These are trying times--no doubt. A global pandemic has caused business owners to adjust regular operations and reconsider the immediate future of their company. In the special events industry, we are being hit extra hard, as some governments have banned gatherings of more than 10 people. Beyond that, we have to keep in mind the safety of the general public, especially those populations that are vulnerable, such as the elderly and immunocompromised. This is an immensely difficult situation, and one that continues to evolve by the hour.
With the understanding that this situation could last for months, there is the concern about operating your business effectively to reach the other side of this pandemic. A crisis of this magnitude is one we’ve never seen in our lives, so it’s natural to feel unsure about where to go next.
Thus, I want to cover three main strategies that will see you through this global crisis. But, first, let’s consider what this means for many of our clients.
It's essential to think about the emotional and financial impact this crisis is taking on your clients. For wedding clients, they likely have to postpone or cancel their dream day. It's heartbreaking and devastating, so you need to communicate with compassion and respect.
For corporate clients, recognize that there could be a lot on the line financially--sponsors, vendors and clients could all face the repercussions. Generally, we are seeing that corporate clients are outright canceling their events, whereas wedding clients tend to be postponing.
1. Remember risk management.
Expect your clients to look to you for guidance as they navigate the circumstances surrounding their event. Industry-wide, the message we must communicate is that postponements are better than cancellations. This messaging is the only way we can save our industry. While we may understand this, many of our clients won’t--especially corporate clients.
Thus, it's our responsibility to be proactive in communication. Don't wait for them to make a decision; connect with every client one at a time and be clear and transparent. Let them know the measures you have in place and how you will take care of their needs. Ensure that your team is at their disposal, and you're committed to being proactive with their events.
The key is to show them that you're prepared to shoulder the weight of their worries. People are overwhelmed and, if you can take some of the decisions off their plate, they'll be far more likely to postpone instead of cancel. While we are hired for our creativity, we are also problem-solvers, so lean into that role and act as damage control for your clients.
With imminent postponements and cancellations, now is a great time to talk to a lawyer about your contracts. Although I have no legal background, I've spoken with attorneys who recommend formulating a new agreement that communicates the terms of a postponement. Once the dates of the original contract have passed, it is considered null and void, so you could be found for breach of contract since no services were rendered.
Once you’ve connected with a lawyer, communicate with your existing clients to let them know the original contract has been cancelled and a new contract is being generated with everyone’s best interest in mind. Again, please look to your attorney for guidance here.
2. Consider your communication protocol.
During times like these, there is nothing more important than compassion. Everybody is being affected by this pandemic in different ways, so you need to communicate with transparency and empathy. A little bit of generosity goes a long way.
Of course, you do need to protect your business security (which we’ll discuss in the next section), but we need to recognize that our clients are also in a bind. The people who will be remembered on the other side of this will be those that worked with one another and collaborated to find solutions for their clients.
As you communicate with clients, start reaching out chronologically, so you're connecting first with those whose events are upcoming. The truth is that we don't know how long this crisis will last. Thus, you should be making an effort to reach out to all of your clients--even those with events in fall, winter or beyond.
Let’s turn our sights to social media, which will be your best medium for communicating messages to a mass audience. If you haven’t stopped your scheduled funnels and promotional posts, you must stop them immediately. Otherwise, you risk seeming tone-deaf to those who are feeling the repercussions of coronavirus.
Knowing what to post is challenging, so take the time to reassess every post that is going out. You don't want to dwell in the gloom, but you also need to be realistic and sensitive to the matter. Craft some messaging that advocates for the industry at large and lifts your creative partners. Use social media to bring people together and create a digital community filled with positivity and empathy.
3. Protect your business.
Postponements and communications aside, one of the biggest concerns for business owners is whether their own companies will survive the pandemic to continue operating afterward. The economic impact of this crisis is devastating already and will get worse before it gets better. It is tough to hear, I know, but it is the reality that we need to accept if we want to move forward.
In the short term, we’re going to face a severe cash deficit. This is scary, but preparation is the key to avoid panicked decisions. But, consider it like a kink in the economic hose. The flow has stopped abruptly, but when this all blows over, the industry will be overloaded--not just with money, but with work. All of these rescheduled events will still have to take place. This will likely be in the fall and winter, but until then, we will have a pretty slow period, which we can use to our advantage to take the proper measures to prepare for the inevitable onslaught of events.
Of course, things are changing every day, but this is how the forecast is looking. Keep this in mind as you make business decisions.
In terms of staffing, you might have to ask your staff to be off for a few months or to transition to a part-time role until this blows over. You may need to consider tapping into savings or a line of credit to continue paying them. Expect to make difficult decisions in the next few months, but with the understanding that we will be swamped on the other side of this--which is a great thing for everyone.
Unfortunately, that surge is not going to last forever. Come 2021 and 2022, economic experts are anticipating a recession, and it's going to be a setback for some businesses. Believe it or not, this recession isn't COVID-related; it's been a long time coming, but COVID-19 is making it a more urgent and immediate situation.
During the recession, you will still be getting business, but things will be tighter. So, in these slow and quiet times of social distancing and isolation, it's a good idea to start preparing your business's finances to ensure you remain solvent through the recession.
One thing you can do now is connecting with your clients, especially those with events later in the year or in 2021. Explain what your business is doing and let them know that you are offering clients the opportunity to pay advances now. Be humble in your approach, but let them know that this would help your business in these tough times, and it essentially means they won't have to pay later (when they may also be financially impacted). People are seeking ways to support small businesses and, if you provide them the opportunity to help, many will take you up on that offer.
Another way to streamline your cash flow is to adjust your payment schedule. The industry standard is typically to require a 50 percent deposit with the final 50 percent due at the end of the event. That's just not going to work now; if possible, think about breaking up payments into at least four milestones. By milestones, I'm referring to things like "secured the venue" and "finalized floorplan"--that way, your income is more steady, and your clients will feel see their payments linked to actionable items. This might not work for every business, but it's worth considering.
Still, you may find yourself in a situation where you need to consider financing. While I don’t typically advocate for financing a service-based business, there are some parameters that may make it worthwhile in this climate.
Before making any major financing decisions, head over to a loan amortization calculator and put in your numbers to find out the monthly payment you’ll be making over the term of the loan. If you are confident that you can take it, then it might be a good option for you. If the monthly payment makes your stomach turn, you’ll need to find another strategy--it’s not worth taking the burden of long-term repayments if you’ll risk defaulting on a loan.
There are a few options I want you to consider in the way of financing:
1. SBA Disaster Relief Loan
The U.S. Small Business Administration is providing disaster relief loans for small businesses impacted by the COVID-19 pandemic. These are low-interest loans (2 percent to 4 percent). Make sure to indicate that it’s for an Economic Injury Disaster Loan (EIDL). If you can get one, this is going to be your best option due to the interest rates. There are some limitations, so review the information here before applying.
2. Business Line of Credit
If you don't qualify for an SBA loan, consider a business line of credit that will have a lower interest rate than a credit card. Typically, you get to decide how much you want to pay every month; however, at any point, you can be asked to pay it off immediately if you've been stagnant with payments. It's a potential risk to consider down the line, but it's worth exploring if you think it would make sense for your situation.
3. Credit Cards
For me, credit cards are always going to be the last resort because of their high interest rates. If you're at a point of desperation (and maybe even have some revolving credit card balances), you can convert it to a business loan to reduce interest rates. This is called debt restructuring, and it can cut your interest payments from 20 percent-plus to, say, 10 percent. It's a far more favorable situation to be in than having monthly credit card payments.
Although we can’t anticipate many things at this point, we should still be taking the steps that we need to position our businesses to weather this storm as best as possible. And, on that note, we also need to be taking care of ourselves in these trying times.
We’re all taking this one day at a time, so make it a priority to find balance in your day. Take breaks when you start to feel overwhelmed by business; go for a walk, make a pot of coffee, stretch in your home office--do whatever you need to do to unwind and, whatever you do, don’t give up. We’ll make it through.
Michelle Loretta is the founder of Sage Wedding Pros, a consulting firm and online resource supporting wedding professionals in building solvent, sustainable companies. She is the brain behind the annual Be Sage Conference and a highly sought-after speaker.