In the current crisis, the government’s key focus is locking down the country.
To facilitate this, they have generously introduced a short period, where non-essential staff can 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 their staff rejoining 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. Large travel firms such as airlines, who employ a lot of staff in the UK and have strategic benefits, may receive further emergency support to stave off collapse. But even this may come at the cost of giving the government substantial equity stakes.
Small and medium-sized business can apply for the government-backed 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 spent with extreme caution as they are not free and will have to be repaid.
These travel companies can only survive this crisis by cutting overheads as close 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. Businesses can only afford to pay the 80% of salary that is going to be paid by the government and most staff won’t expect more, 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 of cash quickly and go bust. All other overheads must be renegotiated and/or cut.
However, there is some assistance, and these are some top tips:
Effectively, your business needs to be mothballed as soon as possible. Cash is king. Cutting overheads to as close as nil as possible will help save cash. But every possible avenue for cash retention needs to be considered.
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 wherever possible; and businesses should secure any government-backed loan possible, but don’t spend it unless you absolutely have to. Businesses must then prepare for the rebound, which will come. But your business cannot be the same as before the coronavirus hit. 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, who will have been displaced by other businesses failing to survive the coronavirus. 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 may require technology, but often it’s just about reviewing processes and cutting out the inefficient bits people do because “that’s how we have always done it”.
Marketing cost 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.
Use your time wisely; it costs nothing, and can save a lot of money when the rebound comes. Start thinking and planning now.
Steve Endacott is co-founder of Rebound Counsulting.