If I Get Hit By a Bus ...
I don’t want my last thought to be about a wine deal I was doing with Walmart, said Michael Chiarello, who died unexpectedly on Friday.
Here are today’s highlights:
The founder of a Seattle restaurant is turning pizza into a technology business.
The time to clean up your books is right now.
There’s still a gap in SBA lending to women, who often resort to expensive alternative lenders.
Businesses are grappling with whether to take a stand on Israel and Palestine.
Ami Kassar says now is the time to clean up your books: “For many entrepreneurs, accounting is the last thing they think about when they start a business. They have an idea they want to bring to life that they are passionate about, and accounting and bookkeeping are annoying details that sometimes feel like they get in the way of the million other things they need to do. But if the bookkeeping systems aren’t working correctly, problems can have a domino effect. And the longer you wait, the more challenging they are to clean up. Checking in with your accountant yearly at tax time is not enough. Often, as a business grows, the accounting and bookkeeping demands increase, as well as the skills required to execute them; if you don’t have the right team in place, other issues will escalate.”
“In our work at MultiFunding, we often get calls from businesses with a current or looming cash flow crisis. We need to see clean financial statements before arranging a fair and reasonable financing package.”
“When the financials are a mess, the options are far more limited and far more expensive. On those occasions when the crisis is too great, and there is no time to clean up the books, the conversations can be extremely painful.” READ MORE
Can robots make artisanal pizza? “For most of the past couple of decades, Lee Kindell ran a backpackers hostel and boutique hotel in Seattle where he made pizza for travelers as a way to make them feel welcome and share stories over a good meal. The pizza was so good that guests often told Kindell he should open his own restaurant. He thought it sounded like a good long-term plan but something he might do after he retired from the hotel business. But then Covid hit. ‘We lost our business, and I said, You know, that retirement plan of making pizzas? We’re going to do it now.’”
“Fast forward to today, and Kindell is running one of Seattle’s (and America’s) hottest restaurant concepts. In just two years, MOTO Pizza has expanded from one temporary location to three permanent ones with more on the way and a spot inside T-Mobile stadium where Kindell’s team serves up pizzas to hungry Mariner fans during every home game.”
“When asked if the waiting list is some marketing gimmick, Kindell says it was out of necessity. ‘When we first opened, we had a four-hour wait,’ Kindell told me. ‘Now we’ll do 250 pizzas a night at one location, and it’s all timed.’”
“It wasn’t long before he heard of another Seattle company, Picnic, which makes pizza robots. Now, he uses the Picnic robot to add cheese, sauce, and toppings to hundreds of pizzas daily and is looking for more technology. ‘Now, I’ve been reaching out to everybody, drone delivery, sidewalk delivery robots. Everything I can think of.’” READ MORE
Women still face a gap in SBA lending: “The Small Business Administration has been working to broaden access to its 7(a) lending program — but data shows there’s a long road to level the playing field for women-owned businesses. While women-owned businesses accounted for about 38 percent of American businesses, they were approved for about 32.6 percent of SBA 7(a) loans in fiscal year 2023 through Sept. 17. But the share of loans approved for businesses majority-owned by women stood at just 11.4 percent.”
“The rate of improvement in recent years is mixed. In 2022, about 28.4 percent of 7(a) loans went to businesses at least partially owned by women. Before the pandemic, that figure was 28.5 percent. But loans to businesses majority owned by women represented 19.5 percent of 2018 loans.”
“In the 7(a) program, when women-owned businesses do get loans, they are typically smaller than those obtained by male business owners. So far in fiscal 2023, men-owned businesses saw an average loan size of about $500,000. For businesses that were more than 50 percent women-owned, the average loan size was $356,000.”
“[Awesta Sarkash, public policy director at Small Business Majority] stressed, there is more money than ever now to make loans, and that means women might be getting their capital from online or alternative lenders that charge higher interest but cater to a wider range of businesses.” READ MORE
Price pressures continue to abate: “Inflation held steady in September but underlying gains were subdued, providing the Federal Reserve evidence that price pressures are slowly abating despite signs of continued strength in the labor market. Prices rose at a 0.4 percent pace in September from the prior month and 3.7 percent from a year earlier, the Labor Department said Thursday. The monthly gain represents a cooling from August’s 0.6 percent increase, which was driven by higher energy prices. The 12-month rate was the same as in August.”
“When excluding volatile food and energy items, so-called core prices increased 0.3 percent in September, the same as the prior month’s increase and a continuation of mild readings through the summer months. Core prices rose 4.1 percent in September over the prior year, down from August’s 4.3 percent.”
“While hiring was strong last month, workers’ wages are rising more slowly of late. Hourly earnings rose just 0.2 percent in September and were up 4.2 percent from a year earlier. They grew over the past three months at an even lower annualized rate, which if sustained, would be compatible with 2 percent inflation.” READ MORE
Boston is trying to encourage office-to-residential conversions, offering an up to 75-percent break on property taxes over 29 years: “While Boston’s central business district has seen a recent uptick in office tours from prospective tenants, office vacancies continue to increase, according to Newmark research published Tuesday. The vacancy rate is now 19.5 percent, up from 14.1 percent a year ago, the Newmark report showed. The average asking rent is $65.06 per square foot, down about two dollars year-over-year. Those numbers encompass all office buildings, including new ones that have landed some significant leases. Older, lower-quality offices are suffering more.”
“The program is intended to offer a one-time window for redevelopment: Recipients of the tax breaks must pull a building permit and begin construction by Oct. 31, 2025. That means they will need to secure all necessary government approvals and line up financing in two years or less.”
“Should a project be accepted into the program, proposals would be ‘fast-tracked,’ the filing said. Large projects that do not require a Zoning Board of Appeal approval would need to hold only one public meeting, according to the filing.”
“[The BPDA] specifies that the program is meant for conversions, not the demolition of buildings to make way for new residential construction. Developments must still set aside at least 20 percent of residences as income-restricted and adhere to the more stringent building energy code recently adopted by the city.” READ MORE
Businesses grapple with whether to show support for Israel or Palestine: “Houston’s Jewish-owned restaurants, as well as Palestinian restaurateurs, face a conundrum in the aftermath of the Hamas attacks and the onslaught of news surrounding the recent atrocities: Do they publicly show support for Israel, Palestine or is it too political for customers? In some cases, they’re also contemplating safety concerns as officials say they would increase patrols around Jewish and religious institutions in the city.”
“By Monday, [Itai Ben] Eli and his Sof Hospitality business partner Itamar Levy decided that all their restaurants — Hamsa, Badolina Bakery and Doris Metropolitan — would post a message of support for Israel across various social media platforms.”
“Eli says he understands the hesitation of some Jewish business owners to refrain from airing support publicly. So far the feedback from his post of support for Israel has been positive, and customers have been reaching out to ask how they can help. ‘It’s a personal decision,’ Eli said. ‘But it’s important to send a broad message to condemn terror.’” READ MORE
Before you quit the day job: “Insider spoke with eight entrepreneurs and small-business owners about how they knew it was the right time to jump ship — and how they set themselves up financially to do so. Here's their top advice.”
“Ludomir Wanot, who quit a six-figure job at Amazon to build a real-estate-wholesaling business, took stock of his personal finances as he was preparing to leave corporate America. ... Wanot said he ended up cutting his monthly spend down to the ‘absolute necessities,’ which totaled about $2,500 a month. Then he focused on generating at least that amount in passive income before he quit.”
“It's smart to be conservative with your projections, said Katie McCarron, an entrepreneur who worked in the corporate world before starting and eventually selling her first company, Academic Network. ‘Make sure that whatever you think it's going to cost you, double it,’ McCarron, whose latest venture is the Portland Pet Food Co., which she founded in 2014.” READ MORE
Michael Chiarello, 61, whose culinary empire included several restaurants, an olive oil company, a winery, and a retail business: “Mr. Chiarello was a member of a generation of Northern California chefs who by the 1980s had freed themselves from the conventions of continental cuisine. They swapped olive oil for butter when they served bread, and they used seasonal produce and locally made cheese and wine long before the term ‘farm to table’ became a menu cliché. He would later get caught in the #MeToo movement, when two servers filed a sexual harassment lawsuit in 2016 against him and his restaurant company, Gruppo Chiarello. The case was settled out of court, but his reputation was tarnished and television opportunities dried up.”
“Even though he was starting to receive national attention for his cooking — he opened his first restaurant in Miami in 1984 and was named Food & Wine magazine’s chef of the year in 1985 — his father wasn’t pleased.”
“‘When I decided to be a chef, it wasn’t what it is today. It was just a trade, not sexy like today,’ he said in the 2006 interview. ‘I remember my father was concerned about me. One of my brothers is a Ph.D., one an attorney. I was a cook. He’d say, The family came all this way from Italy. He could have done that over there.’”
“‘In the restaurant business I lost a lot of time with my girls,’ he said in 2006. ‘I don’t want that to happen again. I don’t want to be saying anymore that I should have spent more time with my children, more time with my wife. If I get hit by a bus, I don’t want my last thought to be about a wine deal I was doing with Walmart.’”
“His death, in a hospital, resulted from an acute allergic reaction that led to anaphylactic shock, said Giana O’Shaughnessy, his youngest daughter. The cause of the allergic reaction has not been identified.” READ MORE
THE 21 HATS PODCAST
The Employee Engagement Industry Has Failed: In this week’s bonus episode, Bill Fotsch, a business consultant, explains why he thinks much of the effort that he and many others have put into creating employee engagement over the past three decades has been wasted effort—well intentioned, but wasted. The fact is, Fotsch says, employees today are no more engaged than they were some 30 years ago when the concept of employee engagement first gained currency. So what’s the answer? Fotsch has come to the conclusion that it’s something he calls “economic engagement,” which happens to be the name of his consulting business. What exactly is economic engagement? He says it’s getting employees to focus on serving customers, and doing so profitably. He says it’s not so much about sharing financials with employees but about getting employees to understand the strategies and actions that really drive a business’s profitability.
Fotsch is so convinced that he’s cracked the code that he’s gone beyond mere consulting and has been buying stakes in businesses so he can implement his ideas and prove his concept. So far, he says, it’s working.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren