Hayden Ward

Business Survival Plan Part 1: Guide to Finance

Business survival finance

COVID-19 has had a significant impact on the travel and hospitality industries, leaving vacation rental property owners with an unexpected financial loss. Further, with many headlines stating that we are heading into a recession, short-term property owners are undoubtedly concerned for the future. While the total impact of the shutdown of short-term rental businesses is yet to be seen, success will hinge on the financial planning you do now and when things return to a new normal.

Our first article of this two-part series highlights the steps to take to be financially prepared for a crisis. Whether that is a second wave of COVID-19, a natural disaster or any number of other crises that could temporarily shut down your vacation rental business. 

What to Do: Planning for a Financial Crisis

Aim to have 3 to 6 months’ of expenses saved for emergencies.

In an emergency, cash is truly king. No matter how adequate your emergency savings fund is, it is unknown how long you might need to cover in the event of a loss of income. The rule of thumb is saving at least 3 – 6 months of expenses in a separate savings account.

The specific amount you decide is best for your short-term rental business will depend on your comfort level, the availability of other sources of financial support, and how risky your income is. Think about your monthly re-occurring expenses, such as mortgage, utilities, and vendor obligations, plus any personal expenses your rental income covers. Regardless of the amount, make sure the money is easily accessible.

Create a crisis budget.

A crisis budget is reserved for only your business essentials. Cut any non-crucial expenditures when travel is scarce and loss of income is a reality. For example, if you do not need a landscaper to mow your short-term property’s lawn, then don’t account for it in the budget. Make sure you are looking at every line of your business’ budget and evaluate if it is truly needed or if you can either cut or suspend.

Calculating the total amount of funds needed to survive will help lower stress during these unprecedented times. It will keep you ahead of the game knowing exactly where to cut spending. A wise tip is to incorporate all of your bills on a spreadsheet. Tracking spending habits allows you to understand where your money goes and what it is used for. 

Mortgage payments, vacation rental insurance, utilities, and immediate repairs need to be included within your crisis budget. Although you may not have any guests at your property, it is important to have the mindset that risks still exsists. With COVID-19 happening during the springtime, heavy rainfall and other inclement storms are risks will be there regardless of the virus. 

Implementing Your Plan

Balance your business and family.

Implement your crisis budget immediately and adjust your lifestyle to the change. Any expenses not related to keeping your business afloat or essential to living, need to be re-examined and halted if possible. Many property owners have children and are assisting with online schooling. Because of stay-at–home orders or simply lack of time, many property owners may not be able to set foot on their vacation rental properties. If that is the case, monitor the property either remotely or have someone you trust keeping an eye on it. If you know a storm has passed by the area, check to ensure no damage has been done. Balancing your work life while attending to family needs is a challenge; however it is important to ensure your property is safe and remains in good condition, even while it sits empty.

Apply for financial help.

The U.S. government, the Small Business Administration (SBA) as well as other travel entities, have realized the devastating impact of the crisis on vacation rental owners and their families. We compiled a list of different resources to help you navigate through difficult times. If you are eligible to apply for any financial relief, we recommend you do so. 

A creative way to ease the impact of a crisis is by seeking financial support and opportunities offered in your community. Many short-term property owners who are unable to host travelers have opened their doors to help first responders. Some have even been able to allow businesses to rent their space for photo-shoots. Ultimately, keep in mind the regulations your city has in place for rental homes. If allowed, get creative with your circumstances and give back to your community. 

Returning to Normal Life: The Road to Recovery

Resist the urge to splurge.

After the crisis has subsided and travel begins again, there will be a temptation to splurge. Focus on rebuilding your crisis savings account first, then gradually begin to start incorporating priority spending into your budget. Stick to your financial plan and take time to re-evaluate your crisis planning. Was there anything you didn’t account for but needed? Plan to be on your crisis budget until you have rebuilt your 3-6 month emergency fund.

Survive the ‘stress test’.

No small business’ financial situation is guaranteed, particularly that of a vacation rental business, so we all must plan for unforeseen circumstances by:

  • Focusing on the long term and your goals when it comes to your short term rental business
  • Having an emergency savings account
  • Having an idea of how much you need to maintain mortgage, insurance, utilities and your personal essential expenses
  • Being able to run your vacation rental business off a spending plan
  • Immediately adjusting your business when a crisis strikes
  • Remembering people will travel again and they will be looking for safe, clean places to stay


Stay focused on your long-term goals.

The most important thing property owners can do is stay focused on your long-term financial goals. When investing in short-term rentals, keeping your bank account in shape and not becoming discouraged when travel is down are the keys to riding this unpredictable wave. This industry is one of the most persistent ones out there. Set targets for your small business to measure the progress you have made. If your desired income has not been reached, make adjustments, and be flexible. 

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About Us

CBIZ Vacation Rental Insurance, a division of CBIZ Insurance Services,Inc., is the largest insurer of short-term vacation rental properties in the United States. As part of an $850 million New York Stock Exchange traded company (CBZ), we are the first broker to develop specific policy coverage to meet the needs for vacation rental properties and the amenities offered by these businesses. We have insured vacation rental properties since 2002.

The CBIZ Vacation Rental Insurance team knows insurance, specifically the risks and exposures related to short-term vacation rentals.We won't confuse you with technical "insurance speak" ~ our representatives are well versed in explaining your coverage in plain English. With hands-on, personal customer service, we guarantee swift communication and a 24/7 claims team that is ready to respond to your call any time of the day. As specialist in the industry, we leverage our knowledge and passion to ensure you and your business are adequately protected.