Coronavirus: A fifth of smaller UK firms ‘will run out of cash’ was the headline on the BBC’s Business bulletin on 1st April. Forever the optimist I kept hoping that “April Fool” would be the final two words…
“Sadly they weren’t and the reality is that (as the article goes on to reveal) nearly a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.
That’s according to research from a network of accountants which suggests between 800,000 and a million firms nationwide may soon have to close. Many firms have told the BBC that banks have refused them emergency loans.
The banks say they are following the rules set out by the government.
Experiences with banks, landlords, gov.uk and suppliers this past week suggest that bridal retailers may well make up a fair proportion of those firms who will find it hard to survive.
Banks and loans – stories abound of requests for property as security, excruciatingly high interest rates that make even the sharpest loan shark look like Mother Teresa and projected cash flow (what cashflow? I’m closed, don’t know when I’m going to open, 50% of my 2020 brides postponed until 2021 so no balances, accessory sales, alteration fees and no new deposits as no new brides booking appointments!).
Landlords – don’t get me started on this one!! I’ll share my own experience here. Quarter rent due 25th March so with March already decimated by Covid-19 and with the inevitable lockdown looming we contacted our landlord (a huge property and development company) on 17th March to ask how they could help us out. Radio silence until an e-mail on 2nd April informing us that they were drawing down our deposit and as per the terms of our contract it should be topped up within 7 days! They sympathetically/sarcastically added “we understand that this may be difficult in the current climate”. At least they got that right!
Gov.uk – Employees. Good news – job retention scheme and furloughed staff receiving 80% of salary. Bad news – employers need to fund it until end April and employees are unable to work for us but are allowed to work at a second company!
Self employed. Good news – you’ll get up to £2500 in grants for at least 3 months is Rishi Sunak’s “world leading scheme to support the UK’s self employed”. Mood lifts at this news and moves higher as criteria number 1 “average trading profits of less than £50k” is easily met by me and probably most UK bridal retailers, Criteria no 2 “more than half of their income must come from self employment” still sounds hopeful though many of us now need to “phone an accountant” to translate what we’d signed off months and years ago. Mood in a millisecond moves south as I’m informed that I don’t qualify as profit from rental income exceeded self employment! Forever the optimist (or in denial) I consult gov.uk to discover that my only hope (apart from income tax & VAT referrals and a 3 month mortgage holiday which I already knew about) is Universal Credit at around £94.25 per week!! Bye bye Bolly and bonjour budget Bucks fizz it is!
So that leaves many self-employed boutique owners surviving on £94.25 per week (if you qualify) or savings or, if you’re lucky, other income with employees furloughed and not allowed to work and waiting for local authority grants of either £10000 or £25000 depending on your rateable value and no definite date as to when these will be paid. So onto suppliers….
Suppliers. We appreciate that, like we retailers, you have bills to pay. We will pay you when we can. What we can’t promise is that the payment will be within our credit terms.
What we find helpful is suppliers who are being proactive in communicating with us in a supportive and helpful manner. Examples are Justin Alexander and their Q & A webinars, Maggie Sottero and their Let’s Chat Ways to lead newsletters and Bridal Live’s free Business Relief sessions (US related but still useful).
What is less than helpful (don’t worry I won’t name, blame and shame here but you probably know who you are) is being bullied to accept deliveries to our homes as “you’ll be able to get the balances from your brides and this will help your cashflow” or more truthfully “it will help our cashflow”. Never mind we won’t be insured, risk contracting coranavirus from unecessary contact, have little or no chance of taking payment as brides want to see their gown and prefer to have the security of paying by card! Newsletters informing us that if we want any delivery then it’s a pro forma payment regardless of previously agreed credit terms and the dresses come out unpressed. A bit of a mixed message as said supplier wrote in the same missive “our primary focus is to support you”.
By far the most annoying communications have been the relentless e-mails with headers such as Order 2021 collections now on the hub and Did you see our live runway show? Beaten only by Place an order for half annual minimums and we’ll apply a £50 credit posted on 27 March and, from the same supplier, on 24 March (Day 1 of lockdown) Until 15 April sell 3 gowns and earn £50. Hello….ooooo get on the page, wake up, smell the coffee and get in the real world. Very few of us are interested in looking (let alone buying) your new collections as we are in survival mode as we don’t want to be one of the 20% of retailers who will run out of cash by the end of April 2020.
The aim of this “Bridget Jones’ Diary meets Letter from Lamberhurst with a touch of a cathartic Retailer Rant” is to say “Can we understand each other in our bridal supply chain and have a sense of shared destiny?”.
Let me explain where this phrase “Shared Destiny” is from.
BB – before bridal 25 years ago I was part of a huge culture change programme with the Unipart group (bringing together manufacturing, logistics and consultancy). Their roots were in manufacturing within the automotive sector and they needed to reinvent themselves several times or die along with British Leyland. Their Group CEO John Neill OBE was one of the most charismatic leaders I have ever met and claims that their success was due to engaging its business partners in long term shared destiny.
Shared destiny is even more key to survival with Covid-19. Examples from other sectors where the supply chain is supportive so they’ll weather this storm and come out the other end are:
- Rightmove offering Estate Agents free advertising
- Fullers cancelling rent costs for hundreds of independent pubs
- Lloyds bank in just over a week granted morgtage holidays to 70,000 customers and would waive interest on overdrafts up to £300.
- Barclays bank automatically waiving interest on all overdrafts
- British Land (owner of shopping centres such as Meadowhall) is scrapping rent for 3 months for small and medium sized companies and will allow larger tenants to spread second quarter rents over 18 months (wish they were my landlord – I need to write to mine!!)
- Airbnb giving grants to hosts who need it and offering economic relief for Covid 19 related cancellations
- E-bay offering 30 day payment holidays and for new businesses no listing or selling fees
- Paypal relaxing some of its payment fees for small businesses
This article gives many more examples in different sectors: https://www.theguardian.com/business/2020/mar/29/which-companies-are-coming-through-during-the-coronavirus-crisis
As Ellie Sanderson wrote recently “We have reached a terrible impasse with the key priority of all suppliers being to sell samples and buying right now is not on most retailers’ agendas”.
My dream is that in a few months after the Covid-19 nightmare is over that I am one of the 80% of smaller UK businesses who are still here and that I will be writing a very different article about how bridal suppliers and retailers are working together to preserve our industry with a true sense of shared destiny. I hope that you are all here too.
In March, Maria and Christine Skilton launched their new venture, ‘Get Savvy’ which was created with the aim to unlock all of the secrets of a successful bridal boutique.
Get Savvy is a members-only group that offers online training and networking that can be accessed anywhere. Whether you’re starting up, selling up, fed up, or somewhere in between, this group could be the answer to your problems. Get Savvy is the 2020 way of working on your business rather than in your business.
To find out more and get on the waiting list for when membership re-opens then click here: https://boutiquepulse.com/gets