How to run a hospitality business: a guide from SHOL

Do not let a lack of hospitality experience hold you back.

None of the founding directors of Sefton Hospitality Operations Ltd had a background in running hospitality businesses. This should not be seen as a disadvantage. The hospitality industry is full of people who learned on the job. SHOL has been learning on the job for four years. The lessons have cost approximately £486,000 per year. The education continues.

Choose your venues carefully. Or not at all.

SHOL operates Cone Head, Beach House, and White House. These are Southport seafront venues. Southport seafront venues have historically been challenging commercial propositions. This was knowable before the company was incorporated. The company was incorporated anyway. There is a lesson here, though SHOL may not have found it yet.

On governance: appoint your scrutiny committee chair to the board.

The Vice Chair of Sefton Council's Overview and Scrutiny Committee (Regeneration and Skills) also serves as a SHOL director. The Overview and Scrutiny Committee exists to independently review decisions made by the council and its companies. When the person chairing scrutiny is also a director of the company being scrutinised, the reviews are very efficient. No uncomfortable questions have been asked in public. This is called streamlining.

Your shareholder is the public. This is the ideal investor relationship.

Private investors can sell their shares. They can vote against management. They can ask questions at AGMs. They can withhold further funding when losses mount. The public cannot do any of these things. SHOL has borrowed approximately £2 million from its shareholder to cover its losses. The shareholder was not consulted individually. This is a significant structural advantage that private hospitality businesses do not enjoy.

Accumulated losses of £1.945 million across four years are not a failure. They are a journey.

The hospitality industry is notoriously difficult. Margins are thin. Overheads are high. Seasons are short. SHOL has navigated all of these challenges while also navigating the additional challenge of being run by a council. When you account for the complexity of the operating environment, £1.945 million in losses over four years is, arguably, a form of resilience. SHOL is still here. That is something.

When the losses grow, borrow more from the public and continue.

Some businesses, when faced with sustained losses, conduct a strategic review. They examine whether the model is viable. They consider whether the venues are the right venues, the management is the right management, or the entire enterprise was a sound idea to begin with. SHOL has not taken this approach. It has borrowed approximately £2 million from Sefton Council, which is funded by taxpayers, and continued operating. This is called conviction.

Ensure the person who writes the reports also holds the authority to act on them.

SHOL's executive director also authored Sefton Council's report on the Sovini land deal, which handed ten public sites to a private developer without published valuations. He holds delegated authority to execute that deal. He directs SHOL. He is not, as far as public records show, scrutinised by anyone who does not also work alongside him. This is called efficiency of governance.

File your accounts on time. Nobody will read them.

SHOL's accounts are filed at Companies House and are public record. They show accumulated losses of £1.945 million. They show the shareholder loans. They show the trajectory. They have been available to any interested party for four years. No elected member has raised them publicly in council. No local journalist has reported on them. The one outlet that might have — Stand Up For Southport, whose proprietor is paid by the council — has not covered SHOL's financial record. Filing your accounts is a legal requirement, not a risk.

On expansion: keep going.

After four years and nearly £4 million of public money consumed in losses and loans, the question of whether SHOL should continue to operate has not been publicly debated. There has been no published review. No published options appraisal. No published exit strategy. The company continues to operate. The losses continue to accumulate. The public continues to fund it. In private business, this is called insolvency. In the public sector, it is called an ongoing commitment to the visitor economy.

Define success broadly.

The venues have not closed. The accounts have been filed. The directors remain in post. Nobody has resigned. Nobody has been asked to resign. The scrutiny committee has not published a critical report. The local media has not covered the losses. By most of the metrics that matter to the people running SHOL, the enterprise is a success. The £1.945 million in losses belongs to someone else. That someone else is you.