What NOT to do when opening your first hospo venue: Part 3
Part three of a Cafe Bookkeepers fictional case study of worst practice.
(Any similarities to existing venues or operators are entirely coincidental.)
By now we’re sure you’re familiar with Chris’s story. As a first-time small business owner, he was arguably overly confident. Stick with us to see how Chris’s future played out, and read part one and two for more background info on how he got here.
Chris, to his shock, was “dobbed-in” by an anonymous ex-staff member. His accountant reaches out to let him know he’s being audited for his super contributions, which he never made.
The new hospitality union has started making noise too, they’re demanding Fairwork open an investigation. There’s been talk about this cafe on Facebook and now the media keep trying to contact him. Chris's girlfriend says her parents heard and are asking about it.
Chris feels very hard done by – it's the industry and everyone does it, he thinks. There would be no cafes otherwise, where would people get coffee?!
Chris doesn't remember anyone telling him about “single-touch payroll” but is absolutely outraged when his accountant tells him he’s been electronically sending the hours and rates to the ATO every single week, since July. He fires his accountant and puts off getting another one until some letters and phone calls about BAS and late fees start piling up.
Finally, the business is GST-audited by the ATO. They go through his POS history and find out how much coffee he’s been buying. Apparently, he’s well outside the cafe benchmarks and the result is an adjustment on GST and a hefty fine, more than a month's revenue.
Chris wants to sell up but can't find a buyer because his books are a mess. The name and online reputation were never managed so the goodwill doesn't count for much. He didn't really plan ahead so with only two years left on the lease, the $250,000 fitout is virtually worthless.
While trying to find someone to buy or even just take over the lease, bills start falling further and further behind. Deliveries stop coming and the staff are getting fed up of having to make do. It's gone from bad to worse. Eventually, Chris closes up and walks away.
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.
The major takeaway here is if you’re opening a business, remember many have done it successfully before you, and you’re likely not an expert in all aspects of business.Welcome help and seek it out. Concentrate on the bits you do well and hire experts to do what they do, aka, us!
Cafe Bookkeepers specialises in bookkeeping, accountancy and payroll for the hospitality industry – from small cafes like Chris’s to large-scale coffee roasters. 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.