In the first of a series of blog posts, the travel veterans behind
Reboundconsulting.co.uk share practical steps SME travel businesses should take to navigate through the crisis
The government’s key focus is locking down the country. To facilitate this they have generously introduced the Job Retention Scheme, allowing non-essential staff to be furloughed and paid 80% of their salaries. However, don’t expect such a generous scheme to be in place for long – businesses should be planning on staff either re-joining the payroll or being laid off before we exit the full impact of the coronavirus.
The government’s next focus will be avoiding large-scale job losses and large travel firms such as airlines which employ a lot of staff in the UK and have strategic benefits, may receive further emergency support to stave of collapse. But even this may come at the cost of giving the government substantial equity stakes.
SME businesses can apply for the government’s loan scheme, but again these loans are by no means free and although every qualifying business should take them to improve liquidity, they should be used with extreme caution, as they are not free and will have to be repaid.
Cut all cost possible to survive today
SME travel companies can only survive this crisis by cutting overheads as near to nil as possible. If you have no income, you cannot have any overheads.
Although it is emotionally difficult, staff have to be furloughed, and that means everyone who is not absolutely necessary, needs to be sent home. Those staff who have stayed on will not expect to be paid more than 80% of their salaries, so don’t pay it. The harsh reality for many travel businesses, is that if they don’t take advantage of the government furlough scheme they will run out cash quickly and go bust.
All other overheads need to be renegotiated and cut. Here are some key ones to start with:
• Stop paying business rates for a year and defer VAT payments till June
• Renegotiate rents with landlords. Ask for a payment break or deferral
• Computer maintenance and all other office related expenditure needs to be cancelled where possible
Effectively, your business needs to be mothballed as soon as possible.
Cash is king
Cutting overheads to as close as nil as possible will clearly help cash. But every of route of cash retention needs to be considered:
• All suppliers should be contacted for cash refunds and/or cash support for the business
• Customers need to be given credit notes instead of cash refunds where ever possible
• Secure any government-backed loan possible, but don’t spend it unless you absolutely have to
Plan for the rebound
The rebound will come, but your business cannot be the same as before the crisis. You need to be leaner, keener and work smarter.
You know who the core members of staff are, the ones willing to go the extra mile and on the journey with you. It’s time to let those who aren’t go and replace them with better staff. Homeworking will be the norm, so embrace it and use it to recruit better staff from a wider catchment area.
Spend the quiet time you have now to work out solutions for all those inefficiencies you will have lived with for years. Sometimes this involves technology, but often it’s just about reviewing processes and cutting out the inefficient, “that’s how we have always done it”, bits people do.
Marketing costs money, so focus now on re-engaging with previous bookers to make sure you have their latest contact details and remind them you are there for their holiday needs when the rebound does come.
Using your time wisely costs nothing and can save a lot of money when the rebound comes, so start thinking and planning now.