How will I pay my employees next month?
Some experts believe that the economic shock from the coronavirus pandemic (COVID-19) may ultimately be far worse than the death toll from the disease itself.
The Federal government has announced a massive stimulus package with the promise of more to follow. However, the details of who qualifies, how to apply and, importantly, when people will actually receive money are vague. And while these programs are critically important, a crisis of this magnitude is going to take more than government programs — it’s going to take the collective effort of every organization, business and citizen.
Every industry is being adversely affected by the crisis, but none more than retailing — the nation’s largest employer, supporting 42 million Americans, according to the National Retail Federation.
Many large retailers are creating their own “mini stimulus” packages like Walmart, which will pay out $550 million in bonuses to help support their employees. Amazon.com, Kroger and others are doing something similar, and this is exactly what all major employers should be doing.
But what about small retailers?
According to retail expert Georganne Bender, principal of Kizer & Bender Speaking and a fellow member of the RetailWire BrainTrust, “We are getting questions from small businesses … namely, what should they do when they can’t pay their bills?”
According to Small Business Trends, small retailers with 50 or fewer employees make up 98.6 percent of all retail firms in the U.S. and employ 39.8 percent of all retail employees. These retailers have average monthly revenue of just over $22,000.
While government programs can help, many small retailers simply don’t have the luxury of time. They need to take action now to stay solvent and keep paying employees.
There are a number of things small retailers can do immediately to weather the financial storm. Some recommendations:
- Stop spending cash NOW: Aside from payroll, all other expenses should be put on hold and prioritized;
- Notify your vendors of delayed payment: Immediately contact all your major suppliers/vendors as well as your landlord and inform them that there will be a delay in payment. Also inform them that you intend to pay in full when business conditions improve;
- Put staff on “COVID pay”: Provide all employees with a modest pay increase based on what you can afford. Even a few hundred dollars per month to purchase essentials will help.
- Reach out to retailers in your area who sell essential goods and ask if they can hire your employees on a temporary basis: Retailers selling essentials are overwhelmed and in desperate need of help;
- Contact your bank and secure a bridge loan: If your current bank says “no,” try the small business-friendly credit unions in your area.
- Coronavirus will bankrupt more people than it kills – and that’s the real global emergency – Independent
- Walmart to pay nearly $550 million in employee bonuses: ‘It’s almost like a mini stimulus package’ – CNBC
- Will raising wages $2 help Amazon keep workers dealing with coronavirus chaos? – RetailWire
- Kroger offering $300 one-time bonus to full-time workers, $150 to part-time staff – MarketWatch
- Wow! Small Retail Businesses Hire Nearly 40% of All Retail Employees – Small Business Trends
DISCUSSION QUESTIONS: What practical advice can you give small and independent retailers who have immediate needs to pay employees and keep their businesses going?
Art SurianoChief Executive Officer, The TSi Company
Art SurianoChief Executive Officer, The TSi Company
Zel BiancoPresident, founder and CEO Interactive Edge
Zel BiancoPresident, founder and CEO Interactive Edge
Art SurianoChief Executive Officer, The TSi Company
Art SurianoChief Executive Officer, The TSi Company
Zel BiancoPresident, founder and CEO Interactive Edge
Zel BiancoPresident, founder and CEO Interactive Edge
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9 Comments on "How will I pay my employees next month?"
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Chief Executive Officer, The TSi Company
President/CEO, The Retail Doctor
President, founder and CEO Interactive Edge
President, Graff Retail
There’s no easy answer for any small business. All of the financial advice above is very sound.
The one thing that needs to happen is for leadership to be transparent about the situation. Keep your staff informed about the realities of what’s happening and what you/they can do to keep things moving for as long as possible. Rumors, wrong information, the media … they all add up to more anxiety.
President, Humetrics
The list is a good one with some great suggestions. Here is one that most people will not like but if you want your business to survive, you are going to be making some tough decisions. One of the toughest decisions will be about payroll. It is a controllable expense and needs to be looked at that way. So the question is, which of your employees is essential and which ones are not? Make the call and take the actions you need to to survive. That way you will be able to provide for the employees you do keep and have jobs to offer once things get better. For those that survive, things will get better.
Founder, CEO & Author, HeadCount Corporation
Good point Mel. Survival today is the priority…but keeping an eye on what your business will look like on the other side of crisis is important too.
CFO, Weisner Steel
I’m startled by the low revenue figure — $22k/month? It really limits what is possible.
I guess the first question is to ask employees their needs. This could be problematic if it’s perceived as discriminatory, or rewarding those who don’t plan ahead, but it’s also important to allocate limited resources wisely.
Beyond that: for those with the benefit of a little financial flexibility, try to think in the long term: avoid things like price gouging and delaying vendor payments “just because you can” that will do long-term damage. (That having been said, I’m surprised by the amount of advertising that is continuing just as if nothing was happening … perhaps long-term contracts?)
Contributing Editor, RetailWire; Founder and CEO, Vision First
Many of these steps address the bottom line. Why not apply creativity to operations — can you offer any “essential” services? A few local retailers here are making a difference: a specialty retailer is making house calls/scheduling customers to come in one-on-one, hardware stores deliver/pickup of cleaning devices and products, restaurants are selling/delivering groceries. Neighbors who know these businesses and staff are supportive.
Principal, VSN Strategies
I’d add one more suggestion for independent retailers and restaurateurs, following Patricia’s excellent suggestions: Re-define your offering to fit the moment.
Restaurateurs are shifting to prepared food take-out as table service has been suspended. Why not also assemble meal-kits for order/pick up, so shoppers can acquire measured, prepped ingredients for several meals in one trip? Include a recipe card with your branding. Promote on social media (include a how-to video if you can).
Meal-kits could also be distributed through local service organizations and grocery stores.
Boutique and other “non-essential” retail will be hit hard. Landlords should be contacted immediately, as they have a stake in their tenant’s survival. Same for utilities companies.
Don’t forget to reach out to your health insurance provider too. The loss of medical coverage for your employees at this moment would be am exceptionally cruel irony.