Getting Back to Work - Episode 29

Foreign.

Welcome everybody to this edition of CPG Insiders. I'm your host Mark Young and my co host Justin Gerard. I got your name right. Sitting here by my side. Properly, socially distanced.

Not really close enough.

Ready?

Ready. Fire.

Folks, this show is going to be a little different. We're going to be short and see what we're going to get to. It's about time for everybody to get back to work. About 40 of the states are open, starting to opening back up in some fashion. Some of the states aren't. Michigan happens to be one of the ones that is not. But it is time to get back to work and we want to discuss with people is what does that look like, getting back to work. Now, when we look at life, life is a process of risk mitigation. Every day we get up and we have to make risk assessments. I'm going to get in the car, I'm going to drive someplace. There's a given risk involved in that. There's a given risk. If I'm going to ride a motorcycle, I'm going to go on an amusement park ride. Whatever the case is, we make these decisions. How much risk am I willing to take and how can I mitigate the risk? So let's go back to that motorcycle analogy. I'm going to get on a motorcycle, I'm going to ride a motorcycle, but maybe I'm going to put on a helmet, mitigating the risk. Maybe I'll put on some leathers, mitigate the risk some more. Maybe I'm going to be sensible and make sure I don't drink and ride. Mitigating the loss, mitigating the risk.

Further.

When we look at what we're facing right now is we have to think about getting back to work, getting back to business, and how can we mitigate the risk? So the first thing is, let's talk about mitigating the physical risk. Mitigating the physical risk means get back to work. Use some common sense. Don't walk into a room where somebody's coughing or sneezing. Make a decision. Okay, I'm not going to walk into that room.

Right.

Make sure you're washing your hands. Make sure that you're just doing common sense things to mitigate the risk but not letting it cripple you. Because if you let it cripple you, you become a victim. And if you become a victim, you're not going to be effective at running your business. Now the second thing is, what does getting back to business look like for our business? First off, we have to say, what is it? What's your goals? We have to understand this has been a rough couple of months. You have a rough few months coming up. But is the future of your company based on 2 months or is it based on 2 years or 20 years or 5 years? What's your long term plan? Get back to your long term goals. Understand? And this is funny. I'm already getting these calls, Justin, and that is, I had a call with a client yesterday who was saying he just got a call from his CVS buyer, said his numbers are down and the CVS buyer doesn't want to hear about COVID 19.

Am I supposed to be surprised by that?

Exactly. They're saying, well, you know, COVID 19. The buyer says, I don't care about COVID 19. There are other brands in the category that are up. Lo and behold, the brands that are up in this category are the only brands that are spending on advertising. So this particular new client called me to say, hey, we're in trouble. What can we do? And of course, my advice was, you should probably start advertising.

Right.

So understand, when you get back to business, the retailers are not cutting you any slack.

Nope.

Because we had COVID 19. Also, I want to report to people since our last program that we have clients that have not backed off of their spending. And they're setting records right now for their products. They are at all time highs for sales numbers. So if you did get off the gas, it's time to get back on the gas. And the best thing that can happen for you is to get on the gas before all your competitors figure out they need to get back on the gas. Because the sooner you get on the gas, the less you have to fight for. Share of voice.

Right now. It comes back. It always comes back around, Mark. We tell this to all of our clients. The equation for building a brand is very simple. It is two things. It is physical availability and it's mental availability. If you have the distribution, you made it easy for people to find your product already. Right. So physically, you're ready to go. Now you have to win the mental availability battle. That means you got to stay in front of them because everyone else is stealing that mindshare if you're not.

Right. So the more other people advertise, the more expensive it is to be mentally available.

Exactly.

Right now, since a lot of people have backed out, it's cheaper to be mentally available right now.

Yeah. So take advantage.

So jump in and run with it.

Mm.

And run with what your plans are for the next three to five years.

And also pay attention, we've talked about this too. Pay attention to what's happening right now and what opportunities might have come out of this because that might, that might be able to lend to your plans or they might change your long term plans. There's a lot of habits right now that are being formed from a consumer standpoint, not only just in our media consumption, but in our habits, our shopping habits. We've talked about it, how there's been this emergence of the E commerce space was starting to grow. Well, this accelerated it. Right. So is there an opportunity there for you with changing habits from a. I mean just look at some of the sanitary changes that consumers are going to start doing or how consumers are going to. We know people are going to be very timid to start going out even when things are released, to start going into big events. Do any of those things provide an opportunity for your brands? Do you have a product that can maybe solve new problems that have happened or adapt to these changes?

And keep in mind that a recent survey shows that 4 out of 10 people claim that even after everything is so called back to normal, they're going to avoid large social gatherings and places where there's people. So when 40% of the country says I'm going to stop going to the movies, I'm going to stop going to sporting events, I'm going to back down from restaurants, they're now going to have more available income to spend in other places. They're still going to spend the same amount of money.

Yeah.

People don't increase their savings habit because they quit going to the movies. They shift the spending somewhere else.

Correct.

And if they're not going to spend it on entertainment and being out.

Right.

They're going to spend it in their home and they're going to spend it on themselves.

Right. And you've even seen it from some of the recent, some other studies we've been watching. When we pay attention to, and we know that this time has been very detrimental to our economy, but the way consumers have prepped or adapted to it are completely different than the last recession that we had. Because the last recession was essentially man made. We did it to ourselves.

Too in.

A little different way. The last one was when we built the financial system to fail. Right. So there were definitely warning signs leading up to this that people could prepare or there are ways that we had to react. It's different this time around. It's completely different. And at least out of that last one there was a plan that was pretty clear to see how we can solve this problem. Right. Right now, no one can agree on anything.

But the good news is a sudden crash usually would avail it to have a fairly robust or sudden jump.

Jump back up. Yes, yes. And that's what happened last time, and it could happen this time around. But as we talked about it, because of the reason for this. Okay. Because the reason for, quote, unquote, this shutdown, if it was just based on the science, I would agree with you and I would think that we're going to be able to pop out of this thing a lot quicker. But the problem is, and you know this very well, the politics are going to make this drag out a little longer than it needs to be. Right.

But some of the things that we can look at in the CPG space is we're going to change some habits. There's going to be more people that are going to color their hair at home.

Yes.

Because now they've been doing it and it worked out. There's going to be more people doing their nails at home or doing other types of treatments at home. Dental whitening. So where does your product line lean into this stuff? How can you position your product to lean into some new consumer behavior?

Yes.

And if you really give it some thought, you may find some ways that your products lean into it. Now, the other thing I want to tell people about, I want to talk about is the PPP program. This is the payroll protection program. A lot of companies have applied for payroll protection money, and that money was to go for payroll and for things like rent, utilities, direct expenses, and 75% of it had to go to payroll. Where I want to tell people is if you've applied for these dollars and you receive them, I'm going to tell you, don't run out and spend the money yet if you don't have to. We're getting constant updates or issuances of new rulings on this program almost on a daily basis. And what first tripped it was public companies that applied for the money. So these public companies applied for the money and it made it to the news media that Ruth Chris, with all these employees and all these stores was getting payroll protection money. The reason that these public companies became an issue was because in theory, they have access to the public capital. They can issue stock to generate cash. So that became an issue. Then what became an issue was companies who got amounts over $2 million. So companies got over $2 million. Now the government is saying, well, did they need the $2 million? Did they have access to lines of Credit, did they have cash in the bank?

Right.

So when you first got this loan, the loan said that you felt it was a necessity to get the loan due to unknown circumstances and the effect on your business of COVID 19 I think for most people that was probably an honest statement.

Absolutely.

That, yes, I have no freaking idea what's going to happen to my business. Neither does anybody else.

Right.

So, yes, I'm losing money. Sales are down. I think I need the money. Now comes the second part of the process is when you ask for the loan forgiveness. When you ask for the loan forgiveness, you're going to be recertifying the need. So you want to make sure on what these new guidance that will be coming out because the suspicion is. But the guidance may come out and say that you're going to be asked to certify that you had no access to a line of credit and you had no cash on hand to pay your employees. So I want our listeners to be careful and to pay attention to that because you don't want to be getting into a fraud case with the government, with the feds. So that guidance is coming out. We'll stay on top of it and we'll report on it later. But if that guidance does come out with that, then a lot of companies who did have cash on hand or did have lines of credit, they're just going to have to pay the money back. So this is going to. And part of this is going to be very much dependent on how aggressive does the federal government want to get on trying to get money back?

Well, yeah, I mean, as you know, it costs a lot of money to get money back. Is it worth it? Cost a lot of time is worth it.

We're kind of suspecting they're going to put their attorneys and us have looked at this. We're kind of suspecting the focus is going to move to the 2 million and above group.

Yeah, yeah.

But regardless, we don't want any of our clients or any of our listeners running afoul of the federal government because they have the ability to just come in and do horrible things to your business.

Yeah.

Unfortunately, we're almost moving to a guilty until proven innocent model now where they can come in and seize bank accounts and seize money and then tell you to go to court and prove you didn't do something wrong.

Right. Which is insane.

Which is not how it's supposed to work, but it is what's happening. So I want to warn people to be careful with that. So that kind of wraps it up when we come back on the next episode. We're going to get back to our normal business because it is time to get back to work.

It is.

We have to move on with this. You know, one of the things, Justin, that I'll share with you in the audience, and that is a couple things. One, we had a pandemic like this in 1968 and 69. It was called the Hong Kong flu, lost a million people worldwide, 100,000 people in the United States at a time when we had 200 million people. Adjust that for population and for increased obesity, and that would be the equivalent of about 250 to 300,000 deaths, which we haven't remotely approached. And in 1968 and 69, the way we responded to that pandemic was we threw Woodstock and we landed a man on the moon. That's what we did in 1968 and 69.

Hey, fair enough.

Because we dealt with this as a medical issue, not a political issue.

Yeah.

We chose to say this is the medical community's issue. Politicians aren't going to get involved. I want you to understand, you're not old to remember this, but in 68, 69, that was a very tumultuous time. We had LBJ, who was pushing the Great Society, the rapid expansion of welfare, rapid expansion of Medicaid. We had protests on college campuses left and right. We had civil rights protests going on. It was a very rough time politically. So it wasn't like it was the happy Days era of Fonzie and the Private. But we still didn't deal with it as a political issue. We've dealt with this as a political issue, not as a health issue. The other thing I want to bring out to you, and that is that there's a study called a blue study, and it really shows that roughly in the U.S. for every 1% of unemployment you have, you generate about 37,000 suicides.

Interesting.

We have to keep in mind that the emotional cost, the financial cost, the literal suicide cost of this pandemic is going to be greater than the number of people who die from the pandemic here in Michigan. We're approaching a 30% unemployment rate. Think about it. We're talking 37,000 deaths nationwide per 1%.

Right.

So we have to get back to work. It is all of our responsibility to take this country back and get our businesses back on track and do everything we can to. The reality is, if you're listening to this show, there's a good chance you're an entrepreneur. And if you're an entrepreneur. You were born to live in scary days because that's what you do. Entrepreneurs don't work. We walk a high wire without a net. We don't have retirement plans. We don't have all of the things that salaried workers have. We bet the farm every day. So don't let these kind of days scare you because start to think about it. You deal with this every day. I mean every day when you walk into a Walgreens store and they say yes to you for your SKU, you just entered scary times because they just ordered 24,000 pieces of a product and you're not sure whether they're going to.

Sell them or not.

And you just agreed to pay on scan. So you were built for these days. Start looking for the innovation. Don't be the victim, be the victor. Find the path, find the innovation, find the way forward. Because it is the entrepreneurs that are going to save this economy.

Yeah.

It's not big business, it's not government, it's entrepreneurs and small to medium sized businesses that are going to turn this around.

It's the innovators. That's it.

Right, and the people who listen to this program are the innovators.

Absolutely. Absolutely. That's, that's it.

So get out and do what it.

Is you do and trust yourself.

Make it happen. That's it for today. CPG insiders. As always, if you just have questions or comments or interest in marketing advertising, you want to get an opinion from us, you can always reach out to me, you can always reach out to Justin. You can go to cpginsiders.com or go to jekyllhidelabs.com and you're more than welcome to reach out to us. That's it for today and we'll see you on the next episode. If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde Advertising and Marketing. By the way, the only advertising agency with a guaranteed result. Just go to jekyllheidagency.com or feel free to give us a call at 800542.