The Bowden Group Blog

The Bowden Group has launched an iPhone VAT application for the hospitability industry. The application has been launched to help hotel, pub and restaurant owners to cope with VAT changes which will come into effect from January 2011.

The application known as The Bowden VAT Rise Calculator comes after the success of the online version that was introduced in the company’s blog pages (http://www.hunterbowden.co.uk/blog/)   by Hospitality Business Mentor, David Hunter in October this year

Speaking at the launch, David Hunter said: “The iPhone application and the ones that are  planned to follow, will provide digital and convenient solutions to the daily business of hotels, pubs and restaurants. It is a revolutionary step that will enable hotel and pub owners to manage their finances better using their mobile phones.”

The idea of the Bowden VAT Calculator was originally suggested by David Hunter after he observed that pub, restaurant and hotel proprietors were increasingly failing to come up with the right strategies to maintain their profit margin with the increase in VAT prices.

David Hunter feels that it may be challenging for some to cope with the figures and percentages involved in tax, especially the increase in the VAT prices, but smart planning can help maintain consistent profits.

David adds: “The iPhone application is designed to provide strategic solutions about what needs to be done to the selling price to maintain current margins. It will also add another trendy digital element to the UK’s hospitality industry.  Work is also already underway on a professional version, including additional enhancements to improve profitability, which will include a Menu and Bar individual item costing and pricing tool as well as the ability to save the relevant information.”

David Hunter has 25 years experience in the hospitality industry. David has rescued hundreds of failing businesses, many of which the owners themselves had given up on. The new iPhone application is his latest contribution to the industry and probably an apt one in the current economic climate.

David Hunter, the hospitality business mentor, says that 45-55% of the failing businesses within the hospitality sector, working with him, are owned by individuals who have no prior experience and knowledge about the industry.

David Hunter says: “The hospitality industry may look very appealing and easy to manage, but it is one of the most challenging areas to run a business. Most people who invest are highly enthusiastic, but they don’t have any knowledge about hospitality management. These owners, who come from different business backgrounds don’t implement controls and systems that are necessary to ensure smooth operations and profits. They tend to rely on appointed managers and staff that are not well managed.”David maintains:  “The hospitality industry is a vast and a tricky area. It is not just about having a great looking pub, but among other things, it involves having a sound knowledge about the market, customer preferences, trained staff with the right attitude and a good marketing strategy.”

David Hunter says that from his 35 years of experience in the hospitality industry, he has observed that a huge number of people who want to try their hands in this sector are highly successful entrepreneurs with lots of capital made from running very successful businesses in other sectors, but they then fail because they don’t understand the specific issues of the hospitality trade.

In addition, when these investors appoint managers, as most of them do, they do not necessarily check that those managers have the skills needed to run a business, and they fail to manage the activities of the managers.  As David comments: “Managers have to be managed, and motivated – and that is the owner’s role!”

David says: “Across the UK, we are seeing lots of pubs and restaurants closing down due to the recession. However, things could be set right and a large number of businesses can be saved if the owners have a better understanding of the commercial and management aspects, and get the basics right.”

The Bowden Group’s David Hunter believes that the hospitality industry as a whole, and independent companies in particular will suffer due to poor management of the VAT rise in January.  In an effort to help a simple VAT calculator has been added to his blog – www.hunterbowden.co.uk

Hospitality Business Mentor, David Hunter: “Pubs, restaurants and hotels regularly fail to increase prices in line with imposed changes.  This includes the annual rises following each budget as well as higher supplier costs and, as we will see in January, VAT.  Instead they maintain prices, cutting into their own profits.”

Hunter believes businesses owners don’t want to pass on the costs:  “As I go about my business I regularly meet people who feel that increasing their prices by a penny or two appears mean in the eyes of customers so they simply do not do it.  That might work one year, but if they adopt the same attitude year on year it will chip away at the profits and make their business unsustainable.”

Coupled with this lack of desire, Hunter believes there is also a lack of understanding:  “This is going to sound harsh but I regularly meet proprietors who have difficulties with figures.  It goes without saying therefore that the figures and percentages involved in tax, particularly VAT increases may be challenging for them.  To ease matters we have added a simple calculator to our blog that does the maths for them.”

Hunter added ‘’ There is obviously more to maintaining your margin than increasing prices.  This calculator just shows you what needs to be done to the selling price to maintain your current margins.  You could equally source the same product elsewhere for less, or change to another product that has a different cost base – maintaining your existing selling prices.’’

Hunter defends his comments:  “I know some people will say that this calculator is patronising and they are all capable of dividing by one figure and multiplying by another.  But that doesn’t take into account every individual – such as those people who maintain their success by being great hosts rather than financial managers.  For them, such a simple formula is ideal.”

David Hunter, the Hospitality Business Mentor from The Bowden Group (www.bowdengroup.co.uk) has launched a focused offer, bringing his services to the tied pub market.

David Hunter says:  “The nature of tied pub leases and contracts means the people running these establishments require more than just a passion for the job.  They need to be business savvy, understand the figures and have all their processes in place.  They also need to love the job, and be prepared for the hours entailed.”

For £395 per month ‘’tied brewery lease’’ pubs across the UK can receive:

• A day of face to face, onsite time with David*
• Access to and instruction on David’s tried and tested methods, systems and processes
• Weekly monitoring  of key figures, with feedback
• Arbitration and negotiation with landlords as appropriate

Hunter continues:  “Unfortunately, due to a lack of business skills, lack of capital or lack of previous experience, many tied pubs are failing.  As the tenants face difficulties they find it hard to meet the needs of the landlord and in time the pub fails.  Through better systems and communications from all parties I firmly believe tied pubs can flourish and become a benefit to landlord, tenant and community.”

*Depending on location and timings this could be one of David’s equally experienced and qualified partners.

David Hunter, the Hospitality Business Mentor, firmly believes that three quarters of the failing hospitality providers he meets could be saved with the right focus, processes and management techniques.

•    According to the Beer & Pub Association 39 pubs were closing each week as of February, 2010

•    A report last year highlighted a 61% increase in hotel insolvencies during 2009.

David Hunter comments: “The greatest challenge faced by most failing hospitality businesses is a lack of commercial understanding in the management team.  People open a restaurant because they can cook or run a hotel because they enjoy being a host.  These are vital skills but they are not enough without the essential business acumen that keeps the management elements flowing.”

Throughout the last 25 years David has rescued hundreds of failing businesses, many of which the owners themselves had even given up on.  Once the proprietors are convinced by Hunter about the viability of their business Hunter says it often comes down to a few key things:

Hunter elaborates: “In most cases there is a lack of understanding and awareness about simple accounting procedures such as profit and loss, and cashflow.  Too often, businesses don’t even have monthly P&L Accounts, as I would recommend – most are disappointingly only doing this annually.  You just CANNOT pick up problems in time from an annual P&L.  Profitability is key, and is often underanalysed, meaning that the operator doesn’t know where he needs to improve things. Poor stock control is a problem, including both over and under-ordering – both of which can cause problems with customer satisfaction.  And finally there is poor staff management, whether it is the wrong staffing levels, or the wrong people, it can be a disaster for any establishment.”

David Hunter firmly believes that following a few key rules and focusing on the management side of their business up to 75% of the accommodation providers in the UK that are currently struggling could well be saved through better management.

(ends)

Having studied the Hospitality industry and worked as a Consultant to small and medium-sized pubs for over 25 years, the ‘Hospitality Business Mentor’ David Hunter of The Bowden Group (www.bowdengroup.co.uk), has discovered some worrying facts.

* 99% do not do Risk Assessments

* 95% do not have Health and Safety policies

David Hunter’s research shows that a shocking 99% of the pubs that he has worked with did not do Risk Assessments.

‘Hospitality Business Mentor’ David Hunter: “A Risk Assessment is an important step in protecting both workers and the business, as well as complying with the law.  It involves determining what risks the organisation faces and determining the relative importance of these risks.  It helps to focus on the risks that really matter in the workplace – the ones with the potential to cause real harm.  Risk Assessments are an important aspect of the business continuity development plan.”

The law does not expect you to eliminate all risk, but you are required to protect people as far as ‘reasonably practicable’. With a few simple routine procedures in place you can achieve that with the minimum of fuss.

In addition, a worrying 95% of public houses do not have a Health and Safety policy in place.  These are key business requirements for pubs.

Hunter continues: “In many instances, straightforward measures can readily control risks, for example ensuring spillages are cleaned up promptly so people do not slip, or cupboard drawers are kept closed to ensure people do not trip.  For most, that means simple, cheap and effective measures to ensure that the most valuable asset – the workforce – is protected.”

“Health and Safety and successful business performance are complementary.  Good landlords look after their businesses, and manage skilled workforces who have confidence in them.”

“As with all parts of business practice, to manage Health and Safety you need to plan, deliver, check quality and keep checking  to see what you can improve.’’

David has over 20 years experience successfully providing exceptionally cost-effective Profit Turnaround solutions to the Hospitality Industry.  He specialises in improving profitability for owners, investors and lenders involved in hotels, restaurants and pubs.

‘Hospitality Business Mentor’ David Hunter: “As an external consultant it is my role to analyse each operation and its figures, identify problems and make recommendations on how to maximise Gross Profits, minimise costs and put the business back on track.  I can then help to implement any changes that are needed.”