The hospitality industry has been rocked by the Covid-19 crisis, and I am not surprised.
Restaurants and hospitality venues will now pay a steep price for their historical resistance to cultural, technological and economic shifts -- and it will be paid in full.
50% of the hospitality businesses affected by the Covid-19 crisis will not reopen. Most of these businesses are independent restaurants and small chains who, statistically, have only 2 weeks of operating capital available at best.
Independent operators mostly operate at a deficit, run low on cash and stay in reaction mode. Similar to a person who lives paycheck-to-paycheck with no reserves in the bank, these businesses depend on weekly, and sometimes daily cash flow to keep their doors open and their vendors on shush. The sudden halt to their incoming cash flow leaves no reprieve from faulty business practices.
Not having enough financial runway during a crisis is a blatant indicator that a business does not operate with a budget, has no sound systems and processes in place, and likely doesn't know their true cost of goods sold. A business that lacks operational health can not deploy effective strategies for growth and development. A race car can not drive on a faulty engine.
If your business is devastated during the Covid-19 crisis, it is likely that the aforementioned failures also apply to you and your business. Your business hasn't failed as a result of the crisis -- your business, while physically remaining open, had failed prior to the crisis.
The first businesses to fold are those not being regarded and operated as real businesses.
Hospitality and restaurant businesses will be exposed in ways they’ve never been. Faulty business practices will be uncovered. Inefficiencies will be defined. Poor leaders will be exposed. Destructive habits will be laid bare. Weaknesses will be divulged.
If you play basketball without following the rules of the game, you are not playing the game of basketball, you’re simply occupying the court. It is only a matter of time until someone who plays the real game comes in and plays you off of the court.
This is not a form of punishment. Crisis does not destroy businesses, crises simply corrects them.
The Covid-19 crisis is not destroying your business, it is revealing and magnifying who you already are as a business.
I am not happy about it. I am here to give you a perspective on what is happening and what business owners can do right now to use the crisis as an opportunity.
Every crisis has a purpose.
The word Crisis is derived from the Greek word “krisis,” meaning decision. Crisis is when difficult and important decisions must be made. These are the decisions that today's struggling businesses likely failed to make before the crisis.
Crisis doesn’t come out of nowhere, and should not be defined as a calamity. While its practical, financial and psychological ramifications may be painful, this pain is more of a symptom of unaddressed condition. Even in a global health and financial crisis, the businesses that are devastated simply failed to protect themselves.
So, decisions must be made now.
Wait-and-see is the worst decision to make right now. There is nothing to wait for and nothing to see. If you’re affected by the Covid crisis, your business will not be the same as it was. Waiting now is business susicide. If you wait now, you will be forced to close your business once the economy opens because you failed to anticipate the changes in the market and neglected to adapt to the shifting consumer psychology.
If you wait now, you’re already dead.
Pain has a vital purpose. It is in pain when most people and businesses start to ponder.
Which decision you make depends on your psychology as a leader and which kind of pain you’re feeling right now. Are you in pain of shock, of confusion or of blame? Or, are you feeling the pain of responsibility and commitment to yourself, your business and your people? The former will destroy you; the latter will help you stay in business.
Your perspective will define you and your business.
Do you view the crisis as a catastrophe, or a catalyst for change? Is this a fiasco, or a favor to your business to find ways to reinvent itself? Are you being punished and run off the court, or called to play the real game of business?
Decide.
For restaurants and hospitality venues this is the time to:
Set up protections for future crisis and volatilities
Put systems and processes in place so your business can run more efficiently
Evaluate your leadership and raise your standards
Assess your team and make room for better people
Set up new training and standards so great people want to work for you
Evaluate your purpose and why you do business
The hospitality industry is not being destroyed, it’s being updated, modernized and enhanced. Every business is being called to reevaluate every nuance and make drastic changes.
Though the entire world is in a financial crisis, this is the time when perspective, adaptability and innovation are more valuable than even cash in the bank.
As a business owner in the hospitality industry, you have an exquisite opportunity to examine and confront your inadequacies and burdens, or to collapse under them.