COVID-19 PERIOD 5-POINT ACTION PLAN FOR BIKE STORES
Managing cash is the #1 priority for every small business affected by the COVID-19 shutdown, bike shops no different. While in most parts of the US, bike shops have been classified as a necessary business supporting the transportation and daily commute needs for essential services workers, each store still needs to make an independent assessment of how they run their operations with significantly reduced revenues and customer traffic. This will take some innovation, experimentation, and a detailed, & daily look at your financial position to settle into a set of operating decisions that work for you. Below are guidelines you will have to adapt to your business based on location, customer profile, and of course a daily changing macroeconomic landscape with the pandemic.
5-POINT CASH MANAGEMENT PLAN:
Proactive communication, Priority #1: Communicate immediately, and regularly with your most important stakeholders.
Customers: Foot traffic has either reduced or stopped, but customers are still online consuming content. Be sure to have a daily presence on FB/Insta or another media where most of your customers are looking for info. Share what’s working, what’s not, and how you are able to support them through this time. Even if you are shutting operations fully (in the worst case), proactive communication of your decision and the rationale, is important for now and for the future.
Suppliers: For every supply arrangement where this is possible, postpone shipment and delivery until you have a better view on the business. Be very clear on “Call Before Ship” so you have the option to make decisions that impact cash. Ask for better terms, delayed payments…suppliers are in a bind also and will appreciate delays over cancellations. Be proactive, be regular so you can optimize your cash spend.
Landlords: Every retail business is grappling with the ‘Should I pay rent when I have no revenues’ question, it isn’t just you. Most Business Interruption clauses on leases aren’t covering pandemics (they likely cover fire or natural disasters only) but landlords are also struggling for the balance between some period of rent loss versus tenant loss. You may be able to structure deferred rent/part payment or other bespoke agreements based on your landlord’s financial standing. Force Majeure or ‘Act of God’ clauses may help large retail chains, but small independent retailers are better served capitalizing on the one-on-one relationship with the landlord.
2. Support, Sustain, Disinvest: Break up your business into the different lines you support – for e.g. Bike Services, New Bike Sales, Bike Rentals, Apparel, Accessories, Any Other (Education, Events etc.). For each line of business, assign T-Shirt sizing on current/future customer demand, incremental cost to operate given COVID19 and feasibility to convert to 100% online operations. If you have an online store, converting Apparel and Accessories to online-only sales with meaningful discounts (while not losing money, but clearing way for new inventory) could be an immediate decision. Bike Rental and New Bike Sales likely require constant ‘full store’ sanitization with every customer visit, which is expensive and risky. Unless customers are willing to make ‘low touch decisions’ i.e. no testing or limited testing after a down payment, Rental and Sales may end up becoming very expensive due to the frequent disruptions and labor cost of constant sanitization. Future customer demand will decide which way the decision swings and will need to be evaluated every day. See below for a potential set of decisions. All to be customized for your store and your operating business model given the parameters of customer demand and effort investment.
3. Pull in future demand: If you haven’t already done so, start and promote your Gift Card Program (Try Square or Shopify among several others). Most customers with gift cards will spend more than the gift card amount when they redeem it, many forget to redeem. Gift Cards give you revenue today Sell experiences (Rentals, Services), sell products at a discount, use a limited redemption window given the hard business times we are in.
4. Invest in 100% Contactless servicing: Innovate, so you build a process that is super easy for a customer adopt. It will require assigning concierge space (unmanned pick up/drop offs), investing in an online scheduling system (try Square appointments for end to end scheduling, or Calendly for a simpler setup) and sanitization process for incoming bikes. On the flip side, you have more control over your employee’s time (you will know exactly how much employee effort is required, and use that to decide the number of employees you can support), throughput is improved (reduced back and forth with customers based on a seamless online system), trust is secure (your customers will believe in your processes because you are talking about them), and you may end up changing customer habits for ever and take in the operational and cos