Driving past a First Watch restaurant the other day, I was prompted to place a call to Rayno Seaser, founder (along with his wife Patty) of The Egg & I restaurants - which had recently rebranded to become First Watch locations. First Watch had acquired The Egg & I back in 2015, but only recently changed names for most Colorado locations. We had a great chat, catching up on recent travels and holiday activities, and agreeing we must breakfast together soon.
After our conversation, I was reminded of something he’d told me more than a decade before, when he was on the bank’s Advisory Board and I was his banker on some projects. He’d told me that recessions were helpful during his journey, because they forced you to trim the fat to remain profitable. When things were good, he went on to explain, the business gets fat and happy - and even though sales are better than ever, profits sometimes tend to slip as costs creep up.
But when sales slide, you must make difficult decisions to remain profitable, and you look for places to cut expenses.
And then...when the recession is over and sales begin to increase again - often a bit of a snap-back he’d said - then your costs haven’t had a chance to grow yet. “We’ve made some of our best profits coming out of recessions” I remember him saying. Rayno, if you’re reading this, know that I remember a lot of things you said back in those days, and the kindness with which you treated everyone you interacted with.
In the good old US of A, we’re now approaching 11 years since the end of our last recession - a near-unprecedented string of growth. Many businesses must decide which opportunities to pursue, rather than which difficult expenses (often people) to cut to remain in business. This worries me a bit - many business owners with whom have never become acquainted with declining sales - and neither have I as proprietor of LoCo Think Tank.
But I was faced with an example of cost creep in my own organization, as we examined our metrics on this newsletter over recent months. Though our website and digital contacts activity is way up, our open rate on the LoCo Perspective email has been lower, and click throughs fewer. This despite my continued creation of witty and informational musings, and an increasingly robust newsletter offering that each member of our team invested hours into each month…
Wait a minute, maybe the market is telling us something! Maybe they don’t want an increasingly robust newsletter offering! Maybe instead of 8 or 9 sections each month we should keep it simple. We’ll keep the blog, a few things we think you should know and connection opportunities, and make it easier to say yes to our LoCo Perspective without overwhelming. The hours that my team has been spending creating a bigger newsletter may have been working against us - and guess what - those hours cost money! So, that’s one little thing we’re doing at LoCo Think Tank to cut some fat this spring, is creating a smaller, better newsletter that will take less of our staff and readers’ time. Our team can work on other projects, especially those that create revenues!
And that’s my encouragement to you readers this month. Give your operations and expenditures a good detailed look over at least once a year, and see where you might do some slimming down. Find more profits now and build your cash levels so you can have more time to make tough decisions later - or a war chest from which to make discount purchases. Because we all know there will be another recession and the fittest will survive, and I want you to be there to find the strong profits on the other side.
LoCo Think Tank Founder