I can see that this thread has veered from what you were originally asking. However, as you say, you have learned a lot from the wisdom shown in the replies from the several contributors.
I think a return to a discussion of some of the motivations that prompted your original post would be worthwhile. I think one of the main things you wanted was a plethora of responses promoting significant marketing activity that you could then take to your father to help convince him about what you saw as a major, fundamental necessity for your business to develop increased sales and eventually, profitability. “See dad, all these experienced pizzeria operators agree with me.â€
What I’m about to type is based upon what I see as a major desire of yours. That is, you want your partner, your dad, to invest (spend) additional outlays on marketing. If the marketing is effective and profitable, you believe that many of your other management problems would work themselves out. If you could efficiently generate enough increased sales, everything would be better.
Begin Digression:
Before I get into it, let me say that what I’ll be discussing is minor compared to what I hope seems to be gradually dawning on you. I think you’re starting to realize what it might take from you personally to sometimes have to make dispassionate decisions in your business life. Since, you’re obviously a caring person, it’s a type of gut check for you.
You’ve obviously learned a life lesson that you’re capable of incredibly long, protracted labor based strictly on your own internal motivation. No one has forced you to undertake such an arduous struggle. You’ve motivated yourself to do it on your own. Congratulations!
But… how your current dilemma has come to be framed is a different type of struggle. You care about your employees, your business and your dad, and you care about right and wrong. If you could, you would just work longer and harder so that you wouldn’t have to sacrifice the employment of your friend. However, you’ve maxed out the most you can give of your time without risking burnout or breakdown.
Further, you’ve invested yourself in a model that you’ve set up in your mind and in physical form in your location regarding how and by whom activity will take place within and without your business. You don’t want to let go of what you’ve invested in, whether it’s your friend’s employment or how a pizza maker in your shop handles raw sausage. So your current growth experience is to step back to reassess your entire situation in managing your business.
I recommend you look at your entire operation as completely as possible from the point of view of a dispassionate observer. Actually try to examine what happens physically within your location and with your employees’ time. Could certain raw ingredients be handled with disposable gloves that are discarded at the ring of a bell? Could certain raw ingredients be pre-cooked and then used as ready to eat ingredients? Could certain employees’ time be made more productive by always having something for them to do, even when no orders or customers need attention?
Just because you are young doesn’t mean that you haven’t hardened your thinking. Have you become so wedded to your concepts and plans and procedures that you can’t examine them the way you would when observing a stranger’s operation? Remember, you are managing a business. It may be your business, but it is still a business.
End Digression.
(Keep in mind, I’ve been awake too long to be thinking clearly, so you may not make the same connections in your mind as I have.)
I am not now, nor have I ever been, a pizzeria operator. I started reading and posting here because I’m interested in the field. However, I have business experience, and as my name suggests, poker and gambling experience.
Some parallels to poker strategy can easily be drawn to your present business situation. I don’t know your dad, so I don’t know how he would react to your discussing with him your business situation in poker terms. However, maybe looking at the same problem from a different perspective might jar his thinking. Remember that this just relates to your desire for more marketing.
I don’t have the time to find relevant passages from poker texts written by statisticians, but I think you’ll get the idea. When you’re playing poker, many of your decisions relate to the size of the pot. Imagine you’re sitting around a poker table playing a cash game with a pot in the middle. Although some of the players are out of the hand, you’re still in the hand along with a few others.
Cash game poker is one long game that lasts your lifetime. You don’t make decisions because you need to win any one certain hand. Your decisions aren’t geared to one hour or one session or one month. You’re trying to win for the long term. You make dispassionate decisions regarding when to play, where to play, whom to play with, where to sit, how long to play, what mental and physical condition you play in, etc.
So you’re sitting at the table with this pot in front of you. Is the value of the pot affected by which players put checks (chips) in the pot? Does it matter if some drunk walked by and gratuitously threw in some extra checks as a pot sweetener? Does it matter how much you put in the pot? No to all of those. This isn’t a tournament. Just a pot in a cash game.
Now when you evaluate how to play out the hand, part of your decision making will involve who put what in the pot and when, but once checks are in the pot they belong to the pot. Their value isn’t changed because of who put them in, including what, if anything you put in the pot.
Now think of your business as a pot. Only this is a different type of pot, of course. Every day its physical assets (non real estate) are depreciating. Every day your business is getting more profitable, less profitable or staying the same. Every day your business is getting more valuable, less valuable or staying the same. But all that equipment and build-out are declining in value. Oh, and it doesn’t matter now to the owner of that business who paid for all that stuff. (I’m leaving out all the stupidity that our tax code causes. I’m assuming it really matters to the owner what happens to his business.)
You see, once you own that business, free and clear, it doesn’t matter if you built it, bought it, inherited it, acquired it as proceeds from a lawsuit, won it in a raffle, or whatever way you acquired it. It doesn’t matter if you built it up from glued up toothpicks and sweat or your rich uncle gave it to you on a lark. It’s yours. It belongs to you, just as the checks in a poker pot belong to the pot.
Now suppose you’re sitting around a poker table playing Texas Hold’em, holding cards, looking at a pot that is worth $80,000. It’s the final round of betting and the player to your left opens for $100. The remaining players all fold and the action gets to you. You can fold, call or raise. If you fold or call, your action will end all betting. Lets see, the pot is worth $80,100 and you can call for $100. That’s 801 to 1 odds. It doesn’t matter how bad your hand is, you shouldn’t fold. You may call or raise, but folding is absolutely out of the question. There is no possible hand where you could be an 801 to 1 dog. Even if you had the worst possible hand attainable, the bettor could have the same hand and you could split the pot. Obviously, this is a ludicrous example, but I’m trying to make a point here, so bear with me.
In the poker example above, it didn’t matter who had put money into the pot. Whether the player faced with the $100. bet had put in zero or $40,000. didn’t matter. His poker reasoning was affected by which players did what, but his overriding consideration was the money odds. It was risk vs. reward.
So a small business owner is staring at his business. It doesn’t matter how he got it or how much he personally put into it. It has a current value. It’s value is either growing, diminishing, or staying the same. His manager comes to him and says, “Sir, your business, as currently operated cannot sustain itself. It is losing money and value daily. I have formulated a plan of action. It includes certain cost controls. However, without increasing sales, cost cutting alone will only slightly extend the time of its demise.
“I have consulted with several successful professionals in the same business as yours, and they have given me their expert advice regarding increasing sales for your business. Barring some unlikely, external sales demand, increasing sales will definitely require marketing efforts on our part. I have researched this extensively, and I propose the following efforts on our part. (X,Y &Z are presented)
“Because we are losing money and our equipment is now used and depreciating, I believe the current value of the business is X dollars. At our current rate, I estimate in six months its value will be X-Y dollars. The marketing efforts I propose will cost Z dollars per month for the next six months. It is a risk. It has a reward. The risk is very small compared to the potential reward. If it works, in one year the business could be worth 150% to 200% of its current value. If we do nothing, in one year the business will likely be closed and its equipment will be for sale and you will recover only 80% (or whatever %) of X, its present value.â€
So you’re (obviously, your father is) sitting around an unusual gaming table. The pot is a delco pizza restaurant presently valued at $60,000. (for example) It comes with a young but unusually hard working manager. It’s deal or no deal time. You could liquidate it now. You could leave it on the table and gamble $600. more a month out of your pocket for 6 months and re-evaluate. Let’s say that after 6 months, if things are working out, you project that in 12 months it will be worth $100,000. (obviously made-up). You’re risking $3,600. To gain $40,000. The profit would be 11 for 1. That would be huge pot odds in poker. Of course the business owner here has more than just chance going for him. He has the industriousness and determination of his manager, who is also willing to listen to expert advice.
The amounts are completely contrived, of course. (And the author is sleep-deprived.)
The question is, can you convince your partner that a well-considered marketing effort by you has a more likely chance of success than 9% or 10% or 11%? If the expected 1 or 2 year rate of return if successful is $40K or $50K or $60K increase in value and the only risk is $4K or $5K, are you a 10:1 longshot? Even craps odds are way better than that.
Selling this to your father could very well be more difficult than selling it to a stranger. However, he’s the one you need to sell. Can you convince him that you have at least a 15% or 20% chance of bringing profitability through increased marketing? Some people are motivated by gain. Some are motivated to avoid losses. Some think both ways. Your proposal could cover both ends. Much of the money he has put in will evaporate if you are not successful. He stands to gain much if you are successful.
You are getting lots of experienced impressions and feedback.