18 Mar Coronavirus Info for Screenprinters
As the Pandemic continues to affect the world, we must come face-to-face with the reality of survival.
By Bill Hood, ASDPT Fellow
As we all know, many screenprinting businesses are affected by the COVID-19 Pandemic. It will reach all segments of the screenprinting technologies, due to event cancellations and non-essential businesses shutdowns. And, no one can predict the future of what will happen or how long it will take to recover from the Pandemic. In this article, the discussion will be about what business owners and employees can do during the Pandemic.
The first step you should take is to help stop the spread of the disease by following the Center for Disease Control’s recommendations;
Prevention – Follow the advice to avoid social gatherings and practice social distancing. No more handshakes.
Keep Informed – the better informed you are, the better your decision making will be.
Be Positive – Those who are consistently positive make better decisions.
Lead Calmly – Remain calm and steady in leading your team.
There are a significant number of screenprinting companies that, before the Pandemic, were just making payroll. Satisfied with what they had in terms of business revenue and margins that supported their lifestyle, they were hesitant to grow the company so that there could be working capital to cover a business disruption or to purchase disaster insurance. Now, many will suffer from the errors, and hopefully, we can all learn from this going forward.
Some businesses were in better shape and will weather the crises as best they can. Make no mistake about it that the world is in a time of intense difficulty, and all business owners have troublesome decisions to make going forward. However, there is a positive approach that will benefit the business and prepare you for a better future after the Pandemic.
Whatever your thinking at the moment is going to be worse soon.
Most experts are predicting a recession will follow. The stock market is already in decline, and there will be a severe negative economic period as we recover from the Pandemic.
While it is impossible to guestimate the end of the Pandemic, we can certainly assume that recovery is not going to happen overnight. Most experts are saying that the Pandemic will be over perhaps by August. However, the end of Pandemic is not the end of the problem, as there will be a recovery period to contend with, that could last for up to an additional year or more before things get back to the same before the Pandemic hit.
Closing the Business?
It is time to be more pragmatic than theoretical in your decisions. You can not merely check the bank balance and think about how far that money will go before you are broke. There is much more to consider. Realize that every one of your customers and clients will remember how you handled yourself during this crisis. You don’t want to lose your reputation as it will be difficult to reclaim.
While closing the business may seem the only way out for some, with some reflection; hopefully, you will see that this is not the best solution. Closing the company sends the wrong message to your shareholders; staff, clients, customers, and investors. If you decide to reopen after the Pandemic, it will take more time and money to get back to the point before the Pandemic.
Some have considered laying off their staff as a way of reducing costs, or as one article recently stated, offering employee furloughs where ask to stop working until your business recovers.
The average salaries in the USA for screenprinters, based on advertised jobs across the county is from a high of $17.89 per hour in Atlanta, Ga, to a low of $8.84 in Lexington, KY. The average is $13.49 per hour or roughly $539.60 per week.
In the United States, policies vary by state, but unemployment benefits will usually pay eligible workers up to $450 per week. And, yes, while some may receive up to $450 a week, many will get far less. As an aside, you should probably expect that federal payroll taxes for the employer will likely increase soon to help recover from the Pandemic.
If an employer lets the employees go, the employee’s reduced income is an average of $90 a week or more. When employees have a 16.6% reduction of earnings (or higher), they will need to make decisions about what to cut to maintain their lifestyle. To keep up their house and car payments, they may have to take on short-term debt to make up for the shortfall.
When you let employees go because you can’t make payroll and lay off your employees, you are going to be at more risk. You have to be mindful of the decisions that you make at the moment, more so than ever before.
Owning a business is risky, and all business owners must step up at this time to accept the risk necessary to support their employees by taking out a loan to cover the salaries and on-going operational costs during the crises.
Consider the future of what happens if you don’t accept the responsibility. Out of work, employees are going to have to take out loans to keep making payments on their homes, cars, and other costs of living. When the Pandemic is over, those employees are going to be deep in debt, and they are going to require higher wages to pay off the debt. You, as a business owner, will two choices, either take out the loan and support the business and employees now or pay more in the future when you have to hire new employees asking for more money to pay off the loans that had to take out to survive.
Keeping the Business Open
There is far less risk going forward if you decide to keep the business open and the employees on staff. Of course, you do have to cut the fat, and that may mean letting some employees go that are not currently contributing to the well-being of the company. If you do decide to keep the business open, some changes may be necessary.
Just because they cancel an event or a school is closed, doesn’t mean that they don’t need the order they placed. Offer to print the jobs, even at a reduced price, to keep the business open and your staff members employed. For many of those jobs, the only thing that will change is dates. But many of the events will be rescheduled for later when the Pandemic is over.
You can bet that some of the event coordinators are already considering rescheduling the current events or even holding a celebratory End-of-Pandemic event. You want to get those orders now to make up for any losses you think you may have incurred.
Start calling those canceled their orders and work with them to keep their future business and maybe keep busy now.
Screenprint cards with a heartfelt message, thanking them for their patronage over the years. Let them know that understand their pain and that you wish them well. Have every staff member personally sign the cards and send them out now.
And then make an effort to stay in touch by email with all of your customers and clients every few weeks and let them know that you are thinking of them.
Sadly, few businesses have enough working capital to keep the doors open for four months of little or no activity, let alone to fund a year or two before the market returns to normal.
Some things that you should begin cutting right away might include:
- All overtime pay. Of course, you should schedule all work during regular hours, and when it is necessary to stay late, ask for volunteers to stay, off the clock. Consider going into production and helping where you can; catching at the end of the dryer, moving substrates, cleaning up, reclaiming, anywhere you can to show that you are doing your part, especially during after-hours work.
- Company vehicles, along with all associated costs. If it is not possible to cease the lease, then certainly stop paying the operational cost of those vehicles unless absolutely impossible. However, furnishing cars to salespeople or paying for mileage could be eliminated.
- Cease making deliveries and have customers either pick up the items or have their delivery service pick them up.
- Employee perks that are not necessary.
- Eliminate any services you can; landscaping, gardeners for plant upkeep, coffee service for office, or any other service that has a recurring expense that is not necessary for keeping the doors open.
- Cancel all memberships, trade associations, magazine subscriptions, retainer fees payments as they come due.
- Cut down on utility usage where necessary. Put sensors on lighting that will allow the lights to be on only when occupied, such as bathrooms, reception area, offices, screenrooms, and more.
- Attempt to reduce the use of flash gel units on presses. Consider that screenprinting has only been in existence since 1872, and the flash gel unit came into existence in 1974, and we did just fine without a flash gel unit for 102 years.
- Cut anything that is not critical to keeping the doors open.
Addressing the Problem
The first step is having a meeting with your management staff, where you should explain that you are accepting a pay cut for yourself immediately and ask if any are also willing to take reduced salaries. This reduction will provide some measure of breathing room going forward. Ask them for their suggestions for cutting costs needed to weather the Pandemic. And take action on their recommendations immediately, if possible. Remember, they are vital to keeping the business afloat.
Next, hold a meeting with the entire staff. Explain the situation and be extremely blunt with the team. Offer staff members a choice of reduced wages or hours to help you get over the Pandemic. Ask and allow every member of the staff to make recommendations on how to cut costs further and make improvements going forward. Remember that the team must be on board with the concept of keeping the business open and functioning.
You have a responsibility to your employees to protect them from illness, and you certainly do not want to create a health problem within your business. The bad news is that the Center for Disease Control is saying that people do not begin showing outward signs of illness for 2 to 14 days after exposure to the virus. The good news is that people are contagious after they begin to feel the symptoms.
You should have a clear understanding of your employees to report any symptoms of the virus and stay home immediately. You should immediately begin monitoring employees for illness. If a person shows signs of the disease, such as a fever, send them home. Do not allow them to come into contact with your other employees.
Perform temperature checks for employees arriving at work. A reading of 100˚F requires the employee to return home without entering the workplace for self-quarantine. Implement mandatory monitored hourly hand-washing for a minimum of twenty seconds per hour. Travel should be restricted, and any employee that travels to a Center for Disease Control (CDC) Zone that is outside of the USA should not enter the workplace for 14 days. Anyone going outside of your immediate area should be marked for observation upon their return or quarantined as per CDC’s guidelines.
Consider allowing those whose work does not require physical in shop work to work remotely from their home. Remote workers might include those who do phone sales, customer relations, human resource personnel, phone receptionist, accountants, job pricing and quotation, and others.
Protect Your Cash Flow
Immediately get to work on keeping that cash flowing. Cash flow has always been the lifeblood of any business, and today, cash flow is more critical than ever before.
If you have any receivables out, get that money as quickly as possible. Begin calling them first thing in the morning and explain that you need your money right away to stay in business. If, for some reason, they cannot pay you immediately, work out a payment plan that will put the money in your hands within the next 30 days.
It is highly unlikely that you will be able to collect on all of those account receivables, but you should try. You may get lucky, and some respectable clients will honor their responsibility. Treat this as an important less to not play the role of a banker with your clients.
Change your Order Policy
Starting now, if you are not already doing so, get a 100% pre-payment upfront on all orders, with no exceptions. Yes, orders will be canceled as events do not materialize, but that is the problem of the event planner, not your problem. Put your terms and conditions in writing and stick to it. A 100% pre-payment is required, and any cancellations will not affect any completed work, which will be deducted from any refund request. If you have ordered the substrates and made the screens, those items become the responsibility of the client and not yours.
Line of Credit
Gain access to all cash available to you. If you have a line of credit, draw on it now to have it available. Have the bank put the money into a separate account and let the bank consider it an unused line of credit until you need it. If it is possible to extend your line of credit with the bank, do it now while the bank still has money available. They are going to tighter with their money very soon.
Creditors and Lenders
Get your accounting program open and study your current outstanding debt. If you feel you can’t make payments for the next four months, call every lender and explain the problem. Be upfront with them now, and don’t wait. Most creditors are willing to defer and allow reduced payments if you are well-established. However, be aware that others are calling them as well, and pretty soon, they may not be able to extend themselves further. Get in on the ground floor by calling them now!
Attempt to cancel any outstanding orders for capital equipment that you have just ordered unless it is crucial to your business. Delay any other capital expenditures that you have been considering. Now is not the time to spend, but to stop wasting those valuable dollars.
Contact your banker immediately and ask for their guidance. Several of the larger banks have said that they are willing to help with disruptions due to the virus. Some have already begun waving small business fees and early certificates of deposit withdrawal fees. Banks have access to capital and can expedite the process of putting money in your hands immediately. Ask only for what you need and don’t go overboard on borrowing, as you will only regret it later.
If your main clients were events and schools, now is the ideal time to diversify your business. With a building and staff already in place, consider what else you could be producing to earn revenue to replace the income that has dried up.
Consider what products and services your current client base use. Often, there are products that they are ordering from Amazon that you can fulfill in your existing shop. Get on the phone and ask your client base for ideas. They will be happy to help you stay in business and provide other products and services that you may not have considered.
A hot item right now is the branded portable drinking containers because people are wary of drinking from a public drinking fountain.
If you have ever thought of starting a clothing line or brand, now is an excellent time to get it off the ground and get those samples printed.
Outside of Screenprinting
Consider another business outside of screenprinting that could potentially grow into a separate company when the orders start coming back. This new company should be something that you or one of your staff members have expertise at and can quickly train the rest of the staff. It can be anything that can keep the team busy and bring in extra money to keep the business alive on a short-term basis, if not becoming a permanent new business for you. If it works out, make that person who suggested it a full partner in the new company.
Todd Pedersen was out of work and broke when he started with an idea of selling pest control door-to-door with himself and ten buddies. Fifteen years later, the business was acquired by the Blackstone Group in 2012 for USD$2-billion and is now Vivint. Maybe you, too, can be so lucky with your new business venture.
Consider what you could be printing and selling on your website.
Or consider what Barrel Maker Printing did. They were a custom apparel decorator for companies. They also did live events, and as a result of the Pandemic, they lost 95% of there business almost overnight. They offered to set up websites for any business free of charge where the company can fundraise to support the business’s employees. Barrel Maker will print the design or even come up with a new design and print the items sold on the website. Thee is no upfront cost, no setup, and no management fees to the business and the profits (above manufacturing costs) go directly into the business’ GoFundMe accounts or by check. They have 5,039 followers on Facebook, and they are asking each follower to send the message to 5 companies that could benefit from the offer. That has the potential of each more than 25,000 businesses.
Using Time Wisely
Now is the time to consider all those great ideas that you put aside because you didn’t have time to implement them when you were busy.
Clean the entire shop from front to back.
Conduct distance-based training via video conferencing. Use Skype, Facetime, or Facebook Video to have experts train your employees in the latest technical innovations in screenprinting. Most expert consultants are unable to travel at this time and are willing to provide online training at a discount. Take advantage of the opportunity to train your staff.
Cross-train everyone in the shop. Issue a “passport” booklet to every employee with a different department destination and training plan on each page. Their job is to find the time to work in each department and learn the skills. When the department supervisor is assured that they have learned the skills, they get a sign-off on that page from the supervisor.
Create a better workflow in each department with documentation and standard operating procedures. Rearrange equipment as needed to decrease distance and time.
Use the time to perfect your printing technique by using up all those misprinted substrates.
Print shirts for staff members with motivational statements front and back.
Stay in touch with every customer and client. When the Pandemic subsides, you want those customers to know that you were thinking of them.
Government and small business resources
The U.S. government has a website up to keep everyone informed of the government response to Coronavirus – COVID-19 at https://www.usa.gov/coronavirus.
Money and Taxes
- Consumer Financial Protection Bureau has advice for managing the personal financial impact of coronavirus.
- Internal Revenue Service (IRS) advice for deducting COVID-19 costs from your taxes.
- Department of the Treasury is supporting American workers and businesses.
- Federal Deposit Insurance Corporation (FDIC) is working with regulated financial institutions to help them meet the needs of their customers.
- Small Business Administration (SBA) has guidance for businesses and is offering low-interest Economic Injury Disaster Loans (EIDLs) businesses and non-profits impacted by coronavirus (COVID-19).
Health and Safety
- Administration for Community Living offers information for older adults, and people with disabilities.
- Centers for Disease Control and Prevention (CDC) is studying the virus worldwide and helping communities respond locally. Check the CDC’s Coronavirus Disease 2019 (COVID-19) page for news and guidance.
- Centers for Medicare and Medicaid has guidance for Medicare recipients and Medicare providers.
- Corporation for National and Community Service guidance for volunteers and programs.
- Department of Health and Human Services Office of the Assistant Secretary for Preparedness and Response (ASPR) is developing new medical treatments.
- Department of Labor has information for employers and workers on preparing workplaces and responding to COVID-19 in the workplace.
Travel, Immigration, and Transportation
- Federal Aviation Administration (FAA) offers guidance for air travelers.
- Federal Transit Administration (FTA) offers guidance to transit agencies.
- U.S. Citizenship and Immigration Service (USCIS) has information about office closings, appointments and events.
- Federal Student Aid has information for students, borrowers, and parents.
- Department of Housing and Urban Development (HUD) issued guidance for public housing authorities, landlords, shelters, non-profits, grantees, and stakeholders.