What can hospitality businesses do to survive social distancing?

Everyone is affected by the measures in place to stop the spread of Coronavirus but some of the hardest hit are small businesses in the hospitality, retail and leisure industry. Mike Watson from Business East Sussex has some advice on the options and assistance available to them.

 

The first consideration for any business is for your staff and customers. While the financial implications are very important and need to be carefully considered, the starting point for any decision should be the social aspect.

 

The primary decision has to be whether to close or stay open. There are pros and cons, so neither is the perfect solution. Closing is a relatively straightforward decision, but not necessarily the only option. Clearly if you close down you will have no income during the period so you will need to be clear as to how this will impact you financially and reasonably confident that you can survive the period you are shut.

 

You will need to send out a clear message to customers, staff, suppliers, service providers and financiers explaining why you are closing and for how long.  Most importantly you need to signal that when you re-open, the business will be in a good position to welcome customers and re-commence trading.

 

Option 1 – Closing 

Before you make a decision, here are some things to explore:

 

• Suppliers: Will they accept invoices remaining unpaid past terms? Will they accept a payment plan, and can the business afford one? Will they continue to offer credit terms when you re-open?

 

• Staff: Will they still be available when you re-open? Are you liable for redundancy? Should they go on SSP. It would be best to take professional HR advice.

 

• Financiers: Will they give you holidays from mortgage payments, loan payments or keep overdrafts in place or extend them if necessary? Will your landlord give you a rent holiday or a reduced rate?

 

• Business interruption insurance: Check your policy or talk to your broker to see if you are covered as this could be the key to your decision. Any financial help is going to be a boon, but understand what qualifies, how much you get and the time frame for receiving the funds.

 

• HMRC: Talk to them about time to pay for PAYE, VAT and any other tax obligations. A dedicated helpline has been set up for businesses concerned about being able to pay tax due. Call 0800 0159 559.

 

 

• Local authority rate relief: You should qualify for this and you can also apply for the grant that has just been announced.

 

• Finally sit down and try and forecast what business activity will required when you re-open to give you a reasonable opportunity to trade through. It will take time to build revenues and you will also be carrying a higher debt burden, so time-to-pay plans need to run on well past your re-opening date.

 

 

The other option is to keep trading, which can be keeping the premises open, but not necessarily. Clearly if the location is key to the activity this is challenging, but some businesses may have other options.

 

Option 2 – Staying open 

 

If you want to stay open, then you have to devise a plan taking into consideration the cost of closing against staying open. It is almost certain that trade will be significantly reduced as people stay away, so you have to be clear as to why you are not closing and show what measures you are taking to protect staff and customers.

 

I would not presume to tell business owners how to manage their facilities, but make clear what you are doing to mitigate the risks for customers and staff alike (clear spaces, tissues on tables, hand washing signs, regularly cleaned facilities, paper table cloths, gloves for staff, etc.). The message has to be ‘we are open, but we are conscious of the situation and we have your safety as our priority’.

 

Before you make a decision, here are some things to explore:

 

• For those business that can, promote “take out” and “home delivery”.  Encourage online and phone orders; perhaps offer an incentive for this approach?

 

• Consider what “opening” hours you need. Can you be open while not having any customers on the premises?  If you are gym, can you reduce class sizes and run them more frequently?

 

• Can you collaborate with other local businesses to support the community, for example, a local courier who can deliver?

 

• Talk to staff and make them realise they will have to expect a pay reduction over the period. If you have a key member of staff, could you reduce their take home pay over the period but accrue the balance for repayment at a later date?

 

• As with the closing down option, engage with suppliers, financiers, HMRC, the local authority and your landlord. Negotiate additional support as above but stress the fact you are staying open and seeking ways to trade through the crisis. Also check your insurance for business interruption support.

 

• Finally, Facebook has just announced a package of support for SMEs. There are no details at the time of writing but if you are a Facebook for Business user I am sure you will be notified as to the package in due course.

 

Clearly this is a tough time and no decision is easy or comfortable. I would urge businesses to consider what “staying open” options they have before closing. Although the financial challenge is significant, if you can show the community you are adopting a positive but responsible attitude, I think it helps both commercially and spiritually.

 

For further information please visit the Business East Sussex website or join one of the free online marketing workshops which will include advice for businesses in respect of the Coronavirus pandemic.   These are taking place next week on Tuesday 24, Wednesday 25 and Thursday 26 from 9:30 am -12pm.  For information on how to register for the live workshops please go to bit.ly/businesseastsussex