Thursday, April 21, 2016

The 3M Test” for Small Bars and Local Taverns


When small bar and local tavern owners are experiencing financial troubles it’s important to cut to the chase quickly. Success with a bar is more than just pouring beers and dispensing booze. Some people are not able to accept all the demands of operating and maintaining a bar; they burn out after a few years or lose their business focus. 

Some bar and tavern owners know they should get out of the business; however for whatever reasons they stick in it and wear down the imagine of their bar or tavern to a point where it’s almost impossible for them to repair it.

Many small bar and local tavern owners spend up all their good will and create negative baggage in the communities they reside. It’s inconceivable some bar owners can ever change the way they do business. When situations like this are obvious the only recommendation I can make is “sell you bar or tavern and leave the community”. By selling your failing bar or tavern to someone new, someone with fresh ideas, someone willing to provide a valuable service to the community and someone who really wants to make money everyone wins.

The litmus test I use to determine if a bar or tavern can really make money is based on Ockham’s razor. If you are not familiar with Ockham’s razor let me briefly explain. Ockham’s razor is a term used in natural science to explain the reason(s) for taking a proposed course of action when confronted with a perplexing problem. 

Though Robert Ockham is given credit for initiating this term in the 20 Century the concept actually goes back to ancient Greece. The razor states that after all explanations for a problem are stated - always look for the simplest solution. Don’t complicate the process if you want to make money with your bar or tavern.

I call my Eba G. litmus test the 3M’s assessment. Using the 3M’s I can quickly assess why a small bar or local tavern is struggling. The 3M’s give me a starting point to decide how to precede with a corrective action plan.

The first M refers to the Management plan. Do bar or tavern owners in trouble have a written management plan or is it just in their head? For example are employee work schedules published in advance or are they written as needed? Is there a written bar clean-up up schedule with duties assigned to various staff or do owners just performed all clean up when they have time? Is there a written inventory control plan that dictates the what types and what quantities of products should be on hand or does the bar owner and staff just “wing it”?

The second M is the Marketing Plan. Other than an obligatory listing in the yellow pages does any real marketing take place? Are ads run and news releases sent to the local media outlets on a scheduled basis regarding upcoming events? Is there a plan for community sponsorships? What is the bar or tavern’s target market? Is there a “personal” Face Book and “business” page? Sometimes the question is - does the bar owner know what Face book is? Has the bar or tavern created a Linked In page, an About Me page or a Twitter account – all of which are free? What message is left on the bar or tavern’s voice mail recorder? Does the bar or tavern have an email account or is the bar owners person email account used for business? When do unique events and special celebrations occur? Are they planned out in advance or just thrown together haphazardly at the last minute? How are promotional pieces and give-a-ways purchased and distributed?

The final M is what the Money plan is. Does a bar or tavern have a written financial plan? Are operating funds budgeted and segregated? Are capital improvement accounts restricted? Are their special accounts for maintenance and petty cash? When expenses occur do they come out of the till? Out of the owner’s personal account? Or business accounts?

When I understand the 3M’s behind a small bar or local tavern I have a basis to use Ockham’s razor and can create a corrective action plan to either make the bar or tavern owner money or suggest he or she get out of the business.

Just remember if you are not making money with your small bar or local tavern – something is wrong. Either get out of the business or call Eba G. to get you on the road to profitability.