Many companies are already invoking "force majeure" — or "Act of God" — clauses to suspend or terminate performance under contracts or agreements, arguing that the COVID-19 crisis makes it impossible for them to perform. A typical force majeure clause may permit a party to extend, suspend or even terminate its performance when an event occurs that is beyond that party's control.
Since the consequences of the pandemic likely will be felt for some time, business owners should think carefully about issues that may affect their companies and protect themselves. They also should use this time to take bold steps and quit waffling on the possibility of losing a few dollars of business by supporting vendors who could care less about you or supporting customers who do not pay you.
Here are some suggestions you can simply copy and paste into your own letters or policy:
• Since business conditions have changed, we are dedicating our mission statement to “employees first” and requiring customers to wear masks and follow CDC guidelines when visiting our showroom or wholesale location. If you insist on not abiding by the rules, we will politely ask you to leave.
• Since business conditions have changed, we will no longer sell products in our showroom that are sold in big-box stores, have a direct-to-consumer strategy, only use us as a vehicle to another business channel, and provide nearly no rebate or assistance to make our business better.
We will partner with smaller, more nimble companies who will appreciate our business more, and reward us for our efforts. The brand of our showroom is more important than your brand name.
• Since business conditions have changed, we can no longer afford to work with slow-pay customers and will kindly ask you to pay with a credit card, PayPal or Venmo for your order — in advance. While we understand this is difficult for you, and the history of wholesale was built on giving credit, a sale isn’t a sale until its paid. We will not release material to you unless it is, in fact, paid.
• Since business conditions have changed, to remain relevant in business, we now must provide installed sales as part of our business platform and understand the concerns of the contractors who have been loyal to us. Please understand that to remain competitive with other showrooms, we need to differentiate ourselves, and providing a one-stop-shop is now a necessity.
Our ability to control the quality of our customer experience will now improve, and we will remain in business for years to come.
• Since business conditions have changed, our underperforming employees who refused to change are no longer necessary, and there are now opportunities for jobs within our company for employees who are motivated and can sell. While this is difficult to discuss, performance matters, sales matters and embracing technology matters.
While you may have been employed 20 years with our company or more, if you have refused to change, “force-majeure” allows us to part ways. Thank-you for your service, but you should have worked ahead of your pay, not expect to be paid just for showing up.
• Since business conditions have changed, we are not limiting ourselves to just specific product categories; since we have the space, we can now venture into lighting, tile, appliances or other related products. We understand customers want a one-stop design center and to trust one dedicated salesperson to be the hub of their project. While we know this is a stretch for our employees, we understand our customers expect more.
• Since business conditions have changed, we are not allowing spiffs in the showroom. You will sell what we want you to sell, not what the reps want you to sell. You will sell the products with higher gross profit and sell off the commodity-grade products, or those that are on the Home Depot website. Our showroom will be cleaner and more prepared with products having a strong MAP policy. I am the owner, and this is how I decide to run my showroom.
• Since business conditions have changed, I am canceling my website contract with you. I’ll be working with a proactive company that is, since I am no expert, willing to help show me what a great showroom website will look like. It will have a 3D tour, be mobile optimized, and allow appointments to be made online.
It may or may not have ecommerce but will stand alone from any wholesale site I have. The new website host will provide Google analytics so I can measure what my website does for me.
• Since business conditions have changed, we are now selling online, as well as open to the public. While this was not the case 20 years ago, the world has changed, and we must change with it.
• Since business conditions have changed, we no longer tolerate the “just because we have always done it” mentality.
Position Your Business to Win
The world is navigating unchartered territory. But this does not mean businesses cannot prepare and position themselves to win as they reopen. Focusing now on these measures will help you and your business focus on your core mission going forward and avoid issues likely to arise in these unprecedented times.
Of course, the landscape continues to change, so be sure to stay informed about changes to existing regulations and be prepared to adapt quickly.
I think of the companies I have worked with in my career that stepped up to the plate when the recession hit, or when I really needed help in running my showrooms/wholesale locations. Those are the same companies standing by me now.
The other ones are busy moving their products on Amazon or Home Depot online. While I understand the need to sell and get to the consumer, I see conversations that appear to make independent wholesale/showrooms look like second-class citizens. While I can forgive, I do not forget.
Use force-majeure as your reason to be bold, and finally make those changes.