297: The Financial Repercussions Of Corona Virus On Our Businesses

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Running a business through a crisis comes down to playing the long game with your customers and doubling down while competitors retreat. When we postponed Sellers Summit with hundreds of thousands of dollars on the line, we refunded every attendee and sponsor in full, because keeping that money would have destroyed the business we spend years building.

My business partner Toni Anderson is back for her sixth appearance. We run Sellers Summit together and launched a blog and course at ProfitableOnlineBlog.com.

This episode covers the financial mechanics of postponing an event, why we refunded despite the cost, and the actual numbers from our businesses during the 2009 recession.

Key takeaways

• Event insurance does not cover infectious disease, and most event costs are prepaid and non-refundable.
• We refunded every ticket and sponsorship in full despite carrying hotel obligations ourselves.
• Refusing refunds buys short-term cash and destroys long-term reputation. Those customers are still around in five years.
• In 2009 our store’s profits rose 147% year over year while revenue grew 94%, by increasing ad spend rather than cutting it.
• Ad costs drop during a downturn because large companies pull back, leaving cheaper inventory for small operators.
• Both our businesses started during the 2008 downturn out of job insecurity.
• Blogging overhead was under $10 a month then, and starting a YouTube channel costs nothing now.
• Owning your own store insulates you when Amazon restricts what sellers can ship into their warehouses.

Why running events is financially risky

Both Toni and I get asked about starting events regularly, and our answer is that it is a risky way to build a business.

Events are enjoyable and Toni has run them for 11 years. They are not a large profit center relative to the work involved.

The insurance gap is the specific trap. Event insurance does not cover infectious disease, which very few organizers knew before 2020.

The cost structure compounds it. Most of the significant expenses are prepaid well ahead of the event, and prepaid money is difficult to recover.

How we decided to postpone Sellers Summit

The decision became clear-cut once holding an in-person event in May was obviously unsafe.

Florida had banned group gatherings, so the legal question was settled. Even before that, asking people to travel felt irresponsible.

The industry-wide context made it stark. Prosper postponed, South by Southwest shut down, and Traffic and Conversion held out before concluding they could not proceed.

The uncertainty is worst for organizers with events later in the year, who have no way to know what conditions they are planning for.

Why we refunded every ticket and sponsorship

Refunding was never really a question for us, despite personal financial exposure on hotel commitments.

The contrast that shaped our thinking came from friends. Several had South by Southwest tickets and received no refund, only the option to attend in 2021 if the organization survives. Derek Halpern paid for a sponsorship at another event and was refused a refund outright.

Withholding refunds during a worldwide pandemic struck us both as wrong regardless of the legal position.

The business logic reinforces the instinct. You can take people’s money in the short term and destroy the business in the long run.

The reputational math is simple. Someone denied a refund does not return, and they tell everyone. In five years this crisis will be over and we will still be dealing with the same customers.

Why we still ran the event virtually

Beyond the finances, we were genuinely disappointed about losing the event itself.

Attendees who have come for four years have gone from acquaintances to friends, and the appeal is hearing how their businesses and families are doing.

Neither of us runs Sellers Summit for the money, since there are considerably easier ways to make money. The community is the reason.

The content mattered too. That year’s sessions focused on building a brand off Amazon, driving advertising, growing organic traffic, and an SEO session we had not run in several years.

Amazon’s restriction on non-essential inventory made that curriculum more urgent, since sellers with their own brand and website were unaffected by it.

What we offered ticket holders instead

Every sponsor and attendee got the option of a full refund first.

Beyond that, we ran the event live and virtual on the original dates, with speakers teaching in real time rather than the edited recordings we normally delivered two to three weeks afterward.

That format change added something the previous virtual pass lacked. Live Q&A with speakers, interaction with other attendees, and extended question time.

The masterminds moved online too, in groups of six to eight people running hot seats over video exactly like the in-person version.

Both the virtual pass and the virtual mastermind went free to existing ticket holders with a mastermind pass.

Why a downturn is a good time to start a business

Both of our businesses started during the last recession, and both started from job insecurity.

I launched MyWifeQuitHerJob.com at the end of 2008 partly because I was worried about losing my engineering job and decided I no longer wanted that worry.

Toni’s husband was dealing with deployment injuries and faced discharge from the military six months short of his retirement date, which would have forfeited the benefits. With small children at home and daycare consuming a paycheck, she went all in on blogging.

Our stores predate that. Bumblebee Linens started in 2007 and weathered the same downturn.

How our businesses performed during the 2009 recession

I went back through the archives from that period, and the numbers are specific.

Year over year profits increased 147%, revenue grew 94%, margins improved 6%, and traffic rose 200%.

The mid-year report showed profits up 75%, revenue up 72%, and traffic up 91%.

What produced those numbers was doing the opposite of retreating. We maxed out AdWords, increased ad spend, bought inventory in larger bulk, and improved our packaging.

We also completed a full site redesign during the downturn, optimized ads, and built more automation into the store. All of it while I still worked a full-time job.

Why advertising gets cheaper in a downturn

Ad costs drop sharply when large companies and big box retailers cut their marketing budgets.

Our own ads kept running through the 2020 slowdown and got considerably cheaper as a result.

The conversion math holds up even with softer demand. Google Ads are cost per click so you only pay on a click, and Facebook costs fell enough to offset a lower conversion rate.

Small operators have the structural advantage here. In 2009 our store’s overhead was about $80 a month and the blog cost five or six dollars a month for hosting.

What to do with unexpected free time

The choice is between pressing forward and playing the victim.

The productive version is rallying, doubling ad spend while it is cheap, acquiring leads, and building content. The unproductive version is curling up with Netflix.

Toni’s own recession success came from that decision. She got up early, stayed late, and pushed hard because she saw an opening when people were afraid and looking for ways to save money.

Anyone working from home or furloughed has more uninterrupted time than they are likely to have again. No commute, no sneaking a webinar during a lunch break at the office, and nowhere else to be.

How to pick a content medium and repurpose across them

The medium should follow your natural strength.

If you like writing, start a blog. If you like talking into a microphone, start a podcast. If you are comfortable on camera, start a YouTube channel.

None of it requires capital. Starting a YouTube channel costs nothing, and blogging cost Toni a domain renewal plus under $10 a month for hosting.

The repurposing is what multiplies the output. I write a blog post, turn it into a video, and turn that into a podcast episode.

Toni converts blog posts into Facebook Lives, because that is where her audience is. The principle is going wherever your people already are.

What we each did during the 2020 slowdown

Toni focused on updating and resurfacing existing content, since her frugal living and homeschooling material was suddenly in high demand with traffic up 40%.

She cleaned up and republished old posts, some written in 2009 and 2010, and pushed them back to the top.

She also went live on Facebook nearly every day, because people isolated at home respond strongly to seeing another person.

She published two genuinely new posts that week, one collecting resources for parents at home with children including virtual museum tours and publisher freebies, and one on how to homeschool if your kids are suddenly home.

On my side, ads kept running at full strength despite slower wedding-related sales, since weddings were being postponed rather than cancelled.

I had launched my YouTube channel a month earlier and used the time to film well ahead of schedule, and considered increasing the weekly upload rate.

Frequently asked questions

Does event insurance cover a pandemic?

No. Standard event insurance excludes infectious disease, which is why organizers who postponed in 2020 absorbed prepaid costs directly.

Should you refund customers during a crisis?

Yes, if you plan to still be in business in five years. Withholding refunds during a genuine emergency generates lasting reputational damage from the same customers you will need later.

Is a recession a bad time to start a business?

No. Both MyWifeQuitHerJob.com and The Happy Housewife launched during the 2008 downturn, and advertising is cheaper because large companies cut their budgets.

Should you cut ad spend during a downturn?

The 2009 numbers argue against it. Increasing ad spend while competitors retreated helped grow store profits 147% year over year with revenue up 94%.

How much does it cost to start a blog or YouTube channel?

Very little. Toni Anderson’s blogging costs were a domain renewal plus under $10 a month for hosting, and starting a YouTube channel requires no capital at all.

Why does having your own store matter?

Because marketplace policy changes can shut you down overnight. When Amazon restricted non-essential inventory into its warehouses, sellers with their own brand and website were unaffected.

How do you repurpose content across formats?

Write once and adapt. A blog post becomes a video and then a podcast episode, or becomes a Facebook Live if that is where your audience spends time.

What should you do with unexpected free time?

Build. Most people retreat during a crisis, which is exactly what creates the opening for anyone willing to create content, run cheap ads, and acquire customers.