I have experienced two such shocks: September 11 and the 2008 financial meltdown. That’s not to say that there were no casualties. In 2001, just two weeks after 9/11, I was forced to lay off six of my eleven employees, doing so all at once in a single room. But I was not exempt from the impact; in February of 2002, it was my turn to face the chopping block due to the weakened state of that company. Its struggles continued after my departure and in 2004 the company sold its remaining assets and went out of business, attributable to critical wounds suffered years earlier. Similarly, after the 2008 financial crash, I had a client who managed to continue on for another couple of years. But eventually, he went out of business, the impact of that crisis striking a fatal blow.
And now, we have Coronavirus.
Given what’s happening throughout the world and the nature of our businesses, what should be our priorities? Of course, our first priority is the health and safety of our employees, colleagues, friends, and relatives. The potential human impact is real and not yet fully understood. In terms of business, I’ve already witnessed a level of panic that might kill event companies, as happened in 2001. With many events already having been canceled and various governmental entities making further hasty and somewhat presumptive decisions as is referenced in this Kai Hattendorf’s LinkedIn article, there’s a significant threat to many companies that may only be felt further down the road.
Why the dire prediction?
Because many events are locked into rigid facility or hotel agreements, with harsh cancellation penalties, among other financial commitments. If an event organizer wishes to cancel an event, it could involve the return of attendee and exhibitor revenue while retaining obligations to pay staff salaries and other operational bills. That’s a significant financial hit. Many can live to fight another day while earning the appreciation of their stakeholders if they handle the situation correctly.
But others face financial calamity, particularly if there are other weaknesses in their business that are exacerbated by these circumstances. From the patterns that I’ve observed, the wounds that are suffered from these shocks might not kill a business immediately, but rather take their toll over time. They mortally weaken those companies that do not or cannot make the tough decisions needed to stay alive.
Given the prospective short- and long-term impact on your business, if you are able to go forward with your event, consider the following recommendations:
What to do now:
- Eliminate all unnecessary event expenses, particularly event catering. Since all your suppliers are in the same boat, make sure the hotel works with you to reduce room attrition penalties, food and beverage minimums, and other associated expenses. The closer you are to the event’s date, the harder this will be given you may have already paid the bills. But give it your best shot.
- Ensure that you have enough staff to serve the stakeholders at your events. Be heavy on the customer service and care of your attendees, visitors, and exhibitors.
- Retain as much revenue as you can as soon as you can from attendees (usually on credit cards at registration) and be aggressive in pursuing exhibitor fees. Remember that he who has the money has the power. You’re in a far stronger position in negotiating credits or refunds when it’s money you have already received.
- Take care of yourself. Make sure you get enough rest, eat well and exercise.
- Make sure you take care of your employees in an ‘extra’ way. If your situation is indeed dire, they already have the pressure of knowing that their jobs might be at risk. Take care of them. This may not have to involve money, but don’t skimp there either. Remember these are the people who could make or break your business.
- Retain your composure with your staff, despite the circumstances. Don’t let the stress of the situation cause you – or your staff – to lose the requisite professionalism and teamwork. You’ll need everyone working as one to pull through.
- Be personally proactive in your external communication with stakeholders, particularly attendees and exhibitors. Your stakeholders will make decisions according to how you anticipate issues and communicate. If they are not confident that you are managing the situation well, they may flee or hurt your reputation, making a tough situation worse.
- Move forward as if you know you will succeed. As a leader in this situation, people will look to you for the ‘tone’ of what is happening. Choose to inspire rather than deflate. Do what you can to provide certainty for others. This will be challenging, as it’s likely you that has the most to lose.
- Make sure that you have an event budget that is actively used for every event. You would be shocked as to how many events either have no individual event budgets. Or if they do, the budget is not used as a management tool. There’s enough software to help you develop event budgets, or you can choose to do it with a spreadsheet. When these budgets also include historical data, it is far easier to make decisions about cutting unnecessary expenses and manage fixed and variable costs.
- Review your attendee/exhibitor cancellation penalties and policies, given the situation. Some event management companies are quite strict in their terms (making it difficult to obtain a refund), whereas others may find themselves in a cash crunch because they’ve traditionally been too liberal in returning fees or too lax in collecting the money in the first place. If you’re in danger of going under, my bet is that you’ve made it too easy for people to get their money back. So, ensure you have tightened these policies up if you need to.
- Have exhibitor revenue collection milestones. At my one of my old companies, we had to collect all exhibitor fees four months before an event. That’s pretty impressive, right? This made it much easier to deal with cash crunches. As mentioned earlier, those who have the money have the power.
- Spend time improving your relationships with the speakers, exhibitors, attendees, suppliers and other stakeholders that you have. We’re all in this together. Do what you can to get the understanding of all of your stakeholders, so they are willing to help if you need to call on their assistance.
- If you are going to cancel an event, do it as soon as you know you have to, before you have to pay many of the bills if at all possible. This is a tough one since we don’t know how this situation will pan out or when we can expect things to return to normal.
- Build alternative revenue strategies to help compensate for the downturn in face-to-face events. Many of us have active digital revenue generation vehicles. Think of beefing them up so you can recoup the lost revenue.
- Use the benefit of time to make more educated decisions for the medium and long term. Perhaps you need to shelve riskier projects for now, or perhaps you need to take a home run swing (as mentioned in this article) on a new project.
I know you can do it. Feel free to reach out if you’d like to compare notes!