Heads & Hearts - why both must survive
Painfully simplistic, but perhaps the reason we all ponder philosophy is that some questions will occur as if novel to every one of us, simply because there are no simple answers. Right now, many of us business owners, especially within hospitality, are receiving a visitation from an old 'acquaintance' - the taxman of our moral choices.
He will weigh our heads and our hearts, and for this purpose, I want you to consider a head as evidence of a financial asset to a business, while a heart is a principle-based expenditure that, at least in the short term, costs you those numbers. Let's, erm, leave PR on the bench for now.
Anyhow, where that balance lies, and what things we view as morally qualifying are deeply personal - that's not what these words are about. This article is intended to urge business owners to view these things separately - I believe the above definitions actually embody a falsehood in which many business owners share belief - that hearts and heads are linked on a scale from one to the other, as opposites.
Every halfway-interesting zombie film out there has had a moment of 'but what's the point in survival if we lose our humanity? We'd be no better than them!' - an understandable logic is that, unless we stack the numbers in such a way that the business survives, none of the moralising actually matters. But on the other hand, without our hearts in the right place, the business itself can lose meaning.
And if this doesn't weigh upon you, you either aren't considering it hard enough, or you've become cold - the danger is very real now, as the temptation to forget said hearts has never been greater. So below are the recommendations of myself (Elliot Ball) and my partners (Olly Brading and Andy Mil) - what we're doing for the heads, what we're planning for the hearts. Feel free to skip about - I've tried to keep it concise, but it's not a small topic.
A fair amount of this will have been covered well by others. We'll still mention those bits here - partly as we may have our own spin on it, but more importantly, because there's a lot of bad advice out there; repetition of 'good' (we hope) advice at least contributes to its prevalence.
1. Assess. You remember when you first wrote your business plan?
The sheer level of depth you needed to go into in order to justify the risk to either yourself or your partners/investors? One of the hidden dangers in operating a profitable business is comfort syphoning diligence - I remember when we used to say 'take care of the pennies and the pounds will take care of themselves'.
The value in this virtue isn't in maintaining a sense of scale - it's in the degree of oversight; if you have 20 categories of expenditure contributing to overhead, and you form an understanding of all of them regardless of their value, then you have a full understanding of that overhead. To put it blandly, you only know the value of a wall if you know the cost of the bricks, mortar, contractor, space and whatever council/lawyer's time. The mortar isn't much, but if that's a blank box, your understanding is incomplete, your bargaining power limited, your forecasting weakened.
An accurate forecast will probably be the difference between survival and... the other thing. Meanwhile, confidence in that forecast is what will afford you peace of mind and the ability to still function as a business. Doing takeaway cocktails etc? Great. 100% sure you're going to be able to pay for the stock after your credit terms have expired due to interruption of trade and you've already bought the bottles and labels? Sure, a brand might help, but obviously forecast. Confidently..
This, of course, feeds into what so many others have recommended - writing to landlords etc. Good news - the right way to do all this is also the simplest - categorically. Get that P&L out as if you were looking to buy the business, not just keep it. Isolate every single overhead and attack it.
2. Overheads - open up discussion, understand your leverage, take control
Yes, it reads like a generic WHSmith SAS memoir, but bear with me - in one of our venues, the electricity company took a meter reading after we got closed and debited £6000 from our account. They acted illegally - we'll get it back and go on a payment plan, but it illustrates two things - first, those guys were dicks, and companies like them are 100% going to be dicks to us right now. Following on, point 2 - we know these guys are dicks, so it's really our fault for being vulnerable. We should have cancelled all our direct debits immediately - we should have had control.
After this happened, we messaged a couple of our suppliers, with the ol' one-two; good news - though we've been forced to close yadayada, we understand you guys have your own creditors, and this bar over here will be paying on time.... However, this other bar, thanks to asshole-electricity-company-#4, can't afford to do that right now - we've set the following payment plan in motion - we apologise for the inconvenience, but need to forecast etc etc etc. No issues yet. That's our leverage, and if you look hard enough, most of us have a carrot and a stick - even if the carrot is just future trade.
At least, just ask. Your landlord ain't gonna reach out and go 'rough times, hey bud? Yeah let's cut your rent - that cool?' Two of ours aren't answering our calls, another has agreed to monthly rent, and another has reduced the rent - I count two wins and two exactly-where-we-started, which is well worth a couple emails. Oh, and get on top of your own personal finances - the company won't exist without you as a director, and having a plan for the survival of the business means less if you have to mess with it to keep yourself afloat. More detail further on, but all three directors of this company have basically audited themselves so they know what money they need in order to make it through. We've suggested the same to our team.
3. Other forms of income, obviously
First up, be careful. You wouldn't throw caution to the wind and open a venue selling a product you don't understand, so don't do that just because you already have the venue. Everyone talking up bottled cocktails - great, but don't neglect the legals - if you think you're in a sticky situation now, imagine losing your license - councils really might want to make an example of someone, especially when they aren't getting any rates out of that venue for a year and supposedly owe 25k as a grant! Also FYI, staff so much as answering emails technically can't be furloughed.
Still, as is the emerging theme in this section, it's about a return to that level of thoroughness and exploration that many of us had in our earlier entrepreneurial days. Here, there is again an element of separating heads and hearts; what can you produce/sell to function competitively (heads), vs. what can you ask of your supporters (hearts)? It's crucial to separate these because they're two totally different revenue streams and reliance on them means understanding them - the former is based on trade, the latter is based on empathy. Don't expect to keep selling your 100ml £10.50 cocktails to the general public just because your regulars put in an order on your crowdfunder.
Still, don't let this hold you back on that - our crowdfunder is over £4000 currently - that's money we'll need for sure. We'll make certain that every person receives thanks and that all orders are fulfilled, of course, but we also plan to use it as a trial run for a more commercial approach to bottled drinks. We stand to learn what delivers well, what are the snags, what people actually order, when, logistical issues, etc. Vitally, we've got proper bottles, seals and professionally designed labels. Would you expect to be successful without any of those things? Maybe as a charity, but soon, this won't be that.
This is what isn't going to get discussed as much. Coming back to that zombie fallout metaphor, we have a responsibility to ensure that the post-apocalyptic future isn't just about survival, and that the landscape we all emerge onto is still somewhere we want to live and work.
1. Record your principles - I have several fairly outstated opinions about how and why we can all become assholes.
For one, it's a steady process where it's hard to set an exact point at which you made a change or turned a corner. Like putting on weight, comparing today with yesterday isn't what causes that moment of realisation - no, it's that snap of you from last year. And, seeing as no one takes photos of their principles, instead relying on their practice to evidence their existence, we're in especially dangerous times - without operating and exercising these things day to day, it'll be easy to let them atrophy. Please, don't let it happen to you. Mine, and those of our company, are written down and they're checked every morning as of a week ago.
Without recording our pasts, it's not always easy to say why we become successful operators - was it having finance available? A pleasing disposition that led others to invest either their time, skills or money into you? Just being in the right place at the right time? Usually all of these. Now ask yourself why your teamwork for you - prospects, stability/pay and a nice workplace are the three usual pillars. When you do the bare minimum in any one of these, that's a reason, and when you do more than that, it becomes a principle. Maybe that principle isn't moral - maybe you just pay better because a competitive salary nets you better staff. It's still a principle.
And when we all emerge from Vault 11, I have a feeling only those principles consciously maintained will remain. And what about you, as a boss? If you don't take proactive measures to come out of this less stressed than you could be, and still mentally and emotionally well, then you're definitely gonna be harder to work with.
2. Motivate your team
Sometimes the right option morally also happens to be beneficial in terms of output. When we're all stinking hungover on shift after a staff party, I don't wallow, safe in my position as owner - doesn't so much as occur to me. I a) put in 10x the effort to show the team that I'm not broken, and b) go out of my way to entertain them; to get that engine of humour going. This then feeds back to me because the team realise that if I can do it, they sure can, and the atmosphere of laughter, once started, will keep me going, too.
This is no different - we shouldn't wait for our teams to ask us what we recommend for them in this time of horrific uncertainty - we should look at ourselves, what we're going to need financially, socially and physically in order to come out of this in good shape. We should adapt that based on the understanding of each of our team members, and offer recommendations and ways to support them. For once, we have time, as directors, for this degree of depth. Honestly, we really could come out of this stronger.
Personally, I'll go nuts without physical exercise, and I think most humans are the same - we need our endorphins. I'm figuring out a way I can do that without a gym or having any interest in running (and more importantly, not being on my feet for service), and when I have a solution for me, I might as well share it with the team - they can ignore it if they want.
Though this situation is its antithesis, I need growth. We all do - we play our games and empathise with fictional characters on their adventures and invest in friendships and skillsets because life doesn't make sense without it. Very few of us actually experience the growth we want; life and basic necessities get in the way - like wanting to become a world-class 'mixologist' but being so gifted on dispense that you spend most of your shifts there. This is my chance to really sit down with that person and help them. I don't have to, but conveniently, I'm pretty sure it'll keep me sane, too.
So, I say keep yourself motivated. Sort your jobs list - I've got stuff I need to do to maintain the business, I've got opportunities to be investigated, and things that I've just been putting off forever. I've got a similar list of things to do personally around the house. I've set a timetable, and I'm sticking to it - perhaps it's a leftover pack mentality, but I think we need direction from above to feel satisfaction.
Conversely, if I allow myself to succumb to demotivation or even depression, I cease to be a resource to my team. Perhaps part of the vertiginous temptation of isolation is that we know we can just fall into a slump and nothing's going to change immediately. Having people rely on me is a thrilling motivator, and I plan to make use of it.
3. Take advantage of this unique opportunity to actually grow.
How crappy this situation is, and the extent to which it yields opportunity, are unrelated elements by and large. It's not insensitive to suggest that, with the world having ground to a halt in such a way as most of us will (hopefully) never again experience, we have been given a chance to work on ourselves at a standstill like no other. In many ways, this is a continuation of the above point, but I think it deserves special merit, partly because it's so powerful as a motivation tool, and partly because our industry is crippling itself in a way that our current operations prevent us from stopping.
This is about looking to the future and relaunching our industry with another arguably more damaging pandemic addressed - sleep. Yes, it's been a long article, but this is the most important bit - don't be that idiot who says 'I know, I'm not sleeping enough but I'm an entrepreneur and I have more important shit to take care of'. Present circumstances have removed that defence mechanism (and that's all it is - same for me), and an excellent book will destroy the other - unawareness. That book is Why We Sleep, by Matthew Walker.
This isn't hyperbolic: If a new bar business opened up with 'valuing the sleep integrity of our team' as a core principle, it would blow most of us out the water. In terms of staff welfare, performance and output, there's nothing that could so effectively, so cheaply, reach new heights. And maybe we as business owners would have seen this years ago if we weren't leading the charge against our own sleep health culturally.
For yourselves, there are frightening links between degenerative brain conditions (Alzheimers and the like) and a poor sleep diet. There's also a great deal to suggest that the industrialised world's soaring levels of cancerous, cardiovascular and diabetic struggles and its poor sleep practices are not at all unrelated, even when controlling for, well, most of the things we like to blame that stuff on.
And this is without going into sleep's unfathomably important role in memory (oh, and that includes muscle memory - that chapter honestly made me feel like I wasted 10 years of my life), creativity and ability to read emotions and participate in social interactions. So basically, hospitality.
Not only do all of us have time to just buy that damn book (I promise I don't have shares in the publisher) and read it now, but, and I cannot emphasise this enough, we have an opportunity to fix ourselves and our industry - it must be us entrepreneurs that do it. It can, I'm afraid, only be us. First, we need to reacclimatise ourselves with a healthy sleep diet, including finding out our individual circadian rhythms - seemingly genetic, by the way - think about that with regards to certain stereotypes of night owls, morning larks and 'laziness'. Then we need to find ways to make this accessible as a lifestyle to our teams.
If my fellow directors and I manage this, and alter the operation so that our teams are as well-rested, we will have the strongest team in hospitality. If you do likewise, we'll be strong together. And eventually, it will be a serious operational weakness to not have structures in place that support such competitive standards.
To round off, as the structure of this article suggests, I urge you to consider the false continuum we seem to perceive between our heads and hearts. Without the heads, we have no business from which to operate well, and without the hearts, well - why a business in hospitality? It's a paradox to put the two at opposite ends of a scale. Furthermore, this is perhaps the only instance in which business owners have an actual surplus of time to consider them, separately.
Mostly, though. Get some sleep - you look tired.
If you are a bar owner and would like to contribute to Bar Entrepreneur Frontline please email me at Simon@DiffordsGuide.com. Thanks to support from Havana Club all published contributions will be paid for, with a matching amount donated to The Drinks Trust charity (formerly The Benevolent), or a local hospitality charity of your choice.