What does a hotel consultant do?
Last time we talked about the more Operational aspects of re-opening.
In this second part of this article, we will take a different look at re-opening. Here, I would like to touch briefly on a number of FINANCIAL aspects, and I just need to repeat that these are my opinions, and I may be generalising, but there is no other way to write this article.
REMEMBER DO GIVE IT SOME TIME
Do not expect to bounce back into Profit straight away. The considered opinion is that it will take months or maybe even years, to get back to where we were before the Covid-19 outbreak.
WELL DONE for still being here at all, having got this far. There are hundreds of Hospitality businesses that will NOT have survived at all.
GRANTS
If you had any Grants during the lockdowns, from Local or Central Government, those should not need paying back.
This includes any help received in terms of relief from Commercial Rates bills. That help will not need repaying. So far so good.
GOVERNMENT FURLOUGH SCHEME
The Government’s sponsoring of Wages through the Furlough Scheme has been excellent, and hopefully that will continue in some way. It is understandable however, that the Government will be very keen to move quickly towards a situation where people are back at work and earning their wages from work.
LOANS
If you HAVE benefitted from one of these Government-backed Bank Loans, then you have been fortunate. No, there was no interest to pay initially, but that interest might be very close now (a year later) to kicking in, albeit at a very reasonable rate of interest.
HOWEVER, lets us be under no illusion these WERE loans. You may be able to negotiate an extension to the pay back period, but any monies borrowed do need to be paid back.
That means that in your Budgeting and Financial Planning you will have to make allowance for that INTEREST outgoing when that starts – and you will have to put the capital repayments into your cash flow forecasts.
This is NOT going to be easy but it may well be do-able given the preferential interest rates and the longer payback periods.
RENTS
There is no ‘right’ formula here, and no Government guidance in place. Private Landlords will behave differently, and city landlords can be notorious for their inflexibility.
This is STILL the time for talking with, and negotiating with, your landlords and asking them to help out with rent-free or reduced-rent periods so that you can get the business going again and thus preserve their rental income for the future.
Whatever you do, do not just store up problems for later, so be very cautious about thinking that you can simply make up any shortfalls later in the year, or even over the next year or two. This is just like borrowing money it must be paid back at some stage.
UTILITIES
When you reopen, there will likely be a spike in utilities usage, but that will settle back to previous consumption levels. There will also be a cost to having all the equipment checked over to make sure that it is all working fine. My personal experience is that equipment does not really like being turned off for a long period and you can expect some operational hiccups when you turn it all on again.
SUMMARY
In summary, when we have taken all of the above into consideration, we (you) can decide when to reopen, how to reopen, and what changes you may need to make to the business, to be able to reopen and become a Profitable business again.
Several Foodservice businesses have already declared changes in their operating styles … to fit in with ‘’the new now’’.
It is NOT going to be easy.
It will be VERY challenging, and you will need to be confident, very positive, and VERY STRONG to make it work.
The planning that you do NOW will play a huge part in the outcome … whether it is going to work or not.
If you want to talk through any aspects of this article or discuss how it affects you and your business, just call me: David Hunter of The Bowden Group, on 07831 407984. You can call me any time, but preferably between 09.00 am and 09.00 pm on any day, weekends included. Or just send me a text message asking me to call you.
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