If you fall within the majority of restaurant owners, Thursday is the day you spend juggling finances and available funds in order to work out a plan to cover payroll, probably due tomorrow, and to pay your most important vendors. Jimmy Chicken, Bobby Fish, Billy Beef, and Jimmy Linen will all be waiting for you in the morning, hands out stretched, palms up. Friday’s bring anxiety, but Thursdays bring mental stress as many of us prepare for intense vendor negotiation. Often known as battle.
This time every year, the well, whether a banking institution, a credit card company, a partner, or personal savings has almost run dry and our tapping ability has dissipated. The snow and rain keeps the customers in. They love American Idol. They long for Donald Trump. And, in the midst of all this, March Madness has mesmerized the regulars. Planning ahead, that moron. Jimmy Thornton down the street, bought a wide screen at Costco last weekend, put it on an elevated platform, and his bar is packed.
Whatever the reason you’re slow, you still need the product- and the staff. It’s time to prioritize your biggest needs and talk to your partners about extending those little numbers at the bottom of the invoice. By now 30 day terms are probably a myth. 60 days a hope. And the reality of life may fall somewhere after 90. But, you are still in action and that is one of the most important goals. By this time each year, many owners are no longer worried about vendors. Their doors have long since closed.
Although your bills are mounting, many of the small vendors, who sell perishable, price fluctuating products, often raise their prices about this time of year. Two reasons. initiate the move. Inclement weather has some effect on the price, but if you have a large outstanding balance, you are going to pay for the loan- just like at a bank. No money is free.
Vendors can´t tell you that they a raising the price of, let’s say chicken, to cover the vig, but in many cases of chicken that is the case. But, if you are a cash flow sensitive company, the vig is something that you accept, deal with, and in many instances view as part of doing business. If you owe a vendor a substantial amount of money, don´t even think about price negotiation. It just adds insult to injury. Pay what they say. You´ll get the product that way.
The best way to keep the product coming in the door, however, when the wolves seem to be gathering, is to call your vendors and be honest about your situation. The “check is in the mail” trick should never enter a conversation with a valued vendor. Most are smarter than that. They deal with restaurant owner’s all week long. As your partners, they want you to stay in business, make money, and pay their outstanding, over due invoices.
The worst is almost over. Within the next few weeks, the weather will break in Minneapolis. The wind will cease in Chicago. The Sun will be out in Des Moines. Well, maybe not Des Moines, but at least the snow will melt. The rain will stop pummeling the West. Over the next weeks, focus on Easter, and keeping your vendors semi-happy. And delivering. Talk to them. Call the vendors you’re having sleepless nights about. Let them know that you can’t completely pay the old bill. Make a deal to pay C.O.D. on tomorrow’s product and small amount on the back balance. Be honest about your situation. Most restaurants are in the same boat.
There are those vendors, however, that have large corporate accounting offices, or at least think they do, and will never ship again until your bill is paid in full. If it isn’t a liquor or beer company, they’re governed by the state to collect on a regular basis, and the big vendor´s accounting office won´t compromise, go to the owner. Explain the situation. tell him you tried to make a deal with his accounting office but they refused to listen. He doesn’t want to lose an account. Or the money you owe him. In most cases, owners are salesmen, not accountants, and they will probably understand your problem and work with you. If they don’t, it’s time to find another vendor that offers a similar, or better product. And, when that happens, be honest with the new vendor. They want the account.
Also remember, your vendors are not only your partners, but they are your bankers. And, you should always pet your banker. Don’t forget to pet your vendor. Invite them in for lunch. Send a gift certificate to the owner for a complimentary dinner. Suggest he bring his wife. If you owe him a substantial amount, you may suggest his family. Let them know you appreciate his patience and look forward to a long relationship.
But whatever you do, remember tit is imperative in March to talk to your vendors. It will make April seem like a dream month, and might make Friday more enjoyable.