Business conditions for 2021 are beginning to look more optimistic as state borders reopen and restrictions ease - naturally, hospitality, tourism and trade are anticipated to start picking back up as a result. In the 2020 Budget, the Federal Government also committed to key investments in wage subsidies, business tax incentives and additional funding into infrastructure and manufacturing to support recovery. Although viewed as economic boosts, as we’ve witnessed throughout this year – most recently in South Australia - market conditions can change extremely fast, which can drastically affect your business’ direction and priorities.
It’s now more important than ever to create an effective business plan blueprint to set your hospitality business up for success - particularly through the ups and the downs of business. From planning out your cash flow forecast to establishing your price positioning and strategy, a business plan can seem overwhelming but is an effective tool to plan for the future and mitigate any challenges that may come in the new year.
Fitzroy eatery Mile End Bagels opened in 2016 with one goal in mind to bring New York’s bagel culture to Melbourne, inspired by a trip to the city that never sleeps by founder Ben Vaughan. After further research, the company landed on its model of Montreal wood-fired bagels and the business was born. But in 2020, the business had to re-evaluate its entire business plan to stay afloat.
Ben Vaughan, CEO, Mile End Bagels says, “It was adapt or die. We quickly realised we had to adapt to survive in this new world.”
Before you get into the weeds of your business set up and plan for 2021, there are three important questions every hospitality business owner needs to ask themselves:
What business am I in?
This question helps you understand what is unique about your business - from your products to your services, even your employees and their contributions. Once you’ve established this, you can start to build out your goals and objectives to ensure the construction and growth of your business reflects where you want it to be in 2021 and beyond.
Who is my ideal customer?
Now it’s time to start thinking about your products or services and where they sit within the market. Will you compete on price with the aim of selling large volumes, or will you position your goods as luxury items? Based on this, who are your target customers? Are they happy to pay for quality products or are they likely to shop around? You can then match your pricing position to your business goals, taking into account the hard costs of your products and services as well.
What are the key business elements to consider?
After you’ve answered the first two introductory but critical questions, you can start to think in more detail about your overall strategy and approach. Aspects like core competitive advantage, forecasting your cash flow, government compliance and even market research are all important considerations to make when planning for the future growth of your business.
Mile End Bagels CEO Ben Vaughan explains: “Daily cash flow forecasting has always driven all our business decisions. If you’re not using that to make decisions, numbers without context are just numbers,” says Vaughan.
Understanding and mapping out all the information and data you can get your hands on will help you map out how the new year will look. While there may be hurdles and unforeseen challenges, it’s important for every business owner to map out the aspects of their business they either control or anticipate.
Ben continues: “ANZ also provided us with an overdraft facility to facilitate job keeper payments, which ensured we had the cash flow we needed to keep the business open and open our new shop as well as card and vehicle finance so we could distribute products between the two stores.
“We spoke about the options available to take out loans because ANZ understood the business was on a growth trajectory. They were willing to give us a loan and were confident about our business. Sometimes you need good debt,” Vaughan says.
Give your business the best chance of success by taking advantage of free resources available online.
Whatever assistance you need - from improving cash flow to purchasing new equipment - asking for help from experts is often the best place to start. There are numerous resources available to business owners that can be used to help mitigate risk, diversify offerings and create business managers out of the greenest entrepreneurs. Knowing where to start is key.
ANZ is committed to helping Australian businesses get on top of the ups and downs of business. To find practical tools and resources for your business, visit the business hub here.