Will the hospitality industry ever be the same?
7/07/2021 - MJB Avanti
The pandemic and the subsequent lockdowns, furlough support, and ‘eat-out-to-help-out’ scheme have all contributed to a rollercoaster year for the hospitality industry, and what we’re seeing now is an industry that has changed substantially. Is the change a temporary reaction or are we going to see a significant shift industry-wide?
For those business owners able to access the resources to comply with ever-changing regulations, reopening appears to be going well, but let’s not forget that operating on reduced customer numbers means potentially lower revenue. How can you manage the numbers while ensuring the safety of your team, and still meet the needs of your customers?
The impact on day-to-day operations has been devastating – MJB Avanti Director, Steve Foster explores how a proactive approach can provide your business with a buffer.
Forecasting – review your cash flow forecast and extend the financial projections. MJB Avanti offers a cashflow forecasting service, and we can help you to identify potential issues before they happen, with accurate forecasting. It is important that you maintain up-to-date bookwork that will allow you to monitor your ‘actual’ numbers. Typically, we recommend a 12-week rolling cashflow forecast, which is a great way to ensure you know what is due to be paid and when, and what income you need to cover this. It allows you to fully understand the regular costs, and to build in a contingency related to any unexpected outgoings. Where our clients are wanting improved efficiency with their bookkeeping process, we will generally advise that they use Xero cloud software. It can be linked to EPOS and other software that can assist with their obtaining increased operating efficiency; it will also assist with meeting Government requirements linked to MTD for VAT.
Stretch your payment terms – reach out to suppliers and where possible amend your payment terms to maximise the credit period. This is a simple step to retaining cash in your business for longer but is often overlooked. While you are reviewing such terms, it is a good opportunity to cement supplier relationships and ensure they are aware of contingency plans should something unexpected happen in your business that affects them. In addition, if you have customers who run corporate accounts, for example, chase the payments. A good customer is not a good customer if they are not paying you, so don’t fall into the trap of not following up on unpaid invoices. MJB Avanti provides a credit control service, so if you do find that you have bad debts affecting cash flow in your business, call us to find out how we can help you turn unpaid invoices into cash.
Delay unnecessary expenditure – If the forecasting fails to provide the cashflow for planned business improvements, it may be better to delay those improvements and push back other costs where possible. In contrast, if you can access funding, and doing so will not negatively impact your business, speak with an MJB Avanti advisor who can put you in touch with funding partners to move you and your business forward. Remember that short-term funding is often accessible, albeit often with a higher borrowing cost, and it is, therefore, important to take the time to make considered borrowing decisions.
Adapt your strategy and engage your team – All business owners have had to adapt over the past year, whether related to remote working or installing Covid safe equipment to comply with regulations but adapting goes beyond such operational changes. For your business to evolve, and to ensure you are not left behind, you need to be financially flexible and have an ability to respond to the pace of industry change. It is important to make sure your team is fully on board, being the face of your business, even if it is behind a mask, and it’s a good time to check your HR policies and invest time in them whether they are on the ‘front line’ or part of your back-office environment. The industry was saturated with a pool of applicants not so long ago, but Covid has seen many move away from an industry that has been notorious for long, unsociable hours and relatively low pay. Of course, this situation has been exacerbated by BREXIT. This is the time to acknowledge the key players in your team, those who add value to your business and ensure you invest in and retain that talent.
To summarise, you need to be prepared to think and act fast, and now is a good time to consider restructuring your business. Look particularly at the support you have had throughout the pandemic. For example, did your accountant advise you of the reduced VAT rate for hospitality or did you have to ask? Were your suppliers understanding of your challenges, or did they chase you notwithstanding that they knew you were non-operational? As we get back to a semblance of normality, review the people and processes that support and allow your business to function.
MJB Avanti (08000) 388 799 has been working with hospitality clients for many years and has the expertise, contacts, and resources to fully support your hospitality business. Whether nurturing a start-up, or working with an established business, we’ve got you covered, but please don’t just take our word for it….
“Jolly Good Pubs started in 2012 with The Red Lion in Manningtree, we chose to work with MJB Avanti due to their personal touch and family feel, if we are successful so are they. Over the years, the team has helped navigate our growth from 2 employees to 60 and growing. With growth comes the challenges of increased paperwork and payroll, MJB Avanti helped with scalable solutions for our business taking control of these essential but time-consuming tasks allowing us to concentrate on the running of the pubs. I would recommend their paperwork box swap combined with Xero online portal, with just a few clicks we can see our bills that are due, or how much we spend with a supplier.” Thomas West, JGP East Anglia Ltd.
Visit the MJB Avanti Tax Accountants website to find out how they can help you.
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