Karen Lynch is the outgoing CEO of Belu Water, one of the best known public facing social enterprises. In this blog Karen candidly goes through the impact the coronavirus pandemic has impacted on sales, staff and Belu’s supply chain.
A decade ago, I discovered the wonderful world of social enterprise as I found myself called in to help a company called Belu Water. It was well-meaning business, but it hadn’t quite found its working model, leaving it with £1.9m worth of debt. The future of the business was uncertain and the advice I gave was that it needed to have some very difficult conversations with those to whom it owed money, and find a new business model.
A decade on, having become CEO as a result of that advice, and now in my last couple of weeks at the helm before my gap year to spend time with my parents who live in Spain (please don’t judge the quality of my timing or planning at this point), my last days were to be spent amongst friends, and at our annual World Water Day event. We were all set to celebrate 10 years of Belu and to wish each other a fond farewell. Had we gone ahead, my sign off would have been a glass raised to £925,123 of net profits generated in 2019, and £5 million overall. All of which were passed to WaterAid UK. Those monies transforming 333,779 lives through access to clean water, decent toilets and hygiene education.
How things have changed in the last two weeks. In the last decade, and in all my years working in finance and media, I’ve experienced nothing like it. This situation is immense and intense, so that’s why so many of us are still in shock or feeling like were in some sort of dystopian movie.
We began our contingency planning 2 weeks ago. We were told we were being paranoid by many and kept hearing, “it’s being exaggerated…it’s only the flu…I don’t care if I get it, I’m healthy…bars and restaurants will never close”. Given that we work to predominantly supply the hospitality industry, an industry we are proud to work in, we knew how serious this could be all-round if our partners and friends had to close their doors. On top of this, I have a number of underlying health conditions, and so my slightly overprotective husband (and Belu Trading Director) started analysing the data in detail and planning what our business strategy and isolation would look like before the government guidance suggested those measures. His personal survival instinct helped us get further ahead as a business, helping us to better protect our staff and support our partners.
We called our team together over a week ago to brief them on the plan being submitted for board approval and planned the closure of the office. Friday 13th lived up to its reputation that day. We ring-fenced critical roles from that point, asking our team to cross train each other on tasks to ensure we keep the business going through this crisis period. At this point we had modelled seven different scenarios, each of them becoming increasingly pessimistic.
Last Tuesday, our contingency plan was approved by the Belu board. It reflects the fact that 100% of our income is from trading and that almost all our customer base are hotels, restaurants and caterers. This month (March) will see a 40% decline in business increasing to 95% in April, looking at recovery beginning slowly in late summer. It isn’t pretty, but the reality of the situation must be faced in order to find the best way through it.
In modelling several scenarios, we’ve learned that:
- All scenarios (and I’m sure yours will be the same), quickly highlight that lack of cash will be the biggest issue, you need to focus on that first.
- Secondly, whatever the profit (or loss) number you come up with for the year end is almost irrelevant, you just need to be here to tell the tale and to rebuild.
- This means the key things to protect are your brand reputation, your values, your people and your supply chain. You may also have assets which need additional thought, but at Belu (like many other socents) we don’t.
You may be heads-down trying to follow your instinct to survive, but we found that putting your plan back into the real world gives you context that is incredibly important. Whilst we may be able to trim a few thousand here and there from our already incredibly lean cost base, those actions will help, but can’t offset the risk of any of our sizeable customers being forced to go into administration or delay payment. And that is already happening, but don’t blame your fellow man for asking, they will also be doing everything in their power to protect their own staff and business.
This Wednesday( 18 March), for the first time in 10 years, our sales revenue from mineral water was zero. No wholesaler with any sense wants to fill up his warehouse with stocks as his customers announce they must reluctantly close their doors. We don’t blame them; we think we’d probably do the same.
At Belu, we have accepted worse case scenario. We are talking through this directly and transparently with our team. Together, we have accepted this harsh reality and will work through this and do whatever it takes, applying every ounce of intelligence and creative thinking we can, together.
To all my fellow social enterprises, I wish you well with your contingency planning. And if you need help, look around you and ask. I certainly will be volunteering my time through SEUK to support where I can. And remember, the worst of times can bring out the best in people. Let’s make extra effort to be kind to one another, share and collaborate on ideas and help each other to get through this if we can.
Stay safe, keep going and keep washing your hands. On the really bad days as I do that, I know I’ll spare a thought to those who still don’t have clean water and a decent toilet. Which is why Belu and the hard hit wonderful hospitality sector have to survive this, and get back to solving that crisis.