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LETS GET DOWN TO BUSINESS.

Question :
Hi, we are a Bistro & Bar in Picton.  We purchased the business in October last year.  It was quite run down and we spent money replacing the TAB with a takeaway coffee area.  The majority of our customers were tourists.  Our landlords give us 2 months off paying rent.  We have 3 staff for whom we got the wage subsidy for.  Our bank gave us a $15,000 overdraft and we got the IRD loan for $15,400.  Our question is how long do you think we should try to keep going before deciding to close.  Thank you.

Question submitted 23/05/20 @ 05:02pm
Industry: Retailing
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  • Great to connect and thanks for reaching out.

    Firstly I would understand your financials and do some forecast as to what is the minimum revenue you need to cover your fixed, opex and staff expenses each month. You obviously have some previous experience as to your demand from just locals so you can use this to test your assumptions as to what you believe is feasible to maintain revenue until local travel picks up.

    I would also reach out to local council/tourist centres and the ferry terminal companies to understand what demand is looking like as kiwis start to locally travel?

    Actually would be good to have local or central government start sharing traffic booking and movement numbers from likes of ferries and AirNZ… To help local business like you start planning for potential demand. I will follow up on that too.

    But other than understand what’s your future cash forecast could look like, that should help you make a decision on whether you stay open or close? Tough decisions to be made and appreciate how difficult it is with the unknown we are facing.

    Morena – do you and your business partner work ‘in the business’ and ‘take a wag out’? You maybe able to apply for the wage subsidy? As Craig says, getting those minimum costs in place and then trying to find ways for revenue to be earned, it will not just come to you, you have to go and find it, bring it. That is tough I know.

    Great suggestions from Craig and Andy.

    Another build once you have looked at your forecast, go back to your landlord. They may not be able to re-let the space in the current environment. It might be possible to negotiate a longer rent free or discounted time to support a longer recovery plan. There may be other suppliers you can talk to as well about reducing supply costs for a period of time, to then support the business through to future trading.

    And once all that thinking and work is done, take a step back and work out what is best for you.

    Good luck in these tough times.

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