I have always been a firm believer in the benefits of specializations and specific skill sets. My transition from being a public accountant in the oil and gas industry, to a management accountant in an outsourced accounting service, did not change my belief. The first few opportunities I was offered to work on were restaurant and sporting clients. The change could have been challenging, but the need for focusing on specific industries helped make the transition easier.
However, the way COVID-19 has affected the restaurant and hospitality industry did make me question the niche practice approach. After all, state-level lockdowns as well as restricted leisure and business travel have directly or indirectly affected our clients – and the customers they serve. Yet, I’m confident that I can bring valuable solutions to my clients, so niching is the most viable business model for me and my firm.
Other tax professions may not feel like I do. It has been devastating to hear about the challenges some of our clients are facing:
Lost revenue: State and federal imposed dining and travel restrictions, along with stay at home orders resulting in the temporary and partial closure of businesses, drove a steep decline in sales for most of the restaurants and hotels. The National Restaurant Association reported more than $120 billion of lost revenue in the restaurant industry during the first three months of COVID-19. Other studies suggest that eight out of 10 hotel rooms are empty and projects 2020 to be the worst year for hotel occupancy.
Human toll: Layoffs and furloughs have been a challenging outcome of the global pandemic in every industry. The American Hotel and Lodging Association states that most of the restaurants and hotels had to make difficult decisions to lay off or furlough 70 percent of their employees. Even with the remaining staff, owners have been left with no choice but to either reduce wages or offer fewer hours to work. However, some businesses that have taken a philanthropic approach and have taken care of their employees by keeping them on the payroll, even at the cost of the business’s bottom line.
Policy changes: Since most of the states rolled out stricter guidelines, restaurant owners have had to consider several policy changes at the operational level. To follow the guidelines, the restaurants and hotels have had to reduce the room capacity and remodel dining halls to accommodate social distancing. Some restaurants also have opted to take precautionary measures such as mandatory mask requirement to give a safe dine-in experience to their customers.
Business remodeling: The situation has forced a lot of industries to reinvent their business model and adjust to the new normal. Restaurants went from offering dine-in only services to take out and drive through options. Marketing and advertising strategies changed, and safety measures have been added. Now more than ever, owners have focused on their cash flows, budgets, and sales projections.
Permanent closures: Even after trying hard to survive and stay in business, a lot of restaurants and hotels permanently closed; studies show 11 percent of restaurants will be permanently closed. I personally have lost 20 percent of my restaurants and hospital clients due to closure of their businesses.
Now more than ever, as our clients’ trusted advisors and tax experts, we have an opportunity to provide all the necessary support, so how can we help?
Inform clients about IRS updates and changes in filing deadlines. Due to COVID-19, the IRS has altered its tax filing deadlines. Some states have also opted for payment deadlines separate from filing deadlines. We can help our clients by informing them about the new requirements and guide them to meet the deadlines.
Provide virtual tax filing assistance. Virtual assistance has become a necessity in every field, and the tax profession is not any different. For some of your clients who are used to paper filing and personal meetings, this experience can be a little challenging. We may be required to spend more time with them during tax preparation to help and guide them remotely.
Educate your clients about several federal and state assistance programs. There are a lot of programs made available through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help affected businesses with payroll costs and other working capital requirements. Some programs offer special treatments to the hospitality and restaurant industry. For example, the Paycheck Protection Program offers a special concession to tipped employees since restaurant servers are not able to collect tips right now.
Some state governments also have relaxed laws and offered special assistance to the restaurant and hospitality industry, such as loosening liquor laws, and allowing alcohol sales for takeout and delivery. Some states have set aside special funds for restaurants specifically, other states have waived penalties on late sales tax filing, and states such as Delaware are offering special loans for hospitality businesses.
While guidelines provided by the government can be difficult to understand for business owners, applying for this assistance can also be tricky. This is where we can offer our expert help to guide them throughout the process by learning and keeping up to date about the policy changes and available resources.
Offer advisory services. As the economy slowly recovers and businesses begin to evaluate the financial and operational impact, owners need strong advisors who can guide them through the recovery process. Businesses need help managing and maintaining their cash flow and working capital. Budgeting and forecasting, along with spend analyses, are essential to future growth. These are some of the areas where we can offer our extended advisory services by listening, empathizing, and possibly customizing your approach based on your clients’ operational and leadership style.
Volunteer in your community. In current times of crisis, the world needs advisors, volunteers, and helpers. The impact of COVID-19 has proven to be catastrophic and every little bit counts. Volunteering may be comforting during this crisis. We can use this opportunity to give back and find what we are passionate about.
Let’s support our clients
While It might take a few years for affected industries to recover back to pre-COVID-19 levels, we must continue to play our distinct roles as trusted advisors and contribute to a speedy recovery. The future of the restaurant and hospitality industry also relies on consumers and travelers’ decisions, and as consumers, we can always contribute by making sensitive and respectful choices to support local businesses.