A Coronavirus lifeline for a small shopPublished on 20th April 2020 2020-04-20T06:52:01+00:00 - Last update on 21st April 2020 2020-04-21T10:04:03+00:00
A Rangewell funding success story
Every type of business has been affected by the coronavirus crisis, but many smaller shops have been particularly affected.
Some have been forced to close as ‘non-essential’. Others have made the decision to close to protect both staff and the public from the dangers of contagion.
But some have been forced to soldier on - because they do not believe that if they closed their doors now, they would ever be able to open them again.
We were recently approached by the owner of a small chain of health stores in Hertfordshire for help with her business funding needs.
“We run a three-store chain of health-oriented stores. We actually sell a very wide range, everything from crystals to books on treatments, but most of our income comes from the sale of supplements - things like vitamins and minerals. Some of the lines we offer are hard to get elsewhere and we insist on quality, and so we have built up a loyal customer list over the years.
Of course, we knew there would be problems when the coronavirus started to manifest itself. We had people coming in and panic-buying because they thought that we would have to close down.
The thing was - so did we!”
It seemed that the local authority had identified the shop as non-essential. The news came as a shock when the government’s position on the retail sector was established, and it meant disaster.
“Ours is very much a family business. I have my two daughters as managers in the smaller stores, while I take care of our largest outlet - our original one - as well as the everyday matters of running things.
We are profitable - but not so profitable that we have been able to build up a big cash reserve. I could see that without customers, we would not be able to pay the landlord and that, if we closed, the chances of opening again were very small - particularly if we were shut for weeks.
But then it came to us - we think of ourselves as a health shop - but we actually sell food. Food is not the main thing people come in for, but from organic snacks and things like gluten-free flour and cakes to hard-to-find ingredients, we sell dozens of food lines. We could argue that we were a food retailer - and although we are obviously a specialist, we provide a vital need, because some of the foods we provide are essential for people with particular medical conditions. Allergies and intolerances can be fatal for some of the people we serve.
A quick call to the council and we were reclassified. We might have to cut out some of the services we provide - we have treatment rooms for specialists in the back of two of the shops, and they could not continue - but we didn’t have to shut down the shops themselves at all.”
There was initially some confusion about what shops were allowed to sell during the crisis, but this was clarified by the government - and if a shop is allowed to open because it sells food and is, therefore, an essential business, it can sell any of the stock it has on its shelves. Because of the importance of food lines in the shops, they could continue to sell other items such as the supplements which were the source of most of the profits.
This was marvellous news for the business, but it seemed to come with a sting. The shops were small and crowded with stock. There simply was no room for the kind of 2-metre safety zone that the government was advising was vital to help avoid cross-infection among customers.
“By definition, our customers are health-conscious. They would want to come in and buy the lines that they depend on and which only we can offer in the three towns we serve, but they would not be coming in if they felt that they would be putting their health at more risk simply by coming through the door.
It wasn’t just the customers I was thinking about either. We would be at risk if we didn’t have proper safeguards in place between us at the counter and the people who came in. You don’t want to put yourself or your staff at risk - especially when they are family.”
A way to continue trading
The solution was to arrange a shop refit at very short notice. The old shelving would need to be stripped out and with a new layout, the most profitable lines would be displayed, while providing more space for customers - which would allow them to shop in line with the social distancing rules.
At the same time, a new POS system would be required, which would allow the shop to concentrate on doing business with customers using cards.
The work was something that the owner had been considering for the future - but the crisis meant that her scheduled had to be accelerated.
“We looked at the costs and they were high, but we realised that we had very little choice. Fortunately, the shopfitting contractors were able to provide everything we needed from their own warehouse at short notice - they could do the job over a weekend for our large shop, and working mainly at night to re-fit the smaller outlets.
We called on Rangewell for the funding we needed.”
The funding available for shops affected by the coronavirus
Even if your retail business is allowed to stay open, you may need to make changes
The business was successful, but cash reserves were lacking, with most income tied up in large quantities of stock. However, there could be some additional sources of cash which we wanted to help them arrange.
Local grant funding could be available for many small retailers. Businesses with a rateable value between £15,000 and £51,000, like our client, could see the local council grant rise to £25,000.
We looked at what other types of funding would be available. The Coronavirus Business Interruption Loan Scheme (CBILS) can let small businesses borrow up to £5m, interest-free for 12 months, with the government promising to underwrite 80% of the loan should a business fail.
The CBILS facility can support many types of lending. Most popular is likely to be cashflow support which can provide a reserve of cash to tide a business over while income is reduced.
We arranged a short-term loan of £25,000 under CBILS which would provide the additional funding the business would need to deal with the crisis.
“We have stayed open and our core customers are still coming in.
Overall, their numbers are down, but without Rangewell's help, we would have had no way to open at all.
Obviously, sales are down and we are missing the browsers who come in to look and who always leave with a few small items - but the big shoppers are making larger purchases than ever.
We have been able to salvage something from the season, and that will help us ensure we will be here next year - hopefully operating a business as usual. At the end of the day, the crisis has hit everyone and we all need to make sacrifices. Rangewell helped us ensure that the sacrifices we had to make were not too dangerous for ourselves, our customers or our business.
We don’t know how long lockdown is going to last, but now we can be confident that we can work through it, and that our customers will have no need to start shopping elsewhere.”
What can we do for you?
The retail sector is facing some of the biggest challenges ever. Understanding the most appropriate ways to answer those challenges will frequently mean getting the best financial solution to your need to borrow.
You might need to refit your shop to make it coronavirus-safe. You may need to invest in new stock that you would not usually carry - or you may have other ideas that could help your and your retail business beat the virus.
Whether we can help you find the answers to your needs with a loan under CBILS, or you need more extensive answers such as Asset Refinance or even a remortgage to keep your business running, our team is ready to help.
We know all the lenders in the markets, and we can work with you to find the most cost-effective answers to your funding needs. Plus, during the current crisis, we can provide the quickest way to find the cash you must have now.
If you are a shop owner with a business that has been affected by the coronavirus, call us now. We understand the pressures you are under - not just from in the present crisis - but for the everyday realities of running a shop in challenging times. And remember, and our service is absolutely free.
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