Business Conversations Business Leadership Risk Management
(Sent to my email list on March 7, 2020, with minor revisions)
First, please know that I did not want to send this email.
But this email has been nagging at me the last couple of days. And my job is to support you and help you avoid or limit risk in your business wherever possible. I want to see you succeed. Even through the hard times.
And so I am sending it.
So many people are metaphorically keeping their head in the sand regarding the coronavirus and its likely impacts, including on their businesses. Avoiding this topic feels like the safe path for many people.
Nobody can predict the future, but things are already changing significantly here in Seattle. And we have health leaders around the world issuing statements regarding how significantly different this event will be from past health events. Yet so many people are saying “this will turn out to be just like a flu.”
But the flu doesn’t result in concerned emails and phone calls from my clients who are already experiencing impacts to their businesses due to the coronavirus.
Which is why I am reaching out to you on this challenging subject.
Just yesterday I had a handful of clients reach out on this topic and at I had at least 3 conversations regarding the impact that coronavirus is already having on businesses and clients that I serve.
I want you to be ahead of the curve and have a plan in place in case you begin to experience similar impacts.
- One client called to discuss that he is receiving multiple cancellations for a live event he is hosting in the next couple of weeks.
- Another client, whose business depends solely on live events, has had numerous clients cancel their events in their entirety and ask for a refund of their downpayment due to the coronavirus.
- Another client was having difficulty even securing a location for an event 4 months away because the facility was citing likely impacts of the coronavirus.
Additionally, here locally:
- Public gatherings in Seattle and a wide array of local business events are being cancelled daily.
- All school extracurricular activities, field trips and outings have been canceled for the remainder of the year, and the public school system will be closing schools in the event that a student or staff tests positive.
- Parents are being given the option to keep their children at home.
- Certain health care providers are shuttering their offices (yes, closing their doors) for the foreseeable future.
- I heard an employee at the post office telling the customer in front of me that there is talk of closing down post offices in the Seattle area.
- This week alone over one hundred thousand employees at local cornerstone companies were directed to work from home.
- My husband’s workplace made a similar move, transitioning all “non-essential” employees to working from home for the foreseeable future.
- There are products that have become unavailable at local stores and online.
- A friend reported that her husband, who manages an AT&T location, reported that they have no cell phones to sell at their location (because they come from China), and they won’t be available again until mid to late this year.
- In addition to daily emails from the Public School District, and updates from King County, I received an email yesterday from Washington State Governor Jay Inslee to all business owners discussing supply chain interruption and various additional impacts that are being assessed due to this quickly evolving situation.
Even up until a few weeks ago, I wanted to believe that the coronavirus scare, which remained largely in China at that point, would somehow blow over.
It’s not. This is just the start for us here in the U.S.
And as I began investigating further by watching videos put out by leaders at the World Health Organization, including by people on the ground in China who monitored as this scenario unfolded, it became evidently clear that we are astonishingly underprepared for this event in the West. China and neighboring countries have systems and unified approaches in dealing with and attempting to control outbreaks like this.
But in the United States, we have 50 un-coordinated local state governments, and a CDC that is woefully underfunded. We still do not yet fully understand how it will change things for the near future.
Why am I reaching out to talk about this?
Two reasons. First, because I feel the weight of social issues heavily, and I feel like we all have an obligation in this scenario to do our best to keep our neighbors and society as safe as possible. (And this will require drastically changing the way we do things for some time until we get this thing figured out).
And second, because it will most certainly impact all of us who rely on events and social gatherings to deliver services, support our business growth and share our message.
Let’s talk first about our collective social obligation to each other.
In watching several videos this morning put out by leading world epidemiologists and leaders at the World Health Organization, (including some on the ground in China who have first-hand experience with this virus and its impacts), a single statement stood out to me that went something like this:
“The mistake that we are going to make is that healthy people who are not at the greatest risk will want to continue life as usual. They will minimize the potential impacts, and in so doing, will cause the spread of this disease so that it does reach those who are most at risk.”
This landed very heavily with me.
Because we as humans do have a tendency to want to minimize or ignore risk. But we can’t in this scenario, minimize the risk to the elderly and to those with underlying health conditions, as well as the healthy who may also be adversely impacted. We have to collectively take responsibility for the solution.
And even if we don’t want to, we are likely to be forced to face its impact anyways, like my clients who are already feeling it in their bottom line, and not by choice.
I realize we all get to make our own decisions as we face this unknown territory together. I care that we all come out the other side healthy, collectively stronger, with strategies that we can better deploy in the future when we face such challenges. And I care that you, and your business do well in the meanwhile.
So what is to be done?
I will discuss thoughts on legal implications below, and then share some practical thoughts about what quick pivots may need to happen to create greater sustainability for the next year or more while we collectively address this scenario.
Thoughts on the Legal Implications of the Coronavirus.
If you, like so many of my clients, are asking “What do I do when a client wants to cancel their contract, their attendance at an event, or when an event I have planned is cancelled by the facility?” then this next section is for you.
Examine your contracts. What do they say regarding cancellations?
Also, is there a Force Majeure clause? Force Majeure refers to a clause that is often included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations. (“Acts of God, war, weather” etc).
It is unlikely that the legal system will be able to address the losses that will come with this event. It is also equally unlikely that they will not find such an event to fall within the protections offered by a force majeure clause if one exists and covers the force majeure event. Obviously these clauses can be drafted well, and poorly, depending on the circumstance, so this is not a one size fits all. But Force Majeure clauses are generally designed to protect parties during Force Majeure events, though historically the event must be anticipated and specifically addressed in the contract. (I believe the current crisis has the potentially to significantly impact our current laws and interpretation of the force majeure doctrine and clauses. The government requiring people to quarantine or shelter in place certainly makes the performance under many contracts impossible.) Interpretation of these clauses and the force majeure doctrine generally, however, are going to vary by location, interpreted by state and federal courts in each jurisdiction.
Even without a Force Majeure clause, parties may be protected by the Doctrine of Impracticability or Impossibility, common law doctrines that protect a party from liability for the failure to perform under certain circumstances.
Impracticability means the excuse in performance of a duty. Under the common law of contract, impracticability is a defense that can be relied on when the duty to be performed becomes unfeasibly difficult or expensive for a party who was to perform. The doctrine of impracticability arises out of the occurrence of a condition which prevents him/her from fulfilling the contract.
Impossibility is an excuse for the nonperformance of duties under a contract based on a change in circumstances (or the discovery of preexisting circumstances), the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible.
The Doctrine of Impracticability or Impossibility may be called upon absent a Force Majeure clause. There is also another doctrine, Frustration of Purpose, that may also be called upon in commercial scenarios. Each of these doctrines is subject to interpretation through local, state and federal courts.
However, beyond the legalese, and in the absence of any language that covers this event, what type of business decision with an aim towards fairness feels doable for you? You might need to have open ended conversations with clients in these scenarios about what feels fair. (I believe in most circumstances this will be a far better approach than resorting to litigation or the court system for relief).
I want to be clear that businesses bear unusually high risk in the current circumstances. There is no way around this.
But I am a big believer that we can all come up with solutions when parties are focused on what feels like a fair and reasonable outcome.
Absent that, your clients, event venues, and other parties with whom you engage in your business may be excused for any cancellations or terminations due to Force Majeure, or the Doctrines of Impracticability, Impossibility or Frustration of Purpose.
Which is why I am highly recommending some pivots, if you haven’t considered these already.
This first one is hard for me, because I love people. I have a big caring, feeling heart for people. And I love FACE TO FACE time with people.
Pivot #1. Go Online in an even Bigger Way.
I, by the way, still have yet to do this well. I will be continuing to learn this one myself. This strategy will in part depend on whether public schools close (and when), but regardless I am shifting my focus to showing up online and serving in a bigger way, which I have wanted to do for several years.
This is going to be a year (or more) where social distancing is responsible, and in many circumstances mandated.
But this doesn’t mean we have to be disconnected. Be online. Show up. Serve. Give. Collaborate.
I realize that connecting online is different, and doesn’t allow us to hug. (I’m a hugger). That part will be sad. And again, it will also be socially responsible.
Pivot # 2. Connect Regularly via Phone & Video.
Reach out! I am an old-school phone user. It is a powerful tool in business! Pick up the phone and nurture connections with a power hour every day (phone & video calls).
Pivot #3. Rescheduling or Rethinking Live Events.
I would highly recommend that you have alternate strategies in place if you rely on in-person events for your business growth. You are likely to feel the impact whether or not you pivot, but especially if you don’t. Take your live events online. There will be some advances in this area this year without a doubt. There is often no greater motivation than necessity.
Pivot #4. Get creative.
Creativity is the lifeblood of an entrepreneur’s business. So is change. It’s the nature of things. Collaborate. Get creative. Create entirely new ways of doing the thing you have always done. Come up with new services or new ways of serving people. Change your methods given the changing landscape. Creativity will serve you well in these unusual circumstances.
Pivot #5. Explore Insurance Options and Business Loans.
If you don’t already have insurance in place for your business, now may be the time to consider implementing it to help you face some of the financial risks that are arising in the current environment. Connect with a recommended (local) business insurance broker to determine your options. Get referrals from other business owners if you don’t know anybody in the insurance world. And if your bottom line suffers despite these pivots, you may explore a business loan to float you through the challenging times. I would recommend seeking approval for a business load or line of credit before the full economic damage is felt, whether or not you fund the loan. Having the option will help you rest easier.
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I have to believe there will be a time to return to greater in-person connection.
What I am seeing on the ground here in Seattle is that in the meanwhile we have to think differently and do differently. And that includes thinking about our neighbors. And taking care of clients and our businesses in a new way.
I really hope that collectively we can minimize the impacts we are likely to experience.
I want good health, and a thriving business for you.
Sending so many wishes for you and everybody that we can pivot, and continue to serve each other, and show up in the world with our brilliance, while also keeping each other safe.
Sending love from Seattle,
Heather, The Legal Website Warrior®
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