On Tuesday, wholesale marketplace Faire introduced an online tool that calculates how long stores can stay afloat in the face of the coronavirus pandemic.
The “impact calculator” is a basic form that asks for key financial details — such as available credit lines, sales figures, rent, salaries and other information — and calculates the cash run rate or runway for a given business.
COVID-19 has created a harrowing scenario for stores of all sizes, but it may be especially hard for “mom and pops” and independent boutiques, which already operated on tight margins and don’t have reserves that can make up for the drastic chokehold on their businesses.
Faire recently conducted a survey of more than 20,000 retailers, and discovered that 70 percent of independent stores didn’t have enough cash on hand to deal with a crisis like this, 54 percent had just three months or less of operating expenses and 64 percent already started reducing inventory purchases. And depending on local public health mandates, retailers expect a temporary revenue reduction of 50 percent or more.
Congress has been locked in fights and negotiations over a $2 trillion stimulus bill, but the challenge is surviving long enough to see a help package, small business loan or other assistance make a measurable difference. And the prospect grows exponentially more elusive with each passing day.
As a result, the economic and emotional trauma rippling across retail and other sectors has taken center stage.
Faire has been busy trying to support merchants during this time. The company has been distributing information on its blog, lobbying elected officials, developing the online tool and, on Tuesday, holding a webinar to demonstrate the calculator.
Max Rhodes, cofounder and chief executive officer of Faire, shared some thoughts during the livestream: “In some ways, the biggest thing that we all we need right now is capital. And we have been in touch with Congressmen. We’ve been in touch with lobbyists. I signed a letter last night to Nancy Pelosi, the Speaker of the House — who is actually our representative here in San Francisco — pushing harder for small business relief,” he said.
While the status of any federal aid seems amorphous at the moment, Rhodes remains optimistic.
“I think they’re going to get the deal done. There’s going to be some challenges coming out of it, just with the disbursement of the funds,” he said. “It may take a few more days to make it through the House of Representatives, but it’s good to know the government is taking this really seriously and help is going to be on the way.”
In the meantime, he recommends slowing down purchasing, especially since it’s unclear how long the shutdown period will last. He also urged merchants to pay software providers at one time, instead of through monthly recurring fees, and urged stores to seek financial relief and credit options.
For its part, Rhodes added, Faire extended its terms by 30 days, offered a return extension and pledged to waive fees for next month — which would be crucial, if the stores slow their purchasing.
There are internal matters as well, such as staffing, which is one of the major costs of running a business. Rhodes empathizes with how painful it is to let go of employees. As if to soften the blow, he noted that “the federal government is extending unemployment benefits, so even if employees can’t work, at least they will have something coming in.”
For shops that are able to stay open, they should consider discounting underperforming inventory, marking it down to free up some capital.
Finally, he urged shops to take up the community angle — even suggesting that unusual times call for unusual measures. Already, restaurants have pivoted to offering groceries and delivery. Other retailers could pivot as well.
Rhodes pointed out that customers need essentials, such as soaps, disinfectants and other things right now.
“We can help you source products, so that you can actually support your communities and be essential to your communities — even if your gift shop today or you’re an apparel boutique today, for the next couple of months, maybe you can act as a convenience store,” he offered. “And that’s something that we’re going to try to figure out, if there’s a way that we can support you doing that.”
Also keep in mind that there are others who are rooting for small business owners — like the public.
“We’ve also been interviewing a lot of consumers, and consumers want to support small businesses right now,” Rhodes added. He urged store owners to give people a way to support them — such as pre-selling gift cards for use later, which can get some cash infusion upfront.
Keep reaching out to the public, he said. Use web sites, email lists, social media or even put up a sign in the window with the web site’s address.
“They know that you guys are in pain, and they want to help,” he said.