Takin’ Care of Business

Miriam Reyes is working the counter at the Sierra Mini Mart, a convenience store in a Rock Boulevard strip mall in Sparks. She and her father have owned it only since Aug. 25. They bought it from an owner who had opened it only a few months before that. How is it doing?

“So far, good, even though there are a lot of stores around here.”

She had long wanted to own her own business, perhaps a beauty salon. So she was ready for “helping out my dad to see what we come up with.”

Stores can survive in this strip mall—the Book Gallery and Port of Subs have been fixtures here for many years, for example. But many of the other properties are the kind of storefronts that turn over every couple of years. This store has been here for only a short time. Before it was the Sierra Mini Mart, it was a pet store. Reyes and her father took over the store from an owner who wanted to sell it soon after it opened. Their purchase took courage.

They’re not the only ones, of course. Even in this unfertile economic climate, some people are still going into business. John O’Brien, an experienced advertising salesperson, was working for one of Reno’s Hispanic television stations when he decided it was time to work for himself. He started a small ad agency, Jobo Associates. With his associate Jim Webster, he is surviving and even doing a little better than surviving.

“We didn’t have a lot of capital or anything. We didn’t have an account list. So we just pretty much started from scratch and depended on our experience in the business to carry us through.”

His motivation came from illness.

“I had prostate cancer, and I went through some therapy on that, some radiation and stuff, and I just didn’t want to be stuck in that office answering to corporate 600 miles away in L.A. So I said, ‘You know, I’m just going to go out on my own.’ So I went home and talked to the wife and said that’s what I want to do, and she said, ‘OK,’ so here we are.”

He left the television station in December 2008, eight months into the recession.

“So we just decided to go forth, and one thing led to another, were able to pick up some accounts, and so here we are two years later. And, you know, business isn’t growing as fast as we’d like, but it’s growing each year.”

Webster came on board. “Jim and I worked together in Spanish, and I’ve known Jim for many, many years,” O’Brien said. “We’ve always gotten along. So we had some common interest with some accounts that we finally were able to bring into the agency, but between the two of us, we both bring something to the table. … We just work together on everything.”

Their joint experience in Latino television has given them a niche.

“The Hispanic market is going to continue to grow and grow,” Webster said. He said advertisers who are not speaking to that market are handicapping themselves.

“And because of our experience in the Hispanic market, we’ve been able to help our clients more than most people traditionally would be able to, because [some agencies] do not have them in the Spanish market, and we do.”

The agency has reached a point and a number of clients that O’Brien can say flatly, “It’s a success.” With an ad man’s ebullience, O’Brien says he never doubted his decision to go out on his own and the recession never discouraged him.

“In fact, it even makes me proud to be able to start a business in an economic tsunami … and be able to see it prosper to some extent. But we work at it every day. Try to keep the overhead down, try to be creative, and we’re out asking for business every day.”

He did not seek a business loan and relied on his own resources.

“We just kept things simple, and we don’t go out for steak every night and just have been able to do it without taking loans.”

In this way, O’Brien is right in the mainstream. Whether the recession has sent out a message about debt or for other reasons, few people starting businesses seek loans.

“Oh, my gosh—I can’t remember the last time I saw an application for a new business,” said Heritage Bank of Nevada president Stan Wilmoth.

“The issue isn’t that we aren’t loaning money,” he said. “Nobody’s borrowing money.”

If someone were to seek a loan for a new business, he said, there are some recession-related difficulties because it is so tricky in this economy for aspiring business people to project earnings, which they need to do to convince the bank that the loan would be sound.

“It’s more difficult to find a business model that you can project revenue today and make a profit,” Wilmoth said. “Thus, I guess it’s more difficult to borrow [and] maybe it’s more difficult to loan, in that we really can’t get our arms around what kind of earnings or revenue a new business might derive in this market. Who knows?”

Some new business people start their own companies for the most basic of reasons—they need jobs.

Job seekers

It’s only 11 in the morning at Krumblz Deli and Bakery at the corner of Kuenzli and Giroux streets. The breakfast rush is over, and the lunch crowd has not yet arrived, so it’s easier for employees to keep up with the half dozen customers. The workers are Siena Hotel Casino alums, and so are the two owners. The restaurant opened just two weeks after the Siena shut down. This has led some people to believe that the owners threw the restaurant together in those two weeks—health inspections, building alterations and all. That’s not quite the way it happened.

Almost since the day the Siena opened its doors, some locals have been expecting it to close. But for Juan Villa and Eduardo Quevedo, owners of Krumblz, things started to get serious in January this year. They sensed a change at the Siena that even the crowds from the Reno Aces games could not arrest. Changes in employee benefits, difficulty in getting hotel bills paid and other straws in the wind worried them. They decided to seek new jobs in a very direct way—by creating them.

Seated in his own restaurant now, the stitched word Siena taped over on his white chef’s jacket, but his name and the words Executive Chef still visible, Villa recalls the uncertainty of that time and the scary choices.

“For me to be hired as an exec chef again here in Reno is very, very hard, because most executive chefs in the casinos have been there for years,” he said. “And so, that’s why I had two choices, either leave Reno and find another job somewhere else as the executive chef, or create my own business. … We didn’t know how things would develop over there. They were a little shaky. …We didn’t want to sit home and wonder, so we decided to open this place up.”

The two men—Villa was the executive chef, and Quevedo the pastry chef at the Siena—decided to make some plans. They wrote out a business plan. They started making preparations. But they didn’t leave the Siena in the lurch, staying until the last day—“I was there until the last minute,” Villa said.

“We, all of us, knew that the Siena had that great possibility of closing. So I had to make the decision to wait and see or start something. And I decided to start something. … None of us wanted it to happen, but this was a security for all of us, and it paid off, so far.”

When that last minute came—at noon on Oct. 21—the two men were ready, with name chosen, logo designed, and a lot of suddenly available workers whose abilities they already knew. By then, their plans had taken on a life of their own, becoming not a backup to a possible Siena closure but something they wanted to do in any event. So if the Siena had survived, they would ultimately have left to start the new restaurant.

Krumblz is located in a relatively new building that, however, was not fully rented. The landlord agreed to make tenant improvements, which saved the owners some costs, and let them “design it the way we needed it for the small space.” The two chefs pooled their savings and opened without taking out loans. “It all came out of pocket,” Villa said.

The location is near Renown Hospital and benefits from that proximity. Breakfast attracts a lot of different people from around the community, but lunch is heavy with Renown workers.

“Doing very well,” Villa said. “The community is supporting us a lot. … Our product is good.”

The limitations of the location are actually an asset, he said.

“The kitchen is small. I cannot buy big. … So I buy small quantities [of produce] and keep it fresh. And I don’t have storage, so I have to, on a daily basis, go and buy what I need for a day.” The same applies, of course, to the bakery side of the business. Quevedo bakes the pastries and the breads used in the restaurant on the same day they are sold. The owners are already planning for summer when they will expand to an outdoor patio.

Risks

These new businesses are doing well, for the moment, anyway. But telling their stories glibly here can make it seem easy. The website SnagAJob.com surveyed 511 new business owners with fewer than 100 employees. Among other findings: “Budding entrepreneurs looking for more lucrative pay or more leisure hours by starting their own business may be in for disappointment. … [O]nly one in five (21 percent) business owners with between two and 10 employees is earning more than they had hoped to make when they started their companies. And it’s not for lack of hard work: These small-business owners say they put in an average of 58 hours per week toward their business.”

And the smaller the business, the more difficult. Forty percent of owners with 11 to 100 workers say they have made more money than they expected. Only 21 percent of those who have 10 or fewer employees say that.

One website names 10 businesses that are hot in a recession: Debt collection, health-care products, job search agencies, mediation, security, computer repair, internet marketing, web entrepreneurship, pawnbroking and cosmetics sales. A different site names auto repair, home maintenance and repair, hair salons, collection agencies and businesses that supply basics.

Some online stuff for aspiring business people lacks savvy and expertise and should be approached with skepticism. Speaking in person with real experts, such as bankers and successful business people in the same field is better than relying on internet information.

In addition, news coverage of new businesses always seems to come with an upbeat spin and no warnings of the dangers. “Business is so good at Donald Frazier’s downtown Long Beach restaurant that last month he doubled his seating and his kitchen space and added a bar,” read part of a story on new businesses that ran on a television station in Mississippi last week. It said that in post-Katrina times, businesses are slow to return to gulf towns like Long Beach, [Miss.,] but otherwise contained no indication of how hazardous starting a business can be.

Wilmoth said that someone looking at opening a business in a recession should think hard about it, not rely on optimism, and look at a business model that can be sustained in the worst circumstances. “Plan for the worst and hope for the best,” he said. “The uncertainty of the economy makes it difficult.”

O’Brien said he is confident of the future of his business but also said it’s a lot of work.

“We’re not to the point where we’re happy with what we’re making, but just like with every business, you know, you have to start somewhere and just keep working at it until it gets to be what you want it to be.”

Sometimes, Miriam Reyes has her doubts, which probably is a good trait in a business person.

“Things happen … but there’s not much I can do now,” she said.

Juan Villa said that having the business open and doing well at the start does not calm his fears.

“Absolutely, we were really scared about it. … It was very scary, and it still is, because you invest all your money into something and you hope. … And it takes some time, and we understand it. I’ve been in the business for a long time now, so I know that it takes time, but it’s something that we’re very passionate about, and we think that we’ll do very, very good.”