Paul Davies, director of TA Accounting, says companies need to implement several measures to survive. ‘If your income is going to be down 50% over the next three months, and staff costs are 50% of your income, you cannot reduce costs enough to break even. You will need funding. ‘It is imperative to prepare a budget and cash flow forecast and where necessary talk to your bank about short term funding. ‘Obviously reduce costs where you can.’ But Davies says there are also opportunities and positive ways to use this situation. ‘If you can, use the resources you have to develop and sell product that your clients will buy. Also, use the opportunity to review internal systems and streamline processes.’ He says that for most travel businesses their biggest expense is staffing.
‘Consider discussing options with your staff to work on a three to four-day week until the situation improves. Request staff to take their holidays now and for those who do not have any holidays take unpaid leave if they can afford this.’ He says shareholders and stakeholders need to reduce their own salary to just cover their basic living costs. ‘Owners need to put in place funding to last for at least three months, the banks are sympathetic to this situation.’ Davies adds that TA Accounting is obviously seeing from travel agencies that many people are cancelling and deferring bookings. ‘If you are in this conundrum you are not the only one. This is inevitable as the whole world is suffering from this pandemic. Like most people, he does see this as a temporary glitch and envisages a strong rebound. ‘Most operators have seen these downturns before with SARS, the GFC and even 9/11, so cast your mind back to those events and how those situations were managed and survived through. Remember that departures from New Zealand over the past 10 years have risen at an average of 5.4% per annum. When the virus is dealt with there will be a huge surge in bookings.’ email@example.com