What’s Next for Business: Loans and Product Pivots
Editor’s Note: In early March, Inc. explained how several small businesses across the United States were prepare for disruptions related to the coronavirus epidemic. Here is an update on the steps they are taking to respond to the rapidly changing business environment.
Pacific Manufacturing: switch to mask manufacturing
At the San Diego-based private label sock maker, founder and CEO Harold Robison has done everything possible to avoid layoffs. If the current circumstances were to continue, he says, he would miss his original 2020 revenue forecast by 25% and would have to start cutting his payroll after July. So he does something: apply for a loan from the new government of $ 349 billion Paycheque Protection Program and rotate to make and sell protective masks.
Since production in industries like clothing is essentially halted, Robison fully rotates Pacific Manufacturing to make masks for essential non-medical workers like grocery store workers or construction workers. The non-medical designation allows Robison to bypass the Food and Drug Administration’s regulatory process for imported masks, allowing his business to move quickly. The smooth launch of its new product took place last weekend–and Robison says the first sales were about double the pace of $ 250,000 to $ 300,000 per month he expected.
Robison plans to make masks for the next two months or so. He sets prices that halve the company’s typical profit margins, creates a donation program, and contacts local businesses that may need masks to gauge their interest. The pivot also came with an unexpected side benefit: Robison says employee morale is on the rise, with staff members energized by the new project.
Pacific Manufacturing has applied for a paycheck protection loan of around $ 500,000, which Robison said would prevent layoffs unless the coronavirus crisis lasts until November. “It has to work, so it’s going to work,” he said.
Penguin Patch Holiday Shop / Vita Persona: Apply for a Loan and Navigate the Rules
The Fort Worth-based Penguin Patch Holiday Shop, which provides material for school gift-selling events, has been at a standstill due to nationwide school closures. CEO Jennifer Randklev hopes a paycheck protection loan can help prevent layoffs until schools reopen. (Randklev declined to elaborate on the company’s workforce.) She also has orders for her newly launched company, Vita Persona, which makes protective masks for U.S. health workers. Here is the last one:
Randklev is working with a local lender, Southside Bank, to apply for a paycheck protection loan – for what she calls a “large” sum of money – to help make up some of her lost income. “It allows me to keep all my employees, and for me to be able to finally take a salary for my family,” she says. “It probably covers a third of my lost income. Everything will be fine.”
Vita Persona, says Randklev, is proving more difficult than expected to take off. Chinese factories can create many masks, but FDA import regulations are proving “quite difficult” to navigate. His next step: ask his local Congress representative to speed up the process.
Meanwhile, mask orders are starting to arrive thanks to word of mouth marketing. Randklev says that a city government recently placed an order for $ 400,000 from it, adding that due to the small size of the city, its clinics, hospitals and hospices have not yet been able to grow. procure protective equipment.
Cool Beauty Consulting / Salon Nova: Stay focused and stay in touch
Bennie Pollard is relentlessly optimistic, but even he admits that shutting down his Louisville salons and his wholesale beauty company was a difficult and shocking transition. His first reaction was to stay busy – and visible to his customers – by creating videos online. Now he’s taking on new projects, including one intended to shed light on the challenges his industry faces nationally:
On Friday, Pollard began collecting “customer love stories” from salon owners across the country – times when customers asked to buy gift cards, pay for hairstyles that they don’t get or support their hairdressers in any other way. He is still deciding how he will share these stories.
Despite the layoffs three weeks ago, according to Pollard, the team of about 25 people at the Nova salon have remained in touch and drafted messages for regular customers of the salon. A project is a series of photos of employees each holding a sign with a different word, collectively telling customers “we miss them, and we’ll see them soon”.
Pollard began to study photography, particularly as it relates to advertising his salon’s work. Two years ago, he wrote a book about his entrepreneurial journey. Now he plans to update it with a chapter on the coronavirus crisis. “I’m trying as much as possible to see where I can get our business out of this situation,” he says. “Being able to stay focused is essential for all of us. It would be very easy to fall into a habit of procrastination and non-performance.”
April 2, 2020: Can’t sell any more products? Time to grab a webcam