Small and Medium Enterprises (SMEs) in the Irish hospitality industry have always faced a myriad of challenges. However, these challenges have recently intensified, creating a perfect storm that threatens the very existence of many businesses.
Whether you begin with the rising costs of raw materials and energy bills, staff shortages, fluctuating wages, payroll management, or even the post-COVID-19 VAT increase, these elements have collectively contributed to a turbulent business environment.
In this article, we’ll explore the challenges faced by small and medium-sized enterprises (SMEs). We’ll also introduce Outmin’s services, which provide essential support for SMEs looking to lower their expenses and successfully handle financial difficulties. Outmin allows business owners to focus on growing their businesses instead of simply struggling to stay afloat.
The Escalating Cost of Raw Materials and Energy Bills
The whole world is feeling the relentless increase in the cost of raw materials and energy bills. Driven by factors such as inflation, supply chain disruptions, and geopolitical tensions, the escalating cost of raw materials and bills put an additional strain on SMEs already operating on thin profit margins after the pandemic.
For many SMEs in the hospitality industry, these costs can be a significant portion of their overall expenses. As a result, businesses like yours are forced to either absorb the additional costs or pass them on to consumers, risking the loss of price-sensitive customers.
Fortunately, not all is lost. If your business wants to mitigate the impact of increased costs, consider the following:
- Identifying alternative suppliers
- Negotiating better deals with existing suppliers
- Implementing efficient inventory management systems
- Closely monitoring market trends
- Implementing energy-efficient solutions to reduce bills
In particular, monitoring market trends can help you anticipate price fluctuations and make informed purchasing decisions. And by actively managing your raw material costs, you can maintain profitability without compromising quality.
Additionally, it truly pays to have an experienced financial advisor in the form of an Outmin fractional Chief Financial Officer. When you bring in experts who have helped numerous clients in the hospitality sector improve their profitability even in the most challenging conditions. You gain a competitive advantage and understand precisely where your inefficiencies are. After all, once you see the problems, it becomes much easier to solve them!
For example, many of the hotels we’ve worked with have invested in solar panels, energy-efficient appliances, and waste reduction initiatives, which have helped them lower their environmental impact and achieve significant cost savings.
Staffing shortages have been a persistent issue but never quite as troublesome as they are after the COVID-19 pandemic. Recruiting and retaining employees has become a monumental task with fewer qualified individuals available.
If you’re a small business owner in the hospitality industry, you’re forced to wear multiple hats to compensate for the shortage. You might find yourself managing the accounts when you should be planning how to scale your business.
A few practical strategies you can try to tackle the issue of staff shortages include the following:
- Building solid relationships with local educational institutions and offering internships or apprenticeships
- Improving your employer branding and emphasising career growth opportunities
- Embracing technology and implementing automation where you don’t necessarily need human expertise
The latter will help you alleviate some of the workload while allowing your existing staff to focus on delivering exceptional customer experiences. For example, many of the local restaurants our team has worked with have implemented collaboration programs with local culinary schools. What started as apprenticeships have turned into a fantastic way to generate a highly skilled pool of candidates they were able to tap into right after graduation.
However, the best solution is delegating everything that isn’t your area of expertise. As a business owner, you can’t afford to spend dozens of hours on accounting. You need to be where the future of your business is taking you – Outmin’s accounting software can help with everything else.
The volatility in wage levels is yet another obstacle that has been haunting SMEs in the hospitality industry. With frequent legislation changes and market dynamics, wages fluctuate, and managing payroll expenses becomes a Sisyphean task.
Of course, the easiest way to handle the day-to-day payroll challenges is to implement the right bookkeeping software.
For example, Outmin’s accounting solution offers AI-assisted bookkeeping with human accounting and financial experts to help you steer the course – starting at an extremely cost-effective fee of €199/month!
Finally, the recent VAT hike has added to the financial burden on SMEs in the hospitality industry in Ireland. The increase, which affects various goods and services provided by the sector, directly affects your pricing and profitability.
To stay in business, you have to be extremely smart about adjusting your pricing while remaining competitive. Additionally, you should focus on delivering exceptional customer experiences to justify the price increase and maintain customer loyalty.
Cost-saving measures will be a must, including renegotiating pricing with suppliers and deciding how you want to split the cost between shouldering it as a business and sharing it with your end customers.
However, these firefighting measures don’t come close to an in-depth financial analysis that helps you understand the financial health of your business while giving you a roadmap you can follow on your way to profitability.
Reducing the Burden on Hospitality Businesses in Ireland with Outmin’s Cutting-Edge Solutions
Fortunately, SMEs in the hospitality sector in Ireland can access a range of resources and support to navigate challenges and foster growth.
Accounting services like Outmin help Irish hospitality businesses navigate the turbulent waters by providing a full suite of financial services:
- Bookkeeping and payroll services
- Tax and compliance
- Chief Financial Officer services
- Finance Team services
From traditional accounting assisted by AI and human experts to CFO on-demand services, you’ll get a clear picture of your business’s financial health at a fraction of the cost! And while our experts handle the finances, you can focus on the only activity that requires your unique expertise – running your hospitality business.