16 Make sure your employees understand the numbers
Never underestimate just how naive your employees are about the
concept of profit.They will always overestimate your profitand
underestimate just how hard it is to make money in this business.
The minute you get busy at any level they will spend hours
discussing with their friends and co-workers just what a “gold-mine”
your coffee shop must be and just how little you pay them
compared to what you must be making.
You need to change this perception and make very sure they know
exactly how hard it is to make a profit. Use a simple food item such
as a muffin and cut it up into the various pieces to illustrate where
the money goes. Cut off 17.5% for the VAT or whatever your sales
tax is to begin with. Then cut off the physical cost of the muffin.
Now remove the wage cost adding in and explaining the cost of
employer’s national insurance, holiday pay and sick pay. Now
remove chunks for rent, rates, electricity and all your other
expenses.
Try, where possible, to include actual figures. There is absolutely no
point in hiding the economics of running a business from them and
there is great benefit to letting them know the gory details. Include
costs for accountants, lawyers and various other professionals who
you may have to deal with. If your electrical bills are £1000 a
quarter then tell them this. Add in all those little extras that they
33