Train People To Go Window Shopping
On today’s show we’re talking about how your business can survive the Covid-19 outbreak. Of course the degree to which you take action is a function of the nature of your business and the assets in your portfolio.
We remain in a period of unprecedented uncertainty. You don’t know if the businesses in your commercial space will survive. You don’t know if your tenants will lose their job and when their unemployment benefits will run out.
Every single property must be treated like a business. That means paying attention to both income statement and balance sheet.
Business survival is based on one simple concept, positive cash flow. The emphasis needs to be on cash flow.
If your cash flow has turned negative, you need to decide whether this is a temporary situation or a long term situation.
When cash flow is negative, then cash reserves become of paramount importance. How many months can your apartment building survive if it is losing $5,000 a month, or $10,000 a month?
Often times, I’m seeing investors trying to solve a cash flow problem with the balance sheet. That means borrowing more money. If your problem is short term, then that’s the appropriate solution. You take on a little more debt, but you save the property.
It’s easy to assume that people are not moving during this period of social isolation. While it is true that the level of activity has dropped, it’s not zero. For example, I moved in the middle of March.
Cities like Dallas continue to attract new business. According to a report in the Wall Street Journal two weeks ago, there were 1,500 corporate headquarters staff relocating from California to Texas in the middle of the pandemic.
I’m talking with landlords who are continuing to attract tenants. At the same time, I’m also reading market reports that show zero movement. Both are true at the same time.
These are challenging market conditions. It’s tempting during these times to take your foot off the gas and rationalize that it’s not worth the effort.
Marketing is the exercise in generating interest. Salesmanship is the process of converting interest into sales. Now is the time to practice and improve your skills at closing the sale.
Let’s say that you’re running a restaurant that has closed its dining room and you’re trying to make ends meet by offering take-out. It might not be your restaurant. Maybe the restaurant is a tenant in your building and you have a vested interest in having the restaurant survive.
The restaurant could offer clients the option of repeating the same order for the next 3 weeks for a 10% discount. Their Friday night dinner is taken care of for the next month, and the client is helping a local business. It might save them a trip to the grocery store.
I saw a video from a jewelry store owner in Brooklyn yesterday who was complaining that her store wasn’t allowed to open when Walmart and Costco were open. It seemed incredibly unfair to her. Her revenue was zero. My heart goes out to her.
She could do a window shopping campaign. I’m redefining window shopping to mean the following. The store should send an email to all their clients reminding them that a gift received during the pandemic is worth 10x what a gift is worth during normal times. It would be so unexpected, that the receiver will remember the gift for decades to come.
The client calls the jewelry store from outside the window. The shop keeper talking from the safety of being inside the store shows the client the merchandise. The order is placed by credit card and the product is delivered to the client by courier or by curb-side pickup. Mail order businesses and e-commerce businesses are not closed. A small re-thinking of the transaction opens up the possibilities that were not available before.