I had no idea that so many small businesses have very little cash reserve.

[milestogo]

A week or two without revenues and they can't pay the bills. Lots of small businesses go under during their first year, and that number is going to get bigger this time.

I'm afraid we're going to end up only with Amazon and the big name stores.

[underpants]

1. Small businesses eek bye

Most of them anyway.

[Blue_true]

12. Most do a lot of stuff under the table.

I don't like the idea and I personally avoid it, but the practice helps some small businesses survive.

I remember a situation from many years back before I became a business owner. I was working as a wellpaid corporate engineer and went out to lunch one day to a small pizza shop. There was only a young couple about my age. I got my food and got a soda. For me, everything was fine. The guy in the couple kept complaining about the soda from the soda dispenser. Kept claiming it was flat and kept forcing the employee to pour it out and draw him another drink. I remember specifically tasting my soda because I had the same flavor as the guy, my soda was perfectly fine. Anyone who has ever worked in a food place that has a soda dispenser would know that the machine works from one CO2 tank, every drink drawn at about the same time will have the same amount if fizz. I bought that situation up because it illustrates how thoughtless some customers can be toward small businesses that are already operating on a thin margin.

[jimfields33]

2. Oh definitely

I’d add McDonald’s might survive for dining pleasures. We probably lose 80 percent of all small businesses and a ton of big stores. Macy’s penny’s sears, are goners. The malls are finished. They were barely hanging on. Small town restaurants not chains are gone. It’s a mess.

[GP6971]

3. My first job out of the Army

was with a family owned business and we were paid weekly. More often than not, we had to rush invoicing on Thursdays so management could present their Receivables List to the bank so they could make payroll the next day.

[WVreaper]

4. Get your head out from under that rock,

They are SMALL businesses.

[redstatebluegirl]

5. That is what Amazon wants.

They want to totally destroy mainstreet. This virus was taylor made for Jeff Bezos.

[Demovictory9]

6. not just first year businesses will go under. LA public radio has been featuring

segments on businesses that have been around for 30 year and more... passed from grandparent to parent to child... they are on
shaky ground now. really suffering.

[matt819]

7. Small business

Keep in mind that small includes businesses up to 500 employees. They were among the applicants for the PPP money, along with real small businesses.

Also, giant corporations went cap in hand for billions in bailouts less than a months after the shutdown.

[sarcasmo]

8. Small business like many Americans, very little cash in the bank.

[flotsam]

9. 90% of new restaurants fold within 3 years

I made it 6 years...and a month of total losses losses would have been fatal the whole time.

[Blue_true]

15. I have a friend who is in the business. She is classically trained as a chef, but the business end

is daunting. Her place survived, don't know if it will make it through this. I haven't talked to her in a while. A situation like we have now likely has closed the doors of all marginally profitable shops and likely will kill off moderately profitable ones. The corporate shops will survive, because they have loan facility and all typically have drive-up windows, plus, they buy supplies at a fraction of what the small shops pay.

[kurtcagle]

10. Small businesses have VERY little reserves

Most run on minimal revolving credit lines, primarily to keep payroll manageable, but having run a couple of businesses over the years, most have very, very tight margins for loss. The only positive thing is that you can write off losses when you do your taxes, but that's scant help in this kind of economy.

[Blue_true]

17. Owning a small business is brutal. At the end of each day, there is no one left but you.

You solve all problems, because employees mostly back away from solving them.

I wish people like you who has actually run a small business from the ownership side would make more posts in threads where people are dreaming of opening their "dream" business, or criticizing business owners as being selfish pigs (some are, a lot simply have very thin margins and can't do the wonderful things that some on DU insist all businesses should do), such input would bring some reality to such threads. I recently exchanged posts with a person who was dreaming about a idealistic small business, I got the feeling that the person viewed me as someone who was trying to shit in the punchbowl as I pointed out some of the brutal realities of owning a small business.

[Blue_true]

11. The point that you made is exactly why people should not ask for discounts from

small businesses. The discounts typically is the small profit the business gains. No profits, no building of cash reserves for hard times.

[democrattotheend]

13. I did

I've sued enough small business for FLSA violations to know that most of them operate on thin margins and are usually undercapitalized. When they first started shutting things down, my first thought, after wondering how my clients would get by, was how on earth will their employers survive being shut down?

[Blue_true]

19. How do you feel about suing such people?

I realize some of them are assholes, but many are just people that got in over their heads and find themselves in a tough situation. I had a business failure and got sued, I could not afford an attorney to defend me, in fact, I could barely manage to pay for one simple meal each day during that time. I remember sitting in the courtroom for my docket to be called, all except one of the people being sued had summary judgements entered against them because they didn't seem to be able to have an attorney fight for them.

I am not trying to make you feel bad, you have to do what you have to do and I am sure that you have decent reasons.

[democrattotheend]

27. It depends

I've sued a few small business owners whom I came to genuinely feel bad for after I deposed them or met them at mediation. Some of the regulations in New York are tricky for small business owners, and I get that. But most of the small business owners I've sued are total assholes who knowingly flout laws that everyone knows about, like the obligation to pay overtime. Often they think they don't have to pay overtime or minimum wage because their clients must be undocumented and thus won't complain. Then they are shocked to find out the FLSA and other wage laws cover undocumented immigrants too. And even in the cases where I think the owner made an honest mistake, I might feel bad, but at the end of the day my clients are poorer and less well educated than the owner and they deserve what they are due. And in cases where the company shows an inability to pay I end up settling for less than I or my clients think is fair.

I've also represented businesses defending against these suits, though not as often as I've brought the suits on the plaintiff's side. I've had a couple business clients I felt sorry for, but the majority have been entitled and often a bit sketchy and not entirely forthright with me.

You sound like one of the good ones and I am sorry you were in that situation. If you ever get into business again, I strongly advise you to spend $1,000-$2,000 at the outset and hire an attorney to help you make sure you are complying with all relevant employment laws. It's a lot cheaper than getting sued and having to pay not only your attorney but the employee's attorney as well.

[Blue_true]

28. I met all of my employment obligations at the end of my first business.

I just could not pay things like rent, utilities, ect. At the end, I was working alone, no employee got stiffed, other than not having a job with me.

When I set up my second business, I consulted with a bankruptcy lawyer, an employment regs lawyer and a CPA, fortunately, in Florida, that is not expensive. Your advice in that area is very sound and everyone should follow it.

[democrattotheend]

29. Thanks

You did the right thing making sure your employees got paid. I know there are plenty of good small business people like you (my dad was one as well), and my view is probably skewed negative because the ones I meet are the ones who are being sued.

[Blue_true]

30. Thank you for your efforts, employees need to be treated fairly at all times, for me it's just good

business practice.

[Initech]

14. We're going to see a lot of malls turn into Amazon distribution centers.

Due to last year's retail apocalypse and this year's Coronavirus collapse. Count on it. Cue 16 Tons.

[mtngirl47]

16. The saying in small business is

You don't make any money until you sell the business!

[Blue_true]

18. Small business that have unique products that are right have a chance.

But that is maybe 5% of business startups in a given year. Keeping capital requirements low and controllable during the first three years is vastly critical. Most businesses startup vastly undercapitalized, even as their owners don't realize that. A person can't just have a dream and start a business, there are many dirty sausage-making realities that person should take time to become aware of and have a plan for, most business startups don't do that painstaking prep work and run into big problems.

[mtngirl47]

22. I've had my small business for 21 years--a tourist business in the NC Smokies

It's hard to foresee things like 911 which caused people to stay home for a year.

I didn't predict that the House Freedom Caucus would repeatedly shut down the government and thus the Great Smoky Mtns Nat'l Park for weeks at a time.

Didn't prepare for a rock slide going down on I-40 for 6 months!

I nervously watch fuel prices whenever a hurricane hits or things get dicey in the Middle East.

Sure wasn't prepared for a huge 4 year downturn in travel during the Great Recession. And now a virus!

Each instance takes a different solution. Having a line of credit and cash on hand are important....But if your income stopped tomorrow how long could you pay the bills without liquidating your assets? (I consider retirement savings/401k an asset) Do you have 1 month emergency savings? 2?

The first thing I do every time is to stop the bleeding. Cut expenses to the bone and don't buy anything. Nothing. Don't paint, don't fix, cut employees, do everything myself. Then I look for alternate streams of income. It's hard and you feel helpless because you can't fix it.

I think everyone deserves their small business dream. Some don't prepare, but there are some things you just can't be ready for-- like coronavirus.

[Blue_true]

23. I bought my first business. The second, I started up on a shoestring budget.

I avoid debt because that got me in trouble in my first business eventually. I started my second business doing everything myself, including product research, doing formulations, figuring out pre-startup product pricing, filling and labeling bottles, I ran things so that a punch in the guy like Coronavirus is survivable, even as I am back to doing as much as I can with my own hands. My first business depended upon a lot of walkin traffic and discounting, some aspects that you see in your business. My second business is a skin and hair care business that doesn't depend on walkin traffic and discounting, I set my price based upon the funds I put into making products, people can either pay that price or chose a competitor's products. I am in a good spot, I was able from the start to offload some expenses like transaction costs, shipping to customer prep, and some bookkeeping. The failure of my first business taught me a lot of valuable lessons that I used to set up and operate the second, one of the most important lessons was that unexpected things happen, so there must be at least a theoretical escape plan in place.

Your business is very much unlike mine, my products solve skin and hair problems that people have, so in that regard, they are not impulse buys like whether to take a rustic vacation, or a vacation of any type.

[Polybius]

20. I have a friend that makes $700,000 a year and he's broke

Has five kids, all in expensive private schools, and a house that's way beyond his needs. Expensive cars too for him and his wife.

[Blue_true]

24. That is amazing. Sometimes people get trapped by the choices they make. nt

[oswaldactedalone]

21. My wife ran her own retail business for 21 years

and rarely had more than 4 weeks of cash reserves. She dreaded snow days because business would be off for the better part of a week.

Many people have the misguided idea that if you own your own business, you have plenty of money. It was all she could do to keep it open for that length of time, and even then took a $110,000 loss on the sale just to get out of it a month before she was throwing in the towel and shutting it down. We were both very thankful that someone actually saw some value in it to the point where they decided to buy it.

[Blue_true]

25. Sounds like the person that bought your wife's business did his or her homework.

I would guess that your wife was honest in sharing the operational costs and revenue with that person. I would need to be privy to all the details to decide whether the price paid was fair. One thing that I learned when my first business was failing is that most potential buyers try to get the business for nothing and stick me with all the problems, that was why I just chose to close the doors, I was no worse off.

[JI7]

26. I have a business but I also work to earn a paycheck

because a small business is difficult .