Tev Finger is the Founder and CEO of Luxury Brand Partners [LBP], which develops and builds premium artist brands. Its current product portfolio includes R+Co, IGK and Smith & Cult. The incubator has gone on to successfully acquire, build and sell Pulp Riot, which was bought by L’Oréal in May 2018, and Becca Cosmetics, which was purchased by The Estée Lauder Cos. in October 2016. And, it created Oribe in 2010, which it successfully sold to Kao Corp. in Dec. 2017. Here, Tev talks to CEW’s Beauty News about weathering the storm, clever ways to drum up business and how to utilize free time when working from home.

I know it’s going to sound a bit nuts, but I’ve been tracking this crisis since December when it first broke out in China, so we had a bit of head start on making some changes. We placed larger orders for inventory and got it shipped out of China. That was very helpful. Most of our brands are sitting on six months of inventory, so we are able to really weather stockout. By January, it was clear that the crisis would happen everywhere. That said, the head start doesn’t affect much other than being able to stomach the first few months a bit better. Over the long run, it will be a very difficult year.

Now, it’s more about what else you can do with your business to keep it going. When a storm is coming, you want to save money and the only way to do that is to cut expenses. The resource is cash. It takes real business gut and experience to know how to navigate through these bumps.

When a storm is coming, you want to save money and the only way to do that is to cut expenses.

There are lots of things you can do to cut costs. I definitely do it on a personal level and mirror it in my business. We’re not in the office anymore (we have over 200 employees), so there are money savings all over the place. One of the things we did when we were sharpening our pencils is factor in way less sales and adjust revenue down, and then adjust spending based on the new revenue number. We took an aggressive approach and said, ‘Let’s assume you do 30 percent, 40 percent, and in some cases 50 percent on the brand. Let’s spend toward that.’ I want to be able to make the next move, think more down the road so that we still have a viable business.

The next level was raising money. Early on in December, when I saw this crisis happening I thought, ‘Just to be safe, let’s do a raise, sell a little equity. That way we’ll have a little more firepower to make it through any storms that come, the same way a chipmunk stores more nuts.’ We closed the deal in February at a large valuation, and that made it a lot easier to weather the storm. It’s near impossible to do something like that now because that’s the first thing that dries up at times like these.

Early on in December, when I saw this crisis happening I thought, ‘Just to be safe, let’s do a raise, sell a little equity.’

I know many entrepreneurs who write business plans, say they will lose money for six months, go online, make a profit in 17 minutes, and then sell to Amazon or Google within a year. I’m stuck a little bit more in the older world. Oribe took us a decade to build, from beginning to end. We started it in a recession in 2008, and sold it in at the end of 2017. It was one of the hardest things I’ve ever done. Every single bit of that brand, every brand that I’ve ever been a part of, is hard ass work. Nothing has been easy, nothing has been quick, except Pulp Riot.

Our brands sell in multiple channels. Some brands are more salon, some sell in department stores, others in Sephora and Ulta Beauty. A lot of the brands are DTC. Online is functioning and every single brand is shipping. Because every salon in the United States is closed right now, that’s going to affect a brand like R&Co more than it affects maybe IGK. People are going to now have to figure out clever ways to get some business.

R&Co did something that I thought was really clever. They have a program they rolled out about a week ago. Salons email a link to all their clients and when clients click on the link to buy product, they instantly get 40 percent of that sale. We fulfill and ship and do everything. The salons are getting money for very little work – just emailing their customers – and it has taken off. We launched it a few days ago and are already up to 250 salons in the program. Salons are saying, ‘We have been getting zero revenue for eight days and now we are getting $200, $300 a day selling retail.’ You cannot believe how much root touchups we are selling. Not wearing makeup around the house is accepted, but most people freak out when they see an aircraft runway in the middle of their head. Roots are a critical area in beauty.

Not wearing makeup around the house is accepted, but most people freak out when they see an aircraft runway in the middle of their head. Roots are a critical area in beauty.

Two of our three warehouses are open. (We don’t own our own warehouses. Most companies don’t). The manufacturers that we deal with are all taking orders. What is increasing is sales online and DTC. It has quadrupled. We are shipping internationally, but the orders have definitely slowed down. That is across the board. The only area that is a big challenge is China.

We are investing more in D2C and social media because that will be the vehicle we will need to strengthen in order to make up for the avenues where sales aren’t coming in. We expect those areas to grow substantially as consumers switch their habits of buying. It’s going to make online and selling DTC all the more important because it will be the main highway that is open for business. Everyone is competing for that same highway now.

We are launching two brands this year that are influencer-based brands. They are massive names, heavy on DTC, big-time social influencers, two of the biggest in the game. I’m looking at this as a minimum five-year game plan. The good influencers who know how to reach people and give value to their followers will be golden. We were slowly drifting in that direction anyway, but it’s going to pick up exponentially now.

I don’t think we will be fully out of this crisis for three years at best. This will be a bad year globally for everyone, a year of absolute pain. Then it will be another year of rebuilding. I’m really worried that if small businesses go out of business, this could be more of a depression than a recession. The scary thing is that so many people are going to lose their jobs this year. So it will be a process of hiring back people, a slow build back. I can see younger businesses going out left, right and center. One of the good things from the stimulus package – the $2 trillion that just opened up – is that it will certainly help a lot of small businesses. They’d be crazy not to take advantage of that. I would jump all over that. (We can’t because we don’t qualify).

I’m really worried that if small businesses go out of business, this could be more of a depression than a recession.

Recovery will come racing back when everyone is healthy. We don’t have anyone on the team who has told us they have the virus. In Florida (LBP is headquartered in Miami) it is nearly impossible to get tested. I think there are lot of people who have it that don’t know they have it and are riding it out at home.

We only introduced our remote working policy the day before the government said to stay home. I’ll be honest: I had an old-school mentality. I love having an office where people come in. It was very awkward for me the first few days of remote working, but I am now finding it to be unbelievably efficient. You don’t chit-chat about non-essential stuff. You get right to it, jump in and jump off. The downside is you have a lot less human communication with workers and colleagues.

As a company, we are fully functioning as normal. We use Microsoft Teams to connect and Highfive to do face-to-face meetings. All the companies are meeting every day. The only difference is now I do a call where we have the entire company every week on the phone, and I do a 15-minute touch-base with everybody, addressing what’s happening on the corporate level. I try to stay positive because everything you see is so negative.

I’m a big believer in meditating every day. It’s literally sitting down for 10 minutes every day and not thinking about anything. I recommend to my staff to not watch the news all day long, just 10 minutes and disconnect, otherwise you just relive pain all day long. You can’t hear things and see things, and not have it affect you subconsciously.

I’m a big believer in meditating every day. It’s literally sitting down for 10 minutes every day and not thinking about anything.

The one thing I’d like to highlight above everything is to transcend business to a degree. You’re still up for 10 to 12 hours a day. You still have that time. Make a lot of use of it. Call people you have never spoken to before. That’s what I have been doing. I’ve been spending time with people who I haven’t kept up with and having these amazing conversations. Use the time, don’t lose the time, because it’s going to be like this a little while.