VIEW FROM THE TREMBITA LOUNGE: Teaching Suzy-Q to fish (11/19/06)

VIEW FROM THE TREMBITA LOUNGE

by Taras Szmagala Jr.

Teaching Suzy-Q to fish

For many of us, Soyuzivka is a key part of our Ukrainian American cultural experience. The institution is part of who we are. It's hard for me to explain why this is so; many columnists who have graced these pages before me have said it better than I can ever hope to, and I gratefully defer to them. But whatever the reason, it's clear that Suzy-Q is not just another resort. Perhaps we see our own community reflected in its grounds: a bit old and tired, but nestled in a beautiful natural setting infused with peace and serenity. Were we to lose Soyuzivka, we'd lose not only a place - we'd lose a part of our own community's identity.

And so it is critical that the future of Suzy-Q be discussed, openly and frankly, within the community. At the outset, we need to be honest with ourselves: unless something changes soon, Soyuzivka will have to be sold. That's not rumor or conjecture - it's fact. After all, last year Soyuzivka ran a $600,000 deficit, an amount that the UNA cannot sustain. While room revenue was up, so were expenses - heating costs, insurance, etc. This is not the fault of Soyuzivka management; they are doing well with the resources they have. Rather, the issue is simply this: the Soyuzivka business model, as currently implemented, does not, and will not, work.

Now let's pause for a moment and reflect on that fact. Note that the issue is not primarily about money. It's about the business plan. Remember the old adage: if you give a man a fish, he eats for a day; if you teach a man to fish, he eats for a lifetime? Well, the problem is not that Suzy-Q doesn't have enough fish - it's that it cannot fish.

"Okay, Taras, that seems basic," you say, "but how does that help us? What difference does it make?" The answer is this: we need to change the way we're thinking about Soyuzivka. Currently, we are acting as if we have a fish problem (not enough money), when we really have a fishing problem (no business plan). By asking folks to join the "Soyuzivka Heritage Foundation" and donate to "the Q" in other various ways, we're actually hurting the Suzy-Q cause. Think about it: we're asking people to donate to a business that has no plan to break even in the long term. Let's be clear: without a well-developed business plan, no amount of fund-raising will make the least bit of difference.

To develop this business plan, we'll need to answer the following questions: first, can we improve the resort and market it such that it breaks even on an operating basis? Second, assuming a break-even scenario is possible, exactly what sort of improvements will we need to make? And, finally, how much will such improvements cost? Without answers to these three questions, all else is secondary.

Now, many of us from time to time have fancied ourselves as resort experts. My guess is that you, as I, have offered or heard countless ideas on how to attract more guests to Soyuzivka. And, in fact, some of these ideas have been acted upon, at least to the extent that funds have permitted. The results have been somewhat positive, as well - room revenue is up, albeit not enough to cover expenses.

But when it comes to putting together a business plan, casual talk on how to improve the resort won't cut it. Discussions in the Trembita Lounge do not constitute a business plan. Instead, we need to deal in real numbers. Our business plan must include realistic estimates of our capital requirements, operating costs and revenue projections. (Believe it or not, we've never done that before. Yes, you read that right - to date, we've never operated the resort pursuant to a budget. Oh, we know where the money went, after the fact, but we have never planned in advance the financial operations of Soyuzivka. Is it any wonder that we've not been able to operate the facility on a break-even basis?)

"A business plan isn't magic, Taras," you are thinking. "Preparing a business plan and budget won't make the operating deficits go away." True enough. But by preparing a realistic plan and budget, we'll be able to analyze whether and how we intend to eliminate those deficits. After the planning and budgeting process is completed, we will understand how much capital will be required to improve the resort, and, more importantly, what our cost structure needs to be to break even on an operating basis. Admittedly, budgets and plans don't guarantee that revenue projections will be met. But without them, planning is impossible and failure is guaranteed.

Now that we've established that we need to develop a business plan, the question becomes: how? One answer is clear: we cannot expect the current UNA staff to carry the load. Even if they had the time to devote to this, they certainly do not have the expertise to move this project forward. We cannot depend on volunteer "committees" to be the answer, either. Like the UNA staff, these volunteers lack the time and the knowledge to fashion the type of plan that we need. Instead, we need to work with a professional developer with knowledge of the area and the business. Sure, this may cost money, but there is no other option.

"Hold on," you say, "what if, after the plan is developed, we need millions in capital investment? If we can't raise $600,000, how can we raise the millions we will need for capital improvements?" This is where financing comes in. If we do our job right, and develop a viable business plan that suggests we can truly break even on an operating basis, financing capital improvements will not be a problem. Viable businesses attract investment; operating deficits do not.

Financing can come from multiple sources: developing or selling some of the excess land around Soyuzivka can certainly be considered, as can bank financing and even private equity. Many options have already been considered, such as developing condominiums on the property. But note that these options only make sense if we're financing capital improvements, not covering a $600,000 operating deficit.

Truth be told, there's no guarantee that we can keep Soyuzivka, even with a business plan. It just may be that we can't come up with a break-even scenario that keeps the resort Ukrainian. But I do know this: our current course is a recipe for failure. We need to put aside our fund-raising efforts for now, and focus on locating a developer who can help us craft a business plan and a budget.

We need to teach Soyuzivka to fish, and quick.

Taras Szmagala Jr. may be reached at [email protected].

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