This is part 2 of the Kovid story. If you haven’t read part 1 it would make sense to do so first.
“You never want a serious crisis to go to waste. It provides the opportunity to do things that were not possible to do before” is quote attributed to Rahm Emanuel (or Paul Romer or Machiavelli depending on what you read) and perfectly sums up the way I now feel about COVID-19. On the one hand it dealt us and our clients a crippling, and for some clients a terminal, blow, but on the other allowed us complete freedom to do anything we wanted, something you rarely, if ever, get in business.
Part 1 ended as I hit the low point of my professional career and the sense of failure was only mitigated slightly by the prospect of governmental relief that Rishi Sunak had put together. As should be expected, the devil was in the detail of these announcements and the short term optimism that enough cash was going to be made available to all businesses that needed it soon distilled down to a more sensible discussion about loans etc. In the final days of March we had a skeleton team working, just enough to keep everything in working order and support our clients that were still trading, but nothing more. We were on life support, hoping we could get to the end of the month, pay everyone, and have 30 days until we needed to do it again.
One thing was clear: while we were in a hole, many of our clients were in a much bigger one, with substantial fixed costs that just couldn’t be met or reduced. This was, and in many cases still is, the biggest issue affecting our sector and we recognised that we needed to do everything we could to help our clients get by – their win was our win. So after running the numbers, looking at who was trading and how much, we wrote to everyone advising them that we were cutting their licence fees by up to 80%. In the grand scheme of things, the £350 average per-venue fee that our clients pay us each month isn’t going to be their most significant expense, but by showing that we understood their pain and would do whatever we could to help, we hoped to prove we truly were in it together with them. As a by-product it also stemmed the flow of Direct Debit cancellations and gave us better visibility on our finances. Every client that replied to this email, telling us they were closed and thanking us for the gesture gave me a little boost. We’re a relatively small company and I know a lot of my counterparts personally, so this meant a lot.
Standing with our clients, check.
With the team at Kobas, we’ve tried very hard to ensure that everyone has a voice, and I actively want people to get involved in the robust discussions we have around all areas of the business. This was the first time I really felt like there was a clear divide between me, Neil and the rest of the company and it was a strange feeling. We were making decisions about the business that would directly affect people’s lives at a fundamental level; could they make rent, would they have enough to eat. We were their main / sole income and many didn’t have a safety net to fall back on. Despite this, many of them privately told me that they would be able to survive on a reduced salary while the company was under pressure, or work on the basis that they might be paid later than usual. Knowing that everyone is so bought in to the mission, and still supportive of what you’re doing to make these offers was incredibly humbling.
Standing by our team, check.
Our first setback was with the CBIL. It wasn’t going to be an option for us due to a number of factors, some of which changed in the coming weeks, but it meant we needed look for other options. We were in April and we had some idea of what money we could expect to receive from clients at the end of the month and thus how much work we could pay for. It wasn’t enough to fund a full team by a long shot, but circumstances had changed. We didn’t have the same pressures as usual, with the vast majority of our client based closed, support levels dropped to only a handful of requests per week.
Then came the news that everyone was waiting for: furlough, as it was to be known, was going to happen and at a level that really moved the needle for most of our staff. This was followed up with the Bounce Back loans and a grant from our local council (we’d missed out on the initial £10k grant as we weren’t a registered rate payer, being in a technically shared office). The good news kept flowing with the VAT and PAYE / NIC deferments. It felt like this was a chancellor who was listening to what business needed, specifically voiced for our sector by the fantastic and tireless Kate Nicholls, and he was getting it right. I now had a real feeling of positivity about the future. Sure we were down about 90% month on month in terms of revenue and we had lost some very loyal and talented operators like K10, but the uncertainty that had surrounded our future at the end of March was replaced with a sense of recovery and ambition. We had successfully supported our clients and firmed up their custom in the future. We had bonded stronger still with our team through this horrid experience by being open, honest and up front about the challenges we faced. Now we had the firepower we needed to really push the business forward, we just needed to execute.