Cost control
Prepare an Annual Budget Plan and use it to compare sales and costs with budgeted amounts throughout the year, ideally on a month-by-month basis. This is additional to, but not a substitute for a Cashflow Forecast as cashflow, not profit, is ultimately the lifeblood of a business.
Use our Budget template to estimate your sales and costs for the year and work out your expected profit
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- Carry out an energy audit, and save money by reducing your fuel and energy consumption.
- Keep waste and refuse charges to a minimum.
- Check the effectiveness of your promotions and advertisements. Is your newspaper ad delivering results? Remember that by far the best and cheapest form of promotion or marketing is word-of-mouth.
- Look critically at all areas of spend and ensure that you are getting value for money.
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An across-the-board supplier analysis can result in large savings. Focus your cost saving efforts where the bigger value amounts and potential savings are:
- Source new suppliers that offer better prices across the business from food to electricity costs.
- Negotiate new prices or better value from existing suppliers.
- Strive for improvements in service or quality.
- Check all supplier invoices to ensure you are not being overcharged and that you are claiming the correct VAT (if registered).
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- If appropriate, give responsibility to key staff members to manage the costs for which they are responsible and encourage them to offer suggestions for cost reductions.
- If you have a very busy Guesthouse business, smart staff-rostering will help ensure that you have the required people on hand while keeping your costs to a minimum. For more help with staff-rostering in larger Guesthouses, see our staff-roster template.
- Consider asking staff to multi-task.
- Agree pay-cuts, reduced hourly rates or more flexible pay rates.
- Check that you are not overpaying PAYE or PRSI.
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- Cost each type of meal you prepare.
- For simple recipe costing examples, see our Quality Food Toolkit
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Put in place a book-keeping system to help control your costs and to ensure compliance with Revenue rules. This can be a simple manual system or a computerised system with spreadsheets or accounting software.
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- Ruthlessly cutting costs without considering the implications for your Guesthouse or B&B business could leave you worse off than before.
- Ensure that you are achieving cost savings without sacrificing the quality of your product offering.
- Continue to run promotional activities, such as website promotions, which source new customers.
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