The tourism and leisure sector is often associated with fun and relaxation, but from a business perspective it is not without risk. When all of your commercial activity and therefore ability to make a profit is limited to a specific season or time period it is important to account for the various eventualities so that you don’t leave your business exposed.

Here are a few of the measures a business can take to protect itself against the typical pitfalls:

• Cash flow – every business must be mindful of cash flow, but the difference in earned income between peak season and off seasons can play havoc with the balance sheet. It is important to consider diversifying in the off season to make sure all the budgeted fixed costs are met.
• Business description – If you do decide to diversify it’s important to ensure your business description includes any new activities, as this dictates the warranties and conditions of the policy. When speaking to your broker ensure that you divulge all relevant information about your business to them. Your broker should ask probing questions to gather all information, but don’t be afraid about volunteering things you may think irrelevant. Not mentioning something you do as a business could have disastrous consequences when making a claim.
• Business interruption – When most of your business is expected to take place within a short window of time, if you were forced to close for a reason beyond your control, how would you recoup the income lost? Having a plan in place that you can turn to in the event of an incident is a key step towards managing risk. However, for this plan to remain effective it is vital that it is regularly revisited. Rehearsing and reviewing your plan to check that it still meets your needs as your business evolves and grows makes good business sense.
• Stock and contents insurance – if your stock levels peak during your summer trading months, but reduce during the off season, build into your insurance policy a mechanism to declare the accurate values at risk you have and ensure you pay a premium that reflects your trading patterns.

Obtaining advice from a specialist who knows your industry is a prudent first step. If you would like to discuss these tips or could benefit from some independent advice please get in touch.