Here are a few questions for small retail store owners and managers to ask themselves about their business during the coronavirus outbreak. Some of this will be geared specifically towards game stores (the kinds of places that sell collectible cards, Magic: the Gathering, video games, comics, and similar stuff), but I think it's helpful for retailers in all categories.
A brief personal introduction: for better or worse (mostly worse), my career has been spent working in disorganized operations that were only ever a few weeks away from catastrophic implosion. I've worked at inept non-profits, drowning corporate retailers, and spent several years managing a now-defunct game store. (If it had lasted just a few months longer, it could have been closed because of the coronavirus, instead of just regular closed.) As a result, I'm not a good resource for finding career success, or building the start-up business of your dreams. I simply don't know what those look like. But over the years I've learned a couple things about trying to keep afloat during turbulent times, and here are a few things I think independent retail operators (especially game and hobby stores) should be asking themselves right now:
Have you cancelled events yet?
If not, do so immediately. Even just a few days ago, there was still some waffling over what social distancing really means, and what the best course of action was. At this point, the expert consensus is that no one should be hosting groups of people. Even if not legally required to do so, you still have an ethical duty to cancel any events likely to draw 10 or more people, and you should strictly limit the number of people in your business at any given time.
Do you need to close the business entirely?
This may be out of your hands as more jurisdictions order non-essential businesses closed, but for the time being you may have some tough choices to make.
If you've been ordered to close, you may need to clarify with your local authorities exactly what that means. Are you closed to the public? Can you still ship online orders? Can you do local deliveries? Who do you even call to ask? The governor's office? The mayor? If you can't get a clear answer, you're probably stuck calling your local police precinct or sheriff's office -- they're the ones who are stuck enforcing this mess.
If you have the choice to stay open and enough cash to survive without any revenue, you have a moral decision to make. Closing your business will likely help prevent the spread of disease, but it will immediately harm your local business ecosystem, including you, your family, and your employees. Of course, if you stay open and they get sick, they will be harmed regardless. I have no good advice for you on what the course of least harm is, other than to talk to your employees and your family to make a decision that's right for your community.
For now, the most likely scenario is that you live where you're still allowed to keep the doors open, but you can't afford to close entirely. You need to both eke out at least a few sales, and take drastic steps to cut expenses and preserve cash.
Do you have enough cash? What does "enough" even look like?
By "enough," I really mean enough cash to cover your fixed costs (ie, your rent, salaries, and other independent expenses like insurance) for the next few months with little or no revenue, as well as enough cash to ramp operations back up again when we figure out a new normal. If you own or operate a small business, the default answer is usually "no" even when times are good, but now that times are bad, it might be downgraded to "yikes" or more likely, "calamity!"
If you've been living deposit-to-deposit, then I'm sorry to say your business venture is likely at an end. Lock up, send everyone home, cross your toes, and maybe there will be enough of a government intervention to help you reopen later this summer.
If your cash position is good enough to coast for a few months, feel free to take a minute to indulge in a moment of smug self-satisfaction. You are one of the elite few in the small business world. But don't take more than a minute. The novel coronavirus has put us all into novel economic territory, and it's not clear to anyone what the business world will look like once it has passed. It's likely that you and your team would still benefit from asking the following questions along with everyone else.
If you're closed, have you filed for unemployment for yourself? Have you advised your employees to do the same? Can you apply for Medicare?
This one should be straight-forward, but many business owners forget that they are (or at least were) employed, and they're eligible for unemployment just like anyone else. You paid for unemployment insurance for just such an occasion, and now it's time to use it. If you're laying off employees, encourage them to apply for unemployment as well. Keep in mind that many states have a waiting period before you can actually collect any money, which may be painful for hourly employees living paycheck-to-paycheck. Try to make yourself available in case your staff need any documentation from you to support their unemployment claim.
Again, the sooner you apply, the sooner you get paid. Don't wait.
Applying for healthcare is a tangled mess, but if you just closed your business, you can apply for a new health insurance plan through your state or federally-facilitated health exchange on the basis of a change in job status. Since you're unlikely to earn much in the way of income this year, it's also likely you will qualify for Medicare coverage.
Do you need to cancel orders?
Unless you're ordering wipes and toilet paper, the answer is yes. In the very immediate term, you might see a bump in sales as idled workers drift in looking for amusements, and it's probably worth running a couple short term sales to capitalize on that. In the next few weeks though, liquidity is going to be more important than revenue. For retailers, inventory is your biggest expense, so cancel your orders now. If you've already shut your doors and product is en route, call your distributors and carriers to make sure that deliveries get returned.
Call everyone your business pays, and ask, "What can you do for me?"
Trick question! This is one to ask everyone else, instead of yourself.
This country lionizes small business owners, yet at the same time, everyone from local city councils to credit card processing companies use small businesses like ATMs. It's time to put that small business owner halo to work. Call everyone who collects money from you and ask them to cut you some slack. Go through your chart of accounts, and ask every single entity you pay -- the landlord, each and every service provider (internet, cell phone, water, power, sewer, trash), distributor, office supplier, insurer, any lien holders or creditors -- what they can do for you.
Is it possible to delay payments? Can you waive interest accumulation? Can you waive interest for cash advances against lines of credit? If you delay payments or interest, will your creditor report you and damage your credit score? If they usually ding your credit score, could they please not? Can you switch your billing cycle from monthly to quarterly (and hopefully not pay until summer)? Can someone you're paying with check or ACH payments accept a credit card if they insist on getting paid?
Some of the country's largest service providers have already publicly committed to providing relief to small business owners, but large companies also excel at walking those commitments back when no one's watching. So you need specifics, preferably in writing. Part of corporate customer service is insulating decision makers from needy, marauding customers, and they do so by making a lot of reassuring-sounding, non-promises. So you may need to work through a couple layers of prevarication before you get an actual decision-maker, and that person resist making any written guarantees.
This will be frustrating (for you and the cust serv team).
Do it anyway. And document every conversation along the way.
Many business owners are squeamish about asking for something for nothing -- they got into business to be independent and make fair deals for everyone. If it makes you feel better, big businesses are currently shaking down Congress for free money in enormous amounts. You are asking for crumbs by comparison, crumbs which you and the people who rely on you will need to survive. Many of the entities you ask will tell you "no," and that's ok; they are in the same crisis you are. But be relentless. If someone tells you "no," or "well, it's an abundantly fluid situation," call them back in three days and ask again.
Call everyone you personally pay, and ask, "What can you do for me?"
That thing I wrote above? Go back and do it for everyone your personal household owes money to. The landlord (or your mortgage holder), each and every service provider your home uses (internet, cell phone, water, power, sewer, trash), your car, your child care providers, everyone. Preface everything with, "I'm a small business owner."
This will probably feel even worse than asking for handouts for the business. But in a small shop the most essential component is you, and if your personal affairs fall to ruin, the business won't survive.
If you're staying open, what will your new schedule be? Who will work that schedule?
Again, as curfews and shelter in place orders go into effect, you might not have a say. If you do, this is one where you need to look at your historical sales by hour, and make a decision that catches the most customers possible. Be careful to factor out sales driven by online orders (which could be placed anytime but are usually reconciled during morning shipping hours), as well as any event-driven revenues (like entry fees or event-related merchandise).
Large retailers are defaulting to a mid-morning to early evening schedule; I think this is probably a mistake. These companies typically rely on "power hour" -- midday interval when retirees are finished with doctors' appointments, professionals are on lunch hour, and parents are shopping before it's time to pick up kids from school -- to be the main sales driver during the work week. I think power hours have been dying for a while, and they certainly won't be useful now. The elderly, professionals, and moms with kids are all at home right now, not out and about.
I think it makes more sense to let people work from home during the day, and then give them enough time after work to get out and shop. For most game and entertainment stores, I'm going to ballpark a sweet spot of about 3:00 PM to 8:00 PM.
Additionally, most deliveries happen early to late morning, and if you've cut your orders to near-nothing, you don't need staff to do receiving or stocking.
Unless a large part of your business is online sales, these are probably hours you can work yourself. If you want to keep a couple staffers part-time, remember that hourly employees can claim partial unemployment for a reduction in hours. This may be a good solution for them and the business; the business retains some experienced hands who can help rev the engines back up when it's time, and the staffers are free to look for other work in the meantime (while still getting paid).
What other measures can you take to keep cash in the bank?
If you're in the habit of paying off your credit card balance every month, stop. Remember that businesses do not go bankrupt because they have too much debt; they go bankrupt because they run out of cash. Yes, in the long run, if the cost of your debt service is too high, it will be difficult… but if you don't survive the short term, the long run doesn't matter.
Pay your minimums and keep your cash on hand.
Similarly, if you're on term payments with any of your wholesalers, don't pay them. Decline to pay them politely, of course. You did already ask what they could do for you, right...? This should be part of that conversation. Hopefully they'll agree to let you kick the can down the road for a few months. But if they insist on having you pay on time, don't. If you have a good heart, you will feel guilty about this, but again, your priority is taking care of you and yours.
If you're in the hobby game industry, keep in mind that going into the epidemic there are too many distributors who are too understocked, whose business processes are too outdated, to consistently provide decent service. While it's awful that the current economic meltdown is from a plague, this is unfortunately a market segment that is long overdue for a shake-up. If you pay off your supplier now, it's possible when business picks back up you'll be able to capitalize on that goodwill. Of course, it's also possible that you're giving money to a company that's already a zombie, and that company will fail and take your goodwill to the grave with it. There's no value in the gratitude of the dead.
So do yourself and your local business community a favor, and don't pay your distributors until you're in a place to safely do so.
Another option is taking out cash advances against whatever revolving lines of credit you can, and parking that cash in the bank. This is an expensive way to increase your cash on hand (unless your lender's agreed to waive your interest for the near future), but in the happy event this passes quickly and/or you get a generous government rescue, you can always repay the cash. Think of the interest as an extra "I'd-rather-have-it-and-not-need-it" insurance payment. But if you wait to use your credit options, you might lose them.
One of the uglier parts of the 2008 financial crisis was when banks and other commercial lenders slashed lines of business credit. Business owners went to bed thinking, "Well, this is pretty bad, but I've got $60,000 limits on my credit cards with only $9,000 balances, and I've got a line of credit with my bank if I need it," only to wake up with $10,000 credit limits and a terse email from the bank that their line of credit was closed. Although central banks are working to prevent a repeat of 2008, there's no guarantee that they'll succeed, so if you want to take advantage of this, do it immediately.
What creative methods can you take to get money coming in?
These are being discussed elsewhere, so I won't spend too many words on the topic. A few brainstorm-starters... Curbside pick-up. Home delivery. Facebook Marketplace. Amazon. Tcgplayer. Pricecharting.
The real value of these may simply be morale building, as you try to keep yourself occupied in an empty store.
Have you tried any long-shot measures? Have you talked to your insurance agent? What about applying for a SBA Economic Injury Disaster Loan? Are there other similar state or local programs you can apply for?
Give them a call, but expect disappointment. In all likelihood, your business is not insured against a disease outbreak. While most business policies do have interruption insurance, this usually applies to events like fires or storms that do physical damage to the business. To be protected against coronavirus, your business would likely need either a contingent business interruption policy that addresses a loss of commerce, or a specific, pre-negotiated clause on communicable diseases.
Even for a business with these policies in place, there's a good chance your insurer would declare the coronavirus an Act of God, and refuse to pay out. Good luck with that lawsuit.
It's also worth trying to apply for an SBA disaster loan. You're unlikely to receive one. To be eligible, a business ordinarily needs to have $25,000 in cash on hand, as well as significant assets to serve as collateral. These loans are really intended for operations with hundreds of employees and eight-figure lines of revenue, which unfortunately puts them out of reach of many truly small businesses. You might do better to research what state, community, and non-profit lenders are available, and contact them. It's also possible that some sort of federal bailout targeting small businesses will become available, and if it does, it's worth applying.
Keep in mind that government money often comes with strings attached. A loan that covers three months of operating expenses but requires you to keep all your staff on hand for the next six months might turn into a cursed monkey's paw that dooms you rather than saves you. If you do have a chance to accept a bailout, review it with your lawyer before you take the money.
Is it good night and good luck?
I wish I had a positive ending to this, but I'm not sure how. Instead, I'll leave you with the radio sign-off from journalist Edward Murrow, who coined the phrase during the nightly bombings of London during World War II. We seem to lack the same depth of leadership that we had then, but I believe we have the capacity to rise to the occasion, and some of you who can lead a business can certainly lead your community.
At the end of the day, we might be isolated, but we are not alone.
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