Ask the Experts: How can I protect my business from the spending cuts?

Robert Barnard, partner for Hotel Consultancy Services at PKF Accountants & business advisers, tells one reader what he can do to protect his business as the impacts of the spending cuts start to be felt.​

Problem :​ “As owner and operator of a 100-cover restaurant and 50-bed hotel, I have tried to anticipate the hit my business is likely to take from the government’s spending cuts. I’ve reduced staff hours and introduced some discount offers to keep costs down and keep people coming through the doors. I’m concerned I’m not doing enough, but that anything more would affect the quality of our service. What are the main dangers I should be looking out for in the face of the government cuts? And what else can I do to protect my business?” – Tim, Brighton.

Solution:​ Firstly, the steps you have already taken are absolutely on track to try and cushion yourself against any downturn in business.

To take this further, you need to understand exactly how much of your business is derived from the public sector and quantify the potential loss of business.

The government’s spending cuts will impact public sector expenditure therefore if you do derive business from the sector, for example meeting space, accommodation, catering – this all needs to be quantified so that you have a clearer idea of exactly how much your business may be affected.

In order to mitigate against such losses, there a number if things you can do. For example, you can explore potential new sources of business for both the restaurant and the hotel – with slightly more emphasis on the hotel side – so that you can immediately replace any lost business. A good place to start is to look into any new business developments in the catchment area, for example a business park development, for potential new corporate business.

Secondly, there is no substitute for burning the shoe leather! Now is the time to visit your existing client base and make sure they're happy with your product and service and also to meet new potential clients. Don't wait for people to turn up - get out and about and make things happen.

And what about your marketing material and, more importantly, how is you website looking? Is it time to refresh your brochures/website? Remember that many people search the web to make restaurant/hotel bookings so it's vital that your website does a great selling job for you.

This could also be the perfect opportunity to refresh your menu and take the opportunity to feature low cost/high margin dishes to ensure your restaurant's profitability. Remember the key is cash flow so it's all about maintaining sales levels, not just about taking costs out of the business.

On a similar note, one last thing to note is that I would be wary of too deep discounting, as it’s always more difficult to re-build price.