Hospitality Sector Support

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28 January 2021

Sectors:

Hospitality and Leisure

While the hospitality sector has undoubtedly been pulverised by the pandemic, Kevin Hodgetts delivers some practical advice on how small businesses can make it through.

Glass half full

At the end of 2019, the hospitality sector was the third largest employer in the UK. By November 2020 its trade body, UK Hospitality, was reeling from job losses of 660,000 - a figure that, sadly, will only have got higher to date. So far it’s easy to see why this blog should be called glass half empty. However, there is both help at hand and practical steps hospitality businesses can take to get them through what we all hope will be the last lockdown we must endure.

Additional Funding

Earlier this month, Chancellor Rishi Sunak announced extra funding for retail, hospitality and leisure businesses in the form of a one-off top up grant. The grant is provided on a property by property basis to support businesses forced to close during lockdown. Small businesses with a rateable value of £15,000 and under will get £4,000. Medium-sized businesses with a rateable value of between £15,000 and £51,000 will get £6,000. Larger businesses with a rateable value of more than £51,000 will get £9,000. This is in addition to existing business support, including the Local Restrictions Support Grant and business rates relief. Local authorities can give out this discretionary funding to businesses that aren’t eligible for other grants. The government gives examples of who the funding could be given to:

businesses which supply the retail, hospitality, and leisure sectors
businesses in the events sector
business required to close but which do not pay business rates

You can’t get funding if your business is in administration, insolvent or has been struck off the Companies House register.

Adapting your strategy

In terms of what small businesses can do to help themselves, there are a number of potential solutions. One of the most obvious for cafes, restaurants, coffee shops and so on, is to change their business model to a delivery/takeaway service. We, as customers can support our local small businesses. I have takeaways three nights a week now! For many, it will still be costing them more than they’re making but continuing to operate is a boost to morale as much as the bottom line. Think in terms of cash flow rather than profit. At the end of the day a small loss is better than a big one. Businesses should consider areas that can take a controlled hit to their profits to help generate cash to pay bills as they come up. They should also think about anything the business owns that could be used to generate revenue. Can anything be sold directly to customers that wasn’t before? All small businesses - not just those in hospitality - should take this time to radically prune budgets so they aren’t spending money on bits of the business that are not operating as normal at the moment. Such as expansion plans or unnecessary advertising costs. Finally, business owners need to make sure they’re as tax efficient as possible and continue to do short, medium and long-term forecasts, even if it makes for uncomfortable reading.

A brighter future

I understand it’s a really tough time for our hospitality clients, but with careful planning, the right advice and the rollout of the vaccine programme, I do believe better times lie ahead.