Episode 19: Closed Until Further Notice (Transcript) - pixiedustandprofits.com

Episode 19: Closed Until Further Notice (Transcript)

Apr 7, 2020

The

podcast

Intro (00:01):
Pixie Dust and Profits is a podcast for small business owners who love Disney and want to sprinkle some of that magic onto their own businesses. Join your host, Nicole Boucher, and Yasmine Spencer. As they explore the mouse’s $12.6 billion operation and break down exactly how you can apply are these big scale concepts to your own business.

Nicole (00:26):
Hey, everyone, welcome to this week’s episode of pixie dust and profits. Our last episode, we talked about things you can do to pivot in your business due to the coronavirus and the worldwide pandemic that’s happening right now. And this week, we wanted to take another update to everything going on, to show you things that Disney is doing and what you can consider for your own business. So we know that your time is strapped right now. We’re just gonna get straight to the point this week. And, you know, we just wanna start off with saying like, some things never change, like the way your hand feels in mind and singing that song a lot right now, if you, you have had frozen too on repeat if you have children at home, or maybe if you don’t just know that we’re in this together and that’s the spirit of this episode that we’re giving you some ideas of what Disney a really big business with a really lot of risk going on right now, what they’re doing and how we can do that in our own small businesses. And just know that at the end of the day, we are all in this together and we will get to the other side. There is another side. We just don’t know where that is yet.

Yasmine (01:28):
So if you are a Disney fan, you’ve probably seen in the headlines, Disney is closed until further notice. That’s kind of crazy. Considering Disney has only closed a small handful of times in history, and it’s only been for a day at most off the top of my head. I know September 11th was a day that they close they’ve closed. I think twice for one day during hurricanes hitting Orlando. But that’s the extent of it. Originally when Disney made their announcement, they were due to shut down from the 16th to the 31st. So people were only impacted for about two weeks. Well, right now, the day that we’re recording this, which is Friday, April 3rd, Florida just issued a stay at home order that starts on April 3rd and it’s gonna last for 30 days. So the park year, probably at the very least gonna be closed until mid-May and based on some news coming out of Disney and their current plans for opening, it looks like that they’re targeting a June 1st date. So I should be able to do this math year, but Nicole, how many months is that? That they’re gonna be closed?

Nicole (02:29):
Yeah, it’s about two and a half months, which is a significant amount of cancellations of trips. And, you know, obviously the airline industry hasn’t recovered or won’t recover by then. So there might not even be flights getting to Orlando when they do reopen. So there’s a big downstream impact to all of this. And I think we can all relate like the industry, every industry is feeling this in some way.

Yasmine (02:52):
We actually took a look at Disney’s 2019 annual report, just to understand what type of loss Disney’s experiencing by having their parks alone, being closed. And when we calculate the numbers, it looks like worldwide Disney is losing about 78 million in revenue per day by the parks being closed.

Nicole (03:14):
Yeah. And while Disney world alone is $38 million of that. And that include the hotel rooms that are usually 90% booked $500,000. They make per day in parking fees, all sorts of things like that. So they’re losing 38 million a day and you know, it might be Disney, but that is a significant amount of their revenue that is missing and going into this entire or crisis Disney made some big investments last year, you know, they bought Fox Fox entertainment. So they had a really big liability on their books from that. And then on top of that, they took all of their licensing deals with places like Netflix off the table, because they were making Disney plus. So they were already in this strategic objective for their business of having short-term losses in order to make long-term gains. They were putting all of this risk into Disney plus doing well. And that was before obviously this pandemic happened. So they were already kind of on a plateau with the revenue and some of these streams because they lost revenue from licensing out there, movies and things like that. So, you know, they were already losing some cash and needing that revenue to come in and now it’s not. So there’s a couple steps that they have taken that we’d like to share right now. Yeah.

Yasmine (04:31):
And before we get into that, just so we can visualize the number Disney’s looking at, approximately a $6 billion loss from their theme parks being closed. That’s crazy. See, and that doesn’t even include like Disney cruise lines, which is also being tabled and they’re not allowed to have any new trips start until at least April 28th. And just knowing with what’s happening with cruises, it’s probably gonna be a bit longer than that. So despite all this, and despite the fact that Disney has lost a ton of money, they’re still taking a lot of steps to take care of their team members, to take care of the communities around them. For one Disney has offered to pay team member salaries until April 18th. And they just announced, I think yesterday that as of April 19th, they’re gonna be furloughing a number of employees, which sounds like a terrible thing in the sense that they’re not paying them. But what that does is it actually gives them the opportunity to apply for some government assistance with some of the programs that the states are coming out with to support people during this time. And on top of that, Disney is paying both the employer and the employee portion of their health benefit. So, you know, if anything happens during this time at the, their health insurance is still intact and they can get the support that they need.

Nicole (05:46):
And we were looking at so figure years earlier, and this is just for the Orlando area. So this includes universal SeaWorld and Wal Disney world, but they actually employ 110,000 people locally. And that’s just Walt Disney world. It doesn’t include all of the other parks around. And so there is a significant community impact to this. And, you know, they closed around March 15th, depending on which park it was. And they’ve been paying their employees through around like April 16th, April 18th, around there. So that’s a whole month that people weren’t working, rev knew wasn’t coming in and they were still paying for all of those cast members until the point where it, they just couldn’t do that anymore. It didn’t make business sense. It was putting a strain on the business. It was putting a strain on the people who wanted to apply for unemployment or whatever else they might need to get through this time.

Nicole (06:32):
And so they’re kind of releasing that so people can get those government subsidies and things that are out there right now are in development right now. So some other things that they have done, and I’m kind of bringing in the small business aspect of this too, is though they’re making these really difficult decisions that definitely impact their cast members. They are doing it with respect and with loyalty, and they are showing them that it’s not about them. They are in this boat as well. Former CEO, current chairman of the board, Bob Iger, who we’ve talked about on the show in the past, he is foregoing his $45 million salary entirely while they get through this crisis. The new CEO, Bob Sheik is going for 50% of his salary. So outs cut in half. Most of the SVPs and VPs in the company have reduced their salary by 20 to 30%. And it wasn’t just a like for this month only, it’s just it’s until the business gets back on its footing. So, you know, cast members are still getting paid through April 19th. And, you know, they’re seeing that their CEO team is this too, that this, the leaders above them, aren’t running to the bank while they’re trying their hardest to even get to the grocery store, like it’s impacting everyone. And until further notice.

Yasmine (07:50):
Yeah. And what was that figure we talked about earlier, Nicole, that in Orlando, the three main theme park. So that’s Disney world universe and sea world, right. They employ 110,000 people in the Orlando area. So all those jobs, like basically on pause or loss, that’s like a huge impact to the local economy.

Nicole (08:12):
Yeah. And so, like, we’re what we wanna stress like in your small business. If you have a team, then think about that team. If you need to make changes in adjustments to the salary or retainers that you have with these people, make sure that you’re doing it equally with respect, show them that you are bootstrapping, that you are working in the business and taking up those gaps that you know, that you can’t pay for them to fill right now. Do it with as much integrity as you can. Obviously we are all in this together. It’s a hard time just be open and honest about what he can do, make sure you’re looking at your contracts for, you know, what is legally, right? Most of the time people are willing to, you know, beat in the middle. And, you know, as people who know negotiation tactics meeting in the middle, isn’t always the best tip for negotiation.

Nicole (09:01):
But in this case, you know, a global pandemic will, will make some exceptions that if there are ways that you can meet in the middle, it would probably help both sides because you are probably hurting financially. And so are they. So if you have any means to be able to keep the ’em on your team, to show them that you’re also taking a cut to, or you’re willing to jump in and get your feet wet, to do everything that you used to do when you first started your business is it goes a long way in keeping that trust. And for on the other side of this, keeping that respect that people will still recommend and refer and say you were a great person work with, and that you didn’t put any additional stress on their shoulders while they were already worried about their situation.

Yasmine (09:42):
And on the flip side, if you are a service provider or someone who makes products and you are the one being canceled on, well, again, think about your client situation. They’re probably freaked out about cash flow. What are ways that you can work with them to still maintain your projects and maintain that flow of income in a way that suits both parties. So one example could be rescheduling the service if they were playing on doing a website, redesign with you. Well maybe instead of canceling it all together, let’s push it back a couple of weeks or months until they’re in a better financial position. So it lease you, haven’t lost a project, you can retain that deposit. And you know, that that future income is still coming in.

Nicole (10:23):
If you have an in person event coming up think about a different medium that you could deliver that in. So a lot of people have decided to change their in-person experiences to virtual retreats. And so look at ways that you can still deliver and maybe even deliver more than was originally intended in a different medium. So that’s another option for you.

Yasmine (10:45):
You have like an event or a live course or workshop or something that you’re teaching. Another option could be postponing it. So working with your vendors and trying to find a new date that still suits your audience. So that way you don’t have to necessarily forego all the revenue that you would’ve generated from it.

Nicole (11:02):
And then another thing that you can do, if you are being postponed on or ask for refunds or anything like that is maybe look at any of the contracts that you still have a term outsource. If you still have payments that are supposed to come in, that maybe will be defaulted on or are not paid because of everything going on. Can you make those monthly payments smaller and of a longer duration? Can you maybe say, okay, I can forgive you for the next 45 days, and then we can do a little more of a balloon payment over here. You know, kind of think about things in the way that banks sometimes offer mortgages, that how there’s different types of plans. There’s your 15 year, there’s your 30 here. There’s, you know, the one that has the balloon payment. There’s the one that is an interest only payment, think of different ways that maybe you can get creative with how people can pay. Knowing that possibly in a few weeks, we’ll have an economic stimulus come out for eligible people. They might have a check after that. People might have some money coming in from just their regular federal tax return. So delaying something for a month doesn’t mean you won’t get paid and they might be appreciative of just having those few extra weeks.

Yasmine (12:06):
And just to take it back to something that Disney did with the annual passes originally Disney was going to, to just like extend the amount of days that your pass was eligible for based on how many days the park was closed. Well in Florida and in the surrounding area, a lot of people actually have like monthly payment plans for their pass and they were sort of panicking because well, they’re paying for something and they’re not quite able to like use the pass and yes, it gets extended, but in this time, you know, every dollar that they can save is important. So Disney actually recently rejig the policy to give them the option to cancel current payments. And they’ll just continue on once the Park’s open. So being a little bit flexible can go a long way in maintaining that loyalty from your customer, because I’m sure that those people, once things are better and they’re in a better financial position, they’re gonna be coming back to the parks and they’re gonna be spending that money.

Yasmine (12:59):
So it works out for Disney to forego some of that income in the short term. One other thing that we wanna mention with respect to being postponed upon is just be a little bit sympathetic and understanding to the situation of the event, organizers, you know, for many of them and even call conferences so that I was planning on attending or had bought tickets to, I’ve just been looking at what’s been happening behind the scenes and for a lot of organizers until recently. And when these like, stay at home, orders were put in place or state of emergency was put into effect in various states, they were stuck in their contracts with or vendors because an impossibility clause still hadn’t come into effect like until the actual event itself was impossible to throw because again, a stay-at-home order was put in place. They still could have technically had the event. So if they canceled the contract, they would’ve been out thousands upon thousands of dollars. And, you know, obviously they care about you. They don’t want you to have to travel in this time to go to a different state, to go to a conference where we’re supposed to be socially distancing. And

Nicole (14:03):
Right. It was like a catch 22 for them. Yeah. They were contractually obligated to pay the venue because there was no state of emergency where the venue was located. But people who were traveling to the event were located in places like New York or Seattle or anywhere else across the country that have had cases or

Yasmine (14:22):
In Canada, where I really like legally cannot fly because it’s a non essential trip, right. If they’re cross borders, like borders have been shut down because of this. So just be understanding that the organizers are probably trying to do every thing that they can to protect you as well. And that these things are probably gonna take a little bit of time to sort out because you know, now when you’re looking at rescheduling, well, they probably have like events booked for the rest of the year and where are they gonna fit that in? So yeah, so just, and

Nicole (14:51):
Everyone else is rescheduling at the same time and everyone who’s throwing an event, usually there are, you know, 5, 6, 7 other vendors that you have included in it. So you need to make sure the date works for all of them, everyone. So it, it’s not as easy as just picking another date.

Yasmine (15:06):
So we talked about what you can do as a business owner, what you can do as a service or prog provider, and just as a good human being with respect to how coronavirus is impacting businesses as a whole we did mention that there are a few government stimulus programs that are happening and we will get into too many of the details because like, even though we’ve done a research, we’re not quite experts at that area.

Nicole (15:32):
We don’t, we’re not, we’re not accountants.

Yasmine (15:34):
Yeah. Yeah. We don’t wanna necessarily give you information that’s incorrect. But what we will do is in the show notes, we will link to the stimulus programs that are being provided small businesses in the United States and Canada. I got my northerners covered. So you can look into what resources are available to you during this time. So you can keep your doors open and keep your businesses running.

Nicole (15:55):
Yeah. And to end things wanna really feel good note because you know, it, isn’t all dam and GL. And we started out saying like, some things never change we’re in this together. You know, Disney has done what they can, they’re losing money every single day. You know, some of the things that we’ve heard from them is that all of, of the food that they normally serve in a day at Disney world wi or in Disneyland, which is a lot of food, is being donated to local shelters so that people can still, you know, eat and have that available to them. And that food won’t be wasted. They’ve done things like donated all of those, you know, the rain ponchos that you wear in the parks when it gets rainy out, they donated those. So that way healthcare providers can wear them over their PPE.

Nicole (16:41):
So it can extend the life of that PPE. There’s just all sorts of like donations and things happening across the board, not just from Disney, but from everyone around. And we want to encourage you that if you have of the means and you still have your full income coming in, that that is something that you can do too. Like we said, we’re not accountants, but one of the things in the us that you can do is if you donate to a registered charity, normally on your taxes, you can only claim that if you itemize your taxes and allow of people take the standard deduction and don’t itemize, but part of this stimulus package includes a provision that if you donate up to $300, then it actually comes off as a line item, even if you standardized deduction. So it reduces your tax liability. So that $300 that you can donate can make a big impact right now for a local to you. And you’ll get it back essentially at the end of the year. So if you have the means, consider doing that, whether it’s to keep a community resource in business or for a bigger cause that you normally support, I, they would be really appreciative right now. And, you know, it’s kind of like a loan. You’re giving them because you’ll get it back at the end of the year.

Yasmine (17:55):
So we hope this episode has given you some ideas on how to navigate this whole close until further notice business, as always, we’ll be coming to you with updates from Disney and a lessons that you can apply to your own business. So follow us on Instagram. We’re @pixiedustandprofits, Nicole and I are jumping on Instagram stories sharing, you know, updates and news, both

Nicole (18:17):
Lots of fun things coming out because you know, everyone at home is just still loving their best Disney life. And so we’ve got like a lot of fun videos. We’ve been sharing from people at home. It inspired by at Disney movies, and it’s just really, it’s a really fun place to be right now sometimes,

Yasmine (18:34):
And make sure to sign up for a mailing list to get updates and other bonuses with each show. So you can sign up at magic.pixiedustandprofits.com. Thank you so much again for joining us today. And we’ll see you real soon that.

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