Doing business in the time of COVID-19 is proving tricky for everyone, from the largest international conglomerates to the smallest mom-and-pop shops in Lee County.
Dave Ketchen, the Harbert eminent scholar and professor of management in Auburn University’s Harbert College of Business, said local businesses need to proceed cautiously.
“Loss of revenue is the biggest worry for most small-business owners. Few owners have large stashes of cash in the bank and their ability to borrow is quite limited. Instead, they depend on weekly sales in order to pay their bills,” Ketchen stated in a recent Q&A.
“Hopefully suppliers will work with their small- business partners by relaxing payment deadlines. We’ve seen examples of that happening and it is in suppliers’ best interest to help their small business partners stay afloat. Suppliers make nothing from a bankrupted customer,” Ketchen added.
Other modelsAdjusted business models are evident everywhere. Local restaurants and pharmacies are pivoting to curbside pickup and delivery, as customers aren’t allowed inside their dining rooms.
Convenience stores are offering to pump gas for seniors in the mornings to save them from having to get out of their vehicles and risk coronavirus exposure. Supermarkets are reducing hours to limit their employees’ chances of dealing with customers who may be infected.
Survival for each small business depends on how finances can be juggled, Ketchen said. Congress is working on a large aid package for workers and businesses, but it isn’t clear yet as to how much that would help small businesses.
“If folks rally around a small business so that its sales are only mildly hurt and the landlord is flexible on when rent is received, the business can weather the proverbial storm,” he said. “But if sales are down 80 or 90 percent and suppliers insist on being paid on time, closing the doors might be the only option.”
One strategy that could help the little guy would be to target local community needs.
“A great example is John Emerald Distillery in Opelika, which is just a few miles from campus. They have shut down alcohol production in favor of making hand sanitizer. The sanitizer is being given away to citizens and to other businesses. People will remember this in the future and spend more money with John Emerald than they would have,” Ketchen said.
City government helpThe cities of Auburn and Opelika are doing what they can for their businesses, too.
The Auburn City Council voted this week to help struggling city businesses secure bridge loans to keep their lights on and doors open in the time of COVID-19.
Under the approved plan, seven local banks — Auburn Bank, BancorpSouth, BBVA, MAX Credit Union, Regions River Bank & Trust and Southern States Bank — are committing $500,000 each in loan authority and agreeing to cap interest at 4 percent on three-year loans up to $25,000. The businesses must be within Auburn’s city limits.
In exchange, the city will cover interest payments on those loans for three years — which works out to around $1,000 per year on a three-year, $25,000 note.
Auburn has also extended relief to businesses unable to pay their February, March and April 2020 sales, use, lodging, rental and leasing taxes. Those taxes must still be filed by the 20th of each month, but penalties for late payments will be waived through June 1.
Anyone with questions should call the city’s Revenue Office at 334-501-7239, or visit https://www.auburnalabama.org/coronavirus/business-resources/.
Opelika is offering similar tax relief, with penalties waived until June.
“We know our businesses are going to be impacted and we are doing all we can to help them during this challenging time,” said Opelika Mayor Gary Fuller in a public statement last week.
Lee County Revenue Commissioner Oline Price said March 31 property tax deadlines have been pushed back to April 16 due to the COVID-19 outbreak. The same goes for vehicle registration renewals and property assessments.