Vancouver-based Bench was initially hit hard by the effects of the COVID-19 pandemic. A sudden drop in sales in March forced the FinTech company to restructure its financial plan and lay off 10 percent of its workforce.
However, Bench saw its sales double after it retooled to help small businesses in the United States apply for Paycheck Protection Program (PPP) loans.
“We had to totally change the business, we had to completely redo our financial planning.”
Bench automates accounting for small businesses by pairing its clients with a team of professional bookkeepers. Founded in 2013, the company has raised $53 million in venture funding to date. CEO and co-founder of Bench, Ian Crosby, told BetaKit although the company experienced a “gut-wrenching drop” in sales at the beginning of the pandemic, Bench has since “turned the business around.”
After seeing a significant drop in inbound customer interest and sales, Bench shifted its focus to help support American small businesses apply for PPP loans. The move, which helped increase sales, enabled the Vancouver startup to rehire 17 of 47 employees that had been permanently laid off. Bench has also hired 52 new employees as of June 18.
Crosby told BetaKit in mid-March Bench saw its new client sign-ups fall by more than 40 percent, dropping from 111 in the second week of March to 65 the following week. The CEO said that at the time, Bench had a runway of $5 million USD, meaning the startup “would have been dead in eight months” if it did not make changes to adapt.
Within a week, Bench decided to pursue a financial restructuring and by March 27 the startup permanently laid off 47 members of its 460-person team. The layoffs affected employees in management, recruiting, sales, customer success, business development, marketing, and operations. The cutbacks also impacted facility staff, as the company did not have an office during the pandemic. Crosby said when Bench returns to the office, the facility staff will be rehired. As part of the financial restructuring Bench also enacted “aggressive” decreases to executive pay.
“By the end of that third week [of March], we had to totally change the business, we had to completely redo our financial planning, and we [had] to throw the old [plan] out,” Crosby said.
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In an email sent to all employees at the time and shared with BetaKit, Crosby pledged to provide eight weeks of severance to the laid-off workers, offer support in applying for employment insurance benefits, and keep the affected employees on Bench’s health insurance program.
Crosby said Bench did not seek out any Canadian COVID-19 business relief, such as the 75 percent wage subsidy, or the $40,000 Canadian Emergency Business Account loan program. He noted those programs were not “designed” for companies like Bench, as the company was experiencing growth relative to the same time last year, therefore it would not be able to fit the criteria for the wage subsidy.
On March 27, the same day Bench conducted layoffs, the US Senate signed the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act into law, which included the PPP loans for small businesses.
“Right away, we realized, holy crap, this thing is complicated and every single one of our customers need it,” Crosby told BetaKit, noting that small businesses in the US are Bench’s main clientele.
Bench has hired back 17 of the laid-off workers, and has hired 52 net new employees as of June 18.
The PPP intended to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally-guaranteed loans. Under the terms of the program, businesses have eight weeks from the day they receive the cash to spend it in order for the loan to be forgiven.
Bench shifted its sales and marketing resources in order to provide free consultations to small businesses. The company also posts advice regarding PPP loans on its blog. The move increased traffic to Bench’s website, Crosby said, from 1.7 million unique visitors in all of 2019 to 3 million unique visitors between the five-week period of April 1 to June 19.
The company also began helping American small businesses prepare PPP loan applications.
“Rapidly, our business started turning around,” Crosby said. “Suddenly, we had all these people hearing about us coming in through our blog channel, and our sales actually went up to higher than they were before COVID.”
While Bench offered the PPP application support free of charge, the company was able to turn some of those new users into paying customers. As of June 18, more than half of Bench’s clients were discovering the company through its free COVID relief programs. In the last week of May, Bench signed up 147 new clients, more than double the lockdown low of 65, and up over 30 percent since before the pandemic hit.
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“As the CEO I didn’t tell anyone to do this, they did it on their own,” he added, referring to the team creating resources and providing free consultations to businesses. “Our culture is that we’re really here to help people however we can and we give our people the tools and autonomy to make that difference.”
Bench has also partnered with FinTech lenders BlueVine and Lendio, as well as Toronto-based Clearbanc to get loans for Bench’s customers.
Given the unexpected improvement in sales, the majority of the 52 new hires are in sales and marketing departments, to assist with Bench’s PPP assistance efforts. Crosby told BetaKit that over the next couple of months, the company expects to have more employees than it did prior to the pandemic.
The CEO said the company may need to plan for another “pivot,” depending on where the economy goes. Now that many companies in the US have secured PPP loans, Crosby noted a number of them will likely now focus on the loan forgiveness component of the program as deadlines approach. Once the global economy recovers from COVID-19, Crosby said he hopes Bench can “revert” to its previous business design.
Image source Bench via Facebook.