Opportunity Knocks Twice; Chapter 19

Editor's Note: Utah Pulse is serializing the book, 'Opportunity Knocks Twice,' by Don Hale, as told to Mark Hale. We'll publish two chapters a week. You'll enjoy the wit and wisdom of one of Utah's great entrepreneurs, founder of Hires Big H. To buy the book, click here.

CHAPTER NINETEEN
Business Principles — Profit

Let me introduce the “profit” principle with these selections from another newspaper article, a nice piece written by Doug Robinson, about Hires Big H and me. That article, and the interest it generated, gave us the idea for this book and for the format we have used. I particularly liked Doug’s sense of humor. (Doug did not know that I am color blind.) He wrote:
Grinding through the gears of his tiny pickup truck, Hale drives to the west side of town to pick out produce for his restaurants. He is dressed in a lavender shirt, red tie, green jacket and beige jeans. Hale rarely tops 25 mph — there are people in the world who can run this fast — but he is oblivious to the cars blowing by him.

At the loading dock, the groceries are stacked and waiting for him. Earlier in the morning he made a series of phone calls to compare prices, recording them on a slip of paper in two columns. It is a decades-old routine for a man who began with almost nothing and still operates that way. ‘Look,’ he says, pointing to the paper, ‘I saved $3 on these tomatoes.’ When he is finished he proudly notes, ‘I saved a total of $40 to $50 this morning.’
Not only that, but he also didn’t have to pay for a truck and driver, and he picked out the best produce.

Robinson continues:
After another tortoise-paced drive across town, Hale steers the small pickup into the restaurant parking lot and slowly climbs out the door. Employees unload the truck as Hale stoops to pick up a cigarette butt on the walkway and tosses it into a trash can.
‘Nothing escapes his attention,’ says [an employee]. ‘He is a taskmaster. Sometimes employees don’t understand that it’s his business.’
Hale lords over his domain. He’s so fussy, he’s been known to show employees the proper way to sweep a floor.
Recently, he spied a couple of his waitresses talking to one another while customers were waiting to have their orders taken. ‘If you think I’m going to let that go. . .,’ he says. He confronts employees who waste food. ‘How much is that going to cost me?’
‘I started with a $200 inventory,’ he says. ‘Things were tight. It’s hard to change. That’s why I always watch everything. They (employees) would probably like to get me out of here; I probably make them nervous.’

‘The best fertilizer of any business is the owner’s footprints.’

(Doug Robinson, Deseret News, January 25, 2004)

People and product, done right, all lead to profit.
Utah businessman, Larry H. Miller, once said, “If you make money at what you are doing, it gives you the right to continue to do what you are doing.” As has often been noted,
Volume sales solve a multitude of problems and really help make a profit.

The only reason you are in business is to make a profit.

Take care of pennies and the dollars will take care of themselves.

As everyone learns the principles of successful business, every provider of goods or services, and every purchaser of goods or services, will become more successful.
Profits are best optimized when businesses (1) maximize sales, (2) minimize expenses, and (3) eliminate waste and mistakes.

MAXIMIZE SALES
At Hires, we learned to maximize sales by suggestively selling. When customers order hamburgers we often ask if they want a double burger or bacon on their burger, and we always ask if they would like fries and drinks with their burgers and sandwiches. If they order fries, we ask if they want fry sauce. If they order drinks, we ask if they would like them medium or large. Sometimes customers comment because we charge for fry sauce, but we sell a lot of it and it is a cost to us. We must cover that cost and make a profit on what we sell in order to maintain a viable business.
Suggestively sell the products of your business.

After having maximized sales in business, make sure you receive and protect the proceeds from your sales. Set up sound accounting practices to ensure you receive all that you are entitled to, protect proceeds, and ensure system checks against theft. Compare sales for this year to last year on a weekly basis.
Some of my customers might think that I am a stickler for exactness. Every once in a while, a customer’s bill for lunch will be so many dollars and one cent—$8.01 for example. Sometimes they might hesitate a couple of seconds to see if I will tell them not to worry about the penny, but I never do. Just as I would never give a penny less change than what is owed them, I wait for the penny, and if they do not have any coins, I wait for a dollar bill from which I can make 99 cents change.”

A business is entitled to every bit of money owed it—but not a penny more.

Over time we expanded our Hires Big H business with remodels and a few new locations. We have tried to be careful not to expand too quickly or invest unreasonably in the new locations in order to control operations and maintain profitability.

The bottom line of profits is more important than the top line of assets.

Another way of maximizing sales is to use as much of every product purchased for the business as possible. For example, we take the ends from loaves of bread, which are not usable for sandwiches or garlic bread, and use them to make bread crumbs for our onion rings. Likewise, we dice the centers of onions, which are not usable for onion rings, and use them in our recipes for chili and pizza sauce.

Use in some productive way everything you buy so you get the best value from your purchases.

MINIMIZE EXPENSES
Since everything affects the bottom line, we try to minimize expenses—particularly with regards to labor. The labor force in business is important. If businesses do not watch labor—the number of employees needed for each shift and the best possible use of them—labor hours can be unproductive and then unprofitable. Maximize the productivity of all employees to obtain good value for the wages paid. When people do not operate a business as a business, eventually their businesses fail and they cannot offer any jobs.
Get high productivity from your workforce—everyone’s life will be more secure.

Control labor or risk losing profit.

If you are not busy, help someone who is.

Perhaps no one will care for your business the way you do. However, you can certainly try to teach your employees to—so that when you are not present your employees will carry on as if you were. Business owners have to be teachers. When employees are effectively taught, they realize that, in addition to earning a paycheck, they are learning principles upon which to run a successful business.