Hospitality – how do we get back to making money?
Hopefully we are all soon moving to a position where we can go back to work and start making a dollar or two to make up for the recent difficulties here in New Zealand.
Yes, you are right in your thinking, some businesses have done well during the Covid crisis, but sadly others such as Hospitality are unable to get out there and make some money.
Sure, some have morphed into a take-away/pick-up style but that hardly pays the rent and let us be fair, there are not many of those! Sadly, in hospitality we are in the most part, unable to do this.
So here are two questions for you:
- When you go back, will you be busy?
- And if you are busy, are you going to actually make any money?
I ask these because so often we see good Hospitality businesses extremely busy but with no cash.
“I have had a great month, been flat out, mmm, got no cash left over.”
If you have been there or currently are in this space, keep reading.
There are a few potential issues:
- No Cash Flow: That means money not coming in fast enough, or leaving your account too fast. None left to pay the wages, the rent, the suppliers.
- And the other reason: What is your price? By that I mean what do you ‘sell’ yourself for? What about your menu pricing, value for money, expensive or no? What do you sell your products for? Your service?
- If you are in a hospitality high labour-based business sure you can add a margin on the food, or the drinks but remember, you are a labour business as well. So, what is your price? How do you justify your price? Is it right? Is it too cheap? Is it too expensive? What does the market say? Do you know what the market price actually is?
So, I ask again: What is your price? This is not just about covering your internal labour rates. It is everything you do. Do you price to be the cheapest or do you price to be the best. You cannot be both – ever.
I ask these questions because we see this every day. Incorrect margins, limited understanding of emotional price points, no back-costing, no budgets, zero cash flow, paying suppliers too slow or too fast. Stress, stress, and more stress
- Have you an accurate measure of wastage?
- Do you control your financials or does your accountant talk to you every six months?
- Do you know what is happening in your business every week?
You cannot measure the success of your business by seeing how much money is in the bank. Most of that may not be yours. It is there for the suppliers, the wages, insurance, rent, vehicle loans and so on it goes….
We will NOT give you a silver bullet and make you millions overnight. That is just not possible, unless you win Lotto.
What we can do is help you understand what running the business is all about, get you on track, AND help get you to a better position.
Give it a try. It works. We have hundreds who say it does… What is your answer?
Keep doing what you are doing now, or make a change?
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