Quote:
Originally Posted by IA_Chiefs_fan
We distribute about fifty brands of automotive specialty tools and parts. Retail and wholesale.
Wednesday 3/18 we had a company staff meeting where we had a candid talk and I asked for their input on the situation. I let them know that I've got their back through this and they let me know they've got mine. Each day we've been implementing new procedures or rolling out our scheduling/worksite changes.
There are three employees in charge of updating me as new applicable laws or developments happen. Our CPA firm, county development, and regional small business administration director have all been in constant contact with me. Not only do I have good relationships with the last two but we're pretty important to this community because we're in a very poor, rural area and we have one of the larger payrolls around.
Having a plan calms me. Just last night we started developing a plan for when someone in our main building is inevitably exposed. Part of that plan will be to have Service Master or similar come in and sanitize after we all quarantine. Then the six employees at the remote site could come back and pick, pack, and ship the physical goods. There are a few of us who could assist with customer service from home then as well. We could get by for a few weeks in that scenario but those six would probably be exhausted.
Our inventory valuation (our cost) to debt ratio is greater than 4:1 so I feel like we're in good shape. What reports/measurables do you suggest I keep an eye on right now? Payroll is by far our greatest expense and obviously there's a quick solution to that if I absolutely had to but I am fighting like hell to avoid that.
Our web page header says "Essential Business: We're Still Shipping Orders". The issue right now is that repair shops make up over half of our business and some are temporarily closing.
Several weeks ago I locked in a low rate to refinance our personal home mortgage. That process is still under way. I'm afraid to apply for any of the government loan stuff right now because I don't want it to screw with my refi and I feel like we won't need the business loans. I could end up being wrong about that though, who knows.
I'm mentally exhausted and haven't slept much in a couple weeks. That's making it tougher to be confident in my decisions. I feel like we've got a better handle on everything now though so perhaps I can start sleeping better. As a matter of fact I got seven hours last night and feel great today!
Thank you very, very much for the input and feedback.
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Lots of good things in your post!
1. First and foremost, let me comment on the last part first: You're a person like everybody else, but you also have the concern of the people under your charge. I'm amazed at the business owners I work with, because even under normal circumstances, being a business owner is hard work and you bear all the risk. Just by your response, I can tell you are 100% on your game right now, no matter how exhausting it may be.....you are doing an awesome job protecting your people, business and liquidity right now....far better than a lot of business owners I'm dealing with right now.....Keep up the good work, and don't let up!
2. Keep communicating with your team....even if its for 15 minutes a few times per day to update on things, that will give them encouragement. Again, you've done the right thing by having the all hands, but keep giving situation reports frequently
3. 100% right thing to have people monitoring recent developments, laws, etc. and vetting that with CPA, bankers, etc. Lots of news going around, not all of it firm, so keeping your ear to the ground is important....kudos again!
4. good that you have a built in scenario in case somebody becomes sick. Would it be feasible to keep some key inventory items in a separate location or storage so that certain items can continue to flow even if you are shut down at the main facility for cleaning?
5. Inventory: I'd focus time and attention on moving items / turns. You may ultimately need to make decisions on whether or not we will be "full service", or focus on items that are continuing to turn. Obviously, the longer something sits, the more carrying cost on that item, and certainly more cash that is absorbed for items sitting. It sounds like you have good, stable cash position (i.e. strong balance sheet), but if not, I'd only replenish essential stock and may even discount non-moving items.
6. Be real with the situation: Nobody wants to hurt people, but if it's the right thing to do to keep the business afloat, then don't hesitate. Don't mean to sound harsh, but think of it this way: If you have 20 employees, would you rather lose 2 -3 people now, or risk 20 later?
Also keep in mind that Family First Act goes into affect April 2nd, which can give your employees additional 80 hours of paid leave for COVID reasons, on top of already accrued time. This is reimbursable to the business eventually, but is cash out the door upfront....if you're making personell moves to conserve cash, I'd do so sooner rather than later.
Also keep in mind that most states and the Feds have greatly reduced UI requirements for COVID, and are making it easy for people to get cash in hand, not to mention adding more and longer duration benefits. Obviously, it's not the best thing to put somebody on UI, but I do think there is concerted efforts on Govt. to really help most impacted people. Again, may make the decision a little easier if you ultimately know its the right thing to do. Also note that most states have work share, where people can apply for UI for the "impacted" part of their week. For instance, if you keep somebody on part-time, they can get UI for the difference in their 'normal' full-time position and the wages they earned on part-time work. EACH JURISDICTION IS DIFFERENT, SO PLEASE RESEARCH THIS FOR YOUR AREA!
7. Had to be blunt here, but the likelihood of people looking you up on-line is probably slim to none. So listing "OPEN" on your page, while definitely something you should do, likely isn't really doing much for you. Here's what you need to do: Whether you have this electronically or people have rolodexes full of customers: CREATE A CUSTOMERR CALL LIST AND GET YOUR PEOPLE CALLING THEM IMMEDIATELY - EVERYBODY YOU CAN THINK OF! Let them know you're still open for business, let customer know how you are keeping your people safe, visitors safe, and most importantly you have ample stock and ready to deliver.
Call those customers you haven't been doing business with (you don't know if your competition is open or even able to supply them, and I'd guarantee that most of them don't have the inventory or cash that you have, so they may not be able to sustain business).
Heck, call your competitors, ask if there is anything you have that they need, and vice versa, so that all customers can be serviced....form a strategic alliance with other like businesses to swap inventory.....Sell your ample stock to others that may need the inventory themselves....
With key customers: you're not worried about them paying you, you're worried about the timing of when they can pay you, so if you have inventory, get it to them and work out payment terms through this period. Your customers will remember that you were there for them in tough times
This is going to sound bad, but nows the time to review and refresh your pricing. I'm not talking about gouging people, but I'd look at every SKU you carry, it's turns, and carrying costs, and marking to the appropriate level. Most small businesses don't do this frequently enough, and an extra 1 - 2 % over the long haul (even if you have to discount today due to COVID) goes straight to your bottom line.
Have your employees blast out on their social media that their business is open, they are working, and to communicate that to others.
Communicate communicate communicate, but be the initiator, not the order taker!
8. finally, keep regalar communications with your bank on the refi. This is how they earn their money, so they should be able to tell you appropriate things about your re-fi in relation to business loans. I personally would not hesitate to apply for any and all things COVID related, even if ultimately you don't need them or use them, but you want to keep that option open. Just let your banker know that's what's happening, and unless they stringently object, keep the SBA / COVID / PPP options moving forward
Don't know if any of this helps, but hopefully there's a few nuggets in there for you. KEEP UP THE GOOD WORK, AND MORE THAN HAPPY TO DISCUSS THIS AT ANY TIME (noting that even if you don't want to discuss with me...make sure you have somebody that you can have these discussions with that can help you through this - there is no shame in asking for help!) With that said, you're doing a fantastic job and keep working your plan!