2020 took a heavy toll on all of us but 2021 always offered a glimmer of hope that maybe, just maybe, things would be going back to normal by now.
Halfway through the year, though, and we’re still trudging along under restrictions. But with a fall in cases and a high vaccine uptake, hospitality can finally take advantage of reopening for business to boom.
You would be forgiven for thinking it wouldn’t be the best move to open a brand new restaurant, pub, bar or hotel, but we’re here to say that, in some cases, now is in fact a great time to start a hospitality business.
Last year, COVID-19 forced almost 10,000 pubs, clubs and bars to close their doors for good, while coercing thousands of others to focus their time and energy on restrategising and adapting to unfamiliar territory.
Meanwhile, it’s plausible that fewer hospitality startups will open this year compared to last year because of the common perception it’s safer to start a business when the economy is buoyant.
These two factors offer those bold enough to give it a shot less competition, giving them one less problem to worry about.
It goes beyond competition for customers too. You’ll likely be in a better position when it comes to investors because there’ll be fewer entrepreneurs like you vying for their attention.
Hospitality has also suffered great unemployment recently with the sector losing some 660,000 jobs in 2020.
Unfortunately, not all these jobs will return, but with fewer employers to compete with for the experienced and talented people who are looking to get back into their trade, it is not a foregone conclusion you won’t find the staff you need.
While many COVID-19 support schemes are targeted to those whose businesses were temporarily closed due to the pandemic and ensuing lockdowns, you can take advantage of some initiatives to get a boost for your business.
For instance, you might be eligible for a reduced VAT rate of 5% until 30 September 2021 and a rate of 12.5% from 1 October 2021 to 31 March 2022, while there is also a new VAT deferred payment scheme that you can opt into by 21 June 2021.
Government support extends to recruitment through its kickstart scheme, which pays 100% of the national minimum wage up to 25 hours a week to support you in hiring and training a young person in a sixth month placement.
If the Government’s roadmap out of the pandemic doesn’t go as planned, you’ll also have the assurance that you may become eligible for schemes like furlough (extended until the end of September 2021) and the recovery loan scheme if things don’t happen as you hoped.
It might seem counterintuitive to borrow money right now given all the risks, but now is actually a good time to do so.
After all, interest rates remain at their record low of 0.1% which have been in place since March 2020.
The Bank of England reported in early May that they have no immediate plans to change the rate any time soon either, so commercial banks can be expected to charge lower interest rates for business loans than usual as well.
Some still have their own fixed rates, like start-up loans (6%), so taking time to look for the best deal for your business is important.
If you are starting a new hospitality business, it is also important to put the right accountancy support in place at the beginning. You need to make sure you are compliant with HMRC requirements and think about using online software such as Xero for your record-keeping.
Evans & Partners can help you love your business and keep on top of your finances. Give us a call on 0117 9675215 or fill in the form below.