Hi friends! I know we are all being inundated with news and information right now. My goal is not to add noise to the conversation, but to keep you informed on how we at ES are handling COVID-19. It’s my hope that this gives you some insight on the kinds of decisions small business owners have to make, and I want to share what we’re doing as a resource for other business owners who may be in the same boat. I also want to hear from y’all, because I'm sure there are creative solutions out there that we could benefit from!
Our first focus is on prevention. We have a generous, multipurpose PTO (paid time off) policy that includes sick time, and no one will be without pay if they become ill. Making sure that nobody comes into the warehouse sick is paramount.
A note about PTO: while we are thankful that we have this benefit in place, we know most folks don’t plan on using 10–14 days of their time off for being sick. Our goal is to reimburse any PTO days used for illness (beyond three days) once a few months have passed and we are able to assess the overall impact coronavirus has on our financial health. Once insurance rates normalize, we plan to add short-term disability insurance to provide additional protection for our employees and our company from a situation like this in the future.
*****UPDATED March 17, 2020: All team members who can are working from home, including almost our entire sewing team. We are staggering shifts to make sure that there are never more than ten people in the warehouse at the same time, and that those who have to be in the warehouse (Cutting, Fulfillment, and a few sewers) are all able to maintain social distancing while performing their essential job functions. All meetings are being held digitally, and if essential work in the warehouse can be completed in less than 40 hours we are providing remote work that can be done to reach 40 hours.***** All team members who can are working remotely to reduce the number of people present in the warehouse at a given time. Unfortunately, because we are a manufacturer, it’s not possible for us all to work from home. Encouraging everyone who can work remotely to do so helps protect them and those who must be in the warehouse to work. We already have flexible scheduling, so for those who have to work in the warehouse, staggering shifts will be very doable. We are limiting in-person gatherings by cancelling meetings, and instead we’re having them virtually or postponing.
We’re following the CDC’s recommendations for self-quarantine post-travel, and are asking for those who visit our warehouse to follow the same guidelines we’re asking team members to follow (staying home when sick, not coming in until two weeks after traveling to a medium- or high-risk area, etc).
In our warehouse, we’ve upped our cleaning procedures. We have our facility cleaned every weeknight (this is essential to keep fiber particles and dust to a minimum), but we are adding a weekend clean as well. Our shared dishes and mugs have been put away temporarily. All surfaces that get touched daily, such as doorknobs, light switches, and railings, are receiving extra attention. Gloves, wipes, and soap are readily available for our team. We are, of course, increasing our attention to hand-washing, coughing/sneezing, and wiping down surfaces after use.
All of these efforts will hopefully be successful in keeping our team healthy and limiting our contribution to community spread. As I’m sure you’ve heard, “flattening the curve” and protecting those who are most vulnerable to serious illness are our primary objectives here.
Making sure we are able to provide paid time off, support remote work, stagger shifts, and up our sanitation are all relatively straightforward decisions and changes that are in our control.
What’s tougher to plan for are the potential financial consequences of COVID-19. Several of our materials come from overseas, and we aren’t certain what imports will look like over the next few months. Our products are discretionary purchases, and when the economy is struggling, folks spend less on things like clothing. It costs us several hundred thousand dollars a month to keep the lights on and all of our employees paid, and with a net profit margin of around 2% (last year it was a net loss), a dip in sales can have a major impact.
We have been working to come up with contingency plans in the event that our supply chain is significantly disrupted, sales drop, or a large number of our team members become sick. We can’t afford to go without sales, and we can’t afford to simply halt production. So our primary focus is on avoiding those things. To ensure sales keep coming in, we may focus more on liquidating our already-cut materials, as this doesn’t rely on new shipments of fabric and allows us to provide a bit of a discount to incentivize sales. To keep production flowing, we are taking all of the preventative measures listed above, along with identifying backup staffing for each team and making sure we prepare for that ahead of time (meaning each Team Leader is creating a concrete list of other ES Team Members who could float over to their team temporarily to avoid a disruption).
My biggest lesson so far is that we are sorely missing cash reserves and savings for situations like this. We pour all of our resources back into our business when we can—making improvements to our benefits, increasing pay, improving our workspace and equipment, and investing in training. But when an emergency hits, we need a bigger safety net to ensure that our teams’ jobs are protected long-term (we also need government support to help businesses like ours take care of our employees). So that’s an actionable, albeit daunting, lesson.
Another major lesson is that we need to “lean” back out as a company. We’ve been around for almost seven years (holy shit), and over time we have accumulated a large amount of “in-process-but-not-complete” inventory. This looks like garments that have been cut out but not yet sewn. This happens for a ton of different reasons, but over time, the number of cut-but-not-yet-sewn pieces we have on hand has grown. We always intend to sew through it when we have time so we can sell it, but it has never been a priority. Last year we implemented changes to stop new, cut inventory from accumulating, but we still have the existing items to contend with. That inventory, along with other on-hand inventory, such as photoshoot samples, damages from manufacturing, discontinued raw materials, and more, represent a lot of cash tied up. If we liquidated this miscellaneous accumulation of (expensive) product, we would be much leaner overall and in a better financial position to weather situations like the one we’re in now.
I’m sure this is a message you have heard, but I’ll repeat it because it is true: if your income and security have not been impacted, I encourage you to continue supporting small businesses, freelancers, hospitality and service industry workers. It does matter, and we can’t withstand a major, sustained hit to income. I don’t know what the future holds, and I don’t want to send a message of anxiety or panic. I just want to be candid with you all and share where we’re at today. It is my hope that with communal effort we can curb and slow the impact of COVID-19, not just for our sake but for the many folks out there whose health and livelihoods are at risk. I am optimistic, and we are actively working to adapt and react to the situation as it evolves. We’ll keep fleshing out our contingency plans, and I will keep you posted if we come up with anything creative to share! I’d love to hear from you. How are you doing? Are you a business owner implementing similar changes, or do you work for a company that is handling this in creative ways? Any ideas to share?