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You’re the Boss Blog: The Employer Mandate Has Been Delayed. Will It Be Rewritten?

July 3, 2013 by Leave a Comment
The Agenda

How small-business issues are shaping politics and policy.

It seems that almost nobody was ready for the employer mandate in the Affordable Care Act to take effect — not government regulators, not the managers of health insurance exchanges, and not the employers — and that a year’s delay could buy time for the government to write regulations and for companies to figure out how to comply with them. But many businesses hope to get something else from the one-year delay: an opportunity to rewrite other aspects of the mandate that they find difficult.

In particular, businesses are unhappy that the law defines a full-time employee to whom a business must offer affordable health insurance as someone who works at least 30 hours a week. “We’ve argued that the 40-hour workweek is where most people think the full-time work level should be,” said Neil Trautwein, employee benefits policy counsel at the National Retail Federation, a trade association. “It goes to the compliance burden on employers, and employees, and the balance of full- and part-time employees. What happens to people who prefer to work part time, and find their hours reduced to stay under the 30-hour limit?”

A 30-hour threshold, he added, will create “a new class of 29-ers,” workers with schedules set just below the threshold.

Mr. Trautwine and others have portrayed the 30-hour threshold in the Affordable Care Act as a source of confusion and complexity, since the Fair Labor Standards Act sets the full-time workweek at 40 hours (and establishes rules for overtime pay based on that). The lower definition will require many companies to offer insurance to more employees, which would make providing benefits much more expensive — hence the schedule juggling that Mr. Trautwein foresees.

Tracking who is entitled to benefits might also become more challenging for some companies. “It’s all about proving who’s a full-time employee and who’s not,” said Alan Cohen, chief strategy officer for Liazon, which operates a private benefits exchange for employers. “A lot of these employers don’t track hours, so they don’t even know if they’re full time.” One client, a home health care provider, for example, pays its nurses per visit, not per hour. “This company not only has to provide health insurance, but it also has to buy new systems to track hours,” he said.

“Businesses are looking for something that’s easier to administer and doesn’t require them to give coverage to people only working for you for two or three days,” said J.D. Piro, a senior vice president at the benefits consulting company Aon Hewitt in charge of the health law group. The 30-hour requirement, he said, ran contrary to the spirit of the health law overhaul.

“The idea behind the Affordable Care Act is to keep employers in the game and allow them to provide insurance without making major changes either way,” he said, “not forcing them to expand coverage or forcing them to drop coverage for employees.”

Mr. Trautwein, of the retail group, said that the delay would give his group and others time to press their cases to Congress, where, he said, legislation revising the 30-hour rule has bipartisan support. Once the mandate goes into effect, he said, it would be harder to change it. “We really need relief before implementation,” he said. His group would also like to see the threshold for which companies must abide by the mandate increased from 50 employees.

Mr. Piro, however, said he doubted that such legislation would go very far. “I don’t think there are going to be any changes to this act with the current split in Congress,” he said.

A veteran health policy consultant in Washington, who insisted on anonymity, explained the situation this way: “Opponents of the legislation don’t want to fix this issue, they want to use it as fodder to repeal the whole law. They have no interest in moderating or amending the law, because that implicitly affirms that the law is worth amending.”

Meanwhile, the law’s supporters won’t amend the law, the consultant said, because they fear opponents would use the bill to derail the whole law. “We’re really at a point where we implement the law as it was enacted,” he said.

Apparently, lobbyists and benefit advisers were genuinely surprised at the administration’s decision to delay the mandate, but in the current political environment, this consultant said, they should not have been.

“If you understand both the political dynamic and the fact that this executive decision does not undermine the foundation or infrastructure of the law but still allows for being responsive to employer concerns,” he said, “it’s almost a no-brainer that this decision was made.”

Article source: http://boss.blogs.nytimes.com/2013/07/03/the-employer-mandate-has-been-delayed-will-it-be-rewritten/?partner=rss&emc=rss

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Paid Sick Leave Laws Generate Concern, but Not Much Pain

July 3, 2013 by Leave a Comment

Six years later, Mr. Stone admits to having been a little alarmist about paid sick leave. “As a small restaurant business, it’s really hard to make money, and when they add another requirement, it makes you nervous,” Mr. Stone said in a recent interview. “But all and all, I actually think it’s a good thing.”

This spring, paid sick leave came up for vigorous debate in cities around the country. Portland, Ore., passed a law in March, and New York followed suit last week when the City Council overrode a veto by Mayor Michael R. Bloomberg. In Philadelphia, sick-leave legislation died after Mayor Michael Nutter vetoed it. In each case, the same concerns about the bill — that it is unnecessary and intrusive, and especially expensive and burdensome for small businesses — have surfaced.

At a contentious six-hour New York City Council meeting in March, representatives of at least a dozen trade associations testified against the bill. Jay Peltz, representing independent grocers, called it “a de facto annual $800 million tax increase.” Those arguments appeared to carry the day in the half-dozen states that have passed laws this year prohibiting cities and towns from enacting their own sick-leave laws. But in San Francisco, the District of Columbia and the state of Connecticut, places that have had such laws in force for more than a year (Seattle adopted one in September), it can be difficult to find small-business owners who say they have been hampered by the law’s obligations — though some object in principle.

While the statutes vary by jurisdiction, most require a company to provide an hour of paid time off for every 30 to 40 or so hours worked by full- and part-time employees. The laws make allowances for small businesses, setting varying accrual rates or limits on the amount of paid time earned or exempting the smallest businesses altogether. (In New York, initially, businesses with fewer than 20 employees will have to provide unpaid leave, not paid leave.) Companies that offer an equivalent benefit, including vacation days that can be used as emergency time off, do not have to change their policies.

Before the law took effect in San Francisco, nearly two-thirds of all businesses there already provided the equivalent of paid time off, according to a 2011 study for the Institute for Women’s Policy Research, which supports paid sick leave and other family-friendly laws. “I don’t remember when we didn’t have paid sick leave,” said Paul Cowden, who employs four people at Cowden Automotive, a San Francisco car repair shop he started in 1978. “To me, it’s a humane way to run a business. And I give my guys their time if they don’t use it. I figure I’m making deposits in my karma bank.”

Among those companies that did have to put a new policy in place, about half reported that adopting and managing it was not difficult, according to the study. And many businesses fearful that paying for sick leave would drive up expenses have since reported that those concerns were unfounded. Richard Crain, who runs the Village Grill in San Francisco, said his nine employees were not sick that often. “You have to give them one week per year,” he said. “But usually it’s just a day or two here and there.”

Mr. Stone agreed, and said that paid sick leave increased his payroll costs by less than 1 percent. “In retrospect,” he said, “it really hasn’t been a big expense at all.”

That is not to say that no small businesses claim to have been affected by the law. Daniel Shackford, who operates Great Beginnings, a day care center in Plainville, Conn., said his payroll costs increased by $20,000 last year because of paid sick leave — just over 2 percent. Under the new statewide law, which took effect early in 2012, when someone takes a day’s leave, Mr. Shackford said, “I now have to pay the temporary worker who comes in, as well as the person who’s out sick. That either comes out of my pocket, or I have to charge my customers more.”

But because the law exempts smaller competitors as well as nonprofit organizations like the Y.M.C.A., said Mr. Shackford, who is a member of the Connecticut Business and Industry Association, a trade group that fought the law, “it’s pretty hard to raise my prices to cover this expense.”

“Businesses that are affected by the law don’t like it,” said Peter Gioia, a vice president and economist for the Connecticut trade group. Many companies already had their own version of a sick-time policy, he said. “But this imposed a one-size-fits-all, union-type, strictly regulated set of procedures on everybody.”

Still, the number of businesses affected was limited in Connecticut, because the law was drawn narrowly. It applies only to companies with at least 50 workers, and manufacturers were excluded altogether. (New York City also exempted manufacturers.) Moreover, the Connecticut labor department has allowed business owners who have organized their ventures into individual legal entities to apply the 50-employee threshold to each entity.

For example, a restaurateur with six medium-size establishments might employ 200 or more people in total, but if each restaurant is established as its own business — and this is common, according to Carmen Vacalebre, whose Carmen Anthony chain operates four restaurants in Connecticut — the owner does not have to comply. Mr. Vacalebre said he provided sick leave only to his salaried employees. “In the restaurant business, the hours are very flexible. If someone wants to trade hours, they do it every day,” he said. “My folks make a lot of money, but only when they work.”

Officials of the Connecticut trade group concede that, as written, the law applies to only about 8 percent of its members, and that many of these companies already have paid sick leave policies, or something similar, in place. Bob Davis, president and chief executive of Schulz Electric, a New Haven company that repairs industrial equipment, said he offered a generous vacation policy — two weeks in the first year — to attract talented workers. “I belong to a number of different forums and industry groups,” Mr. Davis said, “and the way the law is written currently it doesn’t affect any of the members.”

In Washington, which mandated paid sick leave in 2008, companies with fewer than 25 workers need to provide only as many as three days of sick leave a year. A report released in June by the District of Columbia’s auditor found that nearly 90 percent of responding businesses said the law would not encourage them to move out of the city. Nearly a third of the businesses, however, said they did not offer paid sick leave to their employees, in apparent violation of the law.

Thomas Damato, an owner of the popular Restaurant Nora — in the ’90s, the Clintons dined there frequently — said he was not aware of the obligation until he heard about it from a reporter. “It’s never been an issue, because we just pay for it,” Mr. Damato said.

Article source: http://www.nytimes.com/2013/07/04/business/smallbusiness/paid-sick-leave-laws-generate-more-concern-than-pain.html?partner=rss&emc=rss

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Start: Here’s an App to Help You Find a Local ‘Find’

July 3, 2013 by Leave a Comment

Rich Winley: Courtesy of NoChains Rich Winley: “It’s not that I dislike chains.”

Start

The adventure of new ventures.

In 2010 Rich Winley was running a marketing company in Greenville, S.C., when he decided to participate in a seven-week business exchange program to Australia through his local Rotary Club. The group traveled from the small town of Darwin in the north down to Sydney, visiting a different city every two or three days.

While in Darwin, Mr. Winley asked local residents to suggest their favorite restaurants so he wouldn’t get stuck eating at chains. “I ended up taking my group to a restaurant that looked like a house in the middle of a river. We had to take a boat to get there,” he said. “We had burgers made from local game, like kangaroo. They were probably some of the best burgers I’d ever had.”

When he got back to Greenville, Mr. Winley decided to create a business that would help people find the best local dishes wherever they were. “It’s not that I dislike chains, it’s just that you can eat at Applebee’s anywhere,” he said. “Why eat there when you’re traveling to someplace new?”

From that idea NoChains was born as a free app that allows users to look for the best independent, non-chain restaurants in an area. Mr. Winley started working on the app after being accepted into a 12-week program at a Greenville accelerator, The Iron Yard, part of the Global Accelerator Network. Through a friend of a friend he met Dan Mall, an expert in user interface who lived in Philadelphia. He became a partner in NoChains and, working remotely, designed the app’s interface.

NoChains works by allowing users to search for a specific dish. Rather than searching for “Best Thai food,” users can look for the best Pad Thai or Tom Kha Gai. The app was introduced first in Greenville, which happens to be Mr. Winley’s hometown, in February, and then in March it had a soft introduction at the South by Southwest conference. In June, NoChains debuted in New York City, with the app briefly hitting No. 50 in the iTunes store’s food and drink category.

Employees: None. Mr. Winley and Mr. Mall, partners in the business, use subcontractors as needed.

Location: Houston.

Pitch: No matter where you travel, there will always be a place that locals recommend for having the best particular kind of food or specific dish, whether it’s sushi, coq au vin or Pad Thai.

Traction: The app is being downloaded between 75 and 130 times a day.

Challenges: Getting a critical mass of users to “like” and review particular dishes at independent restaurants. “Once we get enough likes and have enough people using NoChains, the recommendations will be relevant. Now people are mostly using it to find local restaurants, and we have a fair amount of vegetarians and those that are gluten-free using it, because you can sort dishes that way,” Mr. Winley said.

Another challenge is building a solid team of developers, researchers and sales representatives on a limited budget. At this point Mr. Winley outsources development work to freelancers, as well as the tedious work of collecting and inputting restaurant information. “Because I’m a start-up I have learned how to delegate work very economically,” he said. “I use a mixture of Elance, Fiverr and Mechanical Turk, where you can hire on an hourly basis. And I do all the sales and marketing myself.”

Revenue: The revenue model Mr. Winley initially had in mind — restaurants paying NoChains for analytics — wasn’t tenable, because his research showed that half of smaller, independent restaurants don’t even have Web sites. Now Mr. Winley is developing a Web-site-creation platform — called The Foodture — for restaurants. He said it will include analytics, social media integration and point-of-sale integration for a small monthly fee.

 Financing: Mr. Winley has taken a small round of financing — less than $50,000 — from one angel investor in Charleston, S.C. He is now attempting to raise a bigger round — between $850,000 and $1 million in venture capital — and is hoping to close it by August. “I don’t want to raise it from just anyone that’s interested, I want to raise smart money from those that can be strategic partners,” he said.

Competition: There are plenty of apps that help diners find restaurants — UrbanSpoon, LocalEats, Where2Eat and Foodspotting — but few enable a user to search by dish. And most also drive revenue through advertising.

What’s Next? Within a year Mr. Winley hopes to be in 20 cities — rolling out next in Boston, San Francisco, Philadelphia, Washington and Chicago. When the app reaches 300 to 400 downloads a day, he said, “we’ll essentially be a food search engine.”

What do you think?

You can follow Eilene Zimmerman on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/03/heres-an-app-to-help-you-find-a-local-find/?partner=rss&emc=rss

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She Owns It: Lessons Learned From a Difficult Succession

July 2, 2013 by Leave a Comment
She Owns It

Portraits of women entrepreneurs.

Susan Parker, Bari Jay.Earl Wilson/The New York Times Susan Parker, Bari Jay.

At the last meeting of the She Owns It business group, we talked about succession planning. This post continues that conversation, beginning with thoughts from Susan Parker, who owns Bari Jay, a family business.

Ms. Parker’s outlook was shaped by the fact that she and her sister inherited the business unexpectedly from their father, who left no business succession plan. Had he created a plan, she said, one of two things might have happened. Either she and her sister would not be running Bari Jay today, or the two of them would have been better prepared had their father made it clear that he wanted them to take charge.

“Did you ever think about not running the company?” asked Alexandra Mayzler, who owns Thinking Caps Group.

“I did,” said Ms. Parker. But, she added, “At the end of the day, I felt like I owed it to my father and his legacy.”

And now, she and her sister also believe they owe it to their children to leave a succession plan. Ms. Parker said they are “over-consumed” with creating one and are now hammering out the details with lawyers and insurance agents. They hope to have it finalized in a few months. “We want to do everything our father didn’t,” she said. “I’ve learned from this whole process that it’s so complicated to get what you want.”

Ultimately, Ms. Parker and her sister want their children — each sister has two — to have the opportunity to enter the business if they want to. As of now, the plan provides that if something happens to one sister, her children will own half the company in a trust while the other sister continues to run it. Ms. Parker said that “something” could be a career-ending disability, as well as death — a possibility she realized only after her discussions with professionals. She also noted that the plan will need to be reassessed every five years or so.

Beth Shaw, who owns YogaFit, asked what happens if none of the children wants to enter the business.

Ms. Parker said that will be their choice. For now, she said her children, who are 6 and 8, plan to work for Bari Jay after they retire from careers as professional football players.

“Then you have the complexity of what if all your children don’t get along?” said Deirdre Lord, who owns the Megawatt Hour. “What if one person wants to get out and the other three don’t?”

The succession plan will include buyout options, Ms. Parker said. It will also ensure that neither sister’s spouse can have any part of the business — a provision that could become especially important if one sister dies and her spouse remarries someone who wants to own a piece of Bari Jay.

“There’s just so much to think about,” Ms. Parker said.

Jessica Johnson inherited Johnson Security Bureau, which both her grandmother and her father had run. Neither left a succession plan, contributing to some unresolved challenges that Ms. Johnson cannot discuss. However, she said, “It’s one thing to have a succession plan,” and another to follow it. Questions of interpretation may also arise, she said. “You can have the best intentions and put that on paper, and then how do you make sure it comes to fruition?” she asked. “That’s one of the major challenges of succession planning.”

For Ms. Shaw, the decision to create a succession plan, working with a lawyer and a financial planner, was inspired by her frequent international business travel. She said she realized she could “fall off a mountain or something” in India. Then what? For Ms. Shaw, it’s important that her business continue long after she’s gone.

“I did a plan where I’m leaving the business predominantly to some of the people who’ve worked with the company for a very long time,” she said. She’s told them, “If something happens to me, you guys are going to be running this thing.”

Ms. Parker said it would have been helpful to know that her father planned to leave the company to her and her sister.

Ms. Johnson said her grandmother took a similarly vague approach to spelling out her wishes. “She would say, ‘I’m going to the clods of dirt one day,’ and I’d say ‘What happens then?’” She said her grandmother would reply that she didn’t want to “talk about that now.”

Ms. Shaw said you have to be pragmatic: “We’re all going to be dead, so I need a plan.”

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/02/lessons-learned-from-a-difficult-succession/?partner=rss&emc=rss

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Searching for Capital: Mark Cuban Thinks I’m a Moron

July 1, 2013 by Leave a Comment
Searching for Capital

A broker assesses the small-business lending market.

I was recently reviewing press reports from the Clinton Global Initiative, and I was struck to find an interview with Mark Cuban where he said that any entrepreneur or small-business owner who starts a business with borrowed money is “a moron.” As someone who borrowed money to start a loan brokerage, I guess it’s pretty clear what that makes me — along with thousands of other small-business owners and entrepreneurs I have met over the years.

There are three ways to finance the start of a company: one is by giving away equity, another is by taking on debt, and the third is through personal savings. It is one of the trickiest and most personal decisions an entrepreneur has to make, and the decision can change as a company begins to grow and evolve. Personally, I strongly disagree with Mr. Cuban’s black-and-white assertion, and I fear that he, as an icon of American entrepreneurship, is doing a disservice to hundreds of thousands of entrepreneurs who look up to him. Decisions about how to finance your company can be tough — and filled with lots of gray.

First of all, it bears noting that persuading a bank to lend money to a start-up is no easy proposition — nor should it be. If a bank does choose to make a loan to a start-up with no established business model, you can bet that the bank will demand some form of collateral, frequently involving the owner’s home. Risking your home to start a business — especially given the poor survival rate of start-ups  — is not a decision to be taken lightly. But I would never call people who choose to do what it takes to pursue their dreams morons.

Mr. Cuban and I had an e-mail exchange about this. “If you are profitable and need capital to grow and can easily cover the debt service, sure, go for it,” he wrote. “If the loan is all risk and you don’t yet have consistent cash flow or any cash flow at all, you are crazy.” Mr. Cuban is surely right that taking on debt before cash flow is established is a scary proposition, but it’s also a fact of life for many business owners. If they choose to go for it, they routinely tap credit cards, home-equity lines, Small Business Administration loans, and friends and family. And of course if their businesses fail, as many do, this debt will follow them.

But there are many examples of business owners whose tough choices led to great companies and lots of jobs. In fact, two of Mr. Cuban’s fellow sharks on “Shark Tank” started companies with borrowed money. Barbrara Corcoran started her real estate empire by borrowing $1,000 from a boyfriend, and Daymond John, the fashion mogul, started his business by mortgaging the house that he and his mother owned together.

I asked Mr. Cuban whether entrepreneurs who cannot raise equity should borrow money to pursue their dreams. “No,” he said, “they shouldn’t take the loan. They are better off starting smaller and slower using sweat equity than taking a loan and basically killing their future. The banks don’t care about their dreams; they care about your financial statements.”

One alternative that Mr. Cuban favors is raising equity. The risk with this approach is that it is not always clear that equity investors have the true interests of entrepreneurs at heart, either. And while it is possible to pay off a loan, investors, if you can get them, are likely to stay with you forever. In many cases, they insist on putting your company on a fast-growth treadmill so they can extract big returns, and this strategy often leads to disaster. The options have to be evaluated carefully, and they are rarely black and white.

When I started my company, I was fortunate enough to have investors who were interested in backing me. But rather than part with a significant percentage of my company, I chose to fight it out on my own, keeping control of my company and taking on some debt in the process. I believe in myself and my vision of my company, and I did not want to put myself in the position of having to pursue risky strategies in the hope of pleasing demanding investors. I invested slowly and carefully, but I still needed to incur debt to get to where I am today.

Entrepreneurs wrestle with decisions like these every day, and the issues are never black and white. What are the terms of the debt or the equity? What is the potential upside of the investment opportunity, and what are the risks? Is there another way to do the job with less investment? These are tough questions, and we all need guidance.

I think Mr. Cuban’s comments demonstrate a narrow perspective on what most small-business owners go through. I don’t have data to back this up, but I believe there are millions of successful businesses in America today that were started by entrepreneurs who believed so strongly in what they were doing that they were willing to put their necks on the line and take on some debt before they had cash flow. I also believe there are millions of small-business owners who elected to take the path less traveled and decided to keep control of their companies and not have outside investors constantly looking over their shoulders. Of course, I also know that there have been lots of business owners who took on debt only to see their businesses fail. Those owners were passionate about their dreams, too.

Sometimes I lie awake at night worrying about the debt that I have incurred. But my business is growing, and I look forward, not backward. So far, at least, I don’t think I have been a moron. How about you? Please tell us how you financed your business. How has it worked out? What would you do differently if you could do it over again?

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

Article source: http://boss.blogs.nytimes.com/2013/07/01/mark-cuban-thinks-im-a-moron/?partner=rss&emc=rss

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You’re the Boss Blog: This Week in Small Business: Half-Time Report

July 1, 2013 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

As we close the books on the first half of 2013, here are a few links to some of the most useful small-business articles and posts I have read this year. I hope they are as meaningful to you as they have been to me.

The Economy

Matthew Yglesias complained that economists use shoddy data, and Robert Frank explained why millionaire investors are still holding on to their money.

Management

Eric Barker listed 10 things  you can do to improve your everyday life. Brad Farris said that giving honest, immediate feedback is a leader’s first job — and also offered some suggestions on what to do when you’ve lost your business-owner passion. Karen Vitale gave advice to her 20-year-old self, and Mikey Rox listed 25 ways to boost creativity.

Social Media

Here’s the best story I have read about Yelp: Is the review site a bully — or just misunderstood? Amanda Jacobs had a few tips for managing your social media in just 20 minutes a day, and Jill Konrath provided an example of a LinkedIn strategy that pays off.

Entrepreneurship

Twitter’s Jack Dorsey had some sound advice for what to do when you have an idea: “Get it out of your head and start working on it.”

Human Resources

Both Jeff Schmitt and Alex Befekadu gave their views on employees to avoid, and Amanda MacArthur suggested five methods to increase employee loyalty and reduce turnover.

Finance

Matthew Toren outlined seven steps to ensure a successful crowdfunding campaign, and Joe Taylor Jr. offered advice for building a profitable banking relationship.

Cash Flow

Kathy Davis listed 10 ways to increase small-business profits and productivity. Jon Stow suggested a few common purchasing mistakes you may be making. And if you’re a seasonal business owner, Rohit Arora said you should make cash-flow projections part of your financial planning.

Start-Up

Kevin D. Johnson believes “the potential for attaining greatness is in creating new markets,” and Margie Warrell thinks you should take a risk because the odds are better than you think.

Retail

Nathan Hanks suggested five ways to win when serving local businesses, including: “Live amongst your customers.” And David Lipson had a few great tips for cutting expenses in your restaurant.

Red Tape

Pete Wise listed five legal myths small-business owners should avoid, including this one: “I don’t need a lawyer.” And David Bier explained how immigration creates economic benefits.

Marketing

Freshdesk’s marketing and communications manager, Sairam Krishnan, explained how his company finds and keeps stellar customer service reps, and Casey Newman explained why data is at the heart of marketing’s future.

Online

Dana Prince wrote that the “opt out rate” is just one of five important online metrics to watch closely, and Jayson DeMers explained how to build an online community around your business.

Mobile

Tobin Dalrymple suggested five ways to publish content on mobile and build your brand.

Technology

Daniel Saks said there were five things to consider when choosing small-business apps, and Carl Bass distinguished the myths from the truths of 3D printing.

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/01/this-week-in-small-business-half-time-report/?partner=rss&emc=rss

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You’re the Boss Blog: My Restaurant Adventure: Gone Fishin’

June 28, 2013 by Leave a Comment

The owner: Chris Koszyk The owner: “If time is money, it was a miserable investment.”

Start-Up Chronicle

Getting a restaurant off the ground.

Editor’s Note: For more than two years, Bruce Buschel chronicled his experiences creating a restaurant on this blog. In a series of posts this week, Mr. Buschel explains why Southfork Kitchen will not be opening in Bridgehampton, N.Y., this season.

Not knowing is most intimate, the Buddhists say. Not knowing is also most nerve-racking. A week went by, and then a second. March marched on. Todd Jacobs assured me that a deal was imminent.

It felt like a stall. I gave him until the end of the month. I couldn’t get a straight answer. Was it a lack of money? Of chutzpah? Of counsel? The chef’s lawyer was a solo performer from Sag Harbor and had to be in court one day and at a funeral the next. His caseload was overloaded. If the past four years had taught me many things, chief among them was to count no chicken before it hatched, organic or otherwise. So when I got a text on April 1 asking if we could meet the following week, I stopped smiling and nodding and pacing. There is no next week, I texted back, there is now and there is never.

Two days later, five of us were sitting around a conference table with a stack of contracts and riders; the chef, his lawyer, my broker, my lawyer and me.

At one point, someone asked, “Are you going to miss the place?” and my restaurant life passed before my eyes: the late nights, the daily dramas, the joyous weddings, the miscalculations, the staff D.W.I.’s, the noble essentialness of the dishwasher, the antisocial social media, the lost treasure, the dizzy flirtations, the gas leaks and bright lights and kitchen fires and superstorms and a lot of spilled milk.

I will miss the bliss of those services when everything clicked like clockwork. I will miss the family meals, the relaxed pregame ritual when the cooks stretch and the staff dishes on the previous night’s customers, on each other and on themselves. I am missing all of the people already, the new friends as well as the vagrants, the noisy whiners and unassuming diners, the angry bartenders and bargaining farmers, Lucy Liu, Lou Reed, Bobby Flay, Mark Feuerstein, the artists, the con artists, aficionados, oenophiles, families, foreigners and the millennials who spend so much time frozen before their screens that their need for human contact deepens every dusk. Starbucks macchiato by day, sunchokes by night. It’s a crazy mixed-up world. A lot of good people had good nights and good food at Southfork Kitchen.

What I will not miss are the last-minute cancellations or the 20th guest of the night who wanted to redesign our system or augment our menu, as if we had just thrown it together mindlessly. I will not miss the gloomy winter Wednesdays when no one showed up, or worse, when one party of four would come to dine and you felt bad for them and your staff and yourself. I will not miss the voodoo hold the place had on me. You don’t run a restaurant, it runs you — if you let it. Just keeping up with the craft cocktail craze can drive you to drink. I will not miss my own inability to find a balance, to navigate a middle path, to delegate, to find people in whom delegation would blossom. I could never step back the way Jerry Della Femina had stepped back.

Chef Jacobs handed me a check. In a perfect world, it will be the first of 180 monthly rent checks that will allow me to pay off the loans and leave me with the property. It was not the financial cushion I had hoped for, the establishment of a tasty annuity as well as a local culinary legacy, but it will pay for itself in the long run. Still, if time is money, it was a miserable investment. Entrepreneurs may have a different sense of time and risk, sprinkled liberally with patience, stubbornness, foresight, high-wire walking and a safety net of resources. Those who make it to the other side have worked for years, stumbling, swaying, bouncing around with debt and uncertainty.

Did I waste precious time or money? The only real waste would be regret. Which does not gainsay learning from mistakes or enjoying (and suffering from) the adventure. If my next meal depended on a successful restaurant, I wouldn’t get into the restaurant game. It is a house of mirrors. Crowded places are not necessarily flourishing. Bankrupt places were not necessarily poorly run. Variables are wild: rents, location, capitalization, management, reviews, public relations, social media, timing and luck, if you believe in that sort of thing. Did I mention food? Food counts too. But two stars may be better than three — expectations are lower, satisfaction higher. And your second establishment might carry and justify your first. Or not.

Chef Jacobs is calling his place Fresh. I wish him nothing but success. For obvious reasons. I gave him a list of employees and purveyors and plumbers and gardeners who will serve him well. If he is discerning, he will find the foodie world populated with sweet people and lovable characters.

When I got home from the lawyer’s office, my wife greeted me with a cup of tea. Our conversation went something like this:

“Where have you been?” she asked.

“The lawyer’s office.”

“I mean for the last four years.”

“Oh, I was seeing how the world works.”

“And?”

“Food is the new rock ‘n’ roll. More kids want to be David Chang than Bruno Mars.”

“Who’s Bruno Mars?” she asked.

“See what I mean?”

“And I suppose Brooklyn is the new Liverpool?”

“Exactly. Bourdain is Jagger.”

“Either way. Welcome home.”

Indeed. I had been M.I.A. for four years. Only after you open a restaurant do you realize why the first few nights of existence are called “Friends and Family” — it’s the last time you’ll be dining with those two groups for a very long time.

The phone rang before I finished my tea. It was Jennifer Keil from The New York Post.

“I need a comment about your restaurant sale.”

“A comment? Sure: Jennifer Keil is very fast.”

“No time to waste.”

“Who told you about the restaurant?”

“My sources are confidential,” said Ms. Keil.

“There were only five people in the office. I know it wasn’t my broker, wasn’t the lawyers, so it had to be…”

Fresh Restaurant had hired a public relations firm, the same firm I had fired when Southfork Kitchen first opened to scant coverage. Someone had learned a lesson. Small world, isn’t it, and crammed with ironies.

The story in The Post the next day said, “Southfork Kitchen, a foodie destination known for its local produce and sustainable fish, closed amid lackluster sales.”

“Our sales were not lackluster,” I defensively e-mailed Jennifer Keil. “They were nonexistent. We had been closed for five months. Before that, we were pretty much booked all the time.”

Her e-mail response was: “Bruce: I did not write ‘closed amid lackluster sales.’ That was an addition from the copy desk that should not have happened and I was upset to see it in the copy. If there is a way to make that up to you in a following story, I will.”

Dear Jennifer: A follow-up story? You just read it.

Article source: http://boss.blogs.nytimes.com/2013/06/28/my-restaurant-adventure-gone-fishin/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: Why Some Companies Promote From Within

June 27, 2013 by Leave a Comment
Building the Team

Hiring, firing, and training in a new era.

As I’ve written in my last two posts, we were fortunate to meet with Andy Taylor and members of his leadership team at Enterprise Holdings in the fall of 2011. Since then, I’ve looked for opportunities to stay in touch. I send periodic updates on how H.Bloom has grown and call or e-mail on occasion to ask questions of Enterprise’s experts in talent development. Recently, I spent time on the phone with two of their executives: Steven McCarty, a vice president in human resources, and Pam Webster, an assistant vice president in talent acquisition. What follows are some excerpts from our conversations.

Pam Webster: We Promote From Within

Q: Can you tell me about your approach to recruiting?

A: We hire 1,500 to 1,800 interns every year, mostly pre-junior and pre-senior students in college. For these students, this is not just a summer job but the on-ramp for a full-time position after college. We hire over 8,000 college graduates per year who enter our management-training program. Forty to 50 percent of these hires are from employee referrals. Over 60 percent of them make it successfully through the program and continue on in their career at Enterprise. For those that leave before the end of their training, we hope that they have developed new skills that they can take to another company.

Q: Why do you hire so many recent college graduates?

A: It is a fundamental part of the Enterprise culture that we promote from within. We aren’t necessarily looking for a specific school that someone goes to or the degree that they received. We look for people who have the ability to learn, who can set goals and achieve those goals, and who want to be in a business where they can grow their careers. We believe that there are talented people on college campuses around the country, so we go to many of them – approximately 800 colleges per year.

Steven McCarty: The People Pipeline Is Like the Capital Pipeline

Q: Where did Enterprises emphasis on training come from?

A: At Enterprise, it starts with the C.E.O. It isn’t a training strategy or a people strategy; it is the way Mr. Taylor and his father before him wanted to build the business. They knew they couldn’t be on the ground everywhere all the time. But if they focused on hiring and training, they would get real leverage in the organization. Mr. Taylor has a mantra: “Take care of employees and customers first, and growth and profits will follow.” Everything we do is derived from this philosophy.

Q: How do you measure the success of your training?

A: If you scale a business with multiple entities and multiple locations, you can’t control it all. If you try to do so, you will be a bottleneck. The only way it will work is if you train people and empower them. Here’s what we do: Hire the player, not the position. Always have a farm team and rely on your own bench. Don’t hire anyone over the folks in the management-training program. Promote from within instead, and always have people ready to take on a new role.

The people pipeline is a lot like the capital pipeline. If you don’t have money, you’ll go out of business. Well, if you’re out of good people, the same thing will happen. It is so much harder to evaluate people from the outside during an interview process than it is having everyone start at the bottom of the organization and continuously promote from within. Nearly all of our management positions are promoted from within. The only exceptions are specialty positions – software engineers, attorneys, etc.”

As I said before, we focus on employees and customers first, and expect that profits and growth will follow. Therefore, profits and growth suggest that the training of our employees has worked. We track and measure four areas: one, customer service; two, growth; three, profit; and four, employee development and retention. These are measured and ranked monthly, and we have seen a direct correlation between employee development and the other metrics. Markets that score high on employee development are almost always on top for service, growth and profit.

Q: How do you conduct regular training?

A: The branch manager is the sunrise and sunset for every employee on the team. The manager is responsible for a new employee’s training after the formal new-hire training. The manager has a general guideline provided by headquarters but is otherwise responsible for that employee’s growth. Centralized training only occurs at critical inflection points: new-hire, promotion, etc. The rest of talent development happens between manager and employee. Managers know that they will be evaluated by the scorecard each month, and they have incentive compensation hanging in the balance.”

Q: How do you make sure that your employees retain the lessons learned in training?

A: It’s interesting. We get a lot of questions like, “What training do you do?” or “How do you make sure that it sticks?” I’d rather start with this question: “What behavioral change do you want to see?” Once you ask the question of the behavior you are trying to achieve – extraordinary customer satisfaction, or more sales – you can develop solutions: training, stack ranking, holding the manager accountable, incentives, etc. Once you develop the strategy, you have to measure everything regularly.

Q: If you were going to give advice to a company on how to start a training program, what would it be?

A: H.R. is one of the last department heads that I would hire. You should do it only after the culture of talent development is established. You want the H.R. team to be the guardian, not the owner. The C.E.O. should own this.

One final thought: our success at Enterprise is a true blessing. We know that we are really fortunate. There is a danger, though, that when you get this large, you stop asking questions and learning new things. A conversation like this with a start-up like H.Bloom provides a fresh perspective. You’re calling me to learn from Enterprise, but we’re learning from you as well.”

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/06/27/why-some-companies-promote-from-within/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: My Restaurant Adventure: Can I Pay With Cash?

June 27, 2013 by Leave a Comment

The owner's wife, adjusting a floral display, in the dining room.Chris Koszyk The owner’s wife, adjusting a floral display, in the dining room.

Start-Up Chronicle

Getting a restaurant off the ground.

Editor’s Note: For more than two years, Bruce Buschel chronicled his experiences creating a restaurant on this blog. In a series of posts this week, Mr. Buschel explains why Southfork Kitchen will not be opening in Bridgehampton, N.Y., this season.

The Powerhouse Brokers and I continued to haggle over commissions and advertising and my asking price: $3.75 million. Too high, they said. Not for me, I said. We can’t sell it at that price, they said. I smiled and nodded. We can rent it, they said. I don’t want to be a landlord. You’ll get money every month, they said. I would prefer to cut and run rather than dragging out the separation. They demanded an exclusive. You can’t sell it and you want an exclusive? Yes, they said, and they wanted it by Tuesday.

This I knew: If I signed, the word on the street would be that Southfork Kitchen was on the block — bailing, failing, whatever. Naturally, if it were going to sell, the right people had to know it was for sale. But it would be disastrous if too many people had that knowledge, and we didn’t sell. Who wants to reserve a table on a sinking ship? I fully expected to reopen come spring. Powerhouse Brokers gave me the weekend to decide. Millions of dollars at stake and one handsome fee and many livelihoods and years of work and I had but three days to make a decision.

Distressed, and unable to leave an irony alone, I called my secret role model, Jerry Della Femina. Who sold your place? New Street Realty, I learned. Never heard of it. In New York City. I called. The firm agreed with the price and understood the delicate nature of the mission. We reached a quick meeting of the minds, if not contract details. Sad adios to Broker Amiga. For all her kindness, she was cut out of the deal. I owe her.

New Street Realty needed a local rep to field inquiries, to show the restaurant, and do the diligence. It picked an office in East Hampton. Serious negotiations started anew with the local brokers. Long and arduous. Innumerable calls to my real estate friend in Florida. Eventually, I had to hire a lawyer to make sure my representatives were my teammates, not opponents. The final deal had more layers than a wedding cake. The one thing we all knew was that March 15 was the deadline; time was needed to prepare the restaurant for the summer deluge, whether for us or for the new owner. Fortunately, our place was prêt-à-porter — anyone could walk in and open to the public within two weeks. Nothing old, nothing blue, nothing borrowed, nothing askew.

The local brokers wanted to plant a for-sale sign on the restaurant lawn, as if people motoring down Sag Harbor Turnpike might see the sign and smack their foreheads: “Geez, maybe I want to buy a restaurant.” Ixnay the ignsay. It would serve only to put patrons on notice, not potential buyers. They would be reading the trades. The local brokers also wanted to list the property for rent. Fixing a hole in the roof in the middle of a Nor’easter was the last thing I wanted to face. No rental unless someone very reliable wanted a very long-term lease. Ixnay the entalray.

The very first call I got was from Broker A. (Remember him from Part 3?) He wanted to know why I had overlooked him.

“I wanted a broker in New York City,” I said.

“You made a big mistake going with another local broker.”

“I went with New Street,” I said, “and they picked a local rep.”

“You shouldn’t have given them an exclusive.”

“You can still sell it,” I said.

He insulted a variety of people, including his telephone counterpart, and reiterated his only real question: “Why didn’t you sign with me?”

“This is why,” I said.

“Why?”

“You talk too much. You scare me.”

The first couple of months on the market were, as predicted, slow. A phone call here, a visitation there. No Christmas presents. In January, a New York group that owned a string of vegetarian restaurants came for a visit. That was about it. A well-known operator made an appointment and then canceled. A famous chef said he was too busy to buy a restaurant until September and wanted an appointment for the fall. I asked if his restaurant took reservations seven months in advance. Neither do we, I said.

One local chef came back twice and brought his wife and kids. With years of experience, a spotless record and a good reputation in all facets of hospitality, he reeked of stability. That he loved the restaurant was apparent: the garden beds, the clean kitchen, the exposed steel beam, the upstairs apartment. It all fit his philosophy. To him, I would rent. He disappeared.

Meanwhile, February flew by like the short month it is. March came in like a lamb chop, raw and boney. A chef from New York was interested in renting. He brought a Wall Street investor to the restaurant. We all sat down and talked numbers, trying to design a scheme that would sidestep a deep fiscal hole before he even began. It is a common pitfall and worth skirting.

The local brokers called me two days later.

“The Wall Street guy has a question.”

“Shoot.”

“If he pays you the entire key fee up front and in cash, would you lower the monthly rent?”

“That’s not unreasonable,” I said.

“He wants to pay you a couple hundred thousand dollars in cash.”

“Cash is good.”

“Hundred-dollar bills.”

“O.K.”

“And then you won’t report it.”

“Wait. What?”

“You don’t report it.”

“Is this a sting? Is Mr. Wall Street going to wear a wire or a hidden camera? Does he work for Curbed Hamptons?”

“People think restaurants are a cash business,” the local broker said.

“Not that it matters, but 95 percent of our business is credit cards.”

“I know.”

“Are you endorsing this deal?” I asked.

“I am just a conduit. I pass along information is all.”

“Pass along this information: We launder napkins at the restaurant, not money.”

“So you are going to report it?”

“Of course I am. I can’t break federal, state and maybe local laws to save some money in taxes. You know what kind of food they serve in prison?”

That deal vanished the next day.

But that local chef I liked, the one who reeked of stability, showed up again. His name is Todd Jacobs, and he brought his lawyer. They were getting their Long Island ducks in order. Mr. Jacobs wanted to rent, not buy.

He had been executive chef in three well-known places over the previous 25 years. It was March 15. Spring was on the wing. They were serious. But time was seriously running out. Chef Joe needed to know. He was cooking in Brooklyn and auditioning for a television show and about to fill his plate.

Me? I was breaking plates and pacing. Staff members were calling to find out their schedule — from Montego Bay, Jamaica; from Jamaica, N.Y.; from Ewa Beach, Hawaii. I told them everything I knew and promised a sterling recommendation with the new operator if there were to be a new operator, which I seriously doubted. I remained fully convinced that we would reopen Southfork Kitchen in May.

Friday: Gone Fishin’

Article source: http://boss.blogs.nytimes.com/2013/06/27/my-restaurant-adventure-can-i-pay-with-cash/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: How Would Immigration Reform Affect Small Businesses?

June 26, 2013 by Leave a Comment

We just published a conversation with Sheela Murthy, founder of the Murthy Law Firm, which handles immigration matters. In the interview, Ms. Murthy, an Indian immigrant, discussed her firm’s heavily trafficked Web site and her initial skepticism about “giving away” information online. She also shared her thoughts on managing and motivating employees, the pros and cons of creating a “bigger empire,” and what immigration reform, which appears increasingly likely, would mean for businesses — including hers.

She Owns It

Portraits of women entrepreneurs.

Based in Owings Mills, Md. with an office in India, the Murthy Law Firm has about 110 employees and annual revenue of  more than $10 million. Should an immigration bill pass Congress, the firm is likely to become even busier as more of its clients would be eligible for visas under the newly created EB-6, or start-up, visa category. “Ultimately, the present version of the bill would help bring in more investors and entrepreneurs,” she said, which would be good for business.

While she’s not interested in being “big for the sake of being big,” Ms. Murthy said the firm has worldwide name brand recognition in the immigration field that it could better capitalize on. For this reason, and to provide more opportunities for the firm’s lawyers, she has considered opening other offices. Three years ago, a group of technology business owners in Dallas offered the Murthy firm free office space if it opened a branch there. While the offer was attractive, Ms. Murthy turned it down. With growth, she said, there are always challenges. “If you have problems with 1 percent of your employees or cases, that translates into more problems the bigger you get,” she said.

To learn more about Ms. Murthy’s background, take a look at this video (above) from the Story Exchange, a nonprofit media organization that shares the personal and professional stories of entrepreneurial women around the world.

Do you think immigration reform would affect your business?

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/06/26/how-would-immigration-reform-affect-small-businesses/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,
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