We Are In It Now

Here we are with the world in free fall in response to the Coronavirus.  Massive postponements and/or cancellations of organized public gathering (or any gathering or travel in Italy’s case).  Incredible disruptions in the supply chain.  No travel to China and now Europe. Body blows to the global economy.  All in the last week.  There simply is no escaping the pain your creative business is likely to feel. 

No doubt, I want everyone to be healthy and safe during this time, but man oh man the difference a week makes.  In that time, South by Southwest was cancelled, major universities are shutting in-person classes, the NCAA is shutting the men’s basketball tournament to fans and might postpone the whole tournament as the NBA and likely NHL will be doing.  More and more governments are banning gatherings of more than 1,000 people.  That is a world of hurt for those businesses depending on these events to bring in much needed income and a shock to the overall local consumer confidence we all rely on to move forward.  Oh, and the stock market is in bear market territory (down 20% from its highs), trillions of dollars gone in a week.

Yes, there is work to be done on your business — to tell a better story, improve the flow of information, invest in the technology and education you need to be better tomorrow than you are today.  And those posts will come back starting next week (I hope).  This post though is to acknowledge that you are in the middle of the storm and a few practical notions of what to do and not to do.

Last week’s post was about hope and philosophy and I stand by every word, but this one is about brass tacks.  In that vein, I know I am going to rile some of you since I am going to be really plain and blunt.  I am sorry in advance but know that it is borne of experience, having lived through owning a business being effectively wiped out by 9/11, running Preston Bailey’s business in the midst of the 2008 financial crisis, and working with clients as they made it through various natural disasters over the past several years (hurricanes, fires, etc.).  With very real understanding comes deep compassion for what so many of you are now facing and also the need to be as harsh as I can.  Tough love beyond a doubt.

Panic is a virus and it is spreading uncontrollably now.  You can blame the media, government, your neighbor.  You can argue that it is overblown, underblown or whatever, but it does not matter, it is here.  Your life, your art and your business are in it now.  What it means is to act accordingly and brutally.

Additionally, we have to acknowledge that this shock to the system could not come at a worse time for most creative businesses.  Seasonality is real and most creative businesses are just coming out of the winter doldrums and are reliant on the burst of activity Spring brings with it to refill the tank so to speak.  Yeah, that is not happening.

Practically then, it means you must be ruthless and do all that you can to weather the storm.  Everything from laying off staff (other than the most necessary — see below), renegotiating anything that is costing money at the moment (leases, mortgages, etc.), forestalling any expenditure that you can.  The panic might subside tomorrow, next month or next year.  No-one knows and hoping that you can keep it all in place until the pandemic is over is a fools errand.  Terrible, awful decisions need to be made now.  Whatever you need to do to keep powder dry (i.e., maintain cash), do it. Oh, and this is no time to be sanctimonious or proud.  President Trump just ordered the SBA to start making disaster relief loans flow freely, will likely declare a national emergency to free FEMA to step in and there will be other grants and access to capital.  Perhaps business interruption insurance if you have it can apply.  Force Majeure clauses need to be enforced.  Go get it, even if you have a nest egg. Cash is king, queen and everything in between.  If you intend to keep going (not a decision to be assumed by the way), then go get as much as you can now without resorting to predators (no credit card, personal loans, etc. — real money from available sources at little to no interest if a loan or straight grants if not).

Next, beware the shiny penny.  When my dinner delivery business evaporated, we turned to corporate catering, sandwich wholesaling, fine dining, lunches, anything to use the asset we had (that no-one had any use for at that moment).  There is no such thing as a temporary fix for a hard asset nor for doing piece work with your intellectual property that you would not otherwise do.  Like blood in the water, desperation attracts the worst kind of predators.

Speaking of desperation, there will be tons and tons of players succumbing to the notion that they have to do more for less in order to survive.  As I said last week, good luck with that. 

Just remember that ultra-luxury goods sold by the likes of LVMH and Bentley exploded starting in the beginning of 2009 to 2012 and, by the way, the iPhone was first released in 2008 (announced in 2007).  Beware bottom feeders posing as Chicken Little. When the time comes (i.e., when you feel the panic start to abate), then my strongest advice is to go the other way.  Will that mean forsaking business when you are deeply hungry?  Yep.  But opportunity is never for the faint of heart.  The largest deal I ever made for Preston during my time running his business (multi-millions) happened in the Spring/Summer of 2009.  Lucky? Sure.  Convicted more though.

So while you are waiting for the storm to pass, let’s talk strategy.  Which of your clients are going to come back first?  Who might not come back at all?  Where can your creative business pivot to offer the most value to those coming back first?  And how can you strategize as to how you are going to tell the most compelling story for that effort.  You have to ask why you matter and how you are going to be the first to tell that new story, loudly.  It means that you will be pressing now to have conversations then.  For instance, social events might not be dead, but convincing families and friends to come together when grandma and grandma might die if you do is going to be a hard sell.  That said, it is going to happen, just not the way it happened last week.  You need to be working on how your art is going to serve this new normal now and then start telling your story.

To tell your story, you are going to need the assets and support of those that will serve that effort.  While you might have to lose your most valued personal assistant, maybe not your design team.  Those who will serve to create the tomorrow of your art are the last to go as are those who are responsible for selling it.

Here is another example.  If you are an interior designer serving the luxury client, how are you going to convince your clients to invest in their home as the sanctuary they will need it to be?  How will you recalibrate their understanding of “working from home” so that it feels most natural in everyone’s new normal.  Yes, how are going to set about solving new problems now that the game has changed?  The value is still there it is just that the translation has shifted.  Having just a place to rest your head might not be enough for anyone anymore.  So if you are an interior designer that believes in the power of sanctuary, what are you going to do about it now?  Specifically, how will you double your price to drive that point home?

It cannot be understated though, the time to sell the new normal is not now.  Now is the time to live to fight another day and weather the storm.  Tell your clients, actual and potential that you know now is not the time to do anything other than deal with the crisis at hand, but to set a date now to talk about the new world order.

The world will come back, just know the story of the Phoenix as it will not come back fully until we acknowledge that today is gone and tomorrow is its own ethos.  There is nothing good about the pain we are all in and do I ever wish it were not so.  However, we are here and endure it we must.  On the other side though, when this moment has passed, there will be a choice, a chance at rebirth.  The opportunity will be there if you are brave enough to let go of all that was, convicted that that day when it comes will be its own reward.