Tag: small business

Small Business Crusader Presents: Slate Coffee Roasters


 

Espresso Deconstructed

Photo by © Yana Alexandra Crow

As I mentioned in my travel reflections, it is not enough to treat my visit to Seattle's Slate Coffee Roasters as just another thing I did during my trip to the West Coast in August.  The place definitely deserves its own dedicated post. 

I personally know espresso aficionados who are obsessed with Slate, and I can totally understand why:  Even if you are a jaded connoisseur, you will have a novel, unforgettable experience here.  From the very beginning, Slate's founders conceptualized their business out of three exceptional building blocks: niche high-quality raw materials, superior preparation techniques, and singular finished products.      

Conceived and founded by Chelsea Walker in a partnership with her brother and mother, Slate was born two years ago, in November 2011.  It started its life in an Airstream trailer strategically positioned in Seattle's Capitol Hill.  Now, transplanted to one of Seattle's northwestern neighborhoods, Ballard, the establishment continues to cultivate the same aesthetics of grace and elegance that inspired the founders to start the business in the first place.  It applies to everything: the offerings, the methods, the decor, the ambiance, the hospitality, even the service sets.          

What fascinates me the most is that this young woman did exactly what I advocate all young people to do.  She found something that she (a) feels the most passionately about; (b) has talent for; and (c) knows well how to do, both technically and commercially.  She utilized her reputation as an innovative espresso barista to solicit valuable advice from local coffee-business celebrities and went full force after her entrepreneurial dream, attacking the odds on all fronts: Her business model includes the wholesale of Slate's roasts to other coffee boutiques (so far 9 locations in Washington, California, Massachusetts, and Illinois), the online store selling the current selection of beans as well as a few signature coffee implements, a coffee subscription, and, of course, the bar itself, where you can experience the magic firsthand and then leave with a bag of the fresh roast you've just tasted.

Everything in Slate Coffee Roasters is unique.  The uncluttered decor complements the minimalist menu very well: There are no lattes, cappuccinos, macchiatos, frappes, and such other potions here.  The only espresso-based drinks you can get are, well, espresso – either neat or cut with milk, in various proportions.  The rest are hot or cold-brewed coffees – usually from no more than 3 or 4 sources.  The coffee bean is treated here as a tropical fruit that it actually is.  So, just like good wine makers, Slate folks pursue rich bouquets and go after small-batch sources that harvest the most flavorful products: a 1500-farmers estate in Kenya, a specific lot on a Panama estate populated exclusively by Gesha trees, an Ethiopian co-op, etc. 

The single-source beans are roasted in house twice a month in 15-kilo lots.  Slate abandoned the tradition of the deeply roasted espressos and goes light on the heat for the sake of preserving the flavors.  In order to provide the bar's customers with an unadulterated experience, no sugar or any other sweeteners are offered.  They use non-homogenized local-farm milk here – so sweet and real, you feel happy for the cows that gave it away, and the desire to taste it on its own motivates some people (me!) to order the full Espresso Deconstructed set twice in a row.  If you do like something solid to complement your espresso or coffee, you should try the hand-dipped in chocolate… no, not conventionally dried orange peels, but syrup-soaked fresh orange slices.  It only makes sense that these exquisite offerings are served in a bar (rather than the common coffee house) setting, with espresso presented in designer stemware.  Other straight coffees are brewed to perfection in a variety of methods expertly matched to specific beans.

Of course, when judged by the field's elite, this, for a lack of better words, artistic and somewhat rebellious approach to the provisioning of coffee-based beverages, elicits high recognition and praise: Many a West Coast barista know of Slate; the wonderful Brandon Paul Weaver, who's been at Slate from the start, won the 2013 North West Regional Brewers Cup; and Slate's team captured the title of America's Best Coffee House 2013 in Seattle, which, considering the city's history with the drink, is a feat, especially for such a young establishment.    

It goes without saying that all these elements set Slate apart from the rest of Seattle's coffee scene and theoretically should've given them a tremendous competitive advantage.  Yet, the company struggles commercially. And it is my strong opinion that it has a lot to do with its geographical location – not just the remote Ballard specifically, but Seattle altogether.  Of course, the bar has its own devotees, who come in all the time (some are even willing to fly cross-country just to feel the magical brews on their lips), but, generally speaking, there are simply not enough people to generate a steady stream of clientele to the counter.  There is no question in my mind that the good people of Slate would be so much better off  in a place famous for its unyielding hyperactivity.

Yes, New York City is the most competitive place on this planet.  And yes, it is especially true for the majority of food establishments – according to Business Insider, 80% of restaurants here close in their first year of operation.  It makes total sense to me: you've got to do something extraordinary to survive here as yet another deli, a French or Italian restaurant, a Japanese sushi bar, or a Chinese take-out.  That said, the field of designer espresso is pretty barren.  Well, we maybe have about 20 highly rated specialized places – a ridiculously small number for NYC!  Yet, people with really discriminating tastes still complain that it is impossible to get a good espresso in New York.

The top places in competitions and recognition by connoisseurs are great, but at the end of the day, for a consumer-dependent establishment it's all about the statistics of public exposure: the more people pass a place, the higher the number of those who will enter.  And only then can you start wowing them with your miracles, hopefully achieving a sufficient level of the customer retention:  In order to succeed a small coffee-bar business needs a steady 10-people line during the morning, lunch, and coffee-break rushes.  Alternatively, this particular business can position itself as an exclusive Art House of Espresso with people coming in specifically for the Slate's religious experience and willing to pay exorbitant prices for it.   Neither possibility, unfortunately, is going to present itself  in Ballard.   

To illustrate how the statistical probabilities are impacted by geographical locations, let me use an analogy from my recent music experience:  Royal Canoe, a great small band from Winnipeg, Manitoba (don't jump to Wikipedia – they are not there) primarily performs at alternative festivals and small peripheral venues with, let's say, 50-300 people capacity.  What is the probability that someone who sees them at The Garrison in Toronto (capacity 270) will go out of their way to attend their concert in Brooklyn?  I'd say, close to zero.  But on 09/14 they opened for Alt-J at NYC's Hammerstein Ballroom (GA Floor capacity 3400, plus galleries) and I know of at least 5 people (two independent groups), who went to Canada specifically to see them play again.  And there might have been more.  And even if only 10% of the live audience buys t-shirts and CDs, it translates to 27 music lovers in Toronto, but at least 400 in NYC. 

Numbers - they don't lie.  So, is it surprising that at this moment Slate has only 28 reviews on Yelp, while Lucid Cafe (even though a very nice place, but no award winner or espresso breath-taker) located 4 blocks from Grand Central has 93? 

What I hope for is that Slate's current operations will create enough momentum to ignite in owners the desire to solidify their success and branch out to the busiest spot in the world, the city that never sleeps and, therefore, is in a dire need of Chelsea Walker's heavenly concoctions.  Plus, we have the highest concentration of people who adore the high-end, luxurious, elite products and services.  So, see you in New York?!            

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Economic Reflections of a Traveling CFO

Some Economists Say That a Robot Can Replace My Paige. For Real?



RobotThere are
quite a few optimistic economists out there who convinced themselves
that,  even though the Industrial Revolution, which was responsible for the unprecedented economic development of the United States since the 19th century, is pretty much over, there is no need to panic and envision impending doom.  According to them, we are yet to pull through.  Do you know what will save us?  Artificial intelligence and 3D printing, i.e. fucking robots and compressed plastic powder.  

Ok, let's leave the 3D printing alone for now. I'm quite impressed with the replication capabilities of the so-called printers: the manufacturing of complex forms, moving parts and all directly from scanned or modeled images looks like magic; and I do think that this innovation will revolutionize toy-making and change sculpture forever.  However, because the "printing" powder recipes are kept secret, I cannot really say anything about the quality and/or safety of the household items, tools, auto parts, etc. made this way.  I hear the plastic guns shoot people dead pretty well, but what else is new?

I am more curious about the robotized future though.  From the vantage point of the economists in question, 65% of American employees are engaged in tasks that they classify as "information processing" (sounds pretty arbitrary to me, but let's go with it) and these poor "dehumanized" worker bees will be replaced with super-efficient highly intelligent machines, who never get depressed because information is what they do. And it doesn't matter that the damn toasters will never be able to look at a plant and pick an appropriate tool to trim it (it's just something that cannot be programmed). 

In case you are wondering, the other 35% will be occupied in professions and functions that require superior intelligence and talent: executive management (you wouldn't believe how many executive dumbasses I know, but whatever!), strategic planning, creative work, and of course, gardening (on account of the robots' deficiencies mentioned above).  

Seriously though, I hope you agree with me that defining ALL tasks performed by office employees as "information processing" essentially turns these people into some sort of robots already, which creates an illusion that replacing imperfect human tools with slick intelligent machines is an efficient, easy, and necessary process.  And yes, some of the office routines can be tedious and dehumanizing.  Yet, the reality is that only in large companies, marked by narrow specialization, standardization, and redundancy, work can be likened to the repetitive conveyor operations.  Everywhere else people multitask!        

Ever since my doctoral studies of economics (many year ago), I had a problem with the pervasive tendency of theoretical generalization; with the application of the macroeconomic approach to microeconomic systems.  Again, maybe such abstractions are somewhat pertinent to giant enterprises, but you and I know that every small business operates differently – none of them will fit into an artificially constructed etalon.  It scares me to think that these pseudo-scientists possibly envision the future without any entrepreneurship at all – just fucking GMs, GEs, Microsofts, Starbucks, Smithfields, Apples, Googles, COSTCOs, and Carl's Jr. (Wait a minute, doesn't this ring a pretty loud bell?)

But what if this nightmare doesn't come true? (Call me a fucking optimist!) Imagine that 20 years from now small businesses still exist, but now they can be outfitted with highly efficient (and affordable!) intelligent machines available to step in as your trusted office workers. Let's conduct a mental experiment and see how a robot will deal with three (could've been 100) straightforward issues customarily handled by one of my most reliable and teachable subordinates of all time (I call her "my Paige").  In other words, let's see if a robot can really replace my Paige.

#1.  A commercial customer has a $300K credit line.  The total of the customer's open invoices is $265K.  A $51K order for the product your company really needs to move is transmitted  for the robot's credit approval.  Of course, a discretionary flexibility is programmed into the algorithm (robot designers are not stupid) – it's 5% above the limit (remember, standardization is unavoidable with machines), making the total allowable credit exposure $315k.  But approving the order would exceed it by a mere $1,000.  The robot rejects it, denying its employer an opportunity to move the product, increase the revenue, make a nice profit.  In addition, the relationship with a long-time customer is at jeopardy over a thousand bucks; and the salesperson is mad because he lost his commissions.  And what are you going to do?  Fire the robot?  It cost the company a fucking mint!         

#2.  The operations department (also robots)  needs to make sufficient room in the storage facility to accommodate the upcoming delivery of 5000 mt of a product from overseas.  They transmit a message to Sales to start pushing the shit faster.  Sales plea and beg customers to take as much product as they can – discounts and all kinds of other tokens of gratitude are flowing.  One customer says that he can take a delivery on September 29th, but he doesn't want the inventory on his books just yet and the invoices must be dated October 14th (the "I do something for you, you do something for me" principle).  This information is relayed to my accounting robot.  It's perplexed: It's programmed to record sales according to the order terms; the terms in this case are Delivered; the proof of delivery transmitted into his system by the trucking branch states September 29th; yet, somebody is overriding his algorithm and forces the wrong date!  SCREECH!  SYSTEM FAILURE!      

#3.  The payments-to-suppliers program kicks in.  The robot tallies all invoices that need to be paid – the total is $3.3M.  Now, funds-sufficiency program kicks in: there is only $300K available on the account and the robot transmits a funding request to the CFO's all-in-one communication device installed into her left ear's diamond stud.  The borrowing and investing functions are still done by the human CFO, because the risk of some crafty thief hacking into a fucking toaster is, as you can imagine, pretty high.  The problem is that the CFO is in London dining with a Financial Director of a company her employer targeted for acquisition.  She is trying to pump the stiff for some information beyond the official reports, and she just got him talking, and there is no way she can lose this opportunity on account of some payments.  But the robot must do his job – he must be timely, the payments must be made.  Yet, he sees that, if he actually makes the payments, the account will be overdrafted by $3 million.  The conflicting algorithms are tearing the machine apart, literally – it short-circuits.  

What? Are you telling me that the economists don't have these tasks in mind; that these are semi-managerial-somewhat-analytical duties? Guess what, Mr. Big-Shot-Futurologist? That's what's going on in small businesses with flat structures: Every sector of the value chain is manned by one executive/manager and a handful of her direct reports aka the "the information processors." No middle management. You cannot possibly reassign these minute but essential issues to CFO's and Controllers – that's just too expensive in terms of the compensation, wasteful in terms of the time taken away from more strategic obligations, and demeaning in terms of the moral incentives. And if I have to buy robots AND keep my subordinates for the semi-managerial-somewhat-analytical work, what kind of progress is that?

According to the US Census data, there are over 6 million companies in this country with less than 100 employees.  Obviously, they are too small to see from the top of the theoretical mountain. So, in articles for academic magazines and thick manuscripts for Wiley publications, their diverse office workers first get bundled together with the narrow-niched redundant zombies of large bureaucracies, and then replaced by robots in one sweep of a Montblanc pen.

Just for argument's sake let's get back for a second to the scary possibility: The economists, politicians , and the big businesses paying for them actually erase small companies from the national map. The intellectual flexibility is ignored in the interest of standardization, and all of the "information processors" in the remaining giant conglomerates are replaced by machines. What kind of plans do the movers and shakers have for these 65% of American workers?  How about their children, lately multiplying at the three-per-family rate?  Considering the dramatically falling IQs of the general population, it's unlikely that they will be viable candidates for high-level managerial or creative work.  So, how is the robotization going to make the whole nation wealthier in the same way the Industrial Revolution did?  I see a more polarized society with hordes of people pushed below the poverty level.

But the biggest question I have for the big-time big-picture economists is: Where the fuck are you going to get the energy to power all those robots and their managing network servers?  

  

The Distortion of Bill of Rights in Small Business Environment


Regardless of your position – CFO, Controller, operational staff, CSR, janitor -when you accept “employment at will” arrangement in a privately-held company, you inadvertently give up the majority of your rights granted to you by the US Constitution.  Since the Bill of Rights is automatically presumed, it is not necessary to include freedom clauses into Employee Handbooks, Rules of Conduct and other such documents.  Look through them again whenever you have a chance:  they primarily describe what the company expects of you, not the other way around.

Closely-held companies are not democracies.  They are owners’ kingdoms, absolute monarchies.  And most of the time there is nothing you can do about it.  Let us look at some of the Amendments.

1.  Free Exercise of Beliefs.  Having been always based in NYC precluded me from ever witnessing open discrimination of employees for their religious believes.  At the same time on many occasions I’ve observed explicitly expressed irritation about people’s taking their PTO to celebrate religious holidays.  Quite a few times I saw the candidates being rejected based on the unspoken possibility  of their observance.

2.  We do not have Freedom of Speech as employees.  We try to keep our political, social and cultural opinions to ourselves if we know they contradict those of our bosses. Frequently we are not even given an opportunity to retort abusive, accusatory, or unfair verbiage directed at us or at our subordinates.

3.  We cannot exercise Right to Assembly.  I myself as a supervisor is pretty strict about people congregating for reasons not related to their jobs during work hours.  At the same time I am not as obsessive about it as some business-owners who throw tantrums every time they see people talking.

4.  The Protection from Unreasonable Search is violated time and again in the workplace.  The business files, emails, etc. are rightfully belong to the company you work for, and if you are openly asked to follow established policies of information sharing, files locations and full disclosure, you should willingly comply.  But many employers use System Administrators to secretly look through their employees’ emails, files, etc.  They open doors with spare keys and look into draws containing personal affects.  They use special programs to record IM communications, etc, etc.

5.  Not a single right guaranteed by the Fifth Amendment (due process, double jeopardy, self-incrimination) is considered when you are judged, persecuted and punished by your boss.  Fairness is laughed at in business environment.  A lot of CEO’s, with whom I dealt over the years either as an employee or through business and social networking, considered my personal determination to be as fair as possible and judge people on their merits in all situations as one of my “strange” qualities.  

One right we, as employees, can enjoy under “employment at will” arrangement is the very special freedom it guarantees you: just as your employer can fire you without warning, you can quit on a moment’s notice.   That, of course, if you can afford to do so.

Hard-Working CFO Is Not a Don Quixote


As we already discussed, people like me (not only CFOs and Controllers, but anyone of the same makeup) work hard because they cannot operate any other way.  We do it out of self-respect. If we undertake a job with its multitude of functions we try our best to adhere to our own high standards of work ethics.

Does this mean that we are idealists of the Don Quixote persuasion?  Will we sacrifice merit-based rewards for the sake of doing the job that makes us proud?  Will we let our bosses to take advantage of our self-drive and pay us peanuts?

No, no and no.  If that what you gathered from Why Do I Work So Hard?, you grossly misunderstood me.  Don’t forget that we first accept a job, but once we do, we start working hard.  And the compensation should be adequate.

The thing is, though, we know this about ourselves.  We know that we will do our best for the employer and we know that, unless something we cannot control ourselves happens, the company will benefit from our efforts tremendously.  So, don’t forget that: reflect it in your resumes, your cover letters, your conversations with hiring managers.

And if you made a conscious choice of working in a privately owned business, you actually have an opportunity to present yourself to the people who care about the company’s well-being the most – the owners.  Let them know that you adhere to high level of work ethics.  It will make a difference and it can be used as a negotiating point.

{Side note: my experience shows that stressing these points with recruiters or HR managers will be wasteful and frequently detrimental to your ability to move to the next level of interviewing process.  These people are employees, you don’t know their attitudes towards the job and they may feel threatened.}

A quick word of warning: never say, “I am the best thing that will ever happen to your company.”  First of all, you cannot guarantee that because there are a lot of circumstances that can negate your diligent efforts.  Secondly, I was told by many a psychologists that these types of statements are classified as “over-compensating” and usually signal lack of confidence.  Instead, present your case based on your prior achievements and relate them to your dedication.

Of course, the salary negotiations are tricky and influenced by many circumstances: the job market conditions, whether you are currently employed, whether this job is a real stepping stone in your career, etc.   Nevertheless, that would be true for all applicants, but if you are indeed a naturally hard-working person like me, you have an edge.

Hopefully, by the time a raise and/or a bonus discussion comes up, your reputation will be solidified and you will be rewarded for your efforts.  If you still need to negotiate, you will have a chance to talk about your present, not past, achievements.

And here I would like to refer you to the following The Ladders article, which directly addresses the issue of Salary Negotiation.

 

 

Marketplace Fairness (???) Act, or Lets Stomp on Small Businesses Again


ImagesCA3IO0HMBelieve it or not, but the Battle for (or against, if you will) the Internet Sales Tax has been going on for 20 years now. 

First, there were no online sales taxes at all.  Back in the early 90s, members of various legislative bodies thought that the World Wide Web was something that Al Gore invented and, therefore, didn't pay much attention to it, especially the Republicans.  Meanwhile, the online vendors (the term e-tailer didn't gain wide acceptance until 2000) and their customers justifiably acted like pioneers in the brave new world:  as far as they were concerned, they operated in the environment with no physical attributes, and no brick-and-mortar regulations were applicable to them. 

It didn't take too long, however, for the states to catch on and get all itchy on account of the missing revenues.  The first most obvious targets were those conventional retailers, who quickly added shopping carts to their websites: Godiva, Staples, Best Buy, Bloomingdale's, etc.  With them it was easy to enforce the guiding principle of sales taxation - the physical presence rule.  They have multiple locations practically in all states – collecting and remitting sales taxes are routine tasks for them.  A bit of code-writing and, voila, if your shipping address is in the state where the seller has a store, an office, or a warehouse, the tax will be applied.  

I was in the avant garde of the e-commerce consumers.  I bought my first book on Amazon in 1995.  I recall it was a new addition of Joy of Cooking: 1150 pages – too bulky to drag it with me from B&N.  A desire to own a one-of-a-kind Victorian coral bracelet sold by an antique dealer in Amsterdam trampled my inherent mistrust and led me to the conclusion of my first eBay purchase in 1996.  I had to fax my credit card info to the seller – we were still two years away from the inception of PayPal. And that same year I booked a room at Montreal's Ritz Carlton through Expedia.  I consider myself an Internet veteran.  Today, 90% of my consumer experience is managed online.  And I am not alone: in 2012 Internet sales amounted $226 billion.

And all these years, I've been kind of on the fence about this whole Internet taxation issue. On one hand, I LOVED not paying sales taxes for the items I bought from my home.  Plus, no state or city resources were utilized: I didn't use any public transportation, roads, or street parking; I didn't walk into any buildings; nor did I use any City utilities. The cost of my connectivity is taxed via my cable and power providers, while delivery services collect sales taxes from the shippers. I still remember how disappointed I was when Amazon opened a distribution center in NYC to facilitate same-day deliveries and started taxing my purchases.

On the other hand, the economist in me is fully aware of the importance of sales taxes for the state and municipal budgets. And, while I strongly believe that 70% of government employees are redundant and the rest are lazy, I do want all bridges to be repaired on time. Unlike other people, I understand that it's a capital-intensive process and money has to come from somewhere.  I knew only too well that Bluefly, with offices and employees in NYC, should've been taxing my purchases (they didn't) way before the CEO decided to launch a brick-and-mortar outlet.

I am a stickler for the rules that create common platforms for everyone involved: generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), international commercial terms (Incoterms), etc. Speaking the same language prevents misunderstanding. If we cannot avoid paying, collecting, and remitting sales taxes, let's at least stick to the simple rules of physical presence already in place. Even though, the interpretation of what constitutes "physical presence" in the Internet environment could be debatable. I kept pondering, for example, whether, besides the conventional criteria like leased or owned commercial property, payroll, and inventory, the location of web servers and interface workstations should be considered as well.

Yet, one thing has always been clear to me: If you don't have any type of presence in a state and don't use any of the state's resources in order to generate income, you cannot be made responsible for collecting sales taxes in that state. This is not medieval Europe, I thought: just because the governments want additional revenues, they should not just impose new tax-collecting laws like some Sheriff of Nottingham. This would destroy a lot of small businesses that were able to break out of their local boundaries and find their way into the national and even international markets through the web.

What a fool I was! Who cares about small businesses? Members of the government act according to their allegiances to a few Big Players with their big gains and losses at stake.  On one side, there are Wal-Mart, Target, COSTCO, and Amazon (boy, this alliance alone was unimaginable only a few years ago), who are literally everywhere on the ground and on the web. These "poor" leviathans complain that they are at the "price disadvantage," losing customers to those e-tailers (read: smaller businesses), who don't charge sales taxes. "All" they want is to level the playing field, i.e. for everyone to collect taxes everywhere.

On the other side of the barricade is eBay providing thousands of online shops and craftsmen with the means of offering their products to the world.  It stands to lose tons of fees if the members' business volumes contract.  Nobody represents the unaffiliated e-tailers.

Guess who tips the scales? In the beginning of this month, the Senate approved an Internet tax proposal (perversely named Marketplace Fairness Act), which is not based on e-tailers' physical presence at all and will force shoppers to pay sales taxes on the majority of online purchases. In basic terms: all online sellers will have to collect sales taxes and file returns for all states to which they ship their merchandise. 

The plight of small businesses, including the additional workload related to the new responsibilities, is almost an afterthought in the proposed legislature: the ones with less than $1 million in out-of-state sales will be exempt from sales-tax obligations.  What is this stupidly irrelevant number? Are they low-balling like some cheap hagglers?  Again, common ground, people! According to the Small Business Administration's definition, a retailer is considered "small" if the sales do not exceed $5 million to $21 million, depending on the product!

Why our various government bodies always have to be such opportunists and never think about the future impact of their decisions, I have no fucking clue. The e-customers have only this much disposable income: if they have to spend a portion of it on the Internet sales taxes, they will buy less goods.  Consumer market contraction anyone?  And in the long-run every time a small business is hurt, it affects the entire economy.  But who cares about the long run? The governments are more interested in grabbing whatever they can right now, whether they entitled to it or not.