Pubs urged to carry out business review ahead of cuts
Pubs are being urged to carry out a full business review of how the cuts in public spending will affect them.
Baker Tilly Recovery and Restructuring, which is acting as administrators for the Maypole Group, said that the licensed trade must take a pro-active approach to the cuts, which will see half a million jobs lost in the public sector over the next three years.
Resarch on the latest accounts filed by bars, pubs and clubs in the turnover bracket £0.5 -100m, found almost one in six (15.3%) experienced a fall in sales of 10% or more ahead of the cuts.
"A proactive attitude is the key and there are a number of essential steps to take with any business in distress to maintain stability," said Mark Wilson, partner at Baker Tilly Recovery and Restructuring LLP.
"Fully assess and review your cash flow. In an industry where operating margins are, in the main, extremely tight, this is critical.
"Talk to your funders — work out a survival and stabilisation plan if necessary. Be clear about where you might need additional funding and what security can be provided.
"Natural inclination may be to brace for the worst. Remember that your competitors will face a similar position and not all will be able to weather the storm.
"If you are able to withstand the initial impact to your business, the competitor fallout could present further opportunities in the market."
Last man standing
However, Wilson warned that "last man standing" was not a credible business plan to take to the banks.
"Lenders are willing to engage with operators and at least arrest terminal decline, given time and an opportunity to right the wrongs," he said.
"This comes at a price and at the very minimum this is transparency and the willingness to explore alternative strategies."
He added that speed is of the essence. "Surprisingly, many businesses have not conducted a business review prior to the cuts, instead have adopted a 'wait and see' approach.
"This will not protect you, we recommend you seek advice and take action where you can. Distress can spread quickly so do not delay."
