business person standing at crossroads and looking at a signpost, one sign pointing to road to success, another to failure
Oct 10, 2017

The Five Most Common Reasons Hospitality Businesses Fail

Here are the five most common reasons why hospitality businesses fail.

Location, location, location

It sounds so obvious, but the most basic factor in giving a hospitality business a good start or not is where you choose to open. Get it wrong and it’s almost impossible to recover. There are many problems associated with a poor location, such as difficulties finding it, no passing foot (or car) traffic or no parking. If you think you’ve found a good location, do your research before finalising your choice. What is the area like? What’s its reputation? What do other businesses and residents think about your proposed site?

Location really can make or break a business.

Bad Management

You can’t do everything, which is why you have managers to help with the running of your venue. However, although someone may have all the right qualifications, experience and skills, it may be that they don’t have the right interpersonal skills to fit in with your business. A bad manager can have a negative impact on staff morale and motivation, who then pass on that bad attitude to guests and visitors, driving your reputation into the ground. Poor word of mouth feedback can cost you a lot of business and you may not ever know why.

Make sure all your staff have the support and training they need to do their job. When you make the effort to invest in your staff and make them happy to come to work, they’ll care about the success of your venue as much as you do.

Bad Customer Service

When staff look after guests, it can go a long way to making up for any other potential shortcomings. Conversely, if staff are rude and dismissive, customers will be desperate to leave and you can be sure that they won’t come back.

Encourage customer feedback and pay attention to constructive criticism. Train staff to handle complaints productively to leave customers happy with the outcome. Sometimes things go wrong, but if you solve the problem in a way that satisfies your customers, they’ll be just as happy as if everything went smoothly.

Spend Your Money Wisely

A healthy cash flow means a healthy business, so you need to make sure you always have a strong understanding of your incomings and outgoings. As an entrepreneur, you’re full of new ideas for products or services buzzing around in your mind, demanding that you pay attention – and money – to them. While new ideas are fantastic, if you rush ahead with them without prior research or proper planning and, most importantly, carrying out a cost benefit allowance and seeing if you have sufficient budget to implement your idea effectively and professionally, you can waste a lot of money, fast. And I do mean a LOT of money!

Making sensible decisions on how and when to spend your money and on what will make sure that every penny works hard for you.

Unskilled Marketing

With the amount of choice available to potential customers, marketing is crucial to letting people know about your fantastic establishment and friendly, helpful staff. Effective marketing strategies and carefully targeted advertising campaigns are essential to building your brand and have a massive impact on whether your business will succeed.

Despite this, many hospitality businesses, even larger ones, still do not have a dedicated, skilled marketing person, either on staff or outsourced. Instead, businesses rely on random staff members to take on marketing tasks without thinking about whether they have the knowhow to get the job done. There’s having all hands on deck and then there’s wasting everyone’s time.

Are you still relying on mass producing flyers to attract business but neglecting your website? An outdated, sluggish website can actively harm your business, when it should be the main sales tool of a hospitality business. Despite the fact that effective digital marketing makes the phone ring, many businesses simply don’t seem to appreciate that there is a big difference between generic marketing by an unskilled staff member versus targeted marketing carried out by an experienced inbound marketing professional.

Part of the issue is that modern marketing channels, such as social media, can be inexpensive to use or even free and anyone can access them. This means that there’s an assumption that since anyone can use them, everyone has the skills to use them and it’s simply not the case! Marketers in our digital world need a very specific set of skills and experience. A lot has changed when it comes to how we can market, but the basics of marketing and communication remain the same, so you need someone who does not only understand modern marketing techniques and channels, but also has an appreciation of effective communication and the best ways to reach your target audience.

If you truly want your marketing efforts to be successful and profitable, you need to replace inexperienced, fumbling ‘marketers’ with an experienced professional. As a freelance marketer who specialises in the hospitality industry, I can tackle all aspects of your hospitality business marketing to help you avoid the pitfalls on the path to success. For more information, just get in touch and book your free initial consultation today.

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