Skip to main content
small business

Higher labour costs and increased lease costs for brick-and-mortar locations means some owners are doing more day-to-day tasks instead of planning for the next stage of growth

Peter Sanagan, the owner of Sanagan’s Meat Locker in Toronto's Kensington Market, finds himself increasingly on the floor, cutting meat, instead of working on plans to grow his business.Fernando Morales/The Globe and Mail

Toronto butcher and business owner Peter Sanagan has a lot of on his plate these days, including overseeing a second store he opened earlier this year and a deadline for a cookbook he’s on contract to write by February.

But instead of spending time writing and focusing on how to grow the business, the owner of Sanagan’s Meat Locker finds himself increasingly on the floor, cutting meat.

“I didn’t see myself having to work on the floor at least once or twice a week” at this point in owning the business, says Mr. Sanagan, who opened his first store in Toronto’s Kensington Market in 2009. The second opened last March in Toronto’s east end.

Mr. Sanagan enjoys the work, but the time he spends on the butchery floor is time not spent working on plans to grow and sustain the business longer term. That includes everything from regularly refining his sales and marketing strategy, attending industry events and checking out the competition to stay on top of consumer trends.

“It’s about finding hours to grow the business, instead of not having enough time to get anything done,” Mr. Sanagan says. “The big-picture stuff might seem lofty to some people, but if you can grow the business that will trickle down and be good for everyone.”

Mr. Sanagan is among a growing number of entrepreneurs who are finding themselves back on the front lines in an attempt to curb rising labour costs at their companies. Minimum wage hikes in provinces such as Ontario, Alberta and British Columbia are increasing labour costs for businesses, some of which feel forced to increase the cost of their goods and services as an offset. Those increased prices, in turn, have led to higher costs for companies purchasing goods and services, adding even more pressure to the bottom line.

Marketing for the future

The problem with business owners returning to the front lines is that it takes their focus off planning for the next stage of growth, says Eileen Dooley, a human resources strategist and vice-president of Calgary-based career management company Gilker McRae.

“If you are servicing the here and now, you can’t think about the future,” she says. “You have to be constantly looking at what’s next … A lot of entrepreneurs try to get out of the daily grind; that’s why they left their job to start their own business. That’s an indicator you’re doing well, but you have to take it to the next level.”

To help control costs, and keep working as much as possible behind the scenes, Ms. Dooley says some businesses need to think more strategically about whom they hire, how productive they can be in the role, whether they can do more than one task, and if some full-time jobs should really be part time or contracts. She also recommends companies take advantage of online tools to help simplify administrative work such as banking and bookkeeping, so they can spend as much time as possible on marketing.

“Marketing is critically important because you have to look at whether what’s working now will work a year from now,” Ms. Dooley says, adding that not enough marketing is often what kills a business. “You need to be able to get that next level of customer attracted to you.”

Minimum wage squeeze

Michelle Germain, founder of the Shopgirls retail store in Toronto, is spending about 25 hours a week on the floor, more than double last year, after the spike in the minimum wage sent her labour costs soaring.

The increase in minimum wage, to $14 from $11.60 on Jan. 1, forced her to reduce staff hours and work more herself. Rising rent for her store in Toronto’s Parkdale neighbourhood has also put pressure on costs to run the business in recent years.

“I’m now back to the day-to-day function, trying to run my business on a skeleton staff,” says Ms. Germain, who opened the business in the same location 11 years ago. She also has an online store, which used to be run by a full-time employee. Today, it’s run by a part-time employee and Ms. Germain handles the rest, when she can.

“The quality of my output in terms of marketing and growing the business and establishing networking circles, that’s all on the backburner,” she says.

Ms. German is looking at options to keep the business alive, including bringing in another retailer to share the rent and other overhead costs, or relocating to a smaller space with a cheaper lease rate.

“It’s tough. Retail is a hard industry … you need to reinvent yourself on a regular basis, which makes it difficult when you’re working seven days a week," she says.

Mr. Sanagan and his operations manager have even mused about both of them working on the butchery floor at each store five days a week, which would save about $40,000 a year, per location. However, he says the risk is he’ll spend even less time working on the back end of the business.

Meantime, to trim costs, Mr. Sanagan has reduced store hours and will continue to cut meat a few days a month for the foreseeable future.

He’ll also have to be careful about taking risks that might grow the business, given the even tighter margins today.

“I have to be extremely calculated now. I’m scared of making the wrong move …it could cost a lot of dollars,” he says. “It has not been the most stress-free year of my life. I would have thought by year nine of owning a business, that things would get easier, but I feel like it’s going in the opposite direction.”

Your Globe

Build your personal news feed

Follow the author of this article:

Follow topics related to this article:

Check Following for new articles