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Cash-Strapped Small Businesses Turn to GoFundMe

10 November 2019

From The Wall Street Journal:

Aimee Skier loves taking her 3-year-old son to story time at Books of Wonder in Manhattan. So when she got an email from the bookstore soliciting GoFundMe donations to help with moving costs, she was happy to chip in $25.

“It’s a quaint little independent store,” Ms. Skier said. “Story time, the programs and readings that they do—there’s no charge for those, and you can spend time there. To me, that’s worth something.”

Most people think of GoFundMe as a way to raise money for medical debt, funeral costs or natural disaster relief, but the crowdfunding website is increasingly used by struggling small businesses, said Chief Executive Rob Solomon. Thousands of small businesses, ranging from comic-book shops to drive-in movie theaters, have opened campaigns across 19 countries.

“These independent businesses become pillars in a community, and when they can’t stay open, the communities really rally,” Mr. Solomon said in an interview.

Books of Wonder’s campaign, which started Oct. 22, has raised more than $23,000 toward its $250,000 goal. The company has about 30 employees between its two stores and annual sales of just over $2 million.

Owner Peter Glassman said he can pay his current bills but needs money to move the bookstore’s flagship from 18th Street to a more affordable and high-trafficked space in the Flatiron District. He said he has struggled to pay the $600,000 annual lease at his current location, particularly after his most recent subtenant, City Bakery, entered financial trouble and folded.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

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6 Comments to “Cash-Strapped Small Businesses Turn to GoFundMe”

  1. So you have a business asking for handouts… Sounds to me like they want to be a charity. I wonder what the tax implications are for a business funding operating expenses like this.

  2. > 600,000 annual

    Fifty thousand dollars a MONTH?

    > quaint little independent store,”

    Uh-yeah. The map shows them in Chelsea in Manhattan. Even with that population density, I have trouble believing they have enough floor traffic to make that nut.

  3. Let’s see:
    – Total gross revenue for 2 stores – $2,000,000.00
    – Rent for 1 site – $600,000.00
    – NYC minimum wage for 30 employees – $666,000.00
    – Price of books @ 40% discount/ 0% discount – $1,400,000.00

    – Profit/loss – (-)666,000.00. + second site rent. Figure $1M a year.

    Four choices:

    – Free rent
    – Zero employees
    – Permanent go fund me
    – Close up shop

    I doubt they can get 40% discounts or full price sales.
    Every 10% discount will add about $150k to the loses.
    This is does not look like a viable operation, with or without charity.

    • Of course, that is just a very rough WAG:
      Assuming full time employees but not factoring in payroll taxes, health care, vacation, and other perks or utilities or the owner’s own salary.

      Good news is, despite this being NYC, they won’t have to worry anytime soon about a wealth tax or even inheritance tax.

  4. On one hand, it’s impressive that he’s already brought in 23 grand in such a short period of time. On the other hand, it’s not likely he’ll hit 250K, and after that, what then?

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