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The year 2020 should be a promising and successful year for the climbing industry, especially the indoor sector. Last year, gym operators, climbing hold manufacturers, climbing wall builders, athletes, and climbing federations looked on with optimism as the sport’s consistent positive growth and healthy economic development rolled forward.
At industry summits and major international sport trade shows, the sport of climbing came increasingly into focus. The prospect of the Olympic Games and the knowledge that the sport of climbing would be presented to a wider audience and garner even more media presence made the industry and all of its stakeholders look forward to the current year with confidence.
The fact that things have now turned out differently came not only as a surprise to all of us, but it has also had a significant impact and consequences that no one could have predicted or imagined beforehand. Initially and understandably, the climbing industry seemed to go into a state of shock. From one day to the next, crisis management became an essential tool needed to take on a difficult situation for which few of us have had any comparable reference, practice or preparation.
This crisis is not our own doing. This crisis is not based on fundamental mistakes within the climbing industry. Once the Covid-19 crisis ends there will again be a demand for climbing from the public. The sport of climbing will continue to be justified; it will continue to grow and retain its place at the 2021 Olympic Games.
At present it is important to manage this time of crisis as professionally and as determinedly as possible. It is a matter of finding solutions, developing ideas and using this imposed period of closure as effectively as possible in order to emerge from this crisis and reopen in the strongest position possible.
“Once the Covid-19 crisis ends there will again be a demand for climbing from the public.”
On a personal note, I manage and oversee a climbing gym and a restaurant in Germany’s Wuppertal region. When we had to close those two locations, (DAV Kletterzentrum Wupperwände and the Bouldercafé - Bahnhof Blo) on March 16th, 2020, I experienced the sudden uncertainty and feeling of powerlessness first hand. Once I got over the initial shock, I decided to organize my thoughts and turn them into a step by step plan of action. This plan of action became the crisis plan for my climbing gyms. I find that it helps me keep my focus and stay on track. I would therefore like to share it with all of you.
Four phases can be derived in order to manage the current developments from which concrete tasks and measures arise and become necessary. The more structured our actions are in these four phases of crisis management, the greater the probability that we will largely survive the crisis and immediately get back on track for business success.
The following four phases will structure how we deal with this crisis:
- The Acute Phase
- The Planning and Safeguarding Phase
- The Structuring and Stabilisation Phase
- The Reopening Phase
The four phases outlined below are not mutually exclusive from one another. Rather, they should smoothly merge together and create a fluid sequence.
The Acute Phase
Many climbing gyms are still in the acute phase. The initial shock has settled in and the first and most important measures must be taken now. Above all, good communication is key. In short, the following measures can be assigned to the acute phase:
- Announce the closure of the climbing gym. Refer to the legal grounds for this decision.
- First of all, inform all employees and seek their help. During the course of the initial weeks, keep employees continuously informed and let them participate in the evaluating and planning processes. This helps give everyone a feeling of security, even if you yourself do not know all the answers and solutions.
- Inform partners and co-owners and coordinate joint actions.
- Further inform the public and customers and ask them for patience as you find answers to specific questions, such as how to handle annual memberships, monthly memberships, etc.
- Immediately take all possible measures to safeguard your employees. In some countries, filing for hour reduction, furlough, short-term unemployment, etc. will likely come into play.
- Contact your tax advisor and update them about the current situation and the ramifications of the gym closure.
- Proactively inform your bank and lenders about how the current developments affect you and assure them early on that a very structured crisis management plan is in place. Ask specifically about possible offers of aid and ask the bank and lenders to keep you informed about developments.
- Take all measures to secure liquidity. Examples:
Apply for a tax deferral and tax advance payment
Apply for a reduction in social security contributions
Request a deferral and reduction of rent (inform your landlord immediately)
Reduce all utility consumption in your gym.
Check all current contracts and request a freeze on all non-essentials.
The Planning and Safeguarding Phase
The acute phase is followed by the planning and safeguarding phase. The decisive factor here is that we have immediately implemented all measures to secure liquidity. The aim is to ensure basic liquidity and to reduce all current expenditures to a minimum in order to gain time to secure the climbing gym’s future.
“The Planning and Safeguarding Phase requires a certain level of calmness and concentration.”
We must first reduce the pressure we’re feeling and strive for calmness in order to find solutions for the new challenges that we face. The Planning and Safeguarding Phase should be used to implement the following points:
- Plan discussions with your employees might they fear that a reduction in salary or loss of income will endanger their livelihood and basic security. If necessary, consider state aid, which employees can apply for additionally.
- Business evaluations and a preliminary annual financial statement as of the 31 December 2019, must be prepared as quickly as possible. Reliable current financial statements are needed in order to apply for emergency loans and aid.
- Make sure you are comprehensively informed about aid packages and subsidies that are being offered by the government and banks, and examine and evaluate them case by case.
- Continue to proactively inform your bank and lenders about all the measures you are taking to secure the liquidity of your business. This is likely an urgently needed, confidence-building measure.
- Talk openly with the bank about ongoing financing options.
- Immediately apply for all possible emergency aid from the government. Before seeking credits and loans, see if you are eligible for aid money that does not have to be paid back.
- Evaluate the measures initiated to secure liquidity and get an overview of the remaining liquidity and financing needs.
- Review and apply for deferrals of private taxes for the gym’s managing directors and company owners.
- Inform your members of their current membership options. Make sure to obtain legal advice on what is required under current contract law. It can be very helpful to inform customers about the current emergency situation and to ask for their continuation of existing and ongoing memberships. This measure should primarily serve the immediate purpose of securing a certain level of liquidity in order to consolidate The Planning and Safeguarding Phase. This should be considered a short-term solution for climbing gyms.
The Planning and Safeguarding Phase requires a certain level of calmness and concentration. Only when the results of the initiated measures are known is one able to determine the liquidity requirements and make calculations based on different models with potential scenarios and timeframes.
It will be critically necessary to factor longer closures, or additional future closures in your planning and calculations. It must be assumed that prepared plans and calculations may have to be adjusted and corrected.
Only sound planning will enable climbing gyms to make the right decision regarding the necessary financing for closure periods. Various private investor options or options offered by banks and credit institutions can be considered. With a bit of creativity, it might also be possible to develop ways for your gym to generate additional income. Consider promoting punch cards, gym passes and gift cards for courses, classes and your pro shop or cafe if you have one. Climbers are also donating to their favorite climbing gyms on platforms such as, kaufnebenan.de (Germany), Justgiving.com (UK), Fundly.com (U.S.).
The Structuring and Stabilisation Phase
Once a solution has been found to financially secure your facility during the period of closure and loss of income, the time for maintenance, care, and above all, operational optimisation begins. This phase can and should be used to intensively question and adapt existing structures and processes.
The requirements for modern and up-to-date climbing gym management have increased considerably in recent years. For many necessary tasks within the 5 pillars of asset management (see article in Route Setter Magazine #1) more effective and efficient software solutions can be put into use.
The Structuring and Stabilisation Phase is an ideal time to carry out restructuring measures for which there is often not the time during regular operation.
Over the next few days, we will continue to provide concrete tips and advice for the Structuring and Stabilisation Phase.
“We will have to look more closely at how we can make our sport more accessible to a wider audience.”
The Reopening Phase
It will be essential to thoroughly prepare for your gym’s reopening. Prepare for different scenarios and a wide variety of factors such as limited opening hours and occupancy.
First of all, we should prepare for longer closure periods for sport facilities. For example, when closures first lift, sport facilities might still be excluded. It is also conceivable that a reopening will be associated with restrictions and a limitation to the possible number of occupants.
Depending on the duration of the measures and closures imposed to contain the Covid-19 pandemic, it is possible that your gym’s reopening will occur at a time of year when fewer visitors traditionally come to your gym.
It is entirely possible that the initial number of visitors will not match the numbers experienced before the crisis. Many previous customers and regular visitors may initially feel a stronger urge to be outside and engage in outdoor sporting activities. We also can’t rule out the possibility that investment in sport and leisure activities may experience an initial decline.
We will have to look more closely at how we can make our sport more accessible to a wider audience. It will be a matter of significantly reducing the barriers to entry and examining all the contributing factors to such a problem. This will involve financial aspects such pricing and special offers in addition to promoting attractive courses that make climbing accessible to a broader target audience.
Watch this space for more advice on the Reopening phase. We will regularly develop ideas and present solutions together with the help of leading industry experts.
We hope consistent and focused action using the four phases of crisis management will help reduce the economic consequences felt and will make it easier for gyms to get back on the road to success.