The shopping list of problems faced by the thousands of small businesses and suppliers to events and entertainment has one thing at the top of the list: liquidity. For those still standing and preparing to reopen, deferred loans, leases, and staff entitlements are a potential time bomb.
Last month, representatives of the Business Events Council of Australia (BECA) had a conversation focused on BECA’s three key priorities of business survival. These are retention of specialist industry skills, risk mitigation and confidence. Recovery needs to stimulate demand.
Deputy Chair Geoff Donaghy stated, “Given the significant lead time required for the national restart of the business events industry, many parts of our critical supply chain will be faced with the challenge of surviving without functional revenue, noting that any deposits received for future activity must be securely held until services are delivered. These businesses will continue to run at a loss for another six months or more.”
My events company is one of them. Our solution was to downsize the family home. Fortunately, the property market in Australia defied gravity and boomed through the pandemic, exactly the reverse of predictions. And BECA nailed the problems; now we can’t touch event revenues until after the event. Prior we would pay wages as we collected deposits, relying on the insurance we held.
Insurance is a major issue facing promoters, producers, and event organisers as we can’t buy insurance that pays costs if a government shuts down a city. We have NINE Governments, which all do their own thing. While lockdowns look less likely (once W.A. opens), they can’t be ruled out. Other countries have recognised the problem and underwritten insurance packages.
The Federal Government appears oblivious to the events and entertainment industries, evidenced by lack of response to submissions from BECA who have only managed to meet with opposition shadow ministers, who can say anything because they have no power.
A partial reason for the finger flip from the feds is that they don’t measure our industry in the Census or against tax revenue. There is no industry code for what we do (ask your accountant) so we are not on any radar.
Individual businesses I have spoken with list the issues they face. Staff entitlements is a big one. These are not reported on balance sheets and become a blind-sider if business goes bad. There are many employers in our sector who have not, or cannot, pay accrued holiday or long service leave. They certainly can’t pay retrenchment packages either.
Deferred loans and leases simply become more expensive as interest is capitalised, at a time we can least afford extra expense. There is a lot of money owed to equipment distributors, many of whom have simply stood back to wait and see what happens next.
Now we are ‘open’, Government assistance is stopping, and as BECA tell it, the valley between now and earning money is about six months deep.
I’ve traded through the 1970s recession, and the one we had to have in 1989, The Gulf War, 9/11, and the GFC. All of them spanked my business, but none of them come anywhere near the complete absence of turnover since March 2020. There is a reckoning a’happening, and like a very thick rubber band, you can only stretch so far.
The final and by no means small problem flagged by BECA is retention of specialist industry skills. I can already see this as a problem as I am suddenly in demand as a live audio engineer at age 64, which before Covid was unimaginable. Fortunately for me, I have managed to transition and cope, earning $40 an hour mixing sound.
Strap in, this will be a hell of a ride.
Published monthly since 1991, our famous AV industry magazine is free for download or pay for print. Subscribers also receive CX News, our free weekly email with the latest industry news and jobs.