The following if from a virtual presentation I made to the Minnesota Chapter of the National Association of the Remodeling Industry (NARI).
When we owned our remodeling company, Nina and I were active in the NARI San Francisco Bay Area chapter and NARI National for many years.
We made some wonderful friends in our local community and around the United States.
In the latter part of 2018, Nina booked a Viking River Cruise for us to take place in May 2020. We were to see several iconic sites and some cities, among them, Wuhan, along with the Yangtze River for several days.
Early this year our flights to and from China were canceled by our airline. Eventually the Viking trip was canceled, too.
Nina then found an Overseas Adventure tour of Scotland. We had been streaming “Outlander” and had always wanted to go to Scotland, so she booked it. In early April 2020 that trip was canceled and rescheduled for 2021.
Now we look forward to touring our home and yard, with regular walks in our town, all the while trying to not become another aged victim of the coronavirus.
And we try to stay abreast of the devastating impact the virus has had on our country and the world, and the further measures being implemented day by day.
The World Turned Upside Down
With every day, we live with a reality that most of us could not conceive of several weeks earlier.
Now most of us are “safe at home” or “sheltering in place,” as we await changes in circumstances that will permit relaxation of the safety regulations which we’ve all taken fro the benefit of everyone on the planet.
And trying to do business, within the limitations that have been put in place of your respective states, can be difficult, if not impossible.
Add to the mix that remodeling contractors are:
-Can do
-Results-oriented
-Problem solvers
-Confident
Despite that, there is no way any of us can end this on our own. It’s overwhelming, in so many ways.
Let’s look back at two different previous end-of-the-world situations for some perspective. Please bear with me because this does have significance for today’s situation and your business.
The Great Recession of 2008
Some of you probably were not yet in business when this happened. And the truth is that you knew no other reality except this crazy time. On October 7, 2007, the stock market reached its all-time high. Sound familiar?
Banks and Financial Institutions that were “too big to fail” did just that. The Federal Reserve over the course of several months attempted to slow down the impact on the economy. Over the next 18 months, the stock market would lose half of its value, devastating the circumstances of all those who had substantial investments in the market. Add to that all the folks who were sold sub-prime mortgages, often with a balloon payment in five years of with a variable rate. Many, many thousands of those folks lost their home.
It was not until early 2012 that the stock market had recovered. And the impact of the unequal distribution of wealth in the United States continued to become more and more extreme. The Great Recession of 2008 was characterized as the worst economic event since th Great Depression.
The Great Influenza Pandemic of 1918-1919
From the CDC website: “The 1918 influenza pandemic was the most severe pandemic in recent history. Although there is not universal consensus regarding where the virus originated, it spread worldwide during 1918-1919.
In the United States, it was first identified in military personnel in spring 1918. It is estimated that about 500 million people or one-third of the world’s population became infected with this virus. The number of deaths was estimated to be at least 50 million worldwide with about 675,000 occurring in the United States.
PW: Today that would be 220 million or more deaths worldwide.
Mortality was high in people younger than 5 years old, 20-40 years old, and 65 years and older. The high mortality in healthy people, including those in the 20-40-year age group, was a unique feature of this pandemic. While the 1918 H1N1 virus has been synthesized and evaluated, the properties that made it so devastating are not well understood.
With no vaccine to protect against influenza infection and no antibiotics to treat secondary bacterial infections that can be associated with influenza infections, control efforts worldwide were limited to non-pharmaceutical interventions such as isolation, quarantine, good personal hygiene, use of disinfectants, and limitations of public gatherings, which were applied unevenly.”
Today, what are the recommended measures? Social distancing, washing hands, coughing into elbows, staying home when sick, sheltering in place, wearing a mask. Short of a vaccine, they are the only things that will limit the number of victims. And, as was the case with the 1918-1919 pandemic, they are being applied and followed unevenly!
The city of Philadelphia decided to have the Fourth Liberty Loan Drive parade as scheduled on September 28, 1918. With World War I going on, the city fathers saw this as a great moral booster. Around 200,000 attendees were right next to each other over the two-mile parade length.
From the Smithsonian Magazine: “Lurking among the multitudes was an invisible peril known as influenza—and it loves crowds. Philadelphians were exposed en masse to a lethal contagion widely called ‘Spanish Flu,’ a misnomer created earlier in 1918 when the first published reports of a mysterious epidemic emerged from a wire service in Madrid.
For Philadelphia, the fallout was swift and deadly. Two days after the parade, the city’s public health director Wilmer Krusen, issued a grim pronouncement: ‘The epidemic is now present in the civilian population and is assuming the type found in naval stations and army camps.’
Within 72 hours of the parade, every bed in Philadelphia’s 31 hospitals was filled. In the week ending October 5, some 2,600 people in Philadelphia had died from the flu or its complications. A week later, that number rose to more than 4,500. With many of the city’s health professionals pressed into military service, Philadelphia was unprepared for this deluge of death.”
It is important to note that the Influenza Pandemic of 1918-1919 had three waves of infection. The first was March 1918, lasting until September 1918. This period of time was when a large number of the U.S. military were being assembled and transported to the War in Europe. Many of them died of influenza without ever being in battle. The second wave started in September 1918 and ended in February 1919. This was followed by a third wave, which started in February 1919 and ended in the summer. We are likely to experience something similar.
A very good book on the subject is “The Great Influenza” by John Barry. Reading it feels spooky, as so much that we are experiencing now happened then.
What Does All This Mean to Us Today?
It will be hard to get a handle on the coronavirus, harder than it was with the influenza, as the former has a longer incubation time.
Those infected with COVID-19 don’t have symptoms immediately, so they unwittingly infect other people.
The only thing that will end this is a vaccine, which can take a year to 18 months to develop, test, and manufacture.
The simple steps to limit the virus’s spread that can be taken, will disproportionately affect those with no safety net, such as those with little or no savings and a job that does not pay enough to live on. In other words, those who absolutely need to continue working to support themselves and their family members are most likely to get ill and spread the virus.
What are the lessons from these moments in our history? What happens after such cataclysmic events end? After the 1918-1919 Influenza Pandemic, we experienced a major economic upturn in the Roaring Twenties. After the 2008 Great Recession, we experienced the longest period of continuous growth in the history of the stock market.
The world did not end. It change, often in positive ways, taking a direction that was never anticipated before. This will happen as we get a handle on the coronavirus. Doing that will take longer than anyone wants, likely several years. But it will happen.
What About Your Business in the Meantime?
What can you do to make it likely you, your family, and your business will still be alive in the next two to three years? Why two to three years? It’s likely that’s how long it will take to completely control the coronavirus, based on past history.
Communicate
Frank, a remodeler just outside Philadelphia who I talk with, did the following in mid-March as the stay-at-home measure was put into place in Pennsylvania, along with remodeling not being an essential business:
-On Tuesday, in a conversation with the office staff, it was agreed they should stop working. The only office staff to remain working were Frank, handling sales and estimating, and Dave, handling planning and packaging for future projects.
-On Wednesday, Frank and Dave visited the four projects that were under way. They spoke with the production people at each of those projects in detail about the realities of the coronavirus. Some of the carpenters had no idea how it spread, how important it was to avoid getting sick, and what they needed to do to reduce the likelihood of that happening to them or their loved ones. One employee said he had asthma and was so shook up he asked if he could stop working immediately. Wednesday was the last day sites were open.
-On Friday, Frank called each of the four clients about the need to shut their respective projects down for a two-week period, which was the Governor’s suggested period. All the clients understood. In a couple of days, the Governor made the shutdown mandatory.
That proactive sequence of communication made the situation more manageable, while still not ideal. Keep your people informed weekly about what current circumstances are like. Keep your clients up to date with a call every two weeks. Keep your trade contractors and vendors informed every three weeks. You want all these people to know you care about them and you all can depend on one another.
Government Assistance
There are many different sources of funding for both business owners and your laid off employees. Arguably, the government programs are not being administered as well as they need to be, and they are not funded to the degree they need to be. For example, as I write this, the Paycheck Protection Program has reached its current limit of funding.
What can you do? Contract your Congress people. Calling and emailing them are effective measures to get your message across. Encourage your friendly competitors to do the same. Contact NARI National or the NAHB, asking them to do the same. Ultimately the level of funding needed will be reached. Do what you can to make it happen sooner rather than later.
Downsize Going Forward
When times are good or, at the very least, stable, a business model is deemed “working” if some profits are generated, even if it takes a lot of effort and angst on the part of the owner to make that happen.
For owners of such businesses, going to work is not a source of joy. It is more like a chore. The measures put in place to control the coronavirus are giving such remodelers the idea to remodel their business so it’s a better fit for them.
Rick, a remodeler in the Boston area, is doing this. The office staff has been winnowed down to those essential to the business continuing. Thos people are working from home, for the most part. The production staff is being reduced to those employees who are part of the solution moving forward. The office and production staff remaining are a smaller, more efficient group, and their projected output is the basis for revised gross profit and revenue goals looking into the near future. Factoring into the business plan for the near future are the capacity limits of each of the remaining team members. Success with less stress is the goal. Rick would not be putting these changes into place if the shutdown to the virus was not happening.
Diversify
Most of the remodelers I’ve worked with focus on residential work. When circumstances are stable, this is a good model. When remodeling in your state is deemed not essential, then it is a problem.
Tom, in the greater Chicago area, created over the last several years relationships with a couple of developers, doing new homes and townhomes. He also started doing some commercial remodels and new builds. These are the projects that are underway now which are supplying cash flow, as two thirds of the company’s residential remodeling projects are shut down.
Bill, a remodeler and home builder in New Jersey, has worked in a small area with residents who have large projects to be done. While working for these wealthy and influential people, Bill has developed a good relationship with some of them. Because of those relationships, Bill’s company is doing a large institutional remodel. This is the project that will help carry his company through the current uncertain times.
What is common in Tom and Bill’s stories?
Reach Out
Options get created by meeting new people. Like me, you might not have started a business to meet new people. Often, I felt like most people were a pain in the neck, so why would I want to meet more of them? I learned to temper that tendency in myself. That led to meeting respected competitors. To meeting influential designers and architects. To getting involved in several different professional associations, such as NARI. Those resulting interactions and resulting relationship building opportunities led to our company doing work that we would never have gotten otherwise.
Reach out to people now. Ask them how they are doing during these challenging times. Ask them about the projects they have underway or are planning. Ask them about the opportunities for positive change they see coming as a result of the downturn.
Stay in touch and when it is again possible, arrange a face-to-face meeting. Some of us never started a business to build relationships. You won’t be as successful as you deserve to be unless you embrace doing so now, and going forward.
Take Care of Yourself and Your Family
The most important thing in a world with uncertainty is not your business. It is taking care of yourself and those you love. Set up a routine for your week.
Incorporating interacting with family members and friends, near and far. Continue to exercise. You can have a virtual workout buddy with FaceTime or Zoom. Have quiet time. Avoid watching TV news continuously. Doing so will drive you crazy. Focus on what you can control and what you can influence.
What do you want your spouse and children to remember about how you related to them in this challenging time? Do what you know is right and do it now.
Never Waste a Good Crisis
You’ll likely look back at this time as pivotal in your development as a human being and a businessperson. Chances to change and grow personally and professionally at this scale don’t come along often.
We also have the opportunity going forward to rework our priorities as a country. In all cases, let’s look beyond simply going back to business as usual.
What lessons will you learn? What will you do differently because of the coronavirus?
Start making those changes now.