If you’re waiting for Friday & Saturday to be able to make payroll – you have serious issues that need to be addressed. #20thCenturyThinking

— Jeffrey Summers (@JeffreySummers) July 28, 2017

You have a business model problem. Not a cash flow problem.

The distinction matters because cash flow problems have cash flow solutions — a line of credit, a slower vendor payment, a bridge. Business model problems do not. They compound until the underlying architecture is fixed or the business closes.

The operator who is waiting for Friday and Saturday night revenue to cover the week’s payroll has built a business that cannot sustain itself on the revenue it generates from Monday through Thursday. That is not a slow week problem. That is a cost structure problem. The fixed costs of the operation — labor, rent, utilities, debt service — exceed what the operation produces outside of its peak two days.

This is what the [Helix Read] surfaces when it is run correctly. The revenue model tells you what the operation needs to produce by daypart to cover its costs. The cost model tells you what the fixed floor is regardless of volume. The margin model tells you where the operation breaks even.

The operator who has not built those three models does not know they are waiting for Friday night to make payroll until it is already Thursday and the math is not working. The operator who has built them knows on Monday morning whether the week is on track — and has time to do something about it while there is still time to do something.

Waiting for the weekend is 20th century thinking in the same way that managing to RevPASH is 20th century thinking. Both treat the peak event as the business rather than as one data point in a system that has to work across all seven days, all dayparts, and all volume levels.

The business model that only works on Friday and Saturday is not a business model. It is a weekend business with five days of overhead attached to it.

What Changes Tomorrow

Run the math without Friday and Saturday. What does the operation produce Monday through Thursday in revenue? What does it cost to operate those four days? What is the gap?

That gap is the structural problem. The weekend revenue is covering it right now. When the weekend has a bad week — weather, a local event, a competitive opening — the gap becomes visible and the business becomes a crisis.

Fix the model. Not the cash flow.