PHARMACY owners and managers struggling to meet their rental obligations are being urged to take their heads out of the sand and start talking to their landlords about a strategy to work their way through the coming months as the country braces for the full impact of the COVID-19 pandemic.
Retail rental expert, Lease1 Director, Phillip Chapman, recommended that pharmacy owners let their landlords know how much they can afford to pay and when, and further advise when they will have their battle plan for review and discussion.
"If this approach looks like too much hard work, then retailers need to get help now as time is of the essence to set their business up," he said.
"Not just for survival but to be in a position to thrive once the COVID-19 crisis passes.
"Similarly, landlords need to heed the words of the Prime Minister and step up and play their part ensuring the retail sector gets through these times as well.
"We all have a bitter pill to swallow here but through actioning a plan and collaboration, let's make this pill as small as possible for each of us.
"Let's see some leadership on both sides."
Chapman advised tenants to develop a 10-point plan to tackle the challenges they are likely to face in the coming months:
1. Review Rosters v Trading Hours and create a saving plan (landlords are already advising they will be flexible here).
2. Negotiate with bankers to defer loan payments.
3. Same for equipment and chattel leases, seek to defer.
4. Suppliers, negotiate suitable payment terms and even defer part or all payments for a period of time.
5. Review and remove all non-essential operating costs, for example storage.
6. Defer capital expenditure on equipment, shop refurbishments, etc, and channel funds into the operating costs plan.
7. Compare your numbers on customer counts, sales, gross profit and P & L reports for the same weekly/monthly period this year to last year - be an open book.
8. Review your lease for savings areas such as waiving of annual rent reviews, reduction insecurity/bank guarantee to free up capital.
9. Create a revised sales and cash flow projection to the end of this calendar year making assumptions based on the above savings.
10. Make an appointment with your landlord and discuss where they fit into the battle plan.
The above article was sent to subscribers in Pharmacy Daily's issue from 18 Mar 20
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