It’s never been easy to run a profitable pub, restaurant or café. Even in normal times the failure rate of hospitality businesses is around three times higher than most other sectors. Success has always depended upon hard graft, attention to detail and a firm grasp of some important numbers.
As our pubs and restaurants re-open it’s even more of a challenge to make the numbers add up. The income a dining business can generate is limited by the number of customers it can accommodate. So more separation between tables means fewer covers and less potential income. And the restriction to table service will mean higher staff costs, particularly for pubs. Read more
Somerset, Dorset and Devon boast some of Britain’s best producers of speciality food and drink. Businesses that make the very finest ciders, chutneys, charcuterie, confectionery, cereals, and chillies – plus some cracking cheeses!
Speciality cheese makers were hit especially hard by the lockdown imposed in March. Overnight orders from restaurants disappeared and sales were lost as markets were suspended and supermarkets closed their deli counters.
Sometimes in business, doing nothing different, and waiting for the world around to sort itself out, is a good option. This was not one of those times. Without sales cheese makers could run out of cash and maturing storage space, be faced with having to throw away raw milk and surplus cheese, and potentially lose staff with irreplaceable skills. They approached the challenge in various ways but many focussed on developing online shops.
Most of us aren’t able to spend our lives producing glorious handmade cheese but whatever our line of business it’s clear that disruption and uncertainty are going to be with us for many more months. So, how should we make critical business decisions in the face of uncertainty?
A tried and tested way to get uncertainty under control is to forecast your business results with a range of different scenarios that take into account all the current restrictions and uncertainties along with the initiatives you might take to deal with them.
None of us knows what is going to happen next week let alone during the next 3 years. Although we can’t predict the future we can prepare for it. Here is my recommended approach:
To assess how well prepared you are at the moment, start by forecasting what happens to your business if you ‘do nothing different’ but simply accept what the world throws at you without any new initiatives. There should be several versions depending on different assumptions about new restrictions and how long government support might last.
To assess the benefit of ‘doing something different’, prepare new separate forecasts for each potential initiative. You will need to take into account timescales, prices and different cost structures. Don’t be tempted to only forecast your favourite idea.
Make informed realistic decisions based on the forecasting work. Don’t assume that next week there will be a vaccine or you will win the lottery!
Having chosen a strategy keep your forecast alive by updating it with actual numbers every month to create an increasingly accurate rolling forecast to guide decision making.
With modern software cash and profit forecasting is no longer a laborious inflexible process. Get in touch if you need help to assess your choices and navigate your business route through these uncertain times.
Rishi Sunak’s Eat Out to Help Out experiment will soon be ending. His novel tactic of subsidising meals out on the quietest 3 days of the week was designed to get local economies moving again by luring us out of our protective bubbles and back into pubs and restaurants: a price cut to boost demand.
But what of those of us in other business sectors? We’re not going to get a government subsidy but should we follow suit and try to boost demand with a price cut?
We’ve been hit by pandemics before: I remember as a schoolboy catching Hong Kong ‘flu during the 1969/70 outbreak which may have killed 80,000 in the UK. But this latest pandemic is not just a public health emergency; it may be the first since Black Death swept Europe in the 14th century to leave us with lasting economic and business damage.
Those of us who own and run small businesses know our problems won’t be over when the lockdown ends. There will not be an immediate bounce-back, and even if there was, history tells us that business failures are common at the start of a recovery.
In this series of posts I’m going to explore how we can help our businesses survive and prosper in the aftermath of CV-19.
A business owner at a networking meeting yesterday asked me the question “Should my website show prices?” And it’s a great question because trawling through the websites of businesses offering professional services (I was chatting to a life coach) it’s clear there’s a mix of approaches. Some don’t show any prices while others have opted for detailed fully-priced menus of their services.
So what are the advantages and disadvantages of advertising your prices online?
It all depends on what your website is for, and what kind of relationship you want to build with potential customers when they visit it. Read more
All of us in business know the experience of receiving price complaints. And they can dent our confidence. It could be a raised eyebrow, a potential customer who simply walks away, or maybe a full-blown whinge. But the root cause of price complaints is nearly always around value: the customer doesn’t see the value in what you are offering. Whether it’s an expensive Michelin star meal or my attempt at a plum crumble, potential customers need to see that they’re getting something they value.
Price complaints are about value
And that doesn’t necessarily mean your products or services are over-priced. It could be that this particular customer just happens not to value whatever it is that you sell. He may even give voice to his feelings in a way that assumes everyone else will share his low opinion of the value. But of course that’s nonsense. For me there’s no value in tickets for a Formula 1 Grand Prix (unless I could see an opportunity to sell them on) but opera tickets have a lot of value; other people would see the value very differently.