Why you should add a Coronavirus line item to your P&L.
We highly recommend adding a new expense line item to your Profit and Loss statement for COVID-19. Why? Because your business is incurring unusual expenses this year as a result of the Coronavirus. Many of these expenses will be one-time in nature and are not expected to recur. By adding this line item, it will be much easier for you to track the impact of the virus on your bottom line. Being able to clearly point to any expense impact as a result will help in your discussions with insurance, your lenders, and the government if additional support is offered.
What should I include in the COVID-19 expense line?
Payroll: Have you had to increase your housekeeping hours to ensure that all of your public spaces are sanitized? If so, add the additional hours spent on payroll into this line item.
Cleaning supplies: Keep track of all the additional and higher power cleaning supplies that you have purchased. You likely would not have needed these if these events had not occurred.
Guest handouts: At our properties that are open, we have purchased personal size hand sanitizer that we can give out to guests when they arrive. Not surprisingly we have paid more than average for these products but believe it is important to help keep our guests and team safe.
Personal safety supplies: Have you purchased masks? Add that to the COVID-19 expense line. One region that we operate in has required that all team members have their temperature taken before starting their shifts. We chose to purchase a digital non-contact thermometer (https://amzn.to/2vGnxA0). We would not have purchased this otherwise.
Freight: Have you paid additional freight to expedite orders? If so, count this as a part of these one-time expenses.
Interest expense: Have you borrowed money to boost your cash balances during this crisis? If so, move the interest expense associated with that specific borrowing to the COVID-19 line.
Remember to be honest about what expenses you are allocating to these events: only track expenses that are truly related to the Coronavirus.
What about lost revenue? That is a great question. Some property management softwares offer COVID-19 related cancellation tracking. If yours does not, consider adding Coronavirus as a reason for the cancellation in each reservation's notes section. This will make it much easier to track lost income as a result. We know that this is only part of the revenue impact as you have also likely lost reservations that would have been made that are not, but it is at least a solid starting point.
We've got your back.
1. Need advice?
We will be putting out free content - typically reserved for our in-house team and clients - that we think you'll find valuable in navigating the course ahead. We will publish this to our blog and LinkedIn pages which you can find here and here. If there are specific topics you would like us to write about, please let us know and we will do our best to accommodate.
2. Need an operating partner?
If there ever was a time to partner with a professional management company, now is that time. You can find our thoughts on the need for professional management in the campground industry here.
For any campground that starts working with us before June 1, 2020, we are offering short-term minimum contract commitments. That means you can try working with us for just three months without any longer-term obligations. Interested? Please reach out here to discuss further.
3. Need cash?
We appreciate that liquidity is important to you during this time. If you'd like to discuss selling your campground, we are in a position to help. Please reach out here to discuss further.
Stay safe and in good spirits. If you need us, we're here to help you.
Interested in selling your campground? Let's connect.
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