I’ve once again been remiss in my endeavors to get these updates out on a weekly basis, so please accept my apologies. I know many of you pull yourselves out of bed only to read them, fix a stiff drink, and go back to bed. As a result, this update spans two weeks of nail-bitingly exciting moments in the life of RVAA’s Chief Networking Officer, beginning with the tail end of the Passover holiday (pronounced “Pesach” by our Jewish friends, and if you don’t spit while saying it, you’re not doing it right). And there we shall begin. Enjoy!
Yes, it (was) Passover time once again, and I know this for only two reasons, neither of which my Rabbi would be proud: 1) My Google Calendar, which has the “holidays of all nations” pack installed, reminded me with a buzz and flashing lights on my phone at 2am in the morning, and 2) much more pleasantly, my friends at Kitchen Thyme invited me to their annual Passover Lunch on Monday. For those of you not familiar with this unique business, they offer rental kitchens and event space to everyone from celebrity chefs to sommeliers to conduct wine dinners to commissary space for some of your favorite RVA food trucks (who are able to park, charge. sanitize, etc for a very modest fee). If you’re considering starting a restaurant or food truck or candy company or whatever, spend a few bucks here to get your feet wet and your processes in order before you even consider leasing your own space. It will be money VERY well spent.
Speaking of SPENDING, the Willow Lawn Starbucks was graced by the presence of a home-grown RVA entrepreneur, plus yours truly, for a coffee-and-chat this week when I sat down with David Wilson of Spendown Finance. In a nutshell, David and his group of investors provide private capital for all manner of business venture. I was impressed with not only the flexibility of their terms but also the nimbleness of their model. This is no lender-of-last resort, but instead an evolution in lending geared toward those who need to seize opportunities on short timetables.
One of the highlights of the week was when Ann Schweitzer and I had the opportunity to explore the catacombs of Richmond’s past! Our old friend Abe Massad called us up and invited us to help him evaluate what to do with a pub space that was home to one of RVA’s oldest private clubs! Words alone don’t do this space justice, but if you can picture that super-cool underground English pub full of wood and darts and kidney pie and Guinness and cockney accents and antique memorabilia dating back 50 years from all of those movies you’ve seen… this is that place. Best part is, it’s up for lease in the heart of downtown and is already fully equipped with a full kitchen and hood! So lemme know if you want to see it, won’t last long, I’m sure.
I was so amped-up to see that space that I couldn’t focus on work anymore that day, so I called up my friend Dr. David Berv, owner of Back in Action Health Resource Center, and new owner of Richmond’s Float Zone. “I need to re-focus, Doc,” I told Dr. Berv. “I have just the thing for you, Jason,” Berv responded… “let’s float!”
Skeptical was I, at first, because, you know, what the heck is floating when used in this context? Turns out 1000 gallons of water + 700 pounds of Epsom salt + a little darkness and some soothing music = Nirvana! You just kind of bob like a little cork (because of the salt content, you’re basically lying down ON TOP of the surface of the water) and somewhere at around minute 20 of your hour long float worries just seem to melt away. I don’t know all of the science behind it (I think magnesium plays a part), but I do know that I left the (very nicely appointed) facility more relaxed than I have been in recent memory.
Re-energized and freshly focused, I headed out to a judges meeting for round two of the 2016 Senior Navigator/Lindsay Institute Hack Event! For those of you not yet acquainted with Hack events, they are basically week(end) long tests of human endurance undertaken by our best and brightest. Tasked with solving a given problem, teams of, in this case, students from UVA, William & Mary, Tech, JMU, GMU, Lynchburg and, of course, VCU, have 48 hours to develop an app that makes the lives of caregivers better (this is the mission of the Lindsay Institute). I was truly in awe that this work could be completed, along with, in some cases, partially operational apps, in such a short period of time. I feel fortunate to be a board member of this terrific organization and newly optimistic about the next generation of grads from VA schools.
I had a terrific breakfast at one of my favorite joints, Moore St. Cafe, with one of my favorite people, JoAnn Nolte of the Nolte Law Firm. Jo is one of the most connected people around, and her work with the legislature and on insurance issues is well known. Only slightly less well known is this: she’s a terrific advocate for small businesses and is one of most competent yet affordable lawyers in town for all sorts of issues faced by small businesses.
And to top the week off (or begin it, depending on your interpretation of Sunday as the top or bottom of the week), my friends and clients at Piperbear Properties were generous in taking my wife and I out to the Long Oven pop-up dinner at the always lovely and delicious Sub Rosa bakery in Church Hill. Hands down one of the highest caliber dining experiences I’ve had in Richmond. Next time they pop up, grab some tickets during the very short period of time they’re available.
All in all, an enjoyable, relaxing and full(filling) couple of weeks, and even if my recap is a little outdated, the contributions made to betterment of the city by the aforementioned organizations and individuals are timelessly apropos.
Letters from the Trenches
We answer questions/comments/indictments from the RVA small business community. Please send any questions YOU would like to see answered to info@RVAadvisors.com.
My business partner and I are in the process of purchasing a retail shop in Richmond. Everything was going well until we discovered that the current owner has been paying her employees under the table for years. This is concerning to us because 1) we do not plan to operate this way and are afraid that the long-term employees will leave if we begin to withold taxes and 2) we are concerned that at some point in the near future the taxing authorities could come after us for the current owner’s tax liabilities. Is this a common situation? What do other buyers do? Should we move on and try to find a more “on-the-level” business to purchase?
Tanya B., Richmond
I wish that I could say the business you’re considering is an outlier as far as “on-the-levelness” goes. But it isn’t. Far too many small business owners still pay their employees in cash, often from right out of the register, bypassing both internal systems designed to measure operational health and the tax code.
Precisely because of this type of situation, assembling an advisory team prior to your identification of a target business is key. A qualified business intermediary along with a CPA and attorney specializing in small businesses are three key individuals who can advise you on nearly any question that will arise during the course of a business purchase or sale. Now is not the time to try to save a few dollars, and if you choose the right professionals, those used to working with smaller businesses, you’ll find their rates surprisingly reasonable.
That said, there are several ways to protect yourself from a seller who has been, shall we say, “casual” with their adherence to the letter of the law. One example is asking your attorney about pursuing an Asset Purchase. In this type of transaction, you would be purchasing just what the seller’s company owns, not the selling company itself. This type of sale enables you to purchase all of the inventory, furniture, fixtures, equipment and intellectual property of the business without taking on the full extent of its liabilities (such as potential exposure to enforcement on delinquent taxes). Again, consult a small business attorney before making any decisions around the structure of your company.
As for your concerns about employees leaving if you begin withholding from their checks, you are right to suspect that this situation will impact you… and in more ways than just the risk of long-term employees leaving! For example, the tax returns, profit and loss statements and cash flow statements that you examined as part of your due diligence most likely, all things being equal, overstate the profitability of the business because no payroll taxes are being paid. Moreover, that cash being used to pay those employees under the table had to come from somewhere… and most likely right out of the till; that means that the seller has also been manipulating revenues, which may be limited to payroll but maybe not… it’s a slippery slope once you being reshaping the fundamental metrics of an operation. A CPA with experience in working with small businesses can advise you on how to limit your exposure to the threats created by your seller’s actions.
If you’re like most new business owners, the primary reason you’re venturing out on your own is to improve your quality of life and increase your happiness. There are plenty of ways for business owners to reduce their tax bills, many of which were put into the tax code specifically to bolster small business ownership. Laws, including tax laws, are fundamental to the creation and maintenance of a stable economic system in which retail shops like this one can safely and profitably exist. Skirting those laws not only compromises the integrity of our society, but will bring you stress and worry that may offset the increase in quality of life generated for you by business ownership.
Business Opportunities Galore!
Did you know that in addition to providing Fractional COO and strategic planning services RVAA is also a full service business brokerage? Well, now you know! And here are some of our listings:
Love the Restaurant Biz but Don’t Want to Own One?
This is one of the most unique businesses in the world. No kidding! Very few operations like this one exist anywhere, though trends in the foodservice/restaurant industry and how that industry is regulated are poised to increase demand significantly over the next decade… [MORE]
Love the Restaurant Business and WANT to Own One?
Terrific little cafe serving breakfast and lunch in a HUGE office complex with a built-in clientele. Great hours, great cash flow, great menu with everyday pricing… not yet on the market so CONTACT US for more information.
Profitable West End Dental Practice If you’ve ever considered owning your own practice, there are few opportunities quite as choice as this one. Situated in the University of Richmond area, this long established office… [MORE]
Do You Share Our Vision?
If our mission to better the RVA small business community resonates with you, don’t keep it to yourself! We are always on the lookout for folks who share our values, work ethic and sense of humor. Specifically, we’re actively looking to bring aboard people with strong interpersonal skills or sales backgrounds to assist in our business brokerage efforts. More information can be found here.