The hospitality industry is one of the most dynamic sectors, but also one of the most vulnerable. Fluctuating income, seasonal influences and high fixed costs make it challenging for many hospitality entrepreneurs to remain financially healthy. Add to that the impact of the corona period and rising energy prices, and it is clear why many entrepreneurs in this sector are struggling with debt. In this blog we discuss how you as a hospitality entrepreneur can get a grip on your finances and what steps you can take to get out of debt.

Recognize the causes of financial problems

As a hospitality entrepreneur it is important to identify the cause of your financial problems. Common causes in the sector are:

• Seasonal influences: Turnover in the hospitality industry can fluctuate greatly between busy and quiet periods, such as summer or holidays versus the low season.
• High fixed costs: Think of rent, personnel costs and energy bills that continue to accrue, even if turnover temporarily drops.
• Corona debts: Many catering entrepreneurs still have to deal with deferred taxes or refunds of corona support.
• Competition and margin pressure: Increasing competition and higher purchasing costs make it difficult to remain profitable.

Create a detailed financial overview

To effectively work on your debts, you need a clear picture of your financial situation.

• Map income and expenditure: Record all cash flows, including variable costs (such as purchasing) and fixed costs.
• Identify problem debts: Which debts have the highest priority (for example, tax debts or rent arrears)?
• Forecast for busy periods: Plan for peak periods when you expect more revenue and determine how you can use this revenue wisely to pay off debt.

Optimize your business operations

Many financial problems can be alleviated by taking a critical look at your business operations.

• Revise your menu: Focus on profitable dishes and eliminate less popular items with high purchase costs.
• Staff planning: Make sure your staffing is flexible and tailored to the expected workload. Use an on-call contract or flexible hours during peak periods.
• Save on fixed costs: Negotiate with suppliers for more favorable purchasing prices or consider partnerships with other catering establishments to share costs.

Discuss payment arrangements with creditors

Rent arrears, supplier debts and tax debts are common problems in the hospitality industry. Try to make payment arrangements:

• Suppliers: Ask for extension of payment terms or temporary discounts.
• Landlord: Discuss temporary rent reductions or a spreading of overdue payments.
• Tax authorities: Use the existing deferred payment arrangements or request customisation if you cannot meet the standard terms.

Seek professional help

Many hospitality entrepreneurs find it difficult to tackle debts themselves. This is where professional debt counselling can make a difference.

• Financial analysis: A debt counselor can assess your situation and make a realistic plan.
• Negotiations: Professionals can talk to creditors on your behalf to get better terms.
• Restructuring: If a restart or restructuring is necessary, an expert will help you make the right choices.

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems increase and take control of your financial future today. Click on the button 'Apply for debt assistance now' and take the first important step towards peace and security for you and your company.