COVID-19 Vacation Rentals / Hospitality Industry Update April 10, 2020 – Major Changes In Merchant Accounts for Vacation Rentals. April 10, 2020 Updates on COVID-19 / Corona Virus updates for the Vacation Rentals / Hospitality industry from Micah Berg Founder & CEO of https://www.thevru.com/ and Justin Jones Founder and CEO of https://imegonline.com/ and Daniel Evans – Director of growth at IMEG.
In this update we talk about how to build a business protection plan.
You can get FREE access to https://www.thevru.com/ by using discount code covid19 at checkout.
You can watch this podcast in by clicking play below:
Justin Jones 0:02
Okay, welcome everybody to another edition of the vacation rentals podcast today we have in addition
Daniel Evans 0:09
to myself, Justin Jones,
Justin Jones 0:10
founder of internet marketing expert group, we have Michael Berg with vacation University, and real joy vacation co founder of both of those. And Daniel Evans, who is the director of growth with internet marketing expert group, and today, we’re going to talk about what we just come up with five minutes ago was a business protection plan the BPP Yeah, we’re just gonna have a conversation ranting back and forth about some ideas to protect your business. In this time of crisis. We’ve all heard of the PvP the payroll protection, which is going to be part of this conversation, but I think it needs to be a step further of as Daniel coin this the BPP Yeah, it’s action plan.
Micah Berg 0:56
Yeah, well, that I mean, this came from us helping clients Deal with their problems, and they’re complaining about certain things. And Daniel owns a business with his wife. Obviously, he’s not smart enough to run it. So as much smarter half runs that for him, you know your business. Thank you, babe. Yeah, it’s and, you know, these are real problems that we’re facing in our businesses. And we wanted to think about different ways to look at the PPP and some of this money coming in to solve real business problems. And so, Daniel, this was your bad idea to do this on the podcast. We’re unedited. We’re live. We’re recording. So why don’t you introduced us here and talk to us about some ideas you had, as we were talking through payroll protection and all that money coming in?
Daniel Evans 1:43
Yes. So getting into this, obviously, there was a lot of information out there being produced by a lot of different sources in the beginning, reading things that you thought were true but weren’t so trying to make the best decision in the beginning. If you read the front of this was a little bit Cool. So, over the last three weeks, I think our state Tennessee was declared a disaster state, March 23. They rolled out the original SBA loan documentation and be able to apply for this. It was a lot of work, then once you did that work, you actually didn’t need to do all that. Then they released like three or four documents. But during all that and reading through the information, really starting to learn that there was going to be some real chunk of money here to be able to get obviously, some people right now are like, man, I hadn’t got my money yet, why haven’t I got my money yet? Or am I going to get my money? And I think, to kind of go off on that for a second. If you haven’t got the actual loan yet or you haven’t applied. That’s okay. Because you might be saving yourself some time and some friction. Find a bank that you have a relationship with, most importantly a person at that bank and get started. Yeah, for sure. That’s a big one. I talked to a few other people that I know that have started the process. They started with one bank, then they didn’t like that, because they didn’t get feedback they wanted they moved on. So you’re not too late to the ballgame at all. You’re actually probably just perfect. It’s probably better, right? Yeah, for sure. Absolutely.
Justin Jones 3:12
Especially if you laid a bunch of people off or actually shut down. Being a little later on this one is good.
Micah Berg 3:19
Now, you I’m finding out today, from my own case that one of my plans in an earlier podcast was to defer the loan for maybe a month or so until you could like, get your employees on deck and ready to come back and business restarted, but it doesn’t look like that might be as easy as we were thinking you might get 10 or 15 days. So it might make sense to delay it just a little bit if you because I mean, it’s moving fairly quick. Daniel, you you recently did it. I mean, didn’t it go pretty quick for you?
Daniel Evans 3:48
It did, I stayed on the horn stayed connected, just kind of like Hey, where am I going to be? Are we going to get the money, and we actually got funded today. Cool. So that’s helpful, but you know, working with my accountant who serves three or 400 businesses, I’m teaching her things because I’m reading things for Yeah. But then she’s given me feedback. And I’m like, Oh, that makes sense. Great question. Because there’s gonna be a lot of questions and the higher value questions you asked with this, the better outcome you’re going to have, that’s for sure. Yeah. So if you work in Excel, and you’re running payroll over the next eight weeks, so you find extra money, that’s, that could be a good thing. That could be a bad thing. So think about that, because right now, the most recent documentation literally says, business loan program, temporary changes, paycheck Protection Program. Yeah, this thing is gonna change. Yeah.
Micah Berg 4:40
What’s gonna have to I mean, if I was funded today, it probably take me a week or two. I mean, some of my employees went like that. I told him, we were probably going to be closed for maybe two months. So I mean, they’re out of town. They went to stay with some family members, you know, drove somewhere that whatever I mean, they’re doing whatever So if I got it today, I’d blow two weeks right now. Just trying to get people back on deck, and then I wouldn’t have any business. So it’d be kind of a waste of time anyway, I just send them money. So yeah, so getting funding quickly, if you’re going to work through the process and all this, maybe don’t rush it so much like I think the consensus is, the money is going to be there. There’s a backlog now, so but don’t let that stress you out, right? I mean, it’s kind of my thing. Daniel got through it in about a week or so.
Daniel Evans 5:29
You know, seven, eight days. Yeah,
Justin Jones 5:31
we got an update on ours that I think we’re getting funded next week, which puts us at about a week. So I think the filters are, there’s three core filters. One is if you have your team on staff, and you took a hit, like a lot of restaurants, I’m talking to their, you know, kind of middle not, you know, top tier restaurants but, you know, kind of middle the road, they took about 60 70% hit this payroll protection could really help them offset some of those losses, because they’re still open, but they’re taking a little hit just trying to keep the team. Yeah, obviously, you might want to rush that one. Yet if you don’t have like, if you’re in the vacation rental space, a lot of my clients are still shut down for two weeks while Daniels contra shut down. Or they’ve took a massive revenue hit, they need to do it and do it quickly. Yeah, they can spend it. But But if you’re in a business that that completely shut down, you might want to get in queue but not push it.
Micah Berg 6:25
Yeah, yeah. And ours was approved. So we’re in one of those where more or less completely shut down. I mean, bookings are down 97% and occupancies, you know, basically zero. And we’ve gotten approved in the last couple of days, we’re trying to push out the funding of it, because for the many reasons I mentioned, and some of these will, I do want to talk about, like if you time this Well, some things you can do like why we’re calling it the BPP because there’s a lot more than pay for some expenses in your employees. But you know, so I’m in that boat, which means later in a podcast, I’ll let you guys all know how that went. Like. When we got funded and what we’re going to do now that we got funded because this changes every day, I mean, the the laws are different. I’m guessing like, you know, all my employees are on unemployment, I’m going to get this PPP. I have no work for them. I mean, what what do I do? Do I send it back and reapply? Do I call the bank like get an extension, get a defer. I don’t know what to do. So when I figured that out fortunate, I got a, you know, smart friends here that can help me and like Daniel said, asking high quality questions to the right people, namely the bankers who are on the front lines.
Justin Jones 7:33
Yeah. And when they talk about to look at it, like there’s only really four or five things that you can spend this on, correct me if I’m wrong on this payroll, rent mortgages. What else was hurting? I don’t
Micah Berg 7:45
think it’s payroll. Where’d you get that? Is BPP baby.
Daniel Evans 7:51
It’s mortgage rent, utilities.
rent, mortgage utilities and there might be one in payroll
Justin Jones 8:00
Yeah, so for example, we had some clients who differed a little bit with us. And I’m sure they differed with other other vendors as well. And we were talking about this earlier, trying to help a client work through some cash flow problems. And remember that when this money comes in and you’re making your payroll that should make cash flow go up, then take that cash flow, and then pay stuff like marketing and other things that you can’t pay under the PPP.
Micah Berg 8:28
Yeah, hearing protection. Let’s can we, let’s pause because what you said could be confusing. Like, why does cash flow go up? And so I want to just cover like some of the basics, like the basics are you have revenue, you have expenses, one of which major one is payroll and the other stuff so the PPP loan, that’s forgivable, comes in. So revenue actually stays straight stays flat or hopefully, you know, goes up as we recover. But now your payroll, mortgage, utilities, those sort of things are being paid in this forgivable loan that’s also going to be non taxable later. So the way you got to think about this the reason Justin saying cash flow goes up is that money actually is more rare. It can either be you just take all those expenses off of your your p&l, right? And what would your profit be without paying payroll and, and your mortgage and those kind of things pretty nice, right? Or you just increase your revenue by that amount, right? And it either way it goes to your bottom line. And that’s the cash flow we’re talking about. It’s why we coined this goofy term BPP because it’s paying those expenses, but your profits still gonna be there no matter what. So even though you can’t physically spend the money on anything but payroll and these other things, you’re going to end up more profitable and so you can look at these defray be even more.
Justin Jones 9:49
Yeah, right. Maybe, maybe even more. Yeah, we’ve talked about this on previous podcasts. I won’t dig deep, but the kind of metric this is kind of a 30,000 foot view of looking at it, but I think it’s better to look at it that way. And not at all. So if your payroll was $100,000 a month and you’re going to get that for two months if your margins your gross margins are 30% which is a good number round off for vacation real company that’s the equivalency of $333,000 of revenue for the next two months. Yeah, if your business was only hit 200 grand and they’re making your payroll those other expenses to the PPP you now have 333,000 of revenue coming in so and if you were only down 200,000 your your actual business from a profit cash flow perspective is up not down
Micah Berg 10:39
yeah up 100 grand right.
Unknown Speaker 10:40
Yep. Yeah, you
Justin Jones 10:43
caught up on the things that you you know, obviously bank loans they deferred and pushed it out to the end, but maybe you’re marketing maybe you’re you know if you don’t run you know in house linens Ah, services You know, you had to put them on a little hold and say I’ll catch up in 30 to 45 days, you can start doing that one of the things that we’re doing to help not mess up our optics In the financials. And also to know what it’s supposed to be, is when we are doing that we’re writing a check, keeping track of that, keeping that in a separate account. So we can kind of see where we’re really at cash flow wise in the business. And the other thing I’d recommend and I’ll put a link below is, right now is the time that Imagine you’re in the emergency room and something bad’s happened. Even if it hasn’t to you yet, to a degree that you’re concerned. You’re like, God, it’s not that bad. I take a little hit. I got plenty of cash reserves. Still, I would treat this time because we don’t know how long it’s gonna last. Right? We think we know but maybe we don’t know. Any. I mean, there’s been so many surprises. It’s been changing by the minute. treat this as if it’s gonna last the government’s 800 page bill. References in there 18 months now, the government run on a lot of things and maybe their recoveries 18 months but ours is way way shorter based on the industry and vertical and you’re in but I think that it’d be wise to get enough oxygen in cash for 18 months somehow or at least be optimizing for that. Maybe you only hit three months maybe only six months but be pushing for 18 months and I think that that is a good way to do it is think about it that way. Yeah, but what I was gonna say the link below is 13 week cash flow watch it because right now you know, it’s nice and regular business Tom’s be looking at a lot of different metrics but right now there’s really one and that is cash flow. So I’ll put a link below to a cash flow a 13 week cash flow Excel template that you can plug into and that right there is the vitals in the business that need to be watched daily.
Micah Berg 12:49
Yeah. Daniel which guy but he looked like a deep and thought
Daniel Evans 12:54
I am I’m just thinking, the the questions that I’ve had that have came through that Had fear, if I took action on will hurt me, one of the biggest things in the beginning that was fearful was if you lay people off, you were actually going to be penalized and not be able to receive the loan. That was one of the biggest keywords that I saw across like, solid and forwards on in businesses that are solid in all this on, I’m thinking, you know, people that may not have a current connection to people that they can ask those high quality questions to, what could we put in this that may help them get to that next level of doing this? Because Another thing is, is once you do get the money, understanding Also, if you’re going to save some of that money and put it back and also make payroll, how are you going to calculate that? Yeah. And obviously, having a good accountant is going to be big for that. But being extremely smart, because you got to be really smart in a short window here. And it brings pressure because you don’t want to make the wrong mistake, especially if you have employees and teams that rely on you. So just thinking about that. And just really trying to cover cover anything else that I learned during this time. But that’s about it. That was kind of what was on my mind there.
Justin Jones 14:08
Um, one thing, delete a little bit of what Dan was saying. I mean, Dan has been very strategic on this with what he’s dealing with the one thing because it can get very confusing, because there’s all kinds of unknowns, actually what the bill says. There’s so many things in the bill that actually completely contradicts what the SBA website says, Yeah, we won’t cover those in this one. There’s all these conflicts understand that that’s part of this process. They’re throwing this together, kinda.
Micah Berg 14:34
But maybe, maybe we could do a podcast. It’s like the Evening Edition. And we’ll let you read that bill and put everybody to sleep.
Daniel Evans 14:43
You got to get Morgan Freeman’s voice that’d be a beautiful venue. I bet you could do it.
Justin Jones 14:47
So uh, when when you do this, just, I mean, do your best of course. Yeah, but don’t get sidetracked and think of kind of some first principal’s thinking of that, if I get the money and I can’t spend it, that’s not a horrible day. Yeah. And we think that they may convert some of this. Like, if you get to the end, you can give it back, you could maybe roll that into an actual loan at the low interest rate they’ve been offering on the on the injury loan, all those kinds of things, but but also and you said it best, I’ve said this three podcasts now, but there were some people we had to layoff because we had no work for them to do. Right. And that was selected by the clients. They cancelled those services. Yeah. So and mica said this, which doesn’t make sense. It’s like the regardless of virus or no virus or what economic times you’re going through, if people have no work to do, it’s bad for culture, it’s bad for them and it’s bad for the business to keep them on. Yeah. So if you get the money and there’s no no work to be done. I don’t know that you let people sit around and pay and let them draw unemployment. That’s what it’s for. Yeah. You actually use the money wisely if you have too much and you got to give some of it back I think during you know, considering our situation, that’s a good place to be.
Micah Berg 16:08
Yeah. Yeah. And that, you know, I like to, I like to think about it as you’ve got, would you rather figure out the best way to get your PPP loan forgiven? Or do you want to stay in business because there’s gonna be plenty of smart people who get 100% of their p2p loan be BP DDP PPP loan others PS you all those PS deferred or what was that forgiven? And then you’re gonna go out of business because you were so worried about getting that that amount of money deferred that you didn’t actually plan on your business being around I mean, so so be careful of letting it control you in that regard of being so optimal and so perfect, because you know what, this thing’s moving so much like yeah, convert to a loan you could owe it all back. You could get like, you know, some tax penalties. All these are could B’s right now like Justin said the SBA site and the bill itself don’t match. So you need operate. literally the best case for your business assuming that that’s just cash in the bank, it’s alone, it’s whatever. And then I think things are going to get sort of ironed out over time. I mean, look how long it took for things in 2008. Right? Look how long it took for mortgages to normalize and some of these things to come back. And people who were in lawsuits or had done quote, unquote, illegal things, and they just had to change or give variances on some of that, you know, and this is one of those situations, but it’s the entire freakin world. So, you know, we’re worried about our business and we’re worried about getting this loan forgiven and all that stuff, and that’s great. Just remember all your plans, all your hopes for 2020 just went out the window, right? They got sick and died. They were casualties of the Coronavirus today. You need cash. You need a viable plan to stay in business and you need to stay healthy. And if you do those things, Things like you’ll figure everything else out. Like if if you owe all this money back because you wasted it on Fat Tire and not like one of your beers, Daniel, you wasted all on Fat Tire, you’re just gonna pay it back over a number of years and I hope you enjoyed your Fat Tire. So buy whatever you want. You know, that’s not my advice. Go talk to a CPA, I’m just saying, Be smart.
Justin Jones 18:20
Your old budget, your old strategies, your old plans are out the window right now you need to be focused on cash and health.
Micah Berg 18:26
Yeah, and you’re playing every day. Let’s say you are thinking about bringing your employees back and you have a plan for that. And you do it for two weeks and your revenue doesn’t come back. You know, some people are not in vacation rentals. I know I’m not gonna have revenue for a while. Your choices are to stick it out or lay them off again. I mean, like, at some point, if your plan doesn’t work, you can’t just follow the plan forever. I mean, I guess you can and you just, you know, give the PPP back. That’s cool. That’s an option too. I mean, you know, one of my options. If the PPP is forced to come through, we just hire everybody back and we just To do deep cleans and marketing and content and all kinds of, you know, analyze rates, and do all these tasks that have nothing to do with guests or revenue, call all of our owners and make them feel good, you know, their stuff you could do. So that’s a viable plan to, you know, just hire everybody back and say, we’re going to do stuff that we would never do under normal business circumstances, because we’re paying all of you people, and these things we can get value out of over the next couple of years. So, you know, just run the business the best way possible. And, like, we’ll try to keep you updated on this here. You’re gonna have to keep reading on your own. There’s going to be news released every day, things are changing all the time. So you know, just keep up with it. Keep up with us. You know, I’d give out Daniels email, but you know, I don’t think you can help. No, I’m just kidding. Anyway, would you I gave my email out, by the way, yesterday on the last podcast, and apparently we we either did a good job or a bad job. I’m not sure but I got like 22 weeks emails from people I got my email like some of them are like it’s the beer. It was cool. Yeah, yes, the beard for my baby beard like you show up call me. Uh, like I got a good beard or something. No, I got like people saying hi and all kinds of stuff. That’s why I brought up they would give your email out and you’ll get some
Daniel Evans 20:16
Yes, we’d love to hear to help in any way literally living and breathing this thing. No matter what, because at this time, here to help on the look of it. Daniel atomic online.com. That’s me. Give me um, what do you what do you do you? Yeah, we called you director of growth. What the heck does that mean? Director of growth. So yeah, I bring new clients in. I’m AIG. Prior to the Coronavirus, you know, there were still problems in business. It may be Hey, I I don’t get enough reservations through my website directly or, hey, I’ve got really bad reviews but I don’t think I’m that bad a business. How do I fix that issue or I don’t have a mobile responsive website, how to fix that are so many different things. Those are some simple ones we can get more technical on another podcast later, but I’m essentially if Justin’s the CEO, he writes the music. I go sing it to everybody that wants to listen to it and needs it. So you’re gonna sing it an hour. We gotta wait. Yeah, I would love to,
Justin Jones 21:13
I gotta say,
Micah Berg 21:18
Oh, there you go. Come on.
Justin Jones 21:21
So I tell you what, you get a couple of beers and Daniel and he’ll karaoke with you. Hey,
Daniel Evans 21:27
George Jones. I mean, I’m a reincarnation after six hours.
Justin Jones 21:36
So we’re going to start this with some high cost quality questions, which I think are important now as a CEO and leader or manager, you know, any type of leadership role, or even it always say everybody’s a CEO. You just might not be the CEO of the company, but you’re a CEO of your household, your kids, your Yeah, your own life if you’re single, whatever. But um, there’s a guy that Daniel and I studied With a microphone a couple of bucks but Keith Cunningham I got an article pulled up from him right now. But I give everybody a couple of high quality questions I think he asked during these times that you can write down and think on. But what do I need to do immediately to ensure my survival instability? The other one is, how much are are my cash reserves? And how do I make sure I’m not depleting them with excess spending today, which we talked about in the podcast on March 26. In Depth if you’re watching this and hadn’t watched the march 26 one, check that one out. Um, and then one more that I thought was good. And by the way, these are something you sit down with, and write down possible answers for 3045 minutes, and then go back and find three or four that you can go execute on. So the process is ask this question. Write down all the answers you can for 3045 minutes, go back and find the three or four best and then go execute on what you can. Another part is in my cache, forecast, what is my cash forecast? realistic? And are we hitting the plant? If not, what must change immediately? That’s that 13 week cash flow, but I’ll put a link to the Excel spreadsheet to follow but a lot of businesses owners that Daniel and I work with, don’t know their finances and don’t know really the metrics and optics have their financials. And now is the time to do that. Yeah, hundred percent, because you will never go out of business. outside of your choice, of course, if you have cash. So, oxygen, you know, we can’t make it long in life without it a minute to three minutes. And in business, you don’t make it long without cash. So that’s why cash is so important right now in preserving everything you can do extending accounts payable, decreasing accounts receivable, looking at this payroll protection as alone and actually additional revenue. Like in some weird way of you know, what would you do if your business was up 100 grand this year? With that money, if trying to spend it effectively not, well, I gotta make payroll. If I don’t spend it all I may have this. Like if your business had an additional $333,000 in our scenario earlier of revenue, what would you do with it? Yeah. Would you let six people sit around and do nothing?
Micah Berg 24:17
Yeah. Is that a good return on capital?
Justin Jones 24:20
Right. So those are some things and I’ll put those in the description as well.
Micah Berg 24:25
Yeah. Awesome. Well, Daniel, thanks for your pretty face my brother. And yeah, thanks for the good idea. That’s it. You know, I loved helping you with your questions today and it created more questions but hey, good idea. I’m sure this is gonna be valuable for a lot of people. We’ll do a follow up on it. And then as a plug which you know, we do for every the end of every one of these do we got like 12 signups yesterday right for this? So you guys are doing good for some people, but Daniel and Justin are paying for monthly subscription plans for you guys through vru. So that website www.hevru.com the vru comm sign up for the Masters monthly plan and put code, discount code COVID co v ID one nine in there, you’ll get that for free for the next three or four months. And it’s got everything about the vacation rental industry is is taught in there. And so you can go get your learn on your staff can sign up, you can sign up, your friends can sign up, it’s all all in there, go spend some time, I mean, watching these podcasts are good. You can learn some real stuff that you can implement in your business while things are slow over the next hopefully one week, right? Like it’d be nice if we just bounce right back. But let’s say Yeah, probably a month you can learn almost everything in that platform. You could get covered in a month and really have a lot of stuff to deploy. So check that out. I encourage you to learn, stay safe out there. Hopefully this was helpful to you and, you know, share it with people shoot us emails and And leave us comments or reply back to the email. And we’d be happy to cover anything you want. Gentlemen, thank you very much for your time. Have a good evening and we’ll see everybody tomorrow.
Daniel Evans 26:09
Thank you guys have a good one, buddy.
