What NOT to do when opening your first hospo venue: Part 1
Part one of three of a Cafe Bookkeepers fictional case study of worst practice.
(Any similarities to existing venues or operators are entirely coincidental.)
Meet “Chris”. He’s been in hospo for years, was a shit-hot bartender, worked club doors when they were good and has run venues all over. He’s tired of working for others and finally has the cash to open his own cafe in the suburbs. He knows the industry, all the tricks and is planning on making a tidy sum. No stress!
Trying to impress his mates, Chris overspends on the fit out. He then makes his first hire – his best bud – as the barista “to make the best coffee in Australia!". Together, they buy every speciality coffee toy and accessory under the sun. Chris uses the most ethical, sustainable beans, but still charges $3.50 a coffee.
Rearing to open, Chris is under capitalised, has no business plan, no budget for marketing and isn’t bothered with a website or social media – "we didn't need one ten years ago! We're just selling food and coffee!" he reckons. He also thinks “the product will speak for itself, and if you build it – they will come." Sure.
Chris isn’t super organised. He’s pretty lousy to his suppliers – always late paying, losing invoices and complaining about prices. After a few months he buys more and more from Coles each day which is a 10-minute walk away.
Chris often pays staff and “borrows” cash straight from the till and doesn’t write notes or receipts. You may have guessed Chris banks little to zero cash, "it's smart!" he says, "you pay less tax!"
Come BAS time Chris hires a cheap, generic accountant to lodge his. He’s stoked they don't ask too many questions. He doesn't know or care what software they use as long as it gets done. They send reports sometimes, but he prefers to look at the bank account to gauge how it's going. When the first, second and third BAS payments all arrived Chris was surprised. He didn’t have that money lying around. Unfortunately, only six months have passed since opening and the first of many ATO payment plans has commenced.
Unfortunately, tales like this are all too familiar – we’ve seen the mistakes “Chris” made, and bad ideas he had, a lot here at Cafe Bookkeepers. Our advice? Concentrate on the bits you do best and consult experts (aka us) for the rest. It will save you time, money and a lot of hair pulling in the long run.
Cafe Bookkeepers specialises in bookkeeping, accountancy and payroll for the hospitality industry – from small cafes like Chris’s to large-scale distilleries. We don't just process your numbers, we look at them and learn about your business. Our team is highly experienced in both the financial and operational side of the hospitality industry so you can rest assured any problem you may have has been encountered before.
Sound enticing? Get in touch here.