Times are tough – we all understand this. And one of the biggest challenges for any company is cash flow. When things are going well, bills are easy to pay. When money isn’t coming in, it’s tough.
Business loans are often used in scenarios where companies have a short-term need. Coronavirus Business Interruption Loan Scheme (CBILS) was a great example of how affording companies a loan in the short-term would give them a better chance of survival in the long-term. As documented by UK Finance, 33,812 applicants have so far been granted £5.5 billion.
Another example of this in the UK was the Furlough scheme, or a Stimulus scheme in the US. Again, the idea was that given enough money to tie over a difficult period people were likely able to avoid poverty and be more likely to be able to pay-back their grants in taxes (from one direction or another). BBC reports this to currently include 8.4 million workers, and approximately £22bn.
It’s clear, then, that short-term cash provides companies with an excellent chance of staying afloat.
So, what does this have to do with Gift Cards?
Let’s think for a second about your local high street shops. They have a short-term problem. Not enough people are coming in as people are still staying indoors, and they still have overheads that they need to cover. Given a few months, this problem should reduce or go away, but it’s still a concern for now.
Imagine a scenario where they could ask loyal customers who might shop perhaps a month or two from now, to pay for their goods today. This isn’t a donation. The customers will get exactly that money worth of goods (or food/drink, whatever the business does) when they do visit. It’s essentially a scheme for deferred delivery of goods and services.
This would be great for the shop. They need the money now more than they should in a month or two. And given the markups on instore retail products, they could likely more-easily absorb the cost of your future goods if given the resources to succeed today (no different to how CBILS repayments are structured).
The customer – you – are not hard-done by, as you lose nothing. You are simply pre-paying for your food, goods or services in advance.
Now, let’s think beyond a single shop – I regularly shop at a number of places:
- My local supermarkets and asian food grocers
- There’s a few local clothes shops I buy most of my clothes from
- There’s a barbers that I’ve been visiting for the last 14 years to get my hair cut
- I visit the cinema usually once every month or so
- I have a gardener that we’ve used for many years
These are places/goods/services I’ve used for years, and will likely continue to do so. As, probably, are 1000 people just like me. So, what would £100 to my local barber, from even 250 customers, mean to them? £25,000 is an incredible amount of money for just some of their customers to have pre-paid. And, the remainder of their customers will continue to ensure that cash continues to come in – a luxury they are only afforded by staying afloat.
Not just a grant
The beauty of this system is that it’s not just a grant – a pool of money disappears into the ether without any direct reciprocation. It’s a very tangible way to keep your retailers and providers going through a difficult time.
We’ve been helping Lark London for a while, and came across this very scenario with them.
Webtrends Optimize helped us get gift cards up and running in our Shopify Store – it took them just an hour from asking to get our initial offering online. In less than 24 hours, with no advertising anywhere yet, we started getting Gift Card purchases coming through.Priya Devi, co-owner of Lark London
Individually, these were fairly small in size, and if coming from just a handful of locals they may not have amounted to much. However, since moving online, they are seeing purchases not just from locals or even in the UK, but internationally.
This international market of customers and potential well-wishers easily have the power to give Lark London the boost to power through a difficult time. Having begun reopening their stores in South London, and with Social Distancing restricting how many people are allowed in at any time, they have a long way to go before things get back to normal. But this temporary boost could help them over the bump that so many suffer from.
Sort-of like Kickstarter, but for stuff you were going to buy anyway
When you invest in companies on platforms like Kickstarter, you can either provide them with small donations, or you have the option to purchase their goods at a time where they become available. This could be months or even years in advance.
If we’re willing to do this for gadgets like a ring you can use for NFC payments, special battery packs, or even a high-quality folding ruler (yes, you read that right), why not do it to save our local shops for goods or services we were going to purchase anyway?
So, what can you do? If you have the money, of course – ask. Ask your local restaurants, your favourite retailers, your hair dressers etc. If they operate a gift card scheme. Make sure the time period to use it by is generous, and support your local businesses in a really practical way.
I hope this blog was thought provoking and empowering of how your money can help local businesses. Or even spark an idea for your own business.
Any questions or ideas you may have please do get in touch.