05 May 2020 | 08.33 am
Guest Blog: Austin Hickey, BDO Dublin
Hospitality firms must update business plan
05 May 2020 | 08.33 am
Business owners in the tourism and hospitality sector need to re-evaluate their business in order to survive, advises BDO Dublin director Austin Hickey
These are unprecedented and extremely challenging times for the tourism and hospitality sector in Ireland. The sector has been hit hard by Covid-19, with the majority of businesses now closed. The Restaurants Association of Ireland’s statement saying that nine out of 10 restaurants face permanent closure in the months ahead without urgent action made for stark reading.
With the majority of the industry currently at a standstill, business owners should use this time to take stock, review and re-evaluate their business in order to give the business the greatest chance of survival. There are some measures that businesses can take to help weather the storm until the restrictions lift.
Make a plan Irrespective of what sector you operate in, or your level of experience, having an up to date business plan to guide you and your business out of this crisis should be a priority. A clear vision and course of action are essential for ensuring a business keeps its focus and to drive it forward once the recovery commences.
Innovate Many restaurants, bars and other hospitality businesses have introduced takeaway options for customers, while others are ramping up their online presence and sales channels. Some organisations are also using the lockdown to host virtual tasting sessions, cookery lessons and demonstrations.
Use this time to develop new and innovative product offerings that will enhance the customer experience and help drive sales in the long term.
Continue to engage with customers Businesses should also spend some time reappraising and updating their marketing strategy and website content. Ensuring that customer touch points are up to date and ready for potential clients to find/book online once restrictions on travel and movement are lifted and life begins to return to normal will be crucial.
During the lockdown many people are looking for distractions, leading to opportunities for businesses to develop and share podcasts, create virtual tours, produce a blog or vlog, and consider competitions and incentives to encourage future bookings.
In order to help with cashflow, is it viable to generate revenue through the sale of gift vouchers? Using social media to offer incentives might encourage some guests to make a booking following the lockdown.
During the lockdown many people are looking for distractions, leading to opportunities for businesses to develop and share podcasts, create virtual tours, produce a blog or vlog, and consider competitions and incentives to encourage future bookings. In order to help with cashflow, is it viable to generate revenue through the sale of gift vouchers? Using social media to offer incentives might encourage some guests to make a booking following the lockdown.
Keep in touch with staff Unfortunately, we are seeing an increase in businesses having to furlough staff. Where possible, businesses should keep staff on the books and connected with their business until this crisis is over. Now is the time to be open, honest and transparent. Keep staff informed of what steps are being taken to keep the business operating in the future. It’s an extremely unnerving time for employees and it is important that employers support them as much as possible.
Manage your cash Whether you are operating a multi-million euro business or a micro enterprise, cash is the lifeblood of the business. One of the primary reasons why many businesses fail is down to bad cash management. Cashflow therefore will need to be managed particularly carefully and effectively in the months ahead.
Clear visibility on the current cashflow and working capital requirements is important. Businesses should prepare a 13-week cashflow, based on a ‘base case’ and ‘pessimistic case’ basis.
Where cash is low, and liquidity is tight – examine where costs can be cut and identify opportunities to engage with key creditors to explore forbearance opportunities. Businesses may need to consider engaging with their funders to renegotiate revised terms.
There are several alternative sources of capital and government supports available to assist businesses through the crisis. Click here to see the full list of financial supports available to help businesses.
Maintenance & Upkeep It may be an opportune time to undertake some of those planned refurbishment projects, however small. This is an opportunity to consider a deep clean, a refresh, some new soft furnishings, or some other minor DIY projects. Be sure to let customers know about these plans and keep them updated on progress.