I once heard that you’ve surpassed all odds if your small business is still open after five years, whether it’s successful or not. If that’s the case, my wife Grace and I did everything right.
We opened a hairdresser in 2002 just outside Austin, Texas. We are still in business now, many have been replaced recently.
We were a smart team to start this business. She had been doing high-level hairdressing for over 20 years. He had some monetary and marketing skills. We call it “Transformation” because it replaces our specialty. COVID-19 is a replacement we didn’t expect.
Small on the occasion of a pandemic
Because I took a look at the economic news and saw what happened in China and then Italy, we acted in early February with our already highest hygiene criteria in the salon. We’ve made some physical adjustments to simplify cleanliness and search (unsuccessfully). medical grade protective equipment. Financially, I started accumulating money reserves and checking our lines of credit for a drop in sales.
Typically, the hair sector is very predictable. People tend to cut and color every four to five weeks. In a fancy salon like ours, they make e-books months in advance. So when revenue fell in past-due February, then fell further in early March, long before local shutdown orders, we knew something bad was going to happen.
This showed what undeniable logic had told me to expect. Viruses spread until anything stops them. We knew what he was doing elsewhere and there was no explanation as to why to think he would act here.
On March 16, Grace and I, the final screen was our only option. The hairstyle requires prolonged close contact, something that had attracted me to the industry years earlier. It was a service that may not be subcontracted to Asia. now, an Asian virus made this kind of contact dangerous.
We didn’t need to help make someone sick. We also thought the local government would soon order closures anyway (which they did a week later), and we felt it was better to do so on our own terms.
Temporary, we think
The end of the doors presented a monetary problem: how to make payroll without income, we had enough cash to cover everyone’s overall salary for a while, we also knew that Congress was talking about crisis relief plans, although nothing had happened yet.
In terms of unscrutinly, we fired everyone without delay, but our small team (all nine) was like a family. We also had to think about the future, preserve our money and credits for difficult situations when we reopened in a weak situation. We’ve dug up savings to pay everyone for the rest of March while we’re looking for better ideas.
At that time, Congress approved the paid coverage program. Our long-time bank filed our PPP application on the same day as the program opened. It turned out to be too late. Future investment was recovered almost immediately . . . and the salary came to an end.
We may simply keep paying everyone out of our own pocket, spend the money we want later, or make transitional layoffs. It is a difficult choice, however, we are under pressure from all on how we intended to reopen when possible. This is all going to be transitory, we think. Meanwhile, staggered unemployment benefits were enough to keep everyone afloat.
Grace took up painting and planned precisely how we were going to reopen. It was a challenge because the regulations seemed to replace every day. Brought in 3 massive dashboard binders in combination from other agencies and professional organizations. They all wanted to be useful. However, the conflicting advice and demands only added to our uncertainty.
The background news at the time about New York, where hospitals were filling up and thousands more people were dying. None of this happened where we are in Texas, but we knew it could happen. We told consumers we would reopen when two situations were met.
The moment point had micro and macro levels. We’d like to do a few things in the living room and know that the situations in our domain would render them useless, but how do you measure that?
I think the Opening Up America Again plan launched through the White House on April 16 made sense, had express criteria to meet before reopening, adding a 14-day drop in new cases. This has our guide.
It was around this time that protests against the blockade began to spread across the country. I understood how frustrated other people were, but I didn’t get any court cases on non-essential things.
As a hairdresser, I believe that what we do is vital, but not vital enough to justify a threat to public health. However, all the time we received daily phone calls from other people desperately looking for illegal haircuts. Some have submitted sums gigantescas. de money. We refuse.
However, discontent had a political effect.
On April 27, as instances of the virus continued to rise in Texas, Governor Greg Abbott announced that a slow reopening would begin on May 1. The initial phase did not come with the salons, but Abbott said they would allow the salons to open midway. “May . . . ” It wasn’t good news for us, but it did let us know what to expect.
Then, on May 5, Abbott announced at an convened press conference that beauty salons could open on May 8 instead of mid-May, as he had hinted a few days earlier.
More than hair
Grace and I knew we couldn’t reopen this quickly, so the first day the Texas salons were able to reopen, I went to see what was going on.
Prominent salons like ours seemed to be usually closed. The same goes for some of the reasonable “stores” that sell quick haircuts. But at one, I saw a dozen sloppy-haired men waiting outside. None wore a mask (which was not mandatory at the time) and kept well two metres from each other. I haven’t been inside yet. I can guess the scene: stylists beaten up with poor protective gear, risking their own health.
As we think about it, security and monetary points began to overlap. When calculating the numbers, it was quite transparent that we might simply not be our quality point and make a profit.
The virus, and the measures taken, had killed our business model.
There’s more, too. We didn’t make quick cuts; We made other people charming and charming, in a comfortable and comfortable atmosphere. Our stylists did a highly personalized precision task and we bill accordingly. Now it’s going to be a lot harder. The break-even point is the most productive case. No way.
We’re starting to get stories from colleagues in the industry. An industry exhibition in our region has suffered a disaster. A consumer who was sick and waiting for the effects of the COVID check simply lied about the screening questionnaire. Then, while he was in the coloring living room, he won a phone call telling him the check was positive. The screen had to close for two weeks while all the staff were becoming ingilised, a massive monetary blow.
In the midst of all this, we were nevertheless approved by a PPP loan that would have allowed us to reopen for a few weeks. But we may not yet see a safe and sustainable path to recovery.
For me, personally, reopening the room would mean endangering my wife. We also had workers and many clients with various fitness issues. The idea that we could spread this fatal virus and injure one of them was unbearable.
The drop that filled the glass came when one of our long-time stylists presented another career opportunity, the kind he couldn’t refuse. We were excited about him and we still are, but that replaced our already bad prospect for the worse.
At the time, Grace and I knew the business had to permanently close or move to another.
Us to evolve.
A striker
Our paintings at Transformation have been more than a matter of money. We walk with many cancer patients through the agony of hair loss. We were there for countless graduations, weddings, anniversaries and funerals. I think the shelter we provide probably preserved some marriages. The project was going to continue somehow.
Looking at this new world, we learned that some things hadn’t changed: people need quality hair care, if they can get it safely. They need connection and community. And now they need to escape this crazy new world, if only for a while.
In the midst of all this, our living room lease ran out. Grace and I own another small space near us, and we learned that this small construction can be just a new living room.
It is a charming and secluded place where we can serve other people safely, one or two at a time, away from the crowds. There is an area of herbs where we build meditation areas and a concrete base that we will use for yoga and wellness. Deals.
It won’t be anything like the exhibition and we’ve organized over the more than 18 years, but we’ll continue to help other people and create new jobs.
I hope that’s how the rest of the economy develops. Technology and other adjustments have been killing entire industries for many years. This is nothing new. The difference this time is how quickly this happened with restaurants, bars, hotels, airlines and others for which proximity is a component of the product.
We are among the lucky ones to turn in a new direction. Over time, we hope we all notice that even the worst mistakes can open the door to bigger things.
My spouse John Mauldin predicts an unprecedented crisis that will lead to the greatest erasure of the riches in history. Most investors are aware of the rising tension at this time. Learn more here.
I’m editor of Mauldin Economics and the New York Times bestseller John Mauldin published his unique economic and investment analysis.