How Entireworld’s Scott Sternberg Plans to Get His Clothing Line Through the Coronavirus Crisis

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17.03.2020

This email went out yesterday—has there been a measurable response yet?

Yeah, we had a great, great Sunday. A fantastic Sunday. So from a sales perspective, it was great. And a few nice media folks called and wanted to get my take on why I was so painfully honest with everybody. The sweatsuits are great; it’s a great product. So I think it was a well-timed promotion. Hopefully we’ll keep it up over the next couple days, and then put our heads down and figure the next one out.

Last time we’d talked, you mentioned Trump’s tariffs maybe having an effect on your business because of your production happening in China. So when did you clock the fact that there was a novel coronavirus spreading through the country where you produce your goods?

I was paying attention to it as my sourcing team, who is one person, was paying attention to it, in December. This is major, and it’s something beyond what SARS or MERS was, but this has happened before. This isn’t new, right? And what’s so mind-boggling is that our government wasn’t reacting in December by, like, proliferating tests on a level that would allow all of us to be tested right now, so we had some sense of the future and what this bell curve looks like in terms of infections. But yeah, we were thinking about it, of course. Because at first it was like, okay, some shipments are going to be delayed. And then it was like: this is now in South Korea and Japan, where my investors are. And they’re all quarantined, so that’s gonna slow that stuff down. And eventually it’s here, so that hits us on a consumer level. And really pragmatically, our warehouse, which ships our product, they might have to close. So where are you then?

Does the runway for the business shift in a time of crisis like this, or is it something you’ve budgeted in from the start?

You know, we were in the middle of a round of financing, so it’s a particularly precarious time right now.

Do you have a sense of what that span of time is? What this has to look like for you to come out whole?

It shifts on a daily basis, and it depends on so many levers, other than practical day-to-day sales. It depends on how fast we can close this round of financing, basically—it’s purely dependent on that. But doing that in the time of cholera [laughs] is not easy.

This might sound like a silly question, but when you’re talking about something like a small business loan, have you heard…anything…from…anyone…in a position of authority?

I know, it’s so funny. One thing I’ve realized as I’ve gotten older, and I’m on my second business, is that you’re always looking for, like, dad, or your uncle, or whoever the hell it is, to tell you the answers. Somebody. And that person doesn’t really exist. There really obviously is a crisis of leadership right now, in terms of anybody at the top. But SBA loans have existed before. There are SBA disaster loans. Unfortunately, they’re not currently available to anyone in Los Angeles County. We already looked into that. But you’re navigating this stuff by yourself. That’s the reality of the situation.

What is something the layperson might not understand about how a moment like this impacts running a small business like yours?

Listen, we have a set of fixed expenses, and a set of revenue assumptions against those. When any of that doesn’t align, and you don’t have a reserve of cash to rely upon, that equation goes off the rails really quickly, and you have to make some really quick adjustments. It’s really that simple. And if I learned anything from my past business, it’s that the earlier you pivot, the more flexibility you have.