On January 20th, I received my first Covid-19 email from a client in Hong Kong that began:
“There’s this virus…”
In my wildest Outbreak-infused dreams, I never could have imagined that email was the start of a worldwide pandemic, shutdowns and partial or full studio closures in over a dozen countries we work in, and a completely new view of what “business as usual” means for a boutique studio owner.
Since that first email, we’ve fielded several thousand emails from clients worldwide. The big question every message ends with is:
“How do I find the cash flow to survive?”
It’s the single most important question we have to answer to ensure our livelihoods continue.
We’ve spent the last 8 weeks working with our Asian clients to ensure they not only survive, but are positioned for incredible growth after we move on from this crisis. And, we will move on.
As the **magical 35 day marker** passes, studios overseas are reaching back out for help with a deluge of highly intentional clients, who now, more than ever, have placed their health as a #1 priority.
Below is the Cash Flow Protocol we’ve put into place with thousands of our clients around the world. Not every step is an easy decision or will be right for your business, but as studio owners have thoughtfully used this framework, they’re breathing an air of peace and relief that financially they will survive, and thrive.
The Hard Decisions
- Strongly consider leaving membership payments in place during this crisis with alternate class and session options. Our teams have weathered hurricanes, natural disasters and more over the last few years. The one commonality: The need to keep our membership payments flowing. We’ve had a great response to this approach. Clients want community, even over a slightly fuzzy Zoom link, and you can offer them a peace of mind and a chance to remain in the best health possible by simply moving sessions virtual.
- What if the continuation for recurring payments is not a good idea for your audience? Consider a “Pay What You Can” option. Two of our studios started this yesterday and brought in record income months as students opted to support the studio by paying more than their typical memberships. That’s a win-win for the studio, the team, and their clients!
- We recommend not refunding class packs. Extend the number of classes and expiration period to account for any closures or time with limited schedules. This has been the common practice for nearly all small businesses we’ve come into contact with, whether calligraphers or boutique studio owners.
The Cut Backs
- Immediately request a rent abatement from your landlord. Consider asking for a 100% rent and triple net abatement for 60 days and negotiating backwards from there. Many landlords are afraid, not because they’ll miss 2 months rent, but because there will likely be shuttered storefronts across America. Keep a special eye out for local property tax abatements. If your landlord is not paying property taxes, this should impact your Triple Net. Ask for an immediate reduction, not waiting for a refund at the end of the year.
- Immediately request relief from your lender. We recommend asking for a 100% principle and interest relief for 60 days with interest-only payments for an additional 60 days, and negotiate backwards from there. You need time to recover from this crisis, and this approach is a fast way to make sure it happens. Many banks are already working with clients to ensure this happens.
- Immediately request relief from your credit card companies. See a theme? It’s time to hold off as many bills as possible so you can attempt to support yourself and your team. Speaking of which…
- Prioritize your team members. As we await Federal action, we don’t yet have all the details of how the government will assist with our team members. It’s clear that provisions are being made for Unemployment, Disability payments, and Paid Family Leave. This is changing daily and we expect to see continued updates. In the meantime, it’s best to consider who are the must-have members of your team that will continue to service clients throughout this time.
The Add Nows
- Immediately begin virtual classes. For all my perfectionists, it’s time to put aside Alo Moves worthy dreams, and think functional. Your clients are looking for familiarity in this time and you can offer that just by being you. We’ve watched hordes of clients who initially asked for freezes and cancellations, change their tune and request that their memberships continue just for access to virtual class programs.
- Create a new Intro Package, one that includes your current lineup of virtual classes as well as in-person classes for when you re-open. You may not be able to compete with fully fledged online programs, but you can offer so much more, including future in-person sessions at your studio.
- Use nutrition and accountability to improve your client’s health. Over the last 7 months, we’ve tested an incredible nutrition program across 77 studios. These client’s have sent more messages, thanking their studios for the anti-inflammatory and immune boosting meal plans that they’re living by during this crisis. Your clients are home, hungry to get healthy and you can support them through this. This is an exceptional upsell for current clients who have time on their hands and access to Instacart.
- Pre-sell a limited number of amazing packages. The key phrase here: LIMITED NUMBER. Selling 100 year long paid-in-full memberships at a 50% discount is far more damaging to your long-term cash flow than Covid-19 ever will be. Consider how many memberships or large class packages priced between $1,000 and $1,500 will supply the cash flow needed for the next month. Sell that and nothing more.
- Are you the main attraction? Offer a limited number of private packages with you. These should be expensive and accompanied by a note that these packages are funding the studio during these unprecedented times. Lots of clients will jump at the chance for 1-1 time with you and can support the studio in the process.
Hungry for more ideas and information during these crazy times? Join us on Instagram @studiogrowco as we share daily updates on our Stories.