How do I survive IB

Surviving the Crisis - 7 Steps How Retailers Stay Liquid in Corona Lockdown

In addition to the travel industry, gastronomy and hotel industry, brick-and-mortar retailers in particular are massively affected by the effects of the Corona crisis. If the store is closed, sales collapse massively while costs continue to run. As a result, stationary retailers get into financial difficulties particularly quickly - and very few entrepreneurs can withstand them for more than three weeks. Current political decisions, for example by France's Prime Minister Emmanuel Macron, indicate that retailers will have to hold out for a few more weeks - in France, the majority of shops will probably not be able to open their doors again until mid-May. Stationery retailers must therefore now, above all, ensure that they remain financially flexible - and that they extend their liquidity as long as possible. These seven measures will help reduce costs and attract new funds.

Step 1: Apply for state aid

The governments of several countries, including Germany, France, Spain, Portugal, Denmark and Italy, come to the aid of the troubled companies in their country with emergency state aid. The amount of aid is extremely different from country to country, and the requirements that must be met in order to receive the aid also vary. In addition to state aid, some regions or federal states also support local entrepreneurs with their own funds - again under very different conditions. Entrepreneurs should therefore seek information and carefully study the terms and conditions of the various programs before submitting an application. Information can usually be found on the websites of the local ministries of economics or the local business associations or chambers of commerce.

Step 2: Apply for deferred taxes and social security contributions

In many countries (including all EU states) the local tax offices can defer income, corporation and sales tax, i.e. for the time being without collecting them. In many countries, postponing payments is possible without interest. This postpones incurred expenses that would additionally burden the currently precarious liquidity of many companies, at no additional cost, to a later point in time. In some countries, entrepreneurs can also have the payment of social security contributions (health, nursing care, pension and unemployment insurance) deferred. But you must not forget: deferred payments have to be fulfilled at some point.

Step 3: Apply for short-time work

Employees unable to work due to a store closure continue to cost money. Dealers can reduce this cost point with the help of short-time work benefits. Most EU countries offer different types of short-time work allowance, and in the course of the crisis, comparable regulations were also introduced in Great Britain and the USA. In this case, the employee pays significantly less or, in some countries, no salary at all, and the state pays part of the employee's income gap. In this way, the states are trying to prevent mass layoffs due to corona-related business closings.

Step 4: check government-sponsored loans

Many states, but also associations of states such as the European Union, are also trying to support their economy with cheap loans. For example, the European Investment Bank provides 10 billion euros for loans for small and medium-sized companies, which are to be distributed via the responsible Landesbanks. In many European countries, the state guarantees 80, 90 or even 100 percent of the loans so that the banks can also issue the loans to companies in precarious economic situations. These loans can provide liquid funds in the company, and at the currently low interest rates that are customary in the market. However, the application is time-consuming and lengthy, and a state guarantee of less than 100 percent is in many cases not sufficient to actually get the loan. And every entrepreneur has to carefully consider whether he wants to burden himself with an additional loan in the current situation.

Step 5: negotiate with the creditors

Many running costs arise from rental contracts, for example for the shop, the warehouse or for the leased company car. It is worth calling all creditors personally during the crisis and sounding out whether it is possible to defer the standing costs for the time the shop is closed. Many landlords are accommodating in the current situation, as most have an interest in keeping their commercial tenants - and not losing them due to bankruptcy.

Step 6: explore local commerce opportunities

Customers who have to stay at home because of the exit restrictions still want to shop - and Amazon is currently not a particularly good alternative because the e-commerce giant is currently giving priority to vital products in shipping and products from other categories are only included in the Amazon warehouse long delays or, as is currently the case in Italy and Spain, not leaving at all. Local dealers who deliver the goods to their customers from their own warehouse can therefore score points. A self-developed delivery service or the merger with other local dealers in a mini-network can be suitable for this. Many city marketing departments have already set up online platforms on which local dealers can present their products. Another alternative are local commerce marketplaces, where customers can order directly online. However, onboarding on these platforms is not as quick and straightforward as many retailers would like.

Step 7: Consider presence on online marketplaces

Other online marketplaces specifically advertise stationary retailers who are now looking for alternative sales channels. For example, eBay has launched a support program in many of its stores for brick-and-mortar retailers who now want to start selling on the marketplace. In some countries eBay gives these retailers the premium shop for a few months, in others there are no sales fees for a few months. Other marketplaces such as Rakuten, CDiscount or Real also offer similar enticement offers. Especially traders who have been thinking about entering online trading via marketplaces for a long time should now carefully examine these offers.