Not wanting to get caught out again following the pandemic-induced financial nightmare, Iain McPherson has been busy looking at ways to diversify income and adding revenue streams to the existing business.
It brings me so much joy to see bars open again with a substantial amount of trading time under their belts. We’ve been pretty busy since we reopened our venues, it seems patrons are making up for lost time – I don’t blame them!
Throughout this green patch we all find ourselves in, I still have a sense of caution. The phrase “fool me once, shame on thee; fool me twice, shame on me”, runs through my mind. I might make that my next tattoo (after “we will get there” that I'm going to get with Scott and Kane from Hoot The Redeemer).
To assess the past 18 months: our government has spent a lot of money. There has been furlough, numerous business grants, and a large vaccine rollout, to name just a few of the unprecedented costs. When you add to that the fact our economy was at a standstill for a very long time, it all amounts to record-breaking borrowing. Our country didn’t get this money free – the government will need to pay it back somehow in the years to come. What will this mean for us? Taxes will go up, just as they have off the back of past financial crises. We need to be prepared for the 2022 UK budget and beyond.
Not to go over old ground, but there will also be repercussions from our au revoir from the EU, one of which will be higher prices for a lot of the liquor we take for granted. So, things will be hard, and then there’s our staffing crisis (I’ve never had to fill in as “emergency bar back” as frequently as I am now). Many business owners have had to raise their pay rate to try to entice people to join. Add all this together, and it’s going to make profit harder to come by.
This financial insecurity I’ve felt over the past year is scary, and something I never want to feel again, so I have looked to diversify our revenue streams. One of my approaches has been focusing on building out our existing brands to go beyond just being a bar. By analysing the strengths of my bar brands, I want to build on them. For example, I’ve decided to start up a single-cask whisky business under our Nauticus brand, which will be launching later this year. We already have a strong reputation within the scotch whisky scene and selling bottles in shops or online would become added revenue on top of what we would normally take in the bar. Catering for folk preferring to drink from home, whisky collectors, and folk just wanting a piece of Nauticus wherever they are in the world.
Exploring further options
I also took a look at what I can do with money just sitting in the bank account. Can I get a better interest rate somewhere else? Can I invest my money into something that isn’t correlated to the bars? And I’ve started looking at things like “stores of value”, speaking to reputable portfolio managers about investing in low, medium or high-risk funds. Rather than looking at buying another bar, I’m looking at real estate. There are many options that do not necessarily take you away from working full-time in your bar, so don’t be afraid to explore what’s available to you.
Another world I have looked into is the blockchain space. Most people initially think about day trading or investing in Bitcoin, and that is what initially took me here (and is something I would encourage you to research). Currently, I have ended up taking a role advising start-up projects within the sector. Though it was initially a bit out of my comfort zone, and somewhat time consuming, I am hoping this will allow me to go back to fully focusing on my bars, innovating new techniques, and back to having a normal social life again, without the substantial financial worry.
I know everyone is extremely busy at the moment, but I would advise all bar owners to take some time off the bar to look at the larger picture and make a plan for diversifying income. It’s possible I’m overthinking the financial horizon, but even if that’s the case I’m still adding revenue streams to my business. I don’t know the future of the bar industry, but it’s never a bad thing to prepare for the worst by exploring the options at your disposal.