The outbreak of COVID-19 has had businesses of all sizes scrambling to continue doing business even somewhat normally. Between financials, inventory, employees, and customers, retailers have been overwhelmed by the amount of work and communication that needs to be done to sustain themselves.
Don’t panic. With a plan in place, you can overcome many of the obstacles that the virus has placed in front of you. Here are some planning tips and considerations that others have successfully used. Now you can use them too.
Run a Financial Check Up
Accounting may be the last thing you want to think about right now. Still, it’s critically important to take a look at your profit and loss statements, and balance sheets get a pulse on your business right now.
Discover New Opportunities to Free up Cash
While you review your statements, you should assess your cost of goods sold (COGS), operating expenses, and break-even points. See where you can cut unnecessary expenses that aren’t essential investments.
Detecting areas that are causing unnecessary expenses is the first step in creating a critical cash flow statement. Still, a financial analysis can also help you discover opportunities to become more creative in freeing up cash flow.
You may find new goods and vendors, innovative ways to market and sell, as well as more novel ways to compensate employees or negotiate your rent.
Look Into Emergency Loans
If you need additional funds, look into emergency loans. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, has allocated $350 billion to small businesses to help them keep employees on payroll. If you’re a self-employed one-person business, you also qualify for the Payroll Protection Program.
To see if you’re eligible for either, read the U.S. Chamber of Commerce’s Coronavirus Emergency Loans Guide & Checklist. Once you’ve reviewed it, you can get started by calling your banker or local credit union to discuss your options.
Assess Inventory Needs
With the supply chain in flux, business owners will have to be more diligent about finding inventory.
You likely have cash sitting on your shelves right now in the form of inventory. But before you rush to sell it, run an assessment on on-hand inventory. Then make a plan to buy for the future.
Make a Plan for Selling On-Hand Inventory
Use your e-commerce platform or point of sale system to provide you with detailed reporting on what you’re selling now. Check inventory sell-through rates, aged inventory, gross margins, and break-even points on your brands and categories.
What are your best sellers? Which are your worst? Get a strategy for markups and markdowns. You can likely raise prices on the best selling categories to squeeze out a little more capital.
During this time, you will need to evaluate which products require a markdown carefully. Aged inventory still needs to move to free up cashflow. However, in an inventory shortage, it’s wise to remerchandise and try creative ways of selling to move these items before reducing their price.
What inventory hasn’t debuted in your storefront or online selling channels? This inventory needs to last you until you can get your next shipment in. Carefully schedule this inventory out accordingly.
Make a Plan for Buying New Inventory
The only way to keep sales up is to have enough inventory on hand. However, with the LA Fashion District on lockdown, it’s more complicated than usual to find vendors who can replenish it. You can get ahead of this with a plan.
Communicate with Your Wholesale Vendors
First, contact your vendors and ask how they plan to operate moving forward. Communicate clearly about ship dates, cancellation dates, and terms.
Vendors are also trying to keep their business afloat right now, and are a lot more accommodating than you might think. Be empowered to request changes in quantity or cancel orders that may be arriving too late in the season to sell.
Request cancellation dates for everything that you order. Some Spring shipments have been pushed back to Mid-May at the earliest. You don’t want a surprise charge on your card for Spring transition pieces in June!
Buy Ahead and Mix It Up
Now is the time to prepare an in-stock plan so that you have a steady stream of inventory coming in. The Boutique Hub recommends that you have enough stock to get through until May, at least.
As for what to buy, make sure you do some market research. Consumer behavior is rapidly changing due to the virus. Typically, people would be buying resort styles, but right now, “quarantine fashion” is in. Lounge and leisurewear clothing is on the rise as many stay home. Ask your customers what items they’d like to see more of for best results.
Also, consider prioritizing wider instead of deeper. Buying wider means buying a lower quantity of items but with a larger variety of styles or products. This will give you a lot more flexibility in sourcing and sales.
If these items don’t sell the way you expect, you won’t be stuck with excess inventory. If they’re a hit, waitlists can help you secure sales until you’re able to restock.
Prepare with Employees
Your employees are feeling just as anxious as you are right now. Be open with them about the challenges you will face together and how you will tackle them.
Create an Emergency Plan Together
Gather your employees and explore ways you can continue operations if there are disruptions. Response plans will make everyone feel a little more settled and establish expectations during a chaotic time.
Essential employees and critical roles should be briefed on the line of command should someone fall ill. You may want to create initiatives to cross-train some employees so they will be prepared for this as well.
Discuss Leave Policies
Review your leave policies with employees. If someone gets sick or can’t find a caretaker for their children or ill family members during this time, they need to know how they’ll be supported going forward.
Maintain Workplace Cleanliness and Safety
Clean up and safety plans need to be established for the workplace as well. To keep customers and employees healthy, these spaces should be cleaned regularly and meticulously. Create a schedule for cleaning and assign employees for the task. Ideally, those that are fulfilling packages should also disinfect them.
Discuss social distancing measures and do your best to accommodate it by changing the workplace layout if necessary. Staggered shifts are also an option for those with cramped workspaces.
Are there any work roles that can be performed at home? There may be an opportunity for some positions to telework, such as a virtual assistant, fit video model, or social media coordinator.
Connect with Customers
No matter how turbulent the world may be, your business should have a relentless customer focus. After all, they are the lifeblood of your business!
Be Your Customers’ Escape
Your customers are anxious too. They’re looking for ways to keep their mind off of harsh realities. Why not be there to talk, entertain them, or provide some retail therapy? This provides people with some semblance of normalcy.
Facebook Live video is perfect for real-time, two-way conversations and live selling. Not only will you ease their mind, but you will build deeper relationships with your customers, which is the key to every successful business.
While you keep connected, it’s also essential to keep them up to date on your business operations. Your customers will appreciate your transparency and vulnerability. If you’re experiencing delays in shipping, let them know! Do you need to update your return policy? Talk to them about it.
Everyone is going through a rough time right now. Consumers have been very sympathetic towards businesses throughout this period. Many are looking for ways to continue supporting their favorite businesses by buying or purchasing gift cards despite closed storefronts and shipping delays.
The Coronavirus is going to force retailers to rethink how they run their business, but there is a silver lining to it.
If you get familiar with your financials, find innovative ways to source and sell, plan for the future, and keep customers at the heart of your business, you’ll be setting the foundation for a successful business whenever we return to normal.
In the meantime, make every effort to use your resources wisely and get a marketing and sales plan to sustain your business.