Since we last communicated, the world has changed profoundly. Like most people, I have spent most of the past year working from home; only in the last couple of months has our firm been returning to our offices. California was one of the last states to open up after COVID-19 was seemingly brought under control. But as I write this, it appears that with the recent spike in new cases, California is once again imposing restrictions. The last year wasn’t all bad, however — both the Dodgers and Lakers won their respective champion- ships! Let’s be glad for small favors.
My focus on retail and consumer products has been challenged more in this last year than ever before, with the closure of traditional commerce as we knew it. With stay-at-home orders set in place by many states, non-essential services including most non-food stores were forced to close. Retailers with an online presence were able to survive and even grow, but it was very difficult for retailers with no previous e-commerce experience. These stores were starting their online businesses from scratch, and the lead time and investment to get them up and running was substantial.
Marcum’s Technology Group has been working with retailers for many years and was able to assist our retail clients with the necessary technology and security infrastructure to pivot into the brave new world of internet sales in a time of crisis.
Many businesses could not have survived were it not for the Payroll Protection Program (PPP) passed into law on March 27, 2020, and extended for a second round in December. Our clients worked closely with the professionals at Marcum to secure funding from the SBA and apply for loan forgiveness. Our clients were also able to apply for the Employee Retention Tax Credit (ERTC), which provided a payroll tax credit to companies meeting the appropriate requirements. The ERTC required a drop in revenue of greater than 50% during any quarter of 2020 as compared to the similar quarter in 2019.
Unfortunately (or fortunately), many of our clients met this requirement for the second quarter of 2020. The extension of the ERTC in December allowed the credit if revenue in 2021, compared to the similar quarter in 2019, declined by more than 20%. The one caveat was that a company could not use PPP dollars to qualify for the ERTC, and this required planning and understanding how to best utilize the PPP and ERTC together. The professionals at Marcum created models to determine the best utilization of both PPP dollars and ERTC to maximize the benefits to our clients. I strongly recommend that you work closely with your professional advisors to maximize your benefits for both PPP and ERTC.
Two years ago, I wrote a column in this magazine entitled “Will Magic Survive?” Here is a paragraph that I wrote at that time: “Why are fewer of our clients attending? One reason is the shows are costly, from booth cost to all the related travel cost. The second major reason is our clients don’t need to attend in order to write business; they are finding other methods of securing orders. Clients now have the ability to communicate with buyers via the internet, and more of our clients are seeing their customers at other times of the year and do not need to see them in Las Vegas. Pre-internet, the once-a-year opportunity for face time was mis- sion critical; this is no longer the case.”
Two years later, nothing has changed my opinion. Post-COVID-19, our clients have learned how to sell through the internet and buyers are just a computer away — selling no longer means traveling across the country to meet with buyers. I do believe there will still be a need to connect with buyers, but I am not sure I know how that will manifest in the future. With that in mind, the next Marcum Retail and Consumer Products Symposium will be held in Los Angeles on September 30. Our keynote speaker will be Tom Nastos, who ran Magic for the last 40-plus years. Having since ventured out on his own, Nastos will be discussing the current state of affairs with trade shows and what the future will look like.
Until next time, remember what I always say: if you’re not having fun, then do something else!
