We want you to know that we’re here for you.
Dancers are resilient—dancers and dance teachers who run their own stores, studios or other dance businesses, even more so. To be a successful business owner, you’ve always operated on the assumption that there are things you can’t control—what your competitors or suppliers decide to do; how new generations of dancewear customers like to shop; what to do when one of your teachers opens a studio down the road—and you also have the confidence that you will find a way to succeed. Still, let’s acknowledge that these last few weeks have been an unprecedented challenge to your dance business—and to you personally.
We want you to know that we are here for you. We’ll do our best to be a support in the weeks and months to come—bringing you news and business ideas you can use, links to business relief resources, and, yes, inspiration and ideas from your fellow dance retailers and studio owners, on how to move forward. Many of you have already taken the smart (and painful) first steps of emergency triage for your business. Laying off loyal staff can be particularly painful. “For the first time in almost 30 years, I can’t take care of my staff,” says Joy Ellis, whose Footlights Dance & Theatre Boutique has three well-stocked and popular stores in Maryland and Virginia.
With studios counting on peak tuition revenues in Q2 and back-to-school inventory expenditures looming for stores, time is of the essence to get creative with necessary cost-cutting and new revenue ideas. For those of you wondering if you’re missing something you could be doing now in this first “911 stage,” as one owner called it, here’s a checklist, including ideas from an Entrepreneur.com emergency financial tactics webinar, The Retail Doctor CEO Bob Phibbs and dance business owners.
First, before anything, take care of yourself, your health, your family. Without that, none of this matters. Boost your immunity and stay connected in this brave new world of social distancing. Studio owners are having virtual town halls—you’re invited to attend one co-hosted by Dance Business Weekly with Misty Lown of More Than Just Great Dancing, on Monday, March 30, at 1 pm (CST). Dance retailers who’ve hung out together on private Facebook groups are having online meetups to share ideas and problem-solve. (Zoom is our new best friend!) Now more than ever, this bonding will keep you sane, informed and feeling less lonely as you face what may be the biggest challenge of your entrepreneurial life.
Review your financials, and review them again. Do a new cash-flow projection for the next two weeks, the next two months, the next six months. Next week, look at it again, because what’s happening then will be different from this week. What revenues do you have coming in this week or next, what critical payments must go out? On the expense side, are there “fixed” costs for which you could get a payment deferral or forbearance? If you don’t get help from creditors the first time you ask, call back next week, because businesses are all having to adjust their practices, day by day, to adapt to changing business realities.
Conserve your cash. The standard advice (and best-case scenario) for businesses is to have enough cash in an emergency fund to cover three months of operations. But a 2015 study from the JP Morgan Chase Institute showed that half of small businesses have only a 27-day reserve; for retailers it’s 19 days. Whatever your reserves, “conserve every dollar you have,” says CPA and attorney Mark Kohler, who hosted the Entrepreneur.com webinar. With a looming cash crunch, you don’t want to spend all your reserves over the next two weeks trying to dutifully pay all your bills, as if this will all be over in a month. Better to negotiate up front with every one of your vendors, utilities and other creditors for better terms, forbearance, etc., so you can stretch out those reserves and give yourself as long a runway for recovery as possible.
Talk to your banker. Do it now, when your credit rating is still strong. (We hope it is!) As many small businesses do to get through difficult times, you may have to increase your business credit card balances and even delay some payments to creditors, which can temporarily impact your credit rating. Before this happens is the best time to discuss an extension on a line of credit, or a new line of credit, or better terms on a loan (like skipping a payment or two and adding them to the end of the loan’s term).
Reach out to your landlord. For many of you, rent is the biggest fixed expense on your books. Check your lease contract; call the attorney who reviewed it if you have to. (See, also, “When You Need to Get Out of Your Dance Business Lease.”) Then ask your landlord for concessions. “Ask for rent reductions of 50 percent for April and May,” says Phibbs. “Propose paying over the rest of the year if you have to. No landlord wants an empty store [or studio space] either now or in a couple of months. They would rather get something than nothing.”
Be transparent with your employees and customers. Communicate clearly and regularly. “You don’t need to know everything before you say something,” says studio owner Misty Lown. For any communications—whether it’s staff reductions, closing your store or studio temporarily, delivering different services or changing policies—focus on communicating what you do know. Communication helps manage people’s uncertainty and reduces everyone’s stress. Lown suggests simply saying: “Here’s what I know now” and “This is when you’ll hear from me next.” (Then put a reminder of that promised update on your calendar.) Waiting until you have the perfect answer or solution is counterproductive.
Work with your vendors and event partners. Understand that these businesses are also experiencing significant financial impact. Competition and convention operators have had to cancel or postpone events for which they had prepaid for event space, subject to cancellation penalties. Their ability to refund fees to studio owners greatly depends on their liquidity. There is a domino effect because in turn, studio owners have collected fees from their customers who will expect refunds. As solutions develop, you’ll want to encourage direct two-way communication.
The same goes for recital costumes. Studio directors can contact costume companies about the options available to them, should they have to cancel their recital. Suzanne Blake Gerety of Revolution Dancewear, for instance, has announced that due to hardship recital cancellations, the company will accept returns of unused costumes.
Retailers who put in large back-to-school dancewear orders at trade shows this January and February, with delivery and payment to start soon, suddenly face a big question mark about back-to-dance season. “A lot of my dance retailer friends have already reached out to their vendors,” says Emily Mayerhoff, owner of Attitude Dance Boutique in College Station, TX. She herself has arranged for vendors to hold shipping of her orders until May 1, when they will call her to see whether she’s ready to receive those orders. “Talk to vendors and ask for extra dating,” she says. “I’ve done that with two of mine, and I’m paying them what I can. They are very willing.”
If you must take on new debt, do it with eyes wide open. The U.S. Small Business Administration (SBA) is offering low-interest COVID-19–related Economic Injury Disaster Loans of up to $2 million, which can be used for shortfalls such as payroll and operating expenses. But at the end of the day, says Kohler, you’ll have to pay any loan back, adding to the expense side of your ledger as your business rebuilds. Look carefully at whether this extra loan payment will work for your budget and business plan on the other side of this mess.
Keep an eye out for new programs being created to support small businesses or arts entrepreneurs like yourself. Congress has passed three stimulus bills to help consumers and businesses, and will likely consider others. Federal, local and city governments, along with dance organizations, foundations and private businesses are coming to the rescue of smaller, more vulnerable businesses. Forbes has a Small Business Relief Tracker, and you’ll find Dance Business Weekly‘s explanation of stimulus benefits that can help you here.
Band together with your fellow dance businesses to amplify your voice. Arts groups, museums and dance organizations are actively advocating for their cause. Contacting your reps in Congress and in your state or town will help your voice be heard as government moves to get the economy back on its feet. You may not be Boeing, but together you are stronger.
Look for the light. Already we are seeing the dance community at its most resilient best. Dancers and dance businesses are showing how innovative and resourceful they can be: studios transforming their curricula into online classes, dance stores helping out their dance-mom customers with Facebook Live ballet story time for kids, or celebrating dancers with online dance look contests, or putting together technique tool bundles to encourage their dancers to keep up their training at home.
We don’t underestimate the passion and persistence of dance business entrepreneurs. “When studios, schools and even dance companies are closed, and competitions are cancelled, I was really asking myself, how do we make it work?” says Patrice Powell, co-owner with Kelley Descher, of Bellissimo Dance Boutique, in Franklin, TN. “I’m not sure, but you can bet my creative, outside-the-box brain is working overtime right now trying to come up with the answer.”
Absolutely! There will be many positive examples and brave business moves that we all can look to for inspiration over the next weeks and months. Please let us know how you’re managing, what steps you’re taking and what you wish you had answers to, and we’ll share your stories here. Be safe, stay strong and let’s keep in touch.