Steps Your Business Should Take to Survive COVID-19
Event Industry Business Expert Gary Stansberry Updates His Recommendations
Gary Stansberry is president of The Stansberry Firm, LLC, one of the Event rental industry’s best regarded business consultancies. From the moment Covid-19 upended the 2020 event rental season, Gary has followed the crisis. Here, he updates his earlier recommendations for companies seeking advice on how to survive into next year and beyond.
Tent OX: Gary, your Round-Up webinar with Tent OX this spring talked about creating a longer cash runway for survival’s sake. Could you give tent and event company owners an update?
Gary: The American Rental Association’s (ARA) periodic reports for event companies show that business was down 90% in April, improving to 52% of normal in July. Five months ago, we thought business would return to 75% of normal by August, but it appears the number will be closer to 50%. Most companies do not have a nice swimming pool of cash to work from. It’s more like a hose that is only adequate for rinsing off and getting a drink.
How well companies are doing right now is so dependent on geography and product mix. Tent companies seem to be doing better than full line companies that are heavily into linens, place setting, catering and serving equipment. A lot of companies were counting on a busy fall. As restrictions on events continue, many are disappointed in their fall outlook.
Tent OX: How do you think 2021 will play out?
Gary: Getting back to something more normal may not come till March of 2021. There may be a little bit of pent up demand in April, so Q2 of 2021 could deliver a nice increase over this year. I think we’ll see modest increases in 2021 over 2020, but it may take until 2023 before the industry returns to 2019’s $3.6 billion national level of event rental activity.
Some of the less healthy, less prepared companies may find it difficult to get through the hardcore winter months of December through February, during which time little money will be coming in. You need to look no further than the classified ads in the ARA’s Rental Pulse to realize some companies just aren’t going to make it.
Tent OX: What can event rental companies do to improve their chances to get through 2020 in good enough shape to take advantage of a hoped-for uptick in 2021 business?
Gary: As I said in the previous article, it’s important to get as creative as you can to extend your cash runway.
- Do not mistake 20 hits or inquiries a day on your website as an indicator of what will happen down the road. Some owners could be lolled into a false sense of security that jobs they have now will carry them through to next year. But most companies won’t be able to count on strong numbers for September and October. For instance, colleges and universities probably are not calling for fall parties and festivities. Most sporting events, both college and pro, will be without fans and the related tailgating and related events that many companies count on in the Fall.
- Spend time now to lengthen your cash runway. As I have said before, ‘Survival is Success.’ You will have to review your calculation of how much cash you need to have in order to extend your cash runway into the beginning of the 2021 rental season, at which point money should begin to flow in.
- Recheck your numbers frequently. Some owners have been going out with their crews this year for the first time in years. I encourage that. It helps with employee morale and helps you re-connect with the basics. But don’t forget to spend some time in the office looking at your numbers. Check your cash runway frequently – what I call ‘Wash, Rinse and Repeat’ – to help ensure you can make it through the low or zero-revenue winter months of before money starts to flow again in March.
Tent OX: When the pandemic is behind us, what is the best way to proceed?
Gary: Human nature is to try to get back to where you were before. If you had 25 people in 2019, your inclination is to get back to that figure as soon as possible. I say, why not learn some lessons from the pandemic experience as you move forward?
Realize that for some months now you have been surviving on less than in previous years. Don’t blindly open the floodgates. Question the value of everything you spend money on.
Stansberry Firm LLC specializes in business sales, fair market business valuations and operational consulting, including positioning businesses to increase their value. More information on the company can be found at www.thestansberryfirm.com. Gary can be reached at (210) 797-7368 or by email at firstname.lastname@example.org.