The concept of multi-site operation is here to stay for the foreseeable future. Over the next few months we expect to see the emergence of many ‘little empires’ as some readers are offered the opportunity to take on five, six or more additional sites from their ‘parent’ oil company network. So let’s look at some of the more practical business issues you’ll face.
All of a sudden you’ll be responsible not just for six or seven staff, but maybe 40 or more. That is a major step up in terms of employer responsibility – various bits of employment legislation that don’t affect very small businesses now start to come in to play. Get professional help and advice to stay out of the minefield that is employment law. In terms of administration, running a payroll for those staff can be a nightmare. It’s not simply a question of using an off-the-shelf ‘DIY’ payroll programme, the sheer volume of other paperwork can be overwhelming: think of sick pay, maternity pay, attachment of earnings orders, and so on, all of which involve much form-filling and correspondence with the Revenue and others.
Our ‘PAYEpeople’ division recommends that all your employees are put through one ‘business entity’. Properly set up (with each employee assigned to a particular internal ‘department’) this still allows individual employees to be ‘charged’ to individual sites for proper cost control, but allows you to swap staff between sites whenever necessary, without having to go through the whole ‘starters & leavers’ procedures – in other words giving day-to-day operational flexibility without sacrificing control – and cuts admin costs.
Our Database figures show that a typical site carries some £19-20k of shop stock at any given time (in terms of retail values, think around £27k). Multiply that by five or six and you’ve now got some £150,000 worth of stock to look after. Frightening, isn’t it? Now, as epos hardware and stock management software have become more sophisticated over the years, there’s been something of a tendency among some retailers to believe that stock control isn’t really an issue anymore. Wrong! Take a tip from the professional network operators who’ve been running direct-managed sites for years. There’s simply no other way to know how much stock you’ve got, or how much money you’re losing from any one site, without having an experienced auditor come in and count it; and the simple expectation that there’ll be an ‘auditor’ visiting from time to time helps concentrate the minds of staff on other aspects of proper controls. While on the subject of stock – beware the temptation to swap deliveries and stock between sites if you don’t have firm controls over the book-keeping and paperwork. You’ll end up with empty shelves in one site, a bulging store room at another, and without a clue how much you’re really making (or losing) at any of them!
Some operators believe that they’ll save costs by having all the sites on one bank account. Maybe. It rather depends on how good a relationship you have with your bank manager. However, from the point of view of business information and control, we’d suggest that it might not be any sort of saving in the long term. Experienced bookkeepers tell us that it’s actually easier to reconcile several separate bank accounts, rather than one ‘mega-account’, particularly if there are one or more sites that have a ‘problem’ with either bounced receipts or short banking. The same arrangement allows proper allocation of costs between sites, which we believe to be essential to any properly controlled group or network. If you do run just a single account, who has access to it? Do you allow each of your site managers to be a signatory to the ‘main account’? That could prove rather dangerous. More sensible to allow individual site managers access only to individual site bank accounts, which they might need to pay suppliers when you’re not around, but which restricts the amount of damage they might do if they prove to be less than reliable or trustworthy.
These are just a few of the issues which multi-site operation entails – it can be a massive leap into the dark. Don’t jump alone.
DATA SUPPLIED BY EKW GROUP