Opinion: We are not all in this together

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Back in Grade 4, whenever a whiny student complained “That’s not fair!”, my teacher, the original Mr. D., would always snap back: “Life’s not fair!” He was not being rude or disgruntled; he was genuinely preparing us for the real world and the inevitable disappointments we all face. Not that we shouldn’t strive for fairness, but resiliency is a crucial characteristic Mr. D. wanted to instil.

Maybe he was getting us ready for 2020, a year in which so many of us wish we could just hide under a pile of coats. COVID-19 has created some winners (see Jeff Bezos) but many, many losers who are left holding the bag. For 20 years I have been managing my family business, which I’ve bought into, a conference centre in downtown Toronto called Vantage Venues. Our business model is based on leasing commercial office space that we have repurposed for corporate meetings and events — which, if I say so myself, we are exceptional at executing. It is a high overhead business and because of COVID, sales have fallen about 99 per cent.

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This is not a pity party, but a real-life story about the pandemic’s effects on a severely impacted business and the lives touched as a result.

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For us, the flood of cancellations started a couple of weeks before the lockdown was imposed. Thankfully, our balance sheet was well prepared. Because our industry is susceptible to economic downturns we always manage our business conservatively. We proudly dropped off our April rent cheque as usual, started a program to deliver food to a women’s shelter and, despite putting employees on furlough, topped up all their EI to 80 per cent of their usual gross salaries. Once the curve was flattened we would be back in business, right? There is a fine line between positivity and naiveté, and I tripped on it and fell onto the wrong side.

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Enter government programs: CEWS, CEBA, CECRA and the BCAP Guarantee.

CEWS, the federal government’s wage subsidy, is the most crucial. But let’s be honest about one thing. It is designed to manipulate the economic statistic that matters most to politicians: unemployment. I brought 14 of our 50 staff back on payroll. Some have more work than others but everyone has pulled together. The puzzling part is that for the first four periods (16 weeks) any company with a sales decline of 30 per cent received the same subsidy benefit. I would love to be down only 30 per cent. The government has since tweaked the program to address this shortcoming, but for businesses like ours that are down almost 100 per cent it still doesn’t go nearly far enough.

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CEBA is the $40K given to any incorporated business with 2019 payroll between $20K and $1.5M. Wait a second: because I employed too many people we do not qualify? We are most certainly a small business but paying over $2 million in salaries means we are ineligible. Full disclosure: my Dad and I compensate ourselves through a management company, which actually was eligible for CEBA, which we received. But that just confirms the program’s inherent flaw. Any independent contractor, lawyer, doctor, etc., could receive $40K from the government and only needed to pay back $30K whether their business was affected by COVID-19 or not.

CECRA is the rent relief program designed to help both tenants and landlords. I also co-own Lob Toronto, a bocce golf-course, for which this program has worked well. But if you pay more than $50K in rent per month, you are ineligible. That killed us at Vantage Venues. Of course our rent is more than $50K! Space in downtown Toronto is the product we sell. Why not allow a small business to at least participate in the first $50K of its monthly rent? We are fortunate to have a reasonable landlord who has been willing to work with us. But the pandemic leaves an enormous mess that will take landlords and companies years to clean up.

Finally, the BCAP Guarantee was a loan program that can be administered through your bank, in partnership with government agencies EDC and BDC. You would think from the announcement that the government is guaranteeing the loans, but not so. Business owners must sign personal guarantees for the pleasure of taking on debt and paying administration fees in hopes their business will recover. Essentially, the government is asking us to double-down at our own risk. We went with a BDC loan, which is slightly less restrictive but still carries a personal guarantee. Yeehaw!

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When COVID hit we thought we were being reasonable by offering to extend clients’ deposits so they could be used at any time in the future. Some larger properties charged cancellation fees and most had a strict deadline. To spare the details, a run on deposits would be catastrophic for us. We would not be able to make everyone whole. While 90 per cent of clients have been very understanding, it only takes a few to shrink your soul and make you realize we are not all in this together.

As for benefits, 40 employees are covered on our benefits program, which is something we have always been proud of, given how rare it is in the hospitality industry. Like most small-business owners, we feel we have an obligation to our employees. But at the very significant monthly cost of these benefits we have had no choice but to make changes.

Then there’s the question of pivots. People love to talk about how businesses should just pivot their business to something related to their core. We were always a provider of virtual events and webcasts, so it’s not exactly a pivot but we do work as closely as we can with clients to participate in what has become a tremendously competitive business. And there’s the rub: everybody is pivoting into the same spaces.

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In addition to government programs and our own wiles, we have received lots of help from friends, clients and like-minded business owners. Though it is personally comforting to know we are not alone, the problems small businesses are facing need to concern the general public, too. While I feel confident in our survival, insolvency will be inevitable for many thousands of small businesses, which supposedly are the engine of our economy. So far, most businesses that have failed probably were in poor shape going into COVID-19. But the second wave will be worse as, even for sound businesses, bills pile up, sales prospects remain low and cash becomes scarcer. Jobs will be lost and dreams destroyed.

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Pre-COVID, two of the biggest social issues were inequality and mental health. Our response to the pandemic suggests we care little about either. Jobs are about more than just money; they are also about purpose. I asked my employees if they were willing to work when Ontario’s “Stage Three” began. They all said they would make themselves available. So when people say they’re closing their business to protect their employees, that’s nonsense. They’re closing because it isn’t profitable to be open. If people prefer to live in “Stage Two,” fine, that’s their right. But people are going to suffer if we continue to live in fear. When companies announce they will work from home, they put restaurant workers and building cleaners out of work.

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There are no good options when it comes to dealing with COVID. It is obviously a real public health concern, but there is another side of the ledger that needs to be evaluated, too. This is the challenging part, but if we do not ask the right questions now it will be too late. The job losses are disproportionately at the bottom of the income scale. We cannot keep pretending there are no consequences. Getting people back to work is crucial, but if we can’t agree on how to do that safely we need programs that work to assure people their employer is solvent and they have a home.

Looking my employees in the eye is the hardest thing to do right now. Some have offered to work for free or find another job in the short term. With so little direction about where our industry is going and so little support from our government, I have no choice but to let many of them know they need to look out for themselves and search for other work.

I am incredibly lucky to live in a nice area of Toronto where people keep saying “we are all in this together.” But nothing could be further from the truth. Some people are enjoying working from home without a commute; others can’t pay their rent. The impact on business varies tremendously, with many winners and losers. It seems as if our political leaders must have whined to their Grade 4 teachers and got the response “Life’s not fair!”

Andrew Hodd is president of Vantage Venues and Lob Toronto. He also sits on the Americas Board of the International Association of Conference Centers.