And this is how we cope with the Covid crisis as a small business.
Make no mistake, no one will be spared in this Covid crisis.
Entire supply chains will be affected.
The world over, CEOs from S&P 500 companies are stepping out to address their staff in emotionally-charged videos, highlighting the magnitude of the impact of Covid-19 on their various businesses.
The first hardest hit, is the aviation and hospitality industry. And as travel and movement restrictions set in, and cities get lockdown; factories, offices will be forced to shut down or operate in sub-optimal capacity.
Entire supply chains will be affected.
Brief background on 99 Old Trees & our Team
99 Old Trees is a small durian specialty retail shop in Singapore. We focus on fresh durian and durian pulp supply that we get from our farm in Raub, Pahang.
And my name is Kelvin Tan. I run this small establishment with my business partner, Jeff. The reason I'm writing this is because majority of F&B establishment in Singapore share the same configuration as us: We are micro in size (less than 10 staff), rely somewhat on foreign labour, and we are pretty much price-takers for everything with little negotiating powers.
So we will just like to share our experiences and some of our future plans with fellow tradesmen to let them know they are not alone in this fight for survival and we're all in it together.
We will never let full-time staff go.
Our core team is small, consisting of only 6 full time staff (3 Singaporeans, 1 PR, and 2 Malaysian staff from Raub). During the season, we may hire another 5 to 6 part-timers to boost capacity.
We work like a small family.
Long before this crisis occurred, me and my partner long preached that in this working relationship, unless it's for serious crimes like theft, we will never let full-time staff go.
In this crisis, we are going to try to walk the talk.
Later in this article, I will share with you the specific challenges that we are, and will be facing in the near future.
But first, let's look briefly at what's happening to the F&B industry on the whole.
Impact on the Food & Beverage Industry
The good news is not all F&B industries will be affected.
Based on my observation, there seemed to be a slight increase in foot traffic in neighbourhood and heartland eateries.
Perhaps it's due to more people staying home.
But it won't be good news for cafes and restaurants located in the CBD and Orchard district.
With a sharp decrease in foot traffic, unless the outbreak is contained within the next 2 months, many of them will have to call it quits.
Daniel Ong, a local radio celebrity who owns an extensive F&B business has rightly pointed out the challenges he is facing now (you can refer to his instagram post above).
Some of my friends' cafe and restaurants have revealed to me that sales went down by almost 70% and in some cases of fine dining restaurant- up to 90%.
Inevitably, many cafes and restaurants will not survive.
Impact on our durian business
At this point, we are still considered lucky. Firstly, we are located in the heartlands in a HDB district at Farrer Park. Secondly, it is the durian off-season anyway, so there isn't any supply at all, therefore, we are not affected by any supply disruption as yet.
However, we are expecting a sharp fall in revenue in the coming durian season as the working class cut discretionary spending. I mean, come on, durian is kinda a luxury lah.
A number of companies have also called me to postpone or cancel this year's durian party. And that's quite a substantial component of our annual sale.
I'm having a headache as I write.
So what we are doing to mitigate the impact
Bosses take 50% pay cut. Employee 15%.
Our pledge to keep all full time staff must stand! Where are they gonna go if we let them go at during this period?
But to stay afloat, there are some measures that we are forced to take immediately for now.
I have announce a 15% paycut last Thursday for staffers. But my promise to them is this. When the storm subsides, and things got better, we will try to back pay them for the pay reduction sustained throughout this period.
The bosses shall take a 50% pay cut.
But hey, for a micro business like ours, the truth is, if business suffers, we unlikely to be able to draw a single cent from the business. And the real problem is not whether we are able to draw a salary, but rather, how long can our cash reserves last us for?
Besides salary, we also take the chance and look into our processes to see if there is any wastage in our operation that can be cut: air-con temperature, utilities, etc. We leave no stones unturned.
But the one thing we never cut costs on is COGS. Because being a small company, quality is the only area we can really compete in. If customers don't see the value in our product, then really, we don't deserve to stay in the game.
We also tried negotiating on rent, but to no avail.
Rent. It's been frustrating in the negotiation for us too.
Like many frustrated tenants, we are also having problems getting our landlord to grant us any concession.
The response we get from our landlord is fuzzy at best (a screenshot of my convo with him is attached here).
To be fair, actually our landlord is a very nice person. He has been very helpful throughout the two years we've been here.
Perhaps, the issue lies in the communication between our Government and the people.
Although the property rebates has been announced in parliament, but perhaps the property owners were not explicitly told in paper writing, the exact amount of rebate they will receive and by when.
So my suggestion is for Government or relevant authorities to send out letters to property owners, telling them clearly in writing, the amount of rebate they will receive and a suggested amount of rental rebate each tenant should get.
I do not think this is a difficult step for government, provided the tenants and landlords do their part by getting their documents properly done and legally stamped at the first place.
Well, at this point, I choose to give the benefit of the doubt to the landlord. That their tardiness is due to the lack of substantive information from the authorities.
Now, apologies for my tonality. Here's a serious warning to all landlords:
If you don't do your part to help, your tenants WILL default on rent, and they WILL wind up. At that point, you sue also no use. And your property will stay BARREN for a long long time. The problem will trickle "UP" to you. Do not make the mistake thinking that you have an upper hand in this. In this Covid game, everyone loses.
I think what I really like to say is, in this crisis, nobody wins. Everyone will lose one way or another.
Do not for once, think that it's not going to impact you. Even if you are unaffected, I'm sure there are people around you, people close to you, who will be affected.
Everyone has to mentally prepared to give in a little. And like what our Government did drawing down on past reserves, you too, may have to dig into your savings a little.
Well, at the first place, savings are for rainy days isn't it? And we're talking about an economic shitstorm right now.
Companies and businesses, keep your staff, talk to them, get them to accept a paycut, but keep them.
Workers, accept the paycut, you may have to adjust, you may have to retrain and learn new stuff, you may have to take on additional workload. Don't complain. Be flexible. Bite the bullet and press on.
Our pioneers did it before. I'm sure all of us can too.
I do welcome any comments, and suggestions. Let's bounce ideas! Please leave comments here or you can email us at email@example.com.