Wedding Business Is The Driver To Success

By Richard Mar tin, The Blazing Donkey Countr y Hotel, Hay Hill, Ham, Sandwich, Kent, England (www blazingdonkey co uk)

We are owner operators of a small but thriving countr y hotel near Sandwich in Kent Although our hotel accommodation is on point and our restaurant award winning we prefer to rely on our repution as one of our county's most prolific wedding hosts - and with good reason-its the most profitable segment to our business driving 90% of our profits

TIP 1 - FOCUS ON WHAT DELIVERS YOU THE MOST PROFIT

This year we celebrate our 30th year of ownership Our business has sur vived multiple recessions, Brexit, unfair treatment by the now taxpayer owned Natwest (formerly RBS) and most latterly and most profoundly the global Covid pandemic

So how have we managed to be sufficiently resilient to come through this most latest of challenges and what strategies will we be depending upon to sustain the health of our business moving forward?

The engagement of a top accountancy firm who take the time to understand your business is absolutely vital I am in no doubt that had I not met Paul Randall (senior par tner of UK top 50 London-based accountancy firm RPG Crouch Chapman) then our business could have ver y easily failed Too many small businesses in hospitality do fail needlessly because they don't get good advice and exper tise at the right time or at all

TIP 2 - APPOINT AND BE PREPARED TO PAY FOR A QUALITY ACCOUNTANT WHO IS FAMILIAR WITH HOSPITALITY (OUR ANNUAL ACCOUNTANCY FEES ARE LESS THAN WOULD BE AN ADDITIONAL FULL TIME MINIMUM WAGE EMPLOYEE)

At the time the pandemic struck we were sitting on a record order book of booked events (weddings) and occupancy Covid put paid to a forecasted EBITDA in 2020 of £300k (34%) making way to an enormous trading loss of £190k Despite this deficit which previously would have been unfathomable , we were able to remain viable A combination of suppor t packages from our current bankers (suspension of commercial loan repayments) and rates refunds from council made a dramatic difference Although our balance sheet took a hit the government backed furlough and covid loan schemes made sur vival for us as cer tain as it could be All these schemes though depended on us working ver y closely with our accountants - and in the case of the bank suppor t and Covid loan negotiations, swifty instructing Paul and his team to produce the required detailed suite of information that was essential to ensure that our applications for suppor t were successful

In addition to having no sales income we were staring down the "barrel of a gun " in potential refunds of over £1/2m Our core business niche is weddings and so hundreds of thousands of pounds in refunds were a real possibility The lifeblood of any business is its order book so it became ver y impor tant for us to preser ve this as best we could

Despite Covid we were able to communicate clearly and regularly with all our valued wedding clients which maintained their confidence in us Although the CMA event deposit guidelines were clear in that all deposits for events were unconditionally refundable , none of our booked wedding clients (212 at the time) asked for or demanded a refund Some of our clients changed their wedding date up to four (4) times

TIP 3 - CARVE YOUR NICHE AND PROTECT IT AT ALL COSTS

What are seeing now is the gradual normalising of all market conditions and business costs Some characterise whats' happening in hospitality and business as "payback" that's to perhaps say what the government gave in one hand during Covid they are now [indirectly] taking away The manifestation of this taking away is the resumption of normal vat levels, no furlough suppor t, Covid loan repayments, higher bank interest rates, bank repayment holiday removal and out of control inflation The result for our business has been dramatic with monthly overheads around 33% or £15 000 higher than pre-pandemic Fur ther our cash burn post pandemic has been dramatic

TIP 4 - REACT TO COST INCREASES BY BEING READY TO UPLIFT YOUR SELLING PRICES WHILE AT THE SAME TIME PAYING CLOSE ATTENTION TO

YOUR COSTS AND ANY SAVINGS OPPORTUNITIES

Assuming you have belief and confidence in your product and ser vice you must react quickly to market forces Don t allow the increased costs to erode your margins and immediately adjust your pricing upwardly Be bold, be confident as good quality customers are out there and still spending Our selling prices for weddings and accommodation have increased at a faster rate than our costs and we have discovered to our benefit that our price elasticity to demand (how demand is influenced by price) is extremely low

Selling Price Movement at The Blazing Donkey*

Pre Covid Dbl Room Rate £145

Post Covid Dbl Room Rate £220

Pre Covid 100 Guest Wedding £6k

Post Covid 100 Guest Wedding £10k

*inc VAT

On the flipside we continue during these tough times to monitor cost of sales spend Instead of remaining loyal to our traditional and established supply chain we now "spot buy" in respect of food and drinks purchases In addition we continue to respect a self imposed non essential spend ban Although the proper ty needs maintaining it does not need fur ther or increased capital expenditure

TIP 5 - CASH IS KING - SUSPEND ALL NON ESSENTIAL SPEND AND INTRODUCE SPOT BUYING

Concluding our initiatives and strategies have allowed our firm to restore its current balance sheet value to levels preceded by COVID

TIP 6 - UNDERSTAND YOUR BALANCE SHEET AND THE IMPACT OF YOUR DECISIONS UPON SHAREHOLDER VALUE