Will you be ready?
If we can get through the next weeks, we need to hit the ground running.
By Patrick Flannery
None of us have ever seen anything like this before. The COVID-19 pandemic has depressed economic activity and disrupted our businesses to an extent we never thought possible. Even with the remarkable measures introduced by governments to keep workers and companies afloat, we face an existential crisis that only the strong and prudent will survive. While the human cost in lives and livelihoods is horrific, this is a business magazine and my job here is to talk about the impact in our industry. By all accounts, it will be devastating, especially for the event sector.
On the equipment side, we’re actually relatively fortunate. No Canadian jurisdication has ordered construction activities to stop and equipment rental has been specifically designated an essential service by some provinces. So you’ve been able to keep the doors open, even if your homeowner business has not been coming into the showroom. Your deliveries to construction sites and small contractors have been able to proceed with care. The American Rental Association’s survey showed most equipment rental operators predicting “only” a 15 per cent hit to their revenues, though this seems optimistic to me. There’s just no doubt that the general suppression of business activity will cause a deep recession, though we can all hold out hope that it will be short.
On the event side, it’s hard to find words of hope. We’ve lost essentially all our business from the first half of the year. I don’t know too many stores that can afford close to zero revenue for weeks or months on end. All we can do is hope that people had enough socked away to keep eating, low enough levels of debt, and can get enough government assistance to stay solvent until business resumes. And that, at the end of this, we can get our workers and customers back.
For hope, we should look ahead to the end of social distancing and closure orders. I predict there will be a massive economic rebound, perhaps as unprecedented in its intensity as this shutdown has been. Most recessions happen because of some structural problem in the economy. Interest rates are misaligned with demand. Commodities prices do something crazy. Mass speculation on real estate crashes the global financial system. This recession isn’t like that. Things were chugging along pretty well prior to the outbreak, with perhaps a small correction coming in Canada but gangbusters in the U.S. Demand has been artificially suppressed by the virus, like a lid held on a boiling pot. When everyone gets back to work, they are all going to want to start their delayed projects and host their postponed weddings all at once. Those of us strong enough to weather the storm won’t have enough hands to answer the phones.
This is a danger in and of itself – one we should take the time (now that we have it) to be ready for. What is your plan for the recovery? You will need to either retain or be able to swiftly re-hire your laid-off workers. You will need to have the right items in your fleet, and possibly even more of them than usual as people all rush for the popular items at once. You might need to be able to quickly access additional credit to cover the costs of filling all those orders. And you need to make sure it’s your phone that is ringing when people in your market can’t get an answer at your competitor.
You know better than I how to prepare for most of this. But I do know a thing or two about marketing, and I can say from experience that the biggest mistake people make in recessions is to immediately eliminate the advertising budget. I get it – right now, every penny has to stay in the bank. But when the light at the end of the tunnel appears, be ready to hold your flag high so it’s you they are looking at when this industry breaks into the open.