at m.a.s accountants and is passionate about growing, building and developing small businesses.

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