Episode 8: I Ain’t Going Down

Karen, Jay, and Dana talk about the contingency plans they’re making as we head into the health and economic crises presented by COVID-19. Can they keep paying hourly workers? Can they keep their locations open? Can they find the resolve to hang on no matter where this goes? “You're gonna get through this. You're gonna do what you need to do. If you need to close the one salon, so be it. And you're going to come out of this whole thing because you're smart, and you're ambitious, and you're responsible, and people like you. You're gonna get through this.” Plus: is now the time to join a business peer group?

Episode 8: I Ain’t Going Down

Guests:

Karen Clark Cole is co-founder and CEO of Blink.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Dana White is founder and CEO of Paralee Boyd hair salons.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Jay Goltz: “What I’ve learned over all these years is, I’ve got one job, only one job: It’s to keep the business in business. If you forget that, and you start to not react quick enough and you keep paying people for three or four months, you’re gonna go out of business and that’s not going to help anybody.”

Dana White: “I’m sitting here and I’m listening and I’m concerned about the businesses that are not going to survive this. I’m wondering if Paralee Boyd is one of them.”

Karen Clark Cole: “Well, honestly, I’m at a loss for words, because it’s terrifying. For me, it’s less about my individual business, and it’s more about the overall economy and what’s going to happen to my grandma and people who are in high-risk health profiles.”

Full Episode Transcript:

Loren Feldman:
All right, let’s get started. Let’s go around the room, get a quick update from each of you. I want to know where things stand with each of your businesses. What’s happening? What are you thinking about? Karen, why don’t we start with you? You’re at one of the epicenters in Seattle. What’s happening at Blink?

I should point out we are taping this on Friday, March 13th at noon. Things are happening really quickly. Much will happen between now and Tuesday when we publish this. So I just want people to know we’re talking on Friday.

Karen Clark Cole:
On Wednesday, we closed our Seattle office, and on Thursday, we closed the rest of them: Austin, Boston, San Diego, San Francisco. What that means for us though, is it’s less of an impact than it is for other companies because, as consultants, we often work remotely anyway, because our clients are around the country in a lot of cases. And then our research, when we’re talking to our clients’ customers, takes us around the world. So in many cases, we’re doing that in person. It’s better when it’s one-to-one in person, and we’re observing their behaviors, as well as listening. But we are absolutely capable and often do remote work, remote sessions, remote meetings as well.

We have just turned the whole company into remote. Everybody’s working from home. Everybody is still working, with the exception of a few positions that aren’t consultants. We have hosts and we have studio managers—those kind of people. They are still working, they’re being paid. We’ve got them doing other things in more of a support role. As a company, we are in much better shape than many of the local companies in the area.

Loren Feldman:
Do you have business coming in?

Karen Clark Cole:
Our business has not slowed down. Knock on wood, we have had no slowdown so far in any new business. It’s incredible.

Loren Feldman:
That’s very surprising.

Karen Clark Cole:
Yeah, I expect it may happen. The other advantage for us as well though is that a lot of our clients are set up like we are. They’re high-tech companies. They have distributed workforces, and so they are also used to being remote.

Loren Feldman:
Dana, you have some sophisticated tech aspects to your business, but you’re a retail business. People walk into your store, your customers have to sit in a chair, your employees have to touch your customers. What is happening at Paralee Boyd?

Dana White:
Here in Michigan, they just decided to close all of the schools starting Monday, March 16th until April 6th. The first thing we looked at is how many of our staff are parents, and then how do we cover shifts? We’re going to watch what the volume tells us because we’re not appointment-based. We’re walk-in only, so the volume will tell us how to lean.

What we’re seeing as of this morning, since the announcement was made last night, is guests are calling, asking if we’re still open, and we have had a few people come into the salon. What we’re expecting is we’re expecting people to trickle in today, because a lot of people didn’t have to go to work, and again, a lot of parents kept their kids home from school. We’re expecting people to trickle in.

Again, we’re going to reassess our staffing needs once we see what this weekend shakes out to be. And again, as we said in our original coronavirus special on the podcast, I was concerned that my slow season would be extended, and so far it has. I had a meeting with my manager yesterday and I noticed that business has dropped significantly and I panicked. I reached out to people who I felt could kind of help keep me focused via text—

Loren Feldman:
Panicked in what sense? Did you take any actions? Are you panicked in the sense that you just started thinking about things and asking questions?

Dana White:
I panicked early afternoon, and then started thinking about things, and then started to act that night. That’s what we’ve been doing ever since last night is dealing with it. We’re just gonna see where it takes us. We’re updating—not updating—but we’re maintaining our cleanliness standards. Of course, the state of Michigan has cleanliness standards that we have to adhere to, but we’re going to go above and beyond that. In our morning meetings, we’re talking to our staff about what they can do to keep themselves safe. But we’ve already had gallons of alcohol in the salon because we use it constantly anyway, so we’re just now adding to it bleach wipes. Thank goodness we ordered our supply of bleach wipes and hand sanitizer a little over a week ago.

Jay Goltz:
Solid gold.

Dana White:
I know. We have, I think, nine containers of hand sanitizers—the big jumbo ones you get from Sam’s Club, so we’re covered in that aspect, and just communicating to our guests, “You are safe coming to Paralee Boyd. This is how frequently we’re washing the handles of the credit card machine, of the front door, the vestibule door, bathroom handle.” We’re pretty much Lysol-ing—because we’ve got Lysol in our order too—every hour on the public handles.

But everything else we already do. We already alcohol and sanitize the chair after each guest. We already do cleanliness in the morning and cleanliness at night, according to state regulations. We’re just going to reiterate and hopefully our guests will feel comfortable, and we’re going to ask them to stay home if they’re not feeling good. Cabin Fever I think is going to be the biggest cause of the spread of COVID-19. People are home with their kids for three weeks. They’re gonna want to come out, but we’re gonna ask that when you do come out, please come out healthy to public spaces, and don’t come to Paralee Boyd if you’re not feeling 100%.

Loren Feldman:
Dana, at traditional salons where they do take reservations, they have a pretty good feel of how much business they can expect from day to day. You don’t take appointments. Do you have any other way of judging? Is there any way for you to know how much business to expect, or do you just have to be there and see who comes in the door?

Dana White:
We just have to be there and see who comes in the door, and the good thing about that is that business has grown year over year. I think the couple of months that it showed a lack was because we just opened the Midtown location, so there was some cannibalism. Normally, we have a number that we expect and we project based on several years out, but we’ve never had an external factor such as a pandemic effect. Since this is the first time that we’re seeing it, all we can do is watch it, and again, what we do in the salon is take the data. So if something does happen in the future, we can say, “This is what we can expect based on what happened in 2020.”

Loren Feldman:
Jay, how about you? You’ve got a couple of retail operations in Chicago. What’s it looking like?

Jay Goltz:
This whole thing… it gets into your whole life. In business, things are okay so far, but I certainly think it’s going to affect us. We already had meetings on—I’ve got 115 people—how are we going to cut hours? Are we going to furlough? Are we going to lay people off? If people are starving, are we going to lend them money? Yes. So we have a plan for that, and then there’s the “what if somebody gets sick” thing.

For instance, I’m doing some simple stuff. I’ve got a factory where 40 people are eating in the same cafeteria. I’ve got another room there that’s not being used at all. So I said, “Let’s put some tables in that other room and the different departments will eat together.” That way, if one person gets sick somewhere else, they have absolutely no exposure to the other people. At least we can have a firewall there. We’re working on all that.

At the same time, I’ve got some personal stuff. My kid just put an offer in for an expensive house he’s buying, and as the world’s falling apart, he’s starting to freak out, like should he be buying a house at this juncture? And the real estate agents are all freaking out. Everybody’s freaking out, and then the mortgage rates jumped a point. He happened to lock in. But in one day, mortgage rates jumped a point because they’re so overwhelmed with demand that they can’t keep up with it.

There’s just a lot of anxiety. I go to the grocery store last night. It’s a 24-hour grocery store. Shut down. They’re restocking, shut down. Go there at six o’clock in the morning. Mobbed, 50 people on line. It’s like Armageddon’s here. It makes you think about all of this, and I realized, this is no different than September 11. This is going to go away and things are gonna go back to normal—

Loren Feldman:
It is different. I think you’re making the right comparison. That’s the closest model I can think of. But there are differences.

Jay Goltz:
Well, one difference is, let’s go from September 11 to the 2008 meltdown. The banks were messed up, the mortgages were messed up, the whole housing market was a big bubble. There’s no fundamental problem now, but the virus—which is serious—will go away, but the banks are in good shape, the market was solid. There’s no reason to think that the world’s coming to an end with this whole thing.

I realized in talking to the real estate lawyer about this whole thing, it reminded me, I bought my factory building in 2008 when everybody was hiding under the table because I had to make a decision, “I need to get my overhead down,” and my accountant goes, “This is a risky decision.” I said, “It’s less risky than doing nothing.” And the fact is, that was a decision that was an absolute linchpin to me being in good shape for the rest of my career.

There are people right now who are panicking. Panicking is a bad thing in business, and there’s no room for it. I’m not going to start making stupid decisions now because I stood in line at the grocery store for 25 minutes. The fact of the matter is, things are going to go back to normal.

Loren Feldman:
But you don’t know when. Look at what’s happening in Italy. From the latest that I’ve read, we’re kind of on a similar curve to where they were. They too weren’t as prepared as they should have been. And right now in Italy, everything’s closed except for groceries and pharmacies. Have you thought of the possibility that you might have to just shut down?

Jay Goltz:
Yeah, sure. That’s the point. I was gonna say, Dana, people’s hair is growing as we sit here. They’re going to have to get their hair cut eventually. That’s a for sure thing. People still want to frame their pictures and buy furniture.

Loren Feldman:
But they don’t need to.

Jay Goltz:
No, no. You’re not gonna get away with it if you’re trying to fearmonger me again. I remember the last recession, somebody in financial services sent me the front page of one of the major business magazines—I don’t remember which one—of every recession, and every time the stock market dropped, the front page of the magazine was, “Is capitalism over?” The next one, “Are we ever going to recover?”

Loren Feldman:
Okay, okay, okay.

Jay Goltz:
It goes on and on and on and on. The fact of the matter is, we will get through this, life will be fine, and if you own a business, you don’t have the luxury of being like an employee who just has to worry about getting laid off. You can’t just go hiding under the table and go, “Oh my god, when’s it gonna be over? I better stop buying everything and I better start canceling everything.” Because you could put yourself out of business by knee jerking, and I’ve seen this rodeo seven, eight times already.

Loren Feldman:
Not this one. This is different.

Jay Goltz:
It’s worse, except it’s gonna go away. The fact of the matter is, you have to make smart decisions when things get tight, and there’s no upside to panicking, and you just keep making good decisions. In my case, I have a lot of labor in my business, so if I cut back my labor just 10%, it’s hundreds of thousands of dollars. We have a plan for, if business drops off, we will immediately start cutting back hours, and no one’s gonna starve. And then if we gotta cut back, we’ll do what we need to do because—

Karen Clark Cole:
Jay, are you gonna pay people while they’re not working?

Jay Goltz:
Hourly? No. I’m not Google. I can’t afford to. If there were a flood here and people had to work to clean up the flood for days, they would get overtime and they would get paid. It goes both ways. Salaried people, they’re going to take a furlough for whatever, 10%. But the hourly, no, I don’t have that luxury. I wish I made enough money that I could go ahead and pay everybody, but I can’t. And at the end of the day—

Karen Clark Cole:
Would you lay them off so they can get unemployment?

Jay Goltz:
Um…

Karen Clark Cole:
That’s one thing that people are doing here, is they’re actually laying them off so they can get—

Jay Goltz:
No, no, except unemployment is only half the ratio.

Karen Clark Cole:
It’s better than nothing.

Jay Goltz:
No, no. Well, for sure. If I laid them off, they would be eligible for unemployment, but out of 115 people, my guess is, maybe we’ll lay off two people and the rest will be cut back 10%. They’re way better off getting cut back 10% than either A getting laid off or B having the company go broke. Because what I’ve learned over all these years [is] I’ve got one job, only one job: It’s to keep the business in business. If you forget that, and you start to not react quick enough and you keep paying people for three or four months, you’re gonna go out of business and that’s not going to help anybody. I’m getting into survival mode, though I don’t think it’s gonna get that bad. But if it does—

Karen Clark Cole:
It is, Jay. It’s gonna get that bad. I guarantee it.

Jay Goltz:
Really?

Karen Clark Cole:
Yep. I mean, the closest thing is really 100 years ago. None of us have seen it. All you have to do is look at the rest of the world who’s ahead of us.

Jay Goltz:
So there’s no chance—you just said you guarantee it—there’s no chance that this will take a hit for three, four, or five weeks, it’ll get better…

Karen Clark Cole:
All we have to do is look at the rest of the world who’s already ahead of us. We have a lot of good examples.

Jay Goltz:
Like what?

Karen Clark Cole:
Italy, China.

Jay Goltz:
Let’s stop there. Let’s talk about Italy. I buy a lot from Italy. What’s going on in Italy? They shut down some stores. Yes, okay. Is that going to go on for six months?

Karen Clark Cole:
Only two people are allowed to drive in cars right now. Those are some examples.

Jay Goltz:
I know, but how long is that going to go on?

Loren Feldman:
But Jay, think about it this way. Think about all the money that is coming out of the economy when you shut down the NBA, when you shut down major league baseball, Broadway. You know about the town of New Rochelle, which is in Westchester County north of New York City. They’ve shut everything down there. People are on lockdown. Food is being distributed by the National Guard. Who knows where else that’s going to be necessary? Even if this thing blew over in five weeks, as we would all love to have happen, when the economy takes a hit like that, when all of that money comes out of it, it takes a while to get back into gear.

Jay Goltz:
So I guess I’m asking you, what’s your point? Does that mean that because the NBA shut down, my business is going to take a 30% hit for the next four years? You don’t know that. This is what goes on with the hysteria thing. Like, I’m not saying it’s not going to affect me. I’m absolutely sure it will affect me, but I’m not sure it’s going to mean that my business is going to drop 50% for the next two years. There’s just no way to know.

Loren Feldman:
No one said that. My thinking would be that you just need to be considering contingency plans, which it sounds like you already are.

Jay Goltz:
Absolutely. I’ve got my hand on the Eject button. The first week the business is down… First of all, I’m framing pictures. Half the employees are framing pictures. If there are no pictures to frame, why are they here? I’ll cut back hours, but in 42 years, I’ve laid off a handful of people. Even during ‘08, I don’t think I laid anyone off.

Now keep in mind, I’m in the home furnishing market. Housing crashed, home furnishing, everything like that. I took a 30% hit, which has never really recovered. I’ve never come back from that hit. I didn’t lay anyone off. What did I do? I bought a factory building that cost me a third as much as the place I was using for my warehouse and factory, I readjusted the cost, and now I’m in good shape because of it.

Loren Feldman:
So that’s a great point. You’re talking about finding an opportunity in a very difficult situation. Do you see anything like that now? Dana or Karen, let me start with you. Do either of you see an opportunity in this to do something that will put your business in a stronger position?

Dana White:
I spoke with my mentor yesterday, and I literally had my hand over the Send button to send an email about raising prices. And he said, “Don’t you dare right now. Your sales are already down significantly between your salons compared to this time last year. And now’s not the time for those who already aren’t coming to say, ‘Here’s another reason not to come now,’ especially with this virus.” So he said—and I agree with him—“Send out a reassuring message, post a reassuring post, and give them an incentive to come in. Do your special. Let’s continue going on with marketing.”

When my market gets their hair done, it’s a necessity. Part of it is, “I want to feel good.” But the other thing is, “Hair health is very important to me. I’m not just coming in for a haircut. You wash and style my hair. I’m only going to go so long and I’m not necessarily going to do it at home. I just need to know that Paralee Boyd is a safe place for me to go.” For me, we’re going to try doing a little bit of marketing that I hadn’t done before. We’re just going to keep on with that pace, but I’ve got my hand too on the Eject button because, I agree with Jay, my job is to keep the salon open.

I know the SBA is looking to give out money to small businesses that are feeling the sting of this. I’ve got an email coming to me, explaining what that means and what I can do. I will lay people off, but I’m gonna lean out my staff first, if we really stay on this path. With Karen, I believe we will, especially with schools being closed. It’s my hope that it turns around, that people get cabin fever and say, “I’ve got to go get my hair done.” But in the event that they don’t, then we will lean out, and then if we have to shut down because we’ve seen two days and we haven’t seen anybody, then yeah, we need to have that conversation and hopefully put my staff—who are all hourly employees—in a position where they can receive some help. I’m with Jay, I’m not Google.

Loren Feldman:
Karen, we just visited you in Seattle where we taped the podcast and we had a special guest, Brian Canlis, from his family-owned restaurant who is a great example, I think, of somebody who’s trying to find an opportunity in this crisis.

Karen Clark Cole:
Not just an economic opportunity. They’re helping the community.

Loren Feldman:
What he’s done is he shut down his fine dining restaurant, but he’s basically started three other businesses, one of which I think is selling breakfast from a pop-up store in their lot, they’re doing a drive-thru for lunches and dinners, and they also have started a home delivery service, which I think they’re hoping is going to keep their 115 or so employees employed, but also provide a valuable service. That seems to me like somebody who’s really thinking creatively and looking for an opportunity.

Karen Clark Cole:
Yeah, it’s innovative and creative, and the beauty of it is, it’s still in alignment with their mission of trying to turn people towards each other, which I love. Because it’s not just the employees, but it’s also the community. They’re trying to help people who it may be difficult for to get food. It’s upscale. I mean, it’s not like they’re at the food banks. It still is a business.

Loren Feldman:
Karen, you said your business is holding up so far, but do you see opportunities here? Is there something that you can do?

Karen Clark Cole:
Yeah, we’re really focusing on trying to help our clients get set up for remote work, the user experience of working remotely.We’re trying to talk about how we do that so well and have been doing it for quite a while now. We really do have it dialed in, so we’re trying to really promote that so everyone knows, “Don’t worry, we can still do this,” and help them where we can.

Loren Feldman:
Back to you, Jay. You found an opportunity in 2008, 2009—

Jay Goltz:
It certainly was an opportunity, but it was also a strategic move to make sure the business was healthy. I’m not saying, “Oh, make lemonade out of lemons.” I’m talking about, when things go bad, you have to look at your business and figure out what adjustments to make. I looked at the business and I said to myself, “I believe we’ve been living off of cheap money and cheap mortgages for years. I don’t think this business is going to come back to where it was and I need to change my business model.” I was paying $10 a foot for factory space, and the new space was going to cost me $2.75. That’s like the entire bottom line to the company, so I strategically decided, “I’ve gotta take this cheaper space,” and it righted the ship and it got me in a good place.

I’m not sure that this business won’t shut down eventually from this, but I’m also not sure it will. So I’m not going to freak my employees out and go, “Listen, we might be closing down totally.” I think the worst case scenario, I’m hoping, is if everybody has to take one day off a week for a month, they’ll survive. Everyone will be okay. If I have to lend people money to cover their rent, I’ll lend people money to cover their rent. Like I said, I’ve been through seven recessions.

Loren Feldman:
Are you concerned that people are going to just say, “I don’t even want to go outside. I’m not going to leave the house to frame a picture or buy a sofa.”

Jay Goltz:
This might sound weird, but I just don’t have the luxury to worry. I don’t have the luxury to have fear. I own a business and I need to be fearless moving forward. I don’t know that I would use the word “concerned.” Do I have a contingency plan? Yes. But if I started to be concerned about everything, I would have died of a heart attack 20 years ago. I don’t think you can be in business and sit there and worry about everything every day. I don’t think you can do that.

Loren Feldman:
Dana was talking about—we’ve discussed the prices she charges and we’ve all encouraged her to raise her prices. She’s decided now’s not the right time to do that. How do you look at marketing? Are you going to adjust what you spend on marketing right now? Do you do more, do you do less, do the same?

Jay Goltz:
It gets down to cash flow. When things get tight, you go from profits to worrying about cash flow. The stuff that I know is working—the online stuff that I absolutely am sure is bringing in business because I can track it, because when someone comes in, we say, “Where have you heard about us?” and “Oh, I found you online”—I’m going to continue spending the money on the stuff that I’m 100% confident is working because the customers tell us. Remember, I get their name and number when they come in so I know if they’ve been here before. I have a pretty good what’s called “attribution.” I know if they’ve been a repeat customer. I know if they came in from driving by or from the website or from other advertising. Other stuff, putting a full color ad in the local magazine that I’m not sure works or not, no, I’m cutting that out. I don’t know if it’s working. I’m going for the sure bets.

So what am I doing? I’m considering cutting labor if I need to. I’ve cut back travel considerably just because some of the places—we’re not going to Italy now obviously, and China, I send people to China to buy furniture and stuff. We’ve cut back on travel dramatically. I’m looking at the advertising, cutting back on that. And that should be enough to keep going fine.

Like I said, I’m not going to get into the mindset of, “We’ll probably be shut down.” I don’t think that to be true. I’m not going to participate in this hysteria. The people at the grocery store, they’ve got cartfuls of toilet paper, and you say to yourself, “You’re not buying enough food to need that toilet paper long-term!” Everybody’s crazy. The world’s gone mad for a little while. I’m not jumping into that stuff, and I’m telling you when September 11 happened—

Loren Feldman:
Jay, you’re managing to sound hysterical while you’re complaining about everybody else sounding hysterical.

Jay Goltz:
I got it. That’s because I spent an hour in the grocery store this morning, and I’m hearing about how this is gonna be like Italy. And I don’t believe that to be true. It might. But just because Italy got behind the curve and got out of control there doesn’t mean it’s coming here. When Karen says, “I guarantee it’s gonna happen,” I take exception to that. It might happen, no doubt. I don’t believe that that’s a guarantee.

Dana White:
Jay has mentioned before that he lives by four principles, and that’s what I’m hearing. The first one is, it is what it is. Two, deal with it. Three, as business owners, we are on a good and noble mission to help customers, employees, and our families. And then four, when something gets in our way, i.e., this coronavirus, then f.u. It’s not that you don’t care, it’s hey, do your worst. You’re saying to whatever’s in your way, “Do your worst,” but my job is to make sure that my business stays open so that my customers and my employees have a place to come back to, and if that means I have to lay people off, if I have to help people pay rent, that’s one thing. But what I hear is Jay sticking to his four principles of business ownership.

Jay Goltz:
We’ll call it resolve. I’m in my resolve mode. It’s all in Rocky 2 when Rocky had a terrible round, he’s sitting in the corner, he looks up at Mickey, and he just goes, “I ain’t going down no more.” And then he won. I ain’t going down. I’m gonna do what I need to do to fix this, and I ain’t going down, and my employees are going to keep their jobs, and we’re going to forge through this. I’m not going to waste my time and energy going through the news cycle. I could tell you 10 crises that they’ve hyped up that never happened. Believe me, I’m not downplaying. I know this is bad. But the 401k thing was like, “Oh my god, airplanes are gonna be falling out of the sky.”

Loren Feldman:
The 401k thing? Do you mean 911?

Dana White:
Y2K?

Jay Goltz:
Yeah, all right, take that out. Edit that out. [Laughter] Planes will be falling out of the sky. How about the pandemic that never got here. How about that?

Loren Feldman:
I’m here saying we should have a reasonable conversation about potential issues, and it’s almost like I hear you saying even talking about this stuff is getting hysterical and participating in the insanity. Is that what you’re saying?

Jay Goltz:
I heard the phrase, “We’re going to be shut down. It’s happened in Italy. And it’s happening here,” and I’m enthusiastically disagreeing with that.

Karen Clark Cole:
I’m saying if you look at the data, it’s moving. We can see what happened in China. We can see the difference between countries, cities that reacted quickly and what they did with their social distancing. We can see what happened when they didn’t. You can also see that the U.S. has reacted slowly to get started. That doesn’t bode well for us. That means stay home. It’s bad, in terms of what it means for us socially. It’s gonna be really hard for people to do that. And unless we do, it’s going to hit us really hard.

Jay Goltz:
How many cases are there in Seattle right now?

Loren Feldman:
Wait, let’s not go there.

Jay Goltz:
I’m just saying this. You’re in Seattle. It’s bad there, I get it. There are not a lot of cases in Chicago and everybody is doing everything they’re supposed to do. I’m not sure—

Loren Feldman:
Jay, nobody knows how many cases there are in Chicago because we can’t test.

Jay Goltz:
Okay, I’m just suggesting there’s a good possibility that my business is not going to shut down for a month or two. That’s all I’m saying.

Loren Feldman:
Okay.

Jay Goltz:
And believe me, I’m not at all saying this isn’t serious. I talked to a doctor last night at length about it. It’s bad and I get it, but we’re taking all the preventative measures. I believe that there’s a good chance that there will be a downtick in business, but this is not going to be another economy meltdown for the next five years. There’s just no reason to assume that, and frankly, pause very importantly, there’s no upside to me for that. There’s just no upside being a business owner and deciding we might be out of business in six months. I’m certainly not going to tell my employees, “Brace yourself, you might be out of a job next month.”

Loren Feldman:
Let me ask a couple of questions. Dana, have you thought about what you would need to do if one of your employees were to test positive?

Dana White:
Yes. We would look at the guests who they serviced that day. Then we would contact those guests. I’m sure they’d already not be not coming into work if they tested positive. We would also look at the employees who they worked with that day and have them stay at home. What we decided was, if one of our employees did test positive, it would probably mean shutting down that salon after contacting everybody. We’re just not going to take the risk. We would probably shut that salon down.

Karen Clark Cole:
What if you found out that one of your customers has tested positive? Same thing?

Dana White:
It’s similar, but again, we keep our guests in the salon for a short time. We would probably not have the people who are working that day or with that person come in. We’d have them stay at home and let them incubate to see. Then we would look at the time that they were there. We’ve talked about contacting all the people who were in the salon with them the day that they were there, but we are caught between, “Hey, do we tell them and then we’re hysterical?”

Probably we’re going to err on the side of caution and contact everybody who was in the salon with them at the time. But again, we’re seeing lower numbers. If it were a normal Saturday, we’d have to call maybe 10 people. Right now, with our numbers being low, we’d only have to call a couple of people, so we probably would call people who were in the salon with them and the people who work with them. I don’t believe we would shut down the salon because again, we have these cleanliness standards that are put in place by the state and we’re doing so much to keep the salon clean hourly.

Karen Clark Cole:
The problem is it’s airborne, right? So you shouldn’t be any closer than three feet from people.

Jay Goltz:
The reality is, you can’t make a decision today about what might happen in three weeks if it happens, because we have no idea what’s going to be going on in the rest of the city and everything else—

Loren Feldman:
Well, Jay, you might be right about it might be too early for her to think about whether she would have to shut down or not. But she can certainly think about what the protocol would be. Who has to be alerted, that kind of thing.

Jay Goltz:
I’m not saying she shouldn’t be thinking about everything. I’m just going, you can’t come to a conclusion at this point. You should be thinking about it.

Loren Feldman:
Karen, let me ask you: If it does get bad, and it sounds like you do anticipate it will and that your business will fall off too, what concerns you most? Do you have bank loans that a lack of revenue could create a problem for? What would the big issue be for you?

Karen Clark Cole:
No, it’s just gonna be a reduction in work for us. We have to be careful. We can’t have people on the bench for very long. If we have a reduction in incoming work—and we are, we’ve already let all of our contractors go. These are people who we use for ebb and flow. If we have a higher volume than normal, we’d use contractors rather than hiring employees until we know that that’s a new normal. We’ve already swapped, taking the contractors off work, and put any employees who were idle because of some of these postponements on that work. Meanwhile, we have to keep those contractors warm because we believe that when we get back to normal, we’re going to be gangbusters because all of our clients have to make up for the work that’s been postponed because they still have to get their jobs done.

Jay Goltz:
Those people who do that stuff are going to learn a valuable lesson from this, which is, they better have some reserves. Because people like Karen and I who have people who are paid for a contract, they’re gonna lose their contracts. They’re gonna be out of work for a while. That’s the nature of being a gig worker, so maybe some of those people are gonna decide to get regular jobs because there’s a little more stability.

This is going to test out a whole lot of lifestyles. I have a person who does marketing for me. She works three days a week. She works for the hotels. How do you think that’s working right now? I don’t know that anyone’s getting hit worse than hotels.

Karen Clark Cole:
I hope they don’t go get what you call “regular jobs” because we really need them to run our business. [Laughter]

Jay Goltz:
It’s gonna change and maybe you’ll hire some of them, but the point is, all of her hotels are cutting her off 100%. I had a good talk with her because I have a good relationship with her. I said, “You might want to remind some of them”—Karen, what you just said—“that they should keep you warm here because they’re gonna want you back. Instead of cutting you off 100%, maybe convince them it would be a good idea to cut you back 50% because you’re gonna have to go find a client to replace them.” It’s shaking up the whole dynamics of that stuff.

Loren Feldman:
Let me ask you this. One of the reasons we started 21 Hats was, the basic premise is that a lot of business owners feel isolated. They’re not sure who to talk to. They don’t necessarily have a spouse they can talk to. It’s not appropriate often to talk to employees when things are tough. This seems like, with a lot of people freaking out, with a real crisis on hand, this is a time when people want to compare notes with others.

That’s the whole purpose of the podcast we’re having now, but for people who are listening to this and are looking for other ways to reassure themselves, to figure out what other people are doing, I’m curious what experiences the three of you have had with peer groups and whether you think belonging to a group like Vistage or YPO or EO is helpful in a situation like this. Karen, do you belong to any of those peer groups?

Karen Clark Cole:
I don’t currently. I have various ones in the past. I think they’re good. You’ve got to take a grain of salt. To me, it’s all information, and then what I do with it is probably going to be different. I like to run the company eating our own dog food and think about it as a user experience project in itself. Then I’m continually looking internally and talking to the people who are inside the company and talking to our clients and finding out, “More of this, less of that.”

It’s important to hear other people’s perspectives and know what challenges they face. Even on this call, we all have very different businesses and very different perspectives on how we run them and how we think about them. For me, it’s interesting to see, “Oh, wow, not everyone’s just like me.” I think that’s important.

Loren Feldman:
Dana, what about you? Have you belonged to one of these groups?

Dana White:
I have in the past and I’ve kind of created my own little group. It’s been okay. I don’t really lean on them as much anymore because I just wasn’t getting that much from them outside of, I don’t want to say a lot of talk, but you can only go so many times to an organization for help or questions. You get a couple, “I don’t know, I don’t know, I don’t know.” You go, “Oof, okay.” Instead of relying on the group, you just bring people around you who you feel can help advise or bounce things off. I’m not really a part of entrepreneurial help groups or focus groups like that anymore.

Loren Feldman:
Would you like to be right now? Do you feel like it would be useful?

Dana White:
Again, it would have to be an organization where someone’s come to me who’s in a similar part of their growth that I’m in and they are finding answers or being pointed in the directions to pursue their own answers that are helping. It’s like being in the same grade with kids as opposed to hanging out with kids who are in another grade. I’m kind of focused on keeping people around me who are where I want to be, versus keeping people around me who are where I am.

Loren Feldman:
Jay, you’ve belonged to a lot of these groups through the years.

Jay Goltz:
I’ve been in six different groups, some of the big ones, the nationally known ones that cost $15,000, $18,000 a year. I’ve seen about 100 and some businesses close up, because you go through your books together. It’s been an extremely valuable learning experience of seeing the way other businesses work and in getting some perspective on it.

One of the biggest things—and I’m dead serious when I say this—you start to feel smarter. Because if you’re by yourself and you make so many mistakes like I did, you start to think, “Oh my God, everybody’s smarter than me.” And then when you join a group, you find out, “No, not really,” because there’s a lot of other people that are that are—

Loren Feldman:
Who make mistakes too?

Jay Goltz:
No, more than you do. Here’s a little insight, which is why I’m not mentioning any names. This is just fact. If you pay $18,000 a year for a business group thing—and that’s what a lot of them cost—who do you think has got them that kind of money to pay per year? I will tell you, in my experience—and I’ve talked to other people, this is a statistical fact—most of those people in the business groups are second generation, or third. Mostly second. In the last couple of groups I was in, I’ve only been one of, out of 15 people, only three of us started the business, and the perspective of a second-generation business owner compared to someone who started it out of the trunk of their car is very, very, very different. They’ve got so many resources and so much infrastructure in place that it’s just different and then many of them really shouldn’t be running the business, and I’ve seen them go broke. Out of 100, I’ve seen 20 of them go broke.

Loren Feldman:
Jay, what advice would you give to a business owner feeling isolated right now and feeling the need to compare notes with others and think through their approach? Do you have any advice?

Jay Goltz:
Yes, absolutely. I absolutely think it’s a good thing to join a business group and try to find one that’s got some people who you can learn from. Try to find some people who are in a similar situation and some of them are much older and are way past where you’re at. One guy said to me—this guy looked across the table at me. I had just joined, I was about 31 years old, and he was in his 50’s probably, and he just looked at me and he said, “So have you toughened up yet?” That was such a poignant question because that’s what it’s about. When you start in business, you need to toughen up. It’s not easy. It’s not simple. Sometimes you have to do things that are uncomfortable. It just shows you the wisdom of somebody who’s been in it.

Another guy said to me—this is right up there. He was about 50-something, I was probably 30. He said, “Jay, everybody realizes that they have limitations. It usually happens when you’re about 50.” Oh my God. That’s just brilliant. I don’t have the head to build a $200 million company. I don’t. I realized I have limitations. That was a really smart thing. And when I hit 50, just like he said, I realized, “Yeah, I think I figured out how far I can take this with my personality, with my skill-set, with my risk ability.”

I’ve gotten some really great input from people in those kinds of groups and I’ve also seen people do such remarkably stupid things and do it over. I’ve been in groups with people where you’ll say to the guy—always a second-generation, I’m sorry to say—you’ll say, “Bob, you’ve been complaining about your production manager since I joined this group. Why don’t you fire him?” “Yeah, yeah, you’re right. You’re right. It’s time. I’m gonna fire him.” A year later, you come back to his place. His production manager’s still there. “I thought you said your production manager—” “Well, yeah, yeah.” I just watch people do nothing.

Loren Feldman:
I thought you just told people that they should join a business group, Jay. [Laughter]

Jay Goltz:
Even a bad experience in a business group is better than no experience. I mean it. The life cycle for me in those business groups is usually two or three years. I usually get burned out after two or three years, but I always leave with lots of great insights. I absolutely believe people should be exposed to other business owners.

Loren Feldman:
Okay, so we’re all almost out of time. Again, this is Friday the 13th. As we’re heading into a crisis of some considerable dimension, I knew this was going to be a difficult conversation in some ways. I wanted to bring something that I found really inspirational into the discussion. I’m curious if the three of you looked at it the same way.

Jay Goltz:
Is it a prayer?

Loren Feldman:
No, it’s not a prayer.

Jay Goltz:
Good.

Loren Feldman:
It’s an item from the 21 Hats Morning Report this week about a car dealership in Charlotte, North Carolina that figured out they could provide a safe place for people who are homeless and sleeping in their cars to park overnight. The thing kind of built on itself. They wound up starting a GoFundMe that attracted a good bit of money and allowed the car dealer to actually pay security deposits and first month’s rent for some of the people staying on the lot. To me, it was somebody looking at a situation, not waiting for others to act, figuring out what they had to offer, and taking action that made a difference to a significant number of people. What do you guys think? Do you see it the same way?

Karen Clark Cole:
Are they doing that all the time?

Loren Feldman:
They are now, yeah.

Karen Clark Cole:
Oh, good. That’s great.

Jay Goltz:
I think that’s a great story. It just shows that you’ve got to keep thinking about things. As business owners, we have a unique opportunity to do something good for the world, whether it’s providing jobs or making customers happy or using your empty parking lot to help the homeless, as this guy does. We have a unique opportunity to make the world a better place., and that’s a beautiful thing. I would hope that everybody appreciates that. That’s an honor and a privilege to be able to do.

Loren Feldman:
This conversation went in a lot of different directions. I’m wondering if we can pull it together a little bit. What did each of you hear here? What do you suggest somebody take away from this conversation? Dana, did you get anything out of it?

Dana White:
I did. I’m sitting here and I’m listening and I’m concerned about the businesses that are not going to survive this. I’m wondering if Paralee Boyd is one of them. It’s that simple. That’s my takeaway. My takeaway is this is gonna get worse before it gets better, because we’re not as prepared as other countries. I think we’re doing all that we can, but even in doing all that we can, it’s going to hurt businesses when people stay home. Who’s going to survive this? What great businesses are going to have to close?

I know some of the business owners that I’ve talked to last night are worried. “Is there something more that I could have done?” or “Could I have built my business up more two years ago”—because I’ve only been in business for six years—”could I have done more to make it so that when a travesty or a tragedy happened, I would be prepared?” Because I’m not prepared to survive this. That’s a fear. My takeaway from this conversation is, “Dana, can Paralee Boyd survive?” And we’re going to do what we can, but I’ll be honest with you. I don’t know.

Loren Feldman:
Is there anything you’re thinking about, any steps you’re thinking about taking, that you’re debating in your own mind to make sure that you do survive?

Dana White:
Do we shut down my second location? I don’t mean temporarily. These incidents take time to recover. There’s so much that I didn’t do prior to this incident that I don’t know if it could have prepared me for it.

Being optimistic is saying, “People are going to get cabin fever. And as long as they have a safe place to come, which is a clean place, you hope and pray that they’ll come.” I know restaurants are giving out gift cards, so that when people do come back, we can make money. That might be an idea. But if there’s no salon or restaurant to come back to because they had to close, then there goes the gift card, so I don’t know.

Loren Feldman:
Karen, how about you? Are you taking anything away from this conversation?

Karen Clark Cole:
Well, honestly, I’m at a loss for words, because it’s terrifying. For me, it’s less about my individual business, and it’s more about the overall economy and what’s going to happen to my grandma and people who are in high-risk health profiles. And, like Jay’s son, I’ve got a house on the market right now. And I’m like, “I need to sell that house.”

There are all kinds of little things that are happening that are going to pull us together as a country and as a community, I can tell you that. What we do as business owners, people are looking to us. Our employees are looking to us to make the right decisions. I have gotten a lot of feedback from my employees when we closed our offices ahead of the curve: “Thank you for taking care of me.” They are concerned about their health beyond everything else right now. I think we just have to be real and be cautious in how we’re running our companies, in terms of lowering costs and anything that can happen should happen.

Loren Feldman:
How about you, Jay?

Jay Goltz:
I am not going to wring my hands and tell you that I might be out of business in six months. I’m not going there. I’ve been through this many times, and I’m going to do whatever I have to do to stay in business and take care of my employees as well as possible. I’m giving a rally call to everyone who’s listening: we don’t have the luxury as business owners to wring our hands and to worry. No, we’re supposed to fix things and figure out the best course of action to get through this.

Karen Clark Cole:
I think what we have to do though is preserve our businesses so that it’s on hold. Because when this is all done, people need our businesses to be going, not only as employees, but as customers. Just think of it Dana as a pause, and how can you keep that pause going? How can you preserve it so that it can be on pause so that you’re ready to roll when everything gets back? Because it will.

Dana White:
I don’t know if other business owners who may be listening are in a similar situation. You do the work. You embrace the pause, but there are people that I owe money to who aren’t embracing my pause, who don’t care that COVID-19, brimstone, fire, hail. I don’t care. I want my money.

Jay Goltz:
What are they gonna do, kill your cat? That’s what I want to know. You owe them money. So what does that mean? They’re better off if you go broke? Is that how this ends? No, they’re gonna have to work along with you until you pay them back. There’s a perfect example of they’re in this with you, whether they like it or not. They lent you money or whatever. That was all part of the risk of taking business. They’re just going to have to work with you until you figure this out, because it’s in their best interest and in your best interest. There’s a good example of, what are you gonna do? They’re better off if you stay in business. Everyone is better off if you stay in business.

You’re gonna get through this, you’re gonna do what you need to do. If you need to close the one salon, so be it. And you’re going to come out of this whole thing because you’re smart, and you’re ambitious, and you’re responsible, and people like you. You’re gonna get through this. And make sure that you don’t ever, ever, ever have a bad afternoon and start telling your employees what you’re really thinking, because you might as well set the place on fire then.

Dana White:
You’re right.

Jay Goltz:
There’s no upside to it. All they’re gonna think is, “Oh my God, I just bought a new car. I’m gonna lose my car and who’s going to help my mother?” and you’re just going to help freak them out. So embrace it, you’re gonna look back on this and say, “Wow, I got through the whole corona thing.” This will be just one of the next 20 things that come along that we have to deal with.

Loren Feldman:
We are out of time. Needless to say, we will be returning to this topic as long as it’s necessary. My thanks Karen Clark Cole, Jay Goltz, and Dana White.

Dana White:
Thank you.

Jay Goltz:
Fine job as always.

Karen Clark Cole:
Thank you.