Small businesses have had to get creative to survive the coronavirus pandemic and the lockdown enforced to curb the spread of the contagion. But the same technologies that sustained these businesses also yielded increased costs and complexities.
As our lives are increasingly more digitalized, business owners (of all sizes) are contending with new expenses relating to customer loyalty, relevance, and marketing.
Running a small business was never considered an easy undertaking. But technology is presenting emerging burdens to these businesses, making it even harder to stay afloat. Digital services have many associated costs and fees. Credit card companies and online payment providers take a piece of each sale. There’s really no going back to a tech-less life. Businesses must rely on all sorts of technology for personal and commercial interactions. So while the apps and services are essential to most companies, business owners should keep a close watch on what they are spending and getting in return. They should invest time and energy in maximizing their benefit from these services, just as they look to maximize their bottom line.
Health insurance company Oscar has raised $225 million in its latest round of funding. Existing investors Alphabet, General Catalyst, Khosla Ventures, Lakestar, and Thrive Capital, renewed their commitments, while new supporters joined the venture, including Baillie Gifford and Coatue.
Oscar, the New York-based health insurance provider, has raised a total of $1.5 billion since its founding in 2012 by Mario Schlosser and Joshua Kushner. It is the first direct-to-consumer health insurance company and has more than 420,000 members across its products. Oscar will use the new funding to continue its mission of simplifying health care while also reaching a $2 billion revenue base by the end of 2020.
Corona has forced changes in every part of life. Stores are not the same place we were used to just a few months ago. There are less people walking around, plastic partitions at checkout, customers and clerks wearing face masks, and many more disinfecting stations.
These modifications are costly and many businesses, already strapped after three months of lockdown, are struggling. New York State Senator Sue Serino introduced a new bill that will offer financial aid to businesses and non-profit organizations committing to complying with corona restrictions.
“New Yorkers stepped up in a big way when they were asked to stay home and do their part to promote public health and safety. Now, it’s time for the state to step up and support them as they safely reopen. That means removing any potential obstacles to reopening, including the significant costs that are associated with adhering to the new stringent state mandates.”-New York State Senator Sue Serino
The grants will allow companies to purchase personal protective equipment, hire industrial cleaning services, and/or renovate existent workspaces to comply with regulations. Funding will come from the remaining federal Cares Act Funding to New York state.
The current ongoing coronavirus pandemic has led to some remarkable business discoveries, including the revelation that fintechs, primarily online financial service companies, are effective liaisons for small business owners as well.
The agility and flexibility that most fintech companies have allows them to be responsive in real-time; they experienced fewer policy and bureaucratic hurdles than more established financial service firms. Fintech makes it possible to meet clients’ financial needs online. They build virtual and sustainable relationships with financial clients in the same way traditional physical banks promoted their services.
Rho Business Banking, for example, set up a network of 100 banks at the very onset of the corona crisis. Through this network, customers had access to loans from a diverse set of money lenders. While most banks prioritized the business customers they knew and pre-approved, the countless small businesses that didn’t fit that category saw fintech offering lifelines and immediate lending solutions.
In March, the Brooks Brothers clothing manufacturer was praised for its quick response to the novel coronavirus pandemic. The designer brand transitioned its three US factories to produce personal protective equipment for medical teams and frontline workers.
But these same factories are now at risk of becoming casualties of the virus they were working to protect against. In fact, the future of Brooks Brothers, and its branding as THE “Made in America” brand, is in jeopardy.
The brand that dressed America’s presidents and former presidents, as far back as James Madison, is facing an uncertain future. It is laying close to 700 employees and is looking to sell the factories. Besides the three shirt manufacturing plants in North Carolina, Massachusetts, and New York, the company also has a tie factory in Queens. But these sites together yield less than 20% of the Brooks Brothers line.
Brooks Brothers management is hopeful that restructuring and consolidating will provide fiscal stability, affording the company a chance at survival and regrowth when this is over.
Eastman Machine Company in Buffalo makes fabric-cutting machines. It is a fourth generation family owned business that has weathered its fair share of crises. Over the course of the company’s 132-years history has unfolded: World War I, the Spanish flu pandemic of 1918, the Great Depression and World War II.
The company’s equipment is used by the aerospace and transportation industries. Highly needed makers of medical masks and shields also use Eastman machines which qualified the company as an essential employer allowed to operate under New York State guidelines.
To date, Eastman has successfully stayed alive and operational, though some cuts have been made. Forty of the company’s 57 production workers were let go. While the lay offs were unavoidable, Eastman continues to pay for those workers’ health insurance, to ensure that everyone is taken care of. With a focus on survival, much of the company’s research and development plans have been shelved for now. Eastman is just one of many small businesses across the U.S. that are major employers. According to the Small Business Administration, small business accounts for half of all private-sector jobs.
Eastman received a $2 million loan under the government’s Paycheck Protection Program, and hopes to bring back enough employees by June 30 to qualify for loan forgiveness under the program.
The coronavirus has been ravaging New York City since March, and local food entrepreneurs stepped in to support healthcare workers on the frontlines. Some have offered free meals, others are packaging to-go bags with ice packs for pick up, and some businesses are modifying their business model to accommodate demands.
Cole Riley, for example, founded the Founders Give, to collect and distribute healthy snacks and food products to hospital staff. Over the course of two months, the initiative provided 1.6 million snacks and beverages from close to 300 brands to 47 hospitals. Contributors have been big business food makers like Chobani and Kind Healthy Snacks, as well as small scale eateries.
I’ve become the No. 1 distributor of snacks and drinks in the hospitals, donated or otherwise. Hospitals stopped placing orders in early April for regular food orders. They were running out of money. So, I’ve become in many facilities the only source of food coming in. Every night before the next day’s scheduled deliveries, I reach out to each brand and their founder directly to let them know where their product is heading: one pallet to Mount Sinai, 40 cases to NYU Langone, 6 skids to Metropolitan. That type of transparency doesn’t happen in nonprofits.
The pandemic has necessitated an almost constant shift in plans and realities. Some businesses have closed, others are trying to figure it out. For Mr. Riley, the corona has given him a new goal and vision in his work to promote small businesses.
According to Mr. Riley, “There’s an opportunity to take what we’ve been doing in New York with hospitals, expand on it gradually, focus on the CPG brands and founders, make it as easy as possible to give, and I really believe if you bring this community together as a streamlined nonprofit … we can make a huge impact.”
With the coronavirus lockdown now entering its 10th week, New York City business owners have gotten creative in their attempts to keep customers engaged and buying.
Restaurants remain closed for dining in, but almost all eateries have adopted delivery systems to bring food to diners at home.
Amy Schiappa, the owner of two hair salons in Brooklyn and Manhattan, started selling “color care packages” for customers. She sends each of her clients the customized formulas of their hair color, detailed instructions, and a personal message.
Cleaning services have had to rethink their business model as most homeowners limit people coming into their homes. Aman for Home, for example, transitioned to offering sterilization and disinfection services for the high-traffic areas (entrance ways) of public buildings still in use.
Many recreational stores like toy stores, which rely on customers’ browsing, are now offering virtual shopping. Kids and adults can “walk” through the store via video chat and then opt for curbside pickup or home delivery.
Health and fitness outfits, like gyms and yoga studios, are offering live-streamed classes. New York’s Grassroots Fitness Project launched new virtual-based classes for kids, in the form of 45-minute video classes, capped at eight children per class.
Small businesses have been the hardest hit by the coronavirus- restrictions. But they are also proving to be clever and resilient. Customers are desperate for “creature comforts” and are happy to see their favorite shops and local businesses providing the services they need.
In the midst of a global pandemic and all the hardships of social distancing, it is important to find comfort in the familiar. Hobbies and personal interests are good ways to channel pent up energies (because gyms are closed) and unrelenting anxieties (because this thing is crazy on so many levels). But there is one first-world habit that should be curtailed at this time: retail therapy.
Even as millions of people are unemployed and unsure of how they will pay their bills, online shopping for non-essential goods and services has risen significantly in the last eight weeks. People are buying things they believe will make sheltering at home easier; they are looking to alleviate the pain of all the unknowns. If pre-corona shopping featured panic buying of unnecessary amounts of toilet paper and canned goods, the real-time corona is being marked by impulse purchases and increased spending on luxury items (alcohol being at the top of the list).
This behavior is dangerous for those who already struggle with financial health; it threatens even those who know how to handle their money, but are struggling to find strength and control in these uncertain times. There are many things driving this behavior, chief among them is boredom. Nobody has anywhere to go or anyone to spend time with, so they are finding solace and excitement in the online retailers. Getting a package delivered during this outbreak is giving people the thrills they would have found elsewhere, in healthier activities, before the pandemic.
The most important thing any quarantined shopaholic should do is identify their triggers. If the new sweater purchase is being fueled by anxiety, or the new kitchen appliance is being considered because of boredom, it is time to take a break from the screen. Another critical step is finding alternative ways of getting the same satisfaction. Exercise, meditation, laughing with a friend, or even cooking a wholesome meal, can provide the same rush as spending money. Wish lists are also a good way of curating desired items without actually spending money. By putting the item on their list, consumers feel like they are one step closer to owning it, but giving themselves time to think about the actual purchase.
Budgeting is the most strategic way of fighting against corona overspending. Build a budget that allows for some splurging, but not excessive squandering of cash. Financial advisors recommend limiting online purchases to a specific dollar amount or number of items. The goal is to train the stuck-at-home, looking-for- comfort consumer to buy one thing OR the other, but not everything in their cart. Setting specific times for online shopping also reduces mindless browsing. Staying focused and realistic about immediate needs, versus wants and long-term nice to haves, ensure intentional shopping.
This is certainly a challenging time. Take steps to stay physically and fiscally safe to ensure your wellbeing now and in the future.
It may seem strange to suggest a budget overhaul at a time of so much uncertainty. But that is exactly when these kinds of changes can be most beneficial and impactful.
In general, many regular expenses have ceased to be a concern during the corona pandemic. There are virtually no restaurant meals, mani-pedis, or gym classes happening right now. But that money really isn’t enough to navigate unemployment or a recession. Here are a few tips on saving during a crisis:
Tackle the Two at the Top
Intentionally review your budget and find the three biggest expenses. For most people, these will be housing, transportation, and food. Then decide on two of these expenses that can be reduced or revamped. Car owners should consider reducing or even canceling the insurance for cars they aren’t using. Decide on a few low-cost local takeout menus and order as a treat, not as a default dinner option. Homeowners who have good credit and are still lucky enough to have steady incomes should consider refinancing their mortgage while rates are low. Tenants with a rental lease should talk with their landlords and negotiate an arrangement that makes sense for both parties.
Be Deliberate about Saving
A crisis is not the time to undertake a major D.I.Y. home renovation. Nor is it the time to buy the fancy cooking equipment to indulge a gourmet cooking hobby. It is the time to invest in health and fitness, including financial wellbeing. Money saved should be traceable and accounted for.
Need vs. Want
In times of crisis, most people evaluate what is really important to them. But when it comes to making money decisions, the lines between need and want can be hard to draw. Review all the “essentials” like cable subscriptions (opt for streaming platforms), birthday gifts (call and/or send a handmade gift), date nights (do them at home for a fraction of the cost) and modify accordingly.
Most service providers would much rather retain a customer at a lower monthly rate than lose that customer entirely. Consumers who need to cut costs should contact providers and discuss alternatives. While some restructuring might incur interest or finance charges, many companies are waving those now too.
Keep What is Critical
Home repairs are inevitable. The fridge doesn’t know there is a global pandemic; the roof isn’t aware of the economic recession. Make sure there is enough money in the budget for these maintenance jobs. Don’t remove or reduce comprehensive car insurance; hold on to life insurance policies that can be a hassle to restore if canceled. should be preserved. The critical should also include at least one “Happy” to keep as well. Don’t wipe out every joyful budget line. Make sure to “splurge” on at least one thing that makes corona, quarantine, and social distancing more manageable.