COVID-19 has devastated the events industry. As I talk to other event professionals, I hear statements like, “when this is all over, people will throw parties bigger than ever before” and, “we’re going to be working Thursday through Sunday this fall to cover all the rescheduled weddings.”
While I applaud the optimism, I think we’re woefully unprepared for what lies ahead. The sinister reality is that many of us risk going out of business if we don’t make drastic changes effective immediately.
There are three elements you must understand when developing a business continuity plan to get through the current crisis:
- Timeline for recovery
- Financial runway
- Strategic changes
Understanding the timeline
I believe many event professionals have an unrealistic timeline of when they will go back to work. Government officials could reopen the economy as soon as early May (though I think that is unlikely).
However, large social gatherings will likely be limited until we have a widely available vaccine for SARS-CoV-2, the virus that causes COVID-19. Even if celebrations are allowed sooner, we must factor in a downturn in bookings due to the health risks and financial impact on our clients.
Experts have stated that we can expect a vaccine to be ready 12-18 months from now. While I certainly hope we can get back to work sooner, we should have a plan in place if that doesn’t happen.
That plan starts with understanding our financials.
Calculating financial runway
If you have not already done so, you need to calculate your current monthly expenses – both business and personal. You want to simulate how much cash you would need to last you the next 6, 12, and 18 months, giving you a model for optimistic, average, and pessimistic scenarios.
Next, calculate your total expected income over the same periods. Please do NOT include any revenue from booked events, as the assumption is that you may not be able to service those events until we have a vaccine available.
Finally, calculate your cash flow by subtracting your expenses from your income above. If your cash flow is positive, you’re in good shape. If it is negative and you do not have enough savings to cover the difference, you will need to cut expenses and secure additional funding.
You should cut any non-essential expenses and sell assets, including things like:
- Dining and entertainment
- Unused subscriptions
- Office space
- Extra vehicles
- Unused equipment and personal belongings
- Home improvements/renovation
The federal government is offering supplemental income and financial assistance through several programs. You should apply for them if you qualify:
- Economic Impact Payment – Individuals with adjusted gross income up to $75,000 will receive $1,200 in payments from the Federal government ($150,000 and $2,400 respectively for married couples). If you have filed a tax return in the last two years, there is no action necessary on your part. You will receive a direct deposit or paper check directly from the IRS. If you have not filed a return, you can submit your payment information on the IRS website. You can find additional information about this program here.
- Paycheck Protection Program (PPP) – For businesses that run payroll, you can receive a loan of up to 2.5x your average monthly payroll amount. You can defer the first six months of payments. The loan is 100% forgivable if you use at least 75% of the loan amount on payroll, and use the remaining amount on other approved expenses. You can apply for this loan through an SBA-approved lender. Search for a lender near you. To expedite the application process, you should fill out the application form from the SBA website before speaking with your lender. You can find additional information about this program here.
- Economic Injury Disaster Loan (EIDL) – The EIDL is designed to provide businesses relief from loss of revenue due to the pandemic. You can apply for up to $2 million in funding, with no personal guarantee for loans up to $25,000. The interest rate is 3.75% for up to 30 years. You will also receive up to $10,000 in grants ($1,000 per employee) that you do not need to pay back. However, the grant amount will be deducted from the loan forgiveness amount of any PPP loan you receive. You can apply for this loan directly through the SBA. You can find additional information about the program here.
One thing many people don’t know is that applying for the PPP does not disqualify you from the EIDL – you can apply for both.
Evolving your business
Hosting in-person social gatherings while social distancing is impossible, so we may not be able to serve those events in the near term. It’s challenging; many of us have spent our entire careers working events. Bringing people together got us into this business in the first place.
So what can we do instead? I’m seeing people respond to the pandemic in one of two ways:
- Kill time waiting for the world to return to normal
- Accept the situation as our new reality and adapt accordingly
I hope you’re in the latter group.
To adapt, we must start by understanding what problems exist today; what is currently in-demand? Then, we can look at what resources and skills we may already have to solve those problems. For example, some entertainment companies are helping to facilitate corporate events virtually.
For some people, adapting may involve getting a job doing something unrelated to our event work (for me, it’s writing software). And that’s completely okay. We must think long-term and not let our pride get in the way of doing what’s best for ourselves, our families, and our communities.
Whatever you need to do, know that you’re not alone. The entire industry is going through a painful time, and it’s okay to talk about it honestly.
How you Can Adapt Your Business
I’ll be writing another post soon that provides creative examples of how you can adapt your events company to serve the needs of people today. Sign up for my email list to receive updates as soon as they’re published.