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?