by Jill Cockson | October 18, 2017 7:55 am
The failure rate of entrepreneurship in hospitality is daunting. It is so daunting that it prevents many from realizing the opportunities that exist, as a result of both simple psychological deterrence, and the refusal of financial backing based on the perception of risk. In order to better understand the failure rate, and perhaps begin the process of correcting it, it is important to define ‘success’ with realistic parameters. There are many reasons for failure in hospitality, but an extremely prevalent one is entering the industry with unrealistic expectations.
Food and beverage, as an industry, suffers from a particular vulnerability of familiarity. We all eat and drink, so there is a misnomer that, on some level, everyone has the skill set to own and operate a bar or restaurant. “I cook at home…how hard can it be?” No one would say that about opening a cardiology center, or an automotive repair shop. So, the first problem is that the careless are undeterred. When they fail, they then create a deterrence for those who might have actually succeeded, precisely because they are more cautious.
Next, our industry is lumped in with entertainment, and venues are often rated accordingly. It’s not just the food, drinks and service; it’s the atmosphere, decor, vibe, trendy location, etc. We have been tainted with unrealistic expectations as a result of award-winning (which create award-seeking) venues that are often propped up with private endowments, or supplemented by other venues as part of a larger investment group. These business models aren’t real, but unfortunately impact the real business models as a result of psychologically infiltrating guest expectations. Hiring top chefs, top architects, top designers, etc. creates a start-up expense that is not justifiable on any pro forma developed to show a profit. As success is not necessarily defined by financial profit, defining success for the needs of your model becomes imperative. Obviously, finances are important for a business to grow and succeed in the future, so even if that’s not how you would define success, it still plays a huge part in running a business. Financial profit helps businesses to determine how successful they will be in the future. Some companies have even incorporated sensitivity analysis[1] software into their operations to ensure that they can achieve success in an uncertain future. It’s becoming more and more difficult for smaller businesses to thrive currently, so it’s vital that business owners keep a close eye on finances to make sure the business can continue to grow and operate.
Success can only be achieved if it is defined, as the definition will begin to carve out the path to it. For example, if your primary goal is to win awards, be featured in magazines, and to be known for the fanciest experience, etc., the means to your ends will be different than if your primary goal is to create a sustainable business, capable of producing a reliable, long-term profit. To first with, you need to make sure that your company is environmentally compliant (with the help of some environmental compliance services[2]). Success don’t simply means accomplishing a goal, but several goals.
Businesses can only be successful if they have a clear path to follow. They must have a plan to move forward, whether it is marketing by promoting their brand; creating an online presence by creating a website; or hiring an app development[3] company to create an android application for their business. Profits are not always the best indicator of a company’s success. You may also want to consider how far you’ve come in terms of technological advancements and how well your brand is known among the general public.
The problem is that most F&B entrepreneurs define success with profitability, while trying to compete with those not concerned about it. Is it possible to create/own/operate a sustainable F&B business model? Yes. Will it be recognized for its extravagance? Probably not. The sustainable business model is far less glamorous, and far less concerned with chasing superficial notions of success. However, by promoting sustainable business and implementing them in your business model, you could easily clear the environmental compliances required. Moreover, for that, you can also look for additional assistance from companies similar to RSB Environmental[4], who can perform necessary site tests to provide you with the list of domains you may have to improve to pass the final inspection.
That mom and pop diner that has been there forever, that little ice cream shop, that family owned pizza place, that divey (but delicious) breakfast stop… that is the face of sustainability. The owner is probably somewhere in the back, fixing a small appliance, cleaning, or doing inventory. Chances are, you don’t even know the owner’s name, because every waking hour is spent at his/her business involved in an integral part of the operation, and not at press conferences. But that business is paying their bills, helping a kid out with college, and putting smiles on the faces of regular clientele that can only be cultivated with time, energy, and true love for hospitality.
The very nature of venues that seek recognition vs. independent profitability is that they attract a superficial, non-loyal consumer base. You are only going to be the newest for so long. The luster of extravagant design wears off as soon as the next one opens. Not to mention, design for aesthetics typically results in a lack of ergonomic and efficient function that further impedes the prospect of financial gain. In a time when the word ‘sustainable’ is so trendy, it is sad to see it so rarely applied to businesses as a whole. Every year, we see bars and restaurants come and go because of one thing: the lack of sustainability. The bubble is bursting for those false models, but not for those models focused on returning to a more natural course of hospitality, and on defining success with long-term, sustainable profitability. Cheers!
Source URL: http://fsmomaha.com/defining-sustainable-success/
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