Unlock Code: PRØF1T


You’re not going to want to miss today’s unlock code, right?

Unlock code number eight is: Your suppliers. Your vendors? Your suppliers? Your vendors? Anyone you buy products or services from, okay? Let’s call them your vendors.

About 60% of all the cash outflow — 60% of all the cash you generate — is going out to purchase items to make the beer and services to make the beer.

Okay, as a general rule, what we want to try to accomplish with our suppliers and vendors in this time of profit creation is we’re looking for somewhere between 3-5%.

We want to gain back 3-5% from our suppliers to help generate more profit. Let’s look at the math real quick on what that looks like and what happens if we end up ticking it up or ticking it down.

Let’s do it.

Okay, dream with me for a second here. Let’s look at our 60% and let’s say we want to gain back 3% from our customers.

We’re going to ask for a 3% discount. 60% on our purchases, 3% is our savings. We’re looking at gaining 1.8% back on all of our revenue, basically.

And that’s going to be straight profit to the bottom line. So, for every million dollars if we sell a million dollars times 1.8%, we’re looking at $18,000 in savings to the bottom line. Ok? That’s for a million dollar brewery.

Now, what happens if we’re talking about a three million dollar brewery? A three million dollar operation. Well, we’re going to take that $18,000 three times because the 18,000 times 1.8% is just for a one million dollar brewery. So we’re taking 18,000 times three and that’s going to be a $54,000 savings.

Folks, that’s $54,000 back to your bottom line. I don’t know where you all come from, but where I come from, that’s a ‘W.’ A ‘W.’

There you saw it, the math.

60% times a 3% discount savings. Okay, I’m calling it a savings, but really it’s a renegotiation of terms. It’s asking your vendors to help you generate more profit. And these are going to be difficult conversations, right? So you may be thinking Chris, where do we start?

I’m going to tell you where to start.

Number one, start with your merchant services. I want you to call Square. I want you to call Toast. I want you to call Arryved. Or call your dinosaur merchant service company that’s attached to Heartland or whoever, Micros, and say: We need a lower percentage.

And see what you can generate from there. You should be doing this every six to eight months anyway.

The second place you should be looking at is with your raw materials. Your raw material suppliers, your raw material vendors, are large companies. They can afford to work with you on pricing.

You tell them you’re in a new profit initiative. You tell them that you are being very serious about this initiative and you’ve got to find a way to cut your raw materials caused by 2%.

As you can see in our example, we did a 3% reduction in expenses, a 3% reduction in money going out and you saw what that meant for a 3 million dollar brewery.

Now imagine if you set an internal goal of 4% or 5% and where that number would go. This is going to be a difficult conversation but it’s one that you’ve got to have.

I hope you found today useful. I’ll talk to you tomorrow.
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