How will I pay my employees next month?

Discussion
Photo: @alexandria.mcarthur via Twenty20
Mar 23, 2020
Mark Ryski

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.

DISCUSSION QUESTIONS: What practical advice can you give small and independent retailers who have immediate needs to pay employees and keep their businesses going?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The one suggestion I would make is for all business owners to do their best to help prevent their employees from panicking."
"I happen to believe that there will be many new opportunities for businesses that become really creative in what and how they deliver their goods and services."
"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."

Join the Discussion!

9 Comments on "How will I pay my employees next month?"


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Art Suriano
BrainTrust
Excellent points, Mark. There are many businesses concerned about how they will survive, and a significant part of the problem is that no one knows how long this situation will last. The one suggestion I would make is for all business owners to do their best to help prevent their employees from panicking. Most employees are worried about their jobs, how long they will have them, and what happens if their company goes out of business. The steps you suggested from speaking and being upfront with vendors to attempting a bridge loan can be positively shared with employees, letting them know that the company they work for is taking the necessary steps and that together they will get through this. Another option, when possible, is to attempt to defer payments. Yes, I agree with the pay raise, but not everyone is in the same situation, and some employees work because they want to and not necessarily because they have to. If a company has that type of employee who would be willing, they can work… Read more »
Bob Phibbs
BrainTrust
This is a very fluid moment for everyone. These are a few of the ideas I shared in a lengthy post for retailers. Go over your financials. Plan for how you’ll be able to get through the coming months. Make a list of all fixed expenses like mortgage, car payments, etc. List all variable expenses at the bottom. Go back to fixed expenses and go to each website and search to see if they have a forbearance or postponement clause. This might be moot with new bills being drafted to defer mortgage defaults and credit. Check back at least once a week because things are changing all the time. Speak to your accountant and financial planner about all of these important matters. I am not the expert. Maximize your credit so you can live to fight another day. Check balances available on all your credit cards because they can be a tool for survival. Work with, don’t blow off vendors. Talk to your landlord about rent concessions. Ask for rent reductions for April and May… Read more »
Zel Bianco
BrainTrust
I happen to believe that there will be many new opportunities for businesses that become really creative in what and how they deliver their goods and services. We need to remain hopeful and positive and work towards keeping things in perspective. Our clients and prospects in CPG and retail must keep things going or the situation will be even worse. People are working from home and trying to do more with less. Their employers still need for them to be as efficient and productive as possible while employees are also dealing with caring for an elderly parent or taking care of their kids who are home. Solutions that make it easier for workers to get what they need to continue doing their jobs while working from home will be critical to coming out of this healthy and solvent on the other side of this crisis. I know that in NYC, we are all trying to support local small businesses by ordering take out and even cocktails to support bars and restaurants that are already hurting… Read more »
Kevin Graff
BrainTrust

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.

Mel Kleiman
BrainTrust

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.

Mark Ryski
BrainTrust

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.

Craig Sundstrom
Guest
12 days 38 minutes ago

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?)

Patricia Vekich Waldron
Staff

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.

James Tenser
BrainTrust

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.

wpDiscuz
Braintrust
"The one suggestion I would make is for all business owners to do their best to help prevent their employees from panicking."
"I happen to believe that there will be many new opportunities for businesses that become really creative in what and how they deliver their goods and services."
"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."

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