Investing for growth

 

With the latest GDP figures released it does finally look like we are on our way out of the longest recession most people have witnessed. It will be a slow recovery but at least the economy seems to be going in the right direction.

 

The leisure sector in Lancashire is in need of a recovery and by all accounts, it is not yet here. However, if we can have bit of the upturn seen in London, then we should have some happy hospitality business owners.

 

After speaking to many hoteliers and owners of Restaurant and Bars I know the best performing businesses are those which have continued to invest in their offering. Many have been unable to get finance for refurbishment work from their banks during the recession but now could be the time to review what work is needed, and put together a plan of when, why and how to fund it. At the Annual Hotel conference last October, the panel from the Independent hotel focused session, said that it was of paramount importance to keep reinvesting in your infrastructure. In addition to this a national surveys of hotel guest from aged 16+ revealed that across all age bands guests expect hotels to keep reinvesting and expect the quality & technology to mirror their in-home experience.  With technology changing quickly this can be expensive and mean regularly reviewing your offering against the competition.

 

Banks are all too aware that a lack of investment in the infrastructure will lead to poor performance. The public are more price conscious than ever, and are demanding ever more value for money. If they think you have held back on spending within your properties, then they are less likely to come. The key to convincing the bank to fund some investment within the business is getting a good set of projections done to show how the refurbishment work will affect cashflow, affect sales while work is ongoing, affect sales post completion and how you can afford to repay the monies borrowed. You will need to produce up to date information of current performance to show that you are on top of your finances.

 

With the annual investment allowance currently sitting at £500,000, now is an excellent time to invest. The annual investment allowance means you will get 100% tax relief on your investment up to the £500,000 limit. The Limit has been put in place until Dec 2015, after that it could fall back to the previous level of £250,000 or maybe even lower to the £25,000 level that was in place for a number of years.

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