The Cumberland has teamed up with other experts across the hospitality lending space to share insights on how hospitality business owners can continue to expand despite a challenging economic climate.
In this interview we speak to Matthew Hutton, Accounting Senior Manager at Armstrong Watson accountants to explore how they support hospitality businesses, as well as discussing the pitfalls they must avoid when looking to expand.
Armstrong Watson are business advisers and accountants who support a wide range of hospitality businesses across the North of England and Scotland.
We have a large and diverse portfolio within the sector which provides us with the knowledge and experience to provide proactive and bespoke advice in areas such as sector-specific tax and business planning advice.
Additionally we provide expertise on identification and measurement of Key Performance Indicators suitable for the sector, as well as in-year management of accounts to provide up-to-date and accurate information to help with decision-making.
This is all in addition to our ongoing accountancy, tax and payroll compliance services. For many of our clients, we are not just their accountants, but an integral part of their business.
The current economic climate has seen food, drink, energy, interest, and many other costs increasing for all hospitality businesses at alarming rates. As a result, businesses need to keep pace with these increases when pricing rooms and menus to maintain profitability. This is particularly difficult when coupled with the current cost of living crisis, as businesses targeting people’s disposable income still need to be perceived by their customers as offering value for money.
If a business owners’ product and brand are strong, there is still plenty of opportunity for businesses in the sector looking to expand. Our clients are starting to see the return to the area of the remaining overseas tourist trade that disappeared overnight during the pandemic. So, expanding your current business now will help capitalise on this returning trade.
Meanwhile, there are currently opportunities out there to buy or lease new locations on favourable terms, given that some business owners may be looking to exit after a turbulent few years and despite increased interest rates and rising costs, there are still plenty of options for those looking to finance expansion.
Every business looking to expand needs to have a detailed vision of what they want to achieve and we can help along every step of that journey. We can discuss these ideas and provide advice, but also challenge where required. We can assist with business plans and cashflow forecasting to help bring the vision to life and to prove its viability. Additionally, we have our very own commercial finance department which can help business owners source finance to help fund the costs involved with expansion.
Failure to plan. An idea can sound great in theory, but a failure to properly plan for all the rewards and consequences of growth can lead to unexpected hurdles along the way. To avoid this, hospitality business owners should ensure they have a detailed business plan at the outset and set milestones along the way to assess progress.
For example:
Cashflow issues - Businesses looking to grow normally require some element of initial funding before the benefits of the expansion are realised. This can cause cashflow issues during this expansion phase if it is too quick or too ambitious. A detailed cashflow forecast at the beginning of a growth phase is essential to identify where cash might be tight, and to assess whether any external funding will be required.
Doing too much yourself – It can be tempting to try to achieve the growth by yourself, whilst still running your day-to-day business. Owners should ensure they are adequately resourced so that they can delegate and therefore focus on the most important tasks.
Failure to listen to customers – A business’ customers are absolutely key to its success. Business owners should be sure to listen to their opinions on what is working best for your business, and what could be improved. Ensure these opinions are considered when looking to expand.
Understaffing your business – If owners do not hire enough additional staff to cope with the expansion of their business, it may lead to their existing staff being overworked, which could lead to reduced morale and a worse customer experience. Business owners should try to ensure that they adequately resource their expansion by hiring new staff where necessary.
Not synergising with the current business - Whether a business owner are looking to grow by opening a new location, expanding their existing site, or introducing new product ranges, it is key to ensure that the expansion is in keeping with their current brand. It must not compromise any of the quality or customer experience of their existing offering.
Those who have expanded their businesses successfully always have a clear vision from the outset. They plan carefully, know what they want to achieve, and how this synergises with their current offering. They have a strong brand and product, and this is not compromised by the expansion. They listen to advice and feedback from customers, employees, and advisers.
Finally, if you were going to give one piece of advice to a business in the hospitality sector which is looking to expand, what would it be?
Be confident and bold with your vision but ensure you have a detailed plan from the start and ask for feedback and scrutiny from as many people as you can.
The Cumberland has supported hospitality businesses to fulfil their potential and realise their aspirations for over 20 years through its commercial offering.
By implementing a relationship managed approach with its expert team of advisors, and by putting people at the heart of what it does, The Cumberland has helped numerous hospitality businesses to successfully grow and expand their operations.
Alasdair Swan, Senior Commercial Manager at The Cumberland said: “Supporting people and businesses has been at the core of what we do at The Cumberland since it began. We want to make a positive difference to people’s lives now and in the future, and we do this in a number of ways.”
For more information on how The Cumberland can support you, visit our business page.