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How To Launch A Pandemic-Proof Business
The fallout from Covid-19 torpedoed his shuttle service. So Trent Griffin-Braaf decided to start a new business. How To Launch A Pandemic-Proof Business
Back when Trent Griffin-Braaf was the general manager of a hotel in Schenectady, N.Y., guests and colleagues often complained about the shoddy taxi service in the area. Betting he could do better, in 2016 Griffin-Braaf started a shuttle service for a handful of hotels. “I always had an entrepreneur’s spirit; even at a young age, I remember always wanting to be a businessman.”
As his venture, Tech Valley Shuttle, gained traction, he expanded his service, to schools, workplaces, and beyond. Griffin-Braaf made it a point to recruit ex-offenders like himself while educating employers about tax breaks they could get for using his minority-owned-certified business.
His motivation stems from his own experience serving 3.5 years in prison for selling drugs as a teen. While there, he took Marist College courses and gained confidence in his abilities for the first time, he says.
To do right by the people he’s trying to help, Griffin-Braaf hires his drivers as employees, not as independent contractors. “It costs me more money, but I feel like I’m able to help more people,” the 36-year-old says.
Earlier this year, his business was very busy, on pace to double its annual sales. When the pandemic hit, bookings fell by 90% because people weren’t going to work or school or traveling. “It totally knocked us off our rocker,” says Griffin-Braaf. “We were devastated by what Covid did.”
To help struggling families and keep his 20 employees busy, Griffin-Braaf made deliveries for free for food banks and other nonprofits. Aware that demand for shuttle services was unlikely to bounce back in the near future, he started laying off employees, hoping for some return to normalcy in 2021.
At the same time, he sought a new way to earn income out of economic necessity. “I have three children, a wife, and a mother who lives in the house with us,” he says. In late June, Amazon emailed him unexpectedly. The online retail colossus had accepted an application Griffin-Braaf had sent to become a logistics provider. The deal meant he would have to launch a new business at warp speed.
He got to work, hiring quickly to launch G-B Logistics in July. It operates independently from Amazon but is supposed to follow Amazon’s rules, including that drivers wear Amazon uniforms and vehicles sport Amazon branding.
“It’s basically like a franchise,” Griffin-Braaf says. G-B is responsible for all Amazon packages that weigh over 40 pounds within a 150-mile radius around Albany, N.Y., including parts of Massachusetts, New Jersey, and Vermont.
Griffin-Braaf has hired more than 30 employees so far and plans to double that number by the end of October. That’s when he expects he’ll be up to 25 vehicles (some leased, some rented) and 25 routes, ready for the coming holiday rush. His drivers already are lugging goods like exercise equipment, grills, and mattresses to Amazon shoppers.
Expanding into package deliveries allows Griffin-Braaf to further pursue his goal of building expertise to get people from point A to point B. And his mission to help people who face hiring barriers continues. He says the question other entrepreneurs like him must ask themselves is, “How do you grow so that whatever you’re doing can help your main objective.”
Here’s Advice From Griffin-Braaf For People Looking To Start A Business Today Or Retool An Existing One:
Do your homework. Griffin-Braaf urges entrepreneurs to do research the new business deeply, know what you’re getting into. Spend time on your business plan and flesh out the details. Griffin-Braaf says he wasn’t accepted by Amazon the first time he applied because he didn’t take the process as seriously as he should have.
Be open to new ideas and change. “As I tell my own children, opportunities are around all of us all of the time,” says Griffin-Braaf. “This is a great time for a lot of businesses to pivot.” He’s also been using the pandemic to eliminate services in his shuttle business that don’t make sense. “Maximize on the things that are profitable and minimize the things that aren’t showing much of a return.”
Network with intention. Aim to develop a network of smart people who possess expertise that you lack, says Griffin-Braaf. “Find people who are going to push you, educate you, and hold you accountable.” While you’re at it, don’t forget to build a relationship with a lender.
Find your mentors. One of Griffin-Braaf’s is a retired businessman in his 80s who has made millions. “We talk on a weekly basis for hours.” This mentor encouraged Griffin-Braaf to approach Amazon: “If you’re working for the richest human ever, you should be able to make money,” Griffin-Braaf recalls him saying.
Be fearless. If you start a business, commit to making it work even when times are tough, says Griffin-Braaf. “I’m a risk taker,” he says. “I’m always willing to bet on myself. As a true entrepreneur, that has to be your mindset.” Be confident and be smart about the risks, he adds. “If the rewards outweigh the risks, roll the dice and go for it.”
In the Covid Economy, Laid-Off Employees Become New Entrepreneurs
After pandemic cutbacks, some survive by turning their skills into businesses of their own.
The coronavirus destroyed jobs. It also created entrepreneurs.
To adapt to the pandemic and the job loss it unleashed, more Americans are becoming their own bosses, setting up tiny businesses to work as traveling hair stylists, in-home personal trainers, boutique mask designers and chefs. A man in Maryland started a mobile car-washing business.
Many new entrepreneurs previously worked at salons, gyms and restaurants, in the kind of face-to-face jobs erased when state orders closed swaths of the economy in the spring. The economy has since mounted a split recovery, with some Americans thriving while many others continue to struggle. A cohort of the laid-off, stuck on the descending arm of that recovery, are using their ingenuity to get off it.
“As horrible as [the pandemic] is, and as badly as it has affected so many people, it has pushed people to come up with new ideas and products and services,” said Steven Hamilton, an economist at George Washington University.
When the high-end New Jersey gym that employed Damien Johnson as a personal trainer closed in March, he considered applying for work at an Amazon.com warehouse. But a couple of clients Mr. Johnson already worked with outside of the gym stuck with him, doing their workouts in basements, parks and backyards. Gradually, Mr. Johnson picked up new clients for one-on-one sessions, through a combination of personal referrals and posts on his Instagram page.
By the end of the summer, Mr. Johnson, 46 years old and living in Lodi, N.J., was earning about $500 more a week than his previous take-home pay, he said. Clients pay less per session than at the gym, but no longer does more than half of what they shell out go to the gym instead of to the trainer.
It isn’t uncommon for workers who lose jobs in economic slumps to turn to self-employment as a stopgap. Once hiring conditions improve, many switch back to payroll positions. Not Mr. Johnson.
He returned to the gym when it reopened in September, but client attendance there was sparse. He quit the gym on Oct. 20 to focus on expanding his personal business, for which his plans include offering online training sessions for people working from home.
“If we want to still survive doing what we do, you have to go after people that haven’t lost their jobs,” Mr. Johnson said.
This emerging group of entrepreneurs has pushed into a wide array of service businesses, including home improvement, food, beauty and health. They have one thing in common: figuring out how to connect with those in the upper layers of the economy who have managed a speedier recovery or never lost income.
The phenomenon is somewhat different from the gig economy, in which workers tap into online platforms such as Uber often to supplement another form of income. Many in this newer group are working to build direct relationships with repeat customers and are using their skills as their primary source of income; some say they see their shift as permanent.
It’s hard to pinpoint the number of Americans following such paths. Some are part of an underground economy—often one-person, cash operations not captured in the data.
Still, Labor Department data show that in October, while nonfarm payroll jobs remained down 6.6% from the pre-pandemic level, what’s called nonfarm unincorporated self employment was recovering faster, down just 2.4%.
A different measure pointed to a sharp rise in those turning to self-employment. Some who start a business of their own apply for tax identification numbers. Census Bureau data show that applications by businesses not expected to have employees surged 32% in the first nine months of 2020 from a year earlier.
They took off in the July-through-September quarter, soaring 77% from the second period, the largest quarter-to-quarter jump in 16 years of record-keeping.
It has become easier in some ways to start a small-scale business. People can advertise via social media and use online sales platforms such as Etsy Inc. and Shopify Inc. to connect with customers. Etsy said its third-quarter revenue more than doubled from a year earlier, in part because of a surge in sales of handmade face masks.
Some economists say workers like the personal trainer or those using the online platforms are adjusting to what might be lasting changes in the way people shop, socialize and earn an income.
“A working hypothesis is that individuals realize that the new normal is going to be different from the old normal,” said John Haltiwanger, an economist at the University of Maryland who studies the Census Bureau data. New entrepreneurs “are engaging in activity that is associated with that new structure,” he said.
Self employment has long been a feature of the U.S. labor market. In the late 1940s, it was how nearly one in five Americans made a living, including many small farmers. That share fell with farm consolidation and other changes, but has stabilized since 2000 at between 10% and 11.2% of workers, including both those who incorporate and those who don’t.
Though people often turn to self employment when a recession eliminates jobs, new business formation was weak during the financial crisis. Reasons included tight credit and the loss of household wealth from the housing-market collapse, said Joseph Brusuelas, chief economist at RSM US LLP, an accounting and consulting firm.
The Covid-driven crash had a different effect. “This shock is much more intense and has resulted in people turning to self-employment because they know those jobs probably aren’t going to come back,” Mr. Brusuelas said.
Ramona Wilmarth, a hair stylist in Sonoma County, Calif., said her unemployment benefits and a $1,700 federal stimulus payment, which included $500 for her son, made it easier to leave the salon where she was an independent contractor.
After California temporarily closed most in-person services in March, Ms. Wilmarth told the salon she wouldn’t be back. She bought a wagon, a collapsible salon chair and a long extension cord.
Ms. Wilmarth now visits about five clients a week outside their homes and sees another 15 a week on her brightly colored front porch, which she has outfitted with a chair, a mirror and heat lamps. She and the clients wear masks, and she gets a Covid-19 test every four days.
Ms. Wilmarth said about half of her clients are people who have hung onto their full-time jobs since the pandemic began. The rest saw their hours cut or are no longer working. She said she offers discounts to those who tell her they can’t pay full price.
Ms. Wilmarth, 39, said that her monthly net income is 35% to 40% higher than it was at the salon, and that she canceled her unemployment benefits once her business got going.
“This pandemic has helped me blossom,” she said. “It pushed me to do something I wasn’t really ready for” before.
Interest in freelancing also has expanded during the pandemic. Fiverr International Ltd. , an Israel-based firm that connects freelancers and customers, said new U.S. freelance registrations on its website rose 48% year-over-year during the July-through-September quarter.
The freelancers it deals with provide services such as graphics and design, digital marketing, writing and computer programming, and Fiverr said they have had better incomes in 2020, on average, than in previous years.
In Riverside County, Calif., some are acting as freelance chefs of a sort, taking advantage of a 2018 state law that lets people cook and sell food from their homes.
Foodnome Inc., an online platform that connects them with customers, said the loss of jobs in the pandemic is driving the trend now. An advocacy group, the COOK Alliance, estimated California has tens of thousands of home restaurants, including in counties that haven’t started granting permits for them.
New entrepreneurs face many challenges, including a lack of access to employer-provided health insurance, workers’ compensation, paid sick leave and eligibility for unemployment insurance. They’re often poorly capitalized. Some skirt health and safety laws, not to mention taxes and licensing fees, operating much like the “informal economy” in emerging-market countries. And not every new enterprise will produce sufficient income.
People who were working for themselves before the pandemic have also struggled. The spring shutdowns resulted in a near-universal cancellation of musicians’ performances and artists’ exhibits, for example, and many contractors saw work opportunities dry up as companies tightened spending.
Aaron Thomas, a DJ in Athens, Ohio, used to perform on cruise ships in winter and did gig work at weddings during the summer. He lost much of that work when the pandemic began.
Mr. Thomas turned himself into a one-man distanced-wedding planner, setting up Zoom sessions to allow guests to attend his clients’ weddings virtually and trouble-shooting technical issues.
He lugs a gasoline-powered generator to remote spots where people choose to say their vows. He organizes virtual concerts for students at Ohio University and Bowling Green State University, recruiting musicians he knows from cruises.
Mr. Thomas, 41, said he earns about 60% less than he did before the pandemic.
“I’m trying anything I can to make sure I can pay my bills,” he said.
Like Mr. Thomas, many entrepreneurs turn to skills from the job they lost as the foundation for a personal business. A few, however, figure it’s time for something completely different.
Jorge Paredes of Silver Spring, Md., started washing cars after he lost his job as a food runner at a downtown Washington restaurant in March.
It was tough going. Some people yelled or slammed their doors when he approached their houses, he said.
Then a gig with a local synagogue set off a wave of referrals and interest, and by September, Mr. Paredes had saved enough money to buy a van—a relief after several months of riding his bicycle in the summer heat from one job to the next.
He now travels with a portable power washer and a hose, which he hooks up to the water tap outside customers’ homes. He recently added knife sharpening to his offerings and said he now is earning roughly double what he did at the restaurant.
“I’m glad I lost the restaurant job,” said Mr. Paredes, 46. “This pandemic helped me. I used it like a springboard.”
He plans to continue running his own business after the pandemic is over and believes he is flexible enough to adapt to changes. If car washing becomes less lucrative, he’ll offer a different service.
The Pandemic Took His Business. So He Started Over
Many entrepreneurs in the travel industry saw their business disappear from Covid-19. With normality years away, many are looking to other options.
Running a travel business in 2020 is difficult enough, but Jonathan Baylis’s firm faced a triple whammy when the coronavirus struck.
The 33-year-old’s company provided package tours for religious devotees, 70 percent of which went to the Catholic pilgrimage site of Medjugorje in Bosnia and Herzegovina, where the Virgin Mary purportedly appeared in the 1980s.
The country “had never been in the travel corridor list and most of our clients were in the vulnerable category, the over-65s,” says Baylis, based in Box, England. “It made it impossible to go this year. It’s not like we were going to the Canary Islands and could get a month in here and there.”
But Baylis had a 2-year-old daughter, and another, a son, born during the pandemic in June, to support. Seven-year-old Aglow Pilgrimages wasn’t making any money. The 100 bookings a month he saw in the first two months of the year disappeared when the pandemic took hold.
“It was basically a situation of hoping travel would come back as soon as possible, and rescheduling bookings for autumn thinking it’ll have blown over by then,” he explains. But in the back of his mind he considered the unpalatable alternative: travel wouldn’t bounce back as speedily as that.
Baylis is a tiny part of a massive global industry crippled by the pandemic. The airline industry is forecast to carry 1.8 billion passengers in 2020, according to the International Air Traffic Association—a total last seen in 2003, and down about 60 percent from 2019.
Airlines have lost more than $400 billion in passenger revenue year on year. And passenger numbers for 2021 are only forecast to be 2.8 billion, down 1.7 billion from pre-pandemic times. Travel won’t return to 2019 levels until 2024 at the earliest, IATA says.
“We just saw bookings fall off a cliff,” says Baylis, who decided to set up a backup business, supplying bulk firewood to people in the U.K., called LogsNearMe.co.uk. “It’s a growing market and would be covid-proof,” he says. “If we had a lockdown in winter, people are going to be spending more time at home, working from home, burning more logs.”
When the U.K. lockdown lifted earlier this year, Baylis was one of the 1.8 billion passengers to take a plane—to Lithuania, where he met with suppliers of firewood and brokered business deals. Cautiously following his business plan, he ordered two containers of wood initially, not wanting to spend on stock sat in expensive warehouses.
When LogsNearMe.co.uk launched its website in September, customers bought out the stock within a month. “We’ve been playing a waiting game, waiting for more containers to arrive,” says Baylis.
Baylis has since ordered six 45-foot containers, and made £10,000 ($13,200) of sales of firewood in the first week of December—its biggest week in a short existence. The founder’s hunch that firewood was a covid-proof business has proved correct so far. “As quickly as it comes in, it goes,” he explains. The website now shows no stock available.
Aglow Pilgrimages has been mothballed for now. “I hope to resurrect it as soon as things return to normality and travel starts again, but I wouldn’t be surprised if this overtakes Aglow in a few years,” says Baylis.
The log business hasn’t all been easy. Baylis’s post-lockdown sojourn in eastern Europe saw him encounter a few rogue traders, one of whom he entered into a supply deal with. That shipment hasn’t yet arrived in the U.K., and Baylis is uncertain whether it ever will.
Still, Baylis feels lucky to have come out of the pandemic with a new business that’s a going concern. And as he knows from his tours to Medjugorje, site of the purported sighting of the Virgin Mary, which he first visited in 2005, stranger things have happened. “Hopefully it turns up,” he says.
Tips On Going Freelance During The Covid-19 Pandemic
As coronavirus accelerates moves to contract, gig and ‘on-demand’ work, here’s advice if you’re considering becoming your own boss
When Kyndall Bennett lost her job as a multimedia designer in July, she took it as the push she needed to start freelancing.
“I had been considering doing it for a while, but the layoff kind of lit the fire underneath my behind,” says the 29-year-old, who lives with her husband Stevenn in Valley, Ala. “It was, ‘Hey, look. You might not think you’re ready for this but you’re just going to have to jump in and figure it out as you go.’ ”
She studied video tutorials on LinkedIn Learning about the ins and outs of what’s now often called “on-demand work” and booked her first freelance assignment in September. Since then, she has been offering services such as website design and digital marketing on a contract basis. Though Ms. Bennett says the hustle required to freelance is challenging, she hopes to eventually make a career as an independent worker.
“Covid will accelerate companies’ use of gig workers and legitimize it more.”
— Joseph Fuller, Harvard Business School professor of management practice
Ms. Bennett is one of thousands of people—from millennials to senior executives—who have started working for themselves in the pandemic, whether as high-skilled gig workers in fields like computer engineering, solo entrepreneurs launching one-person firms, or freelance workers offering specific services like data analytics or digital marketing.
Some are part of an undeclared economy—often one-person, cash operations not captured in the data. However, one measure points to a sharp rise in those turning to self-employment.
Some who start a business of their own apply for tax identification numbers, and Census Bureau data show that applications by businesses not expected to have employees rose 33% in the fourth quarter of 2020 from a year earlier. In July though September, they jumped 77% from the previous three months—the largest quarter-to-quarter jump in 16 years of record-keeping.
Toptal, a freelancing platform that connects businesses with software engineers, designers and consultants, reported 286,000 freelancers signed up to use its site between March and mid-January, compared with 189,000 for the full year of 2019. In contrast to driving or delivery gigs, these freelance jobs are typically in fields spanning technology, finance and operations.
“Covid will accelerate companies’ use of gig workers and legitimize it more,” says Joseph Fuller, a Harvard Business School professor of management practice who co-chairs a research project called Managing the Future of Work. “It’s forced companies to blow through some of their concerns about distance work for their overall workforce, and that facilitates the use of distance workers and third parties in ways that they may have not anticipated.”
As more people consider working from home for themselves, here are some tips for success.
Figure out what you do best
“Often when you want to go independent, you throw spaghetti across the wall and hope something sticks, or you say ‘I’ll go broad, I’ll cast a wide net.’ Well, you should absolutely do the opposite,” says career-management consultant Marianne Ruggiero, founder and president of Optima Careers. “The market rewards specialization.”
Think about how relevant your specialty is right now, as companies big and small adapt to social distancing and remote working.
And don’t forget to analyze not only what you’re good at—but also what parts of your profession you like doing the most, advises career coach Sarina Virk Torrendell.
Think Checks And Balances
Because working independently means no more steady paycheck, review your finances when embarking, Ms. Ruggiero says. Remember, it may be some time before you get gigs—and between gigs. Ask, “How long can you float yourself?” she says. Ms. Virk Torrendell recommends consulting with an accountant.
People who thrive in freelance work are those who realize how uncertain the income and overall stability will be, according to research co-conducted by Brianna Barker Caza, an associate professor of management at the University of North Carolina at Greensboro. Have a straight talk with loved ones whose lives are directly affected by your financial status about the ebbs and flows of self-employment, she advises.
Factor in the things that were automatically taken care of when you worked for a company, such as health insurance and vacation time.
Adam Rosenberg, who freelanced for months after being laid off from a public-relations job in June, recommends talking with others who have freelanced or done contract work, to learn the financial ropes.
“Nobody gets it right the first time,” says the 40-year-old Boston resident, who now has a full-time job as communications director of esports technology company Vindex. “Your first contract is always going to pay you way less than it should.”
Sleuth on industry websites and ask fellow independent workers in your field about market rates so you can set your prices accordingly.
Learn to read job-contract fine print carefully or consult with someone who can review the contract objectively, advises Prof. Fuller of Harvard Business School.
Consult Your Contacts
“Try to get your foundation clients: people who know you from prior positions, maybe you sold them something and they were the customer, maybe you were the purchasing manager and they were the vendor,” says Ms. Ruggiero, the career consultant. “Start there with your networking to get assignments.”
You can also use those contacts for advice, says Prof. Fuller. “You don’t have to necessarily say, ‘Can you give me a gig?’ But you can say, ‘Do you use these platforms? Which is the best one?’ ” he says. The bottom line: “Work your network.”
Professional groups of similarly minded self-employed or gig workers on social media can also help you network and find jobs.
Check Out The Platforms
Many online platforms match independent workers with companies looking to assign work contracts, such as Braintrust, Catalant, Fiverr, Toptal and Upwork, in addition to broader career websites like LinkedIn.
They typically are free to join and charge commissions on contracts signed. As with any website in which you’re uploading profiles and looking for matches, read privacy policies thoroughly to make sure you’re comfortable with what the company does with your data.
Be as specific as possible in your profile in order to effectively find matches on the websites. “The words you use and how you describe yourself are raising or lowering the likelihood that algorithms will say, ‘Hey this guy looks like a good match, let me spit him out to get considered for this job,’ ” Prof. Fuller says.
Your goal should be getting a few projects under your belt and do them well, so that your reviews and ratings on sites stay high.
Newcomers should realize it’s a constant hustle and be prepared for how much work it is to get the next assignment. “They have taken on this role of marketing themselves in ways that they didn’t have to do for a larger organization,” says psychologist John Weaver, owner of Stress Management & Mental Health Clinics. They either have to learn this skill or employ someone to help them with it, he says.
Remember you’ll likely take on “non-core work” that a company would have handled in the past. “It’s surprising to some people how much organizations literally organize our lives in important ways and how much of a burden it can be to have complete discretion over your work,” Dr. Caza says. One memorable tip on how to deal with that, from a freelance worker she interviewed recently for a research project: Develop routines and practices around organizing yourself. Tee up alerts and reminders and write out or type notes, detailed schedules and to-do lists for big projects and office minutia.
Don’t Get Lonely
While many people have been working from home or remotely since last March, doing so while working for yourself is different. Working for a company, “you’re isolated but you’re not completely cut off. You still have contact with colleagues,” says Dr. Weaver, the psychologist.
Those working independently don’t have that. “Your contacts are going to be your customers. And for that reason a lot of people will join a business group, a local chamber of commerce or a CEO roundtable or group of colleagues that are in the same environment,” he says. “That’s really important to do.” You can find groups for individuals who are self-employed or independent workers in your field on social media.
Start A Small Business By Capitalizing On These 4 Trends
Looking for a side gig? Pay attention to these consumer shifts.
It’s been nearly a year since the coronavirus pandemic upended our lives. A year when we embraced new habits (curbside pickup) and technologies (Zoom) and found solace in old pastimes (gardening and baking). Many behaviors and preferences we’ve adopted will endure long after the crisis eases, which opens opportunities if you’re thinking of launching a business or side gig in 2021.
So, What Are The Key Trends You Might Profit From?
Below are four I learned about in a recent webinar from SCORE (the national small-business mentoring program affiliated with the U.S. Small Business Administration) presented by Rieva Lesonsky, CEO of GrowBizMedia. Along with each trend, you’ll find my suggestions of related business opportunities and resources.
Trend No. 1: More Americans Are Starting Businesses
In 2020, applications for new business tax IDs actually rose at the fastest rate since 2007.
Opportunity: In the recent Next Avenue article, Smart Move for Your Home Business: Hiring a Virtual Assistant, new entrepreneurs (especially one-person shops) often turn to freelancers and consultants to help run, manage and grow their ventures. The people they hire might be bookkeepers, virtual assistants, business coaches and the like.
“By contracting for these services instead of hiring directly, entrepreneurs reduce costs, and in many cases, gain access to insights from higher quality talent,” says Jon Eckhardt, a professor at the University of Wisconsin’s Entrepreneurship Science Lab and Editor in Chief of Entrepreneur and Innovation Exchange or EIX (full disclosure: EIX and The Richard M. Schulze Family Foundation help fund Next Avenue).
LinkedIn’s report of the top 15 in-demand jobs for 2021 includes four jobs in this category: data content creator; business development and sales professionals; digital marketing professionals and professional and personal coaches.
How much you’d earn starting such a helping business depends on a number of factors, including your skill level, industry and years of experience. For example, ZipRecruiter says work-from-home virtual assistants earn $67,115 a year, on average, but some make as much as $130,000 or as little as $15,000.
Working as a freelancer or consultant can be especially rewarding for professionals over 50, who bring a lifetime of experience to their clients, but sometimes struggle to land full-time jobs. Many independent consultants charge $100+ per hour; those with specialized expertise can command significantly more.
“A good external consultant will not only perform the function, but will also add value by leveraging their expertise,” says Eckhardt. “For example, a contract bookkeeper, accountant or CFO should be able to improve the business as they perform their basic contracted function.”
To learn more about starting an entrepreneurial support business, check out the many excellent training resources on SCORE.org.
Trend No. 2: Gardening Is Blooming
The pandemic created a new generation of gardening enthusiasts. Seed supplier Burpee reported the highest sales in its 144-year history last spring. And the gardening trend isn’t likely to wither anytime soon. According to a fall 2020 survey by Axion Marketing, 86% of homeowners who were gardening said they plan to keep at it in 2021.
Opportunity: The increased interest in gardening is driving demand for gardening-related services. Options include teaching a gardening class, running a lawn care service or offering landscape consulting services. To get a feel for what’s possible, check out the New York Botanical Gardens online catalog where you’ll find a variety of classes to help you get launched in this fertile field.
Another possibility from this growth trend: Sell a gardening product or accessory. As an example, the father and son team Seth and Mark Samuelson, of Coupland, Texas, have seen revenues for their SeCa Hose Holder (a hands-free tool that helps people avoid bending down while gardening) soar by 300% since 2019.
“With people spending more time at home over the pandemic, many turned to gardening and found the SeCa Hose Holder to be the perfect addition for them,” says Seth.
Trend No. 3. Here Come The Brides
The wedding industry is projected to rebound in 2021 after a dismal 2020 due to pandemic cancellations and postponements. But since many traditional wedding venues have a backlog of reservations, some newly engaged couples will opt for more intimate celebrations of 50 people or less, also known as “microweddings.”
On the other extreme, some couples who privately wed last year are planning “sequel weddings” in 2021 — larger celebrations that showcase their original wedding vision.
Opportunity: Whether their weddings will be intimate or extravagant, most couples want to make the day extra special. That means a likely increased demand this year and next for wedding vendors including photographers, wedding planners and caterers.
Kathy Kristof, editor of SideHusl.com, told me she is seeing plenty of demand for wedding photographers on her site. She advises taking advantage of the “buy local” trend by announcing your services on free neighborhood websites, such as Nextdoor. “This is particularly attractive right now because a lot of consumers are newly committed to helping their local businesses survive,” Kristof said.
Another way to benefit from the weddings trend: If you own a property that could be rented for a small reception or milestone celebration, Kristof recommends offering it up on sites like PeerSpace or ThisOpenSpace. Of course, you’ll only want to do this after you’ve been vaccinated and, if you live in a cool climate, in the summer or fall months when it can be held outside.
“Be sure to check into city regulations and zoning requirements,” warned Kristof. “The city of Los Angeles, for example, has famously threatened to turn off utilities to sites that allow gatherings of more than ten people” during the pandemic.
Trend No. 4: Pet Adoptions Are Surging
According to the American Pets Product Association, U.S. sales for pet food, supplies, vet care and other services were estimated to be a whopping $99 billion in 2020.
Opportunity: There are endless ways to profit from your love of pets, including as a pet sitter, dog walker, groomer or trainer. You can open your own business or freelance on an “as-needed” basis by signing up with one of the online platforms that list pet-care jobs, such as Rover.com. The average Rover.com dog walker earns $20 an hour according to Indeed.com.
Bankruptcy Claimed Their Jobs, And Now They’re Out For Payback
Workers usually end up with nothing when private equity shutters a company. At Art Van Furniture, they’re flipping the script.
Art Van Elslander, the son of an immigrant, briefly served in the Army, returned home to Detroit, and started a family and a business. He began in 1959 with one furniture store on the corner of Gratiot Avenue and 10 Mile Road in what was then called East Detroit. By 2015 he owned the biggest and most popular furniture retailer in the Midwest, with almost 100 stores, 3,700 employees, and $725 million in sales.
That year, Patti Smith wrote in her memoir about hanging out in Art Van stores for the free coffee and doughnuts.
Van Elslander and his wife had 10 children, two of whom worked at the company. He became a community leader and philanthropist. He endowed a foundation focused on children and health. He saved the city’s 1990 Thanksgiving Day parade with a last-minute $200,000 check.
His was a classic American story. So is what happened next. Online shopping wasn’t a priority at Art Van, and by 2017, Van Elslander knew the company couldn’t compete against Wayfair Inc. and Amazon.com Inc. without significant investment. He was 86, ready to step back, and, with 10 heirs, it seemed easier to look for a new owner. Before the year was over, he sold the chain to a private equity firm, Thomas H. Lee Partners LP, for $215 million.
“There is still much I want to do,” he said in the announcement. “I feel confident knowing the company and its people will be in the very best of hands for continued growth and success.” He died the following year.
Continued growth and success failed to materialize. The private equity pitch is that it will help expand business.
But when retailers are burdened with new expenses amid industry turmoil, growth is often elusive. Beyond the furniture business, workers frequently report that they can trace deteriorating conditions at their companies to leveraged buyouts.
Research shows those businesses fare worse financially than public companies. A 2019 paper from California Polytechnic State University professors examined almost 500 companies taken private from 1980 to 2006.
It found about 20% of them filed for bankruptcy—10 times the rate of those that stayed public. Private equity owners and investors, though, can compensate for their losses with one great success. On average, the annual returns for private equity were almost 40% higher than the S&P 500 over the past 20 years, according to Cambridge Associates.
At Art Van, T.H. Lee did nothing unusual, and that may have been the problem. As with many buyouts, T.H. Lee’s separated the company from its real estate—which sold for close to $400 million. That meant Art Van had to start paying rent to the properties’ buyers.
Within a year, Art Van bought two smaller, profitable rivals, Wolf Furniture and Levin Furniture, that employed another 1,900 people. T.H. Lee didn’t take dividends from Art Van, as many firms do, but the new rental payments weakened the retailer’s finances as competition grew fiercer.
While the chain’s expenses grew, its same-store revenue declined more than 25% from 2016 to 2020. Art Van filed for bankruptcy on March 8, 2020, only three years after the sale. T.H. Lee planned to close the original Art Van stores and sell back some of the old Wolf and Levin locations. It promised employees continued work and health coverage until it finished shutting down stores in May.
The pandemic ruined those plans. Instead of an orderly process and the preservation of some stores, the entire company closed abruptly. Going-out-of-business sales halted less than two weeks after they began. Also halted: all the pay, severance, and health insurance employees were expecting. They were devastated.
One learned her insurance had been canceled while she was hospitalized with Covid-19; another had to undergo emergency surgery a week after losing his job and ended up thousands of dollars in debt. Shirley Smith, a sales manager, lost a month of vacation pay along with expected severance and struggled to cover the cost of her insulin.
Joey Tallmadge, a finisher who had worked at the company for about 15 years, couldn’t afford to fill his regular prescriptions. “It’s unimaginable that this would happen to us,” he says.
Yet it’s happened to plenty of others, too. The coronavirus pandemic has highlighted with grim precision the inequities of the American workplace, and nowhere are those strains more apparent than in the retail industry. It’s the largest private-sector employer, staffed by workers who often have little control over their schedules and don’t always receive benefits.
In only the past two years, dozens of U.S. retailers have filed for bankruptcy and hundreds of thousands of people have lost their jobs. The workers often receive no warning, though the law requires it. They’re the last to get anything, which often means they get nothing. Those failed businesses weren’t all owned by private equity firms.
But some of the biggest— Toys ‘R’ Us, Sports Authority, and Gymboree—were.
Here’s where this classic American story takes a different turn. The workers fought back. They used the collapse of Art Van to try to force a public accounting of what employees are owed afterward. In letters to T.H. Lee, the company’s former employees demanded that the $11.6 billion private equity firm honor its initial promise of pay and health insurance.
They aren’t alone in their fight. For the past few years, activists have been pushing for workers’ rights in bankruptcy proceedings, and politicians have been calling out owners to treat their former employees better. Amid the pandemic, people across the country are acknowledging the vulnerabilities of essential workers. The fight for a $15-an-hour federal minimum wage has gained popular support and some corporate backing, including from Amazon.com, and is central to President Biden’s labor agenda.
“There’s a real thirst in society for more fairness,” says Thomas Kochan, a director of the MIT Sloan Institute for Work and Employment Research. That thirst—and that pressure, especially when it comes from public investors—is changing what’s happening at some troubled companies, too.
Bankruptcy judges, owners, and lenders are beginning to account for employees’ losses in their negotiations. It’s still possible to ignore workers. But it’s not nearly as easy as it used to be.
Just a few days after receiving the first complaint from Art Van workers in April, T.H. Lee offered to set up a hardship fund—the partners’ first ever. They would put in $1 million, which would come to about $400 per employee.
The workers rejected that offer as “woefully inadequate” and pressed for more. T.H. Lee said it would match additional donations of as much as $1 million, but had come up with only another hundred thousand dollars by the end of January.
The Art Van workers are continuing to make their case, not with T.H. Lee but with its investors, to receive an amount closer to $1,500, the equivalent of three months’ health insurance. The private equity firm declined to comment for this story. In a document reviewed by Bloomberg Businessweek, T.H. Lee told workers: “We care deeply about the impact the liquidation had on the lives of former employees, which is why we proactively initiated the hardship relief fund.”
That relief fund is much smaller than they demanded. But that they received one at all has to count as a success, however modest. And this was before a new administration more sympathetic to labor concerns took office.
While more bankruptcies and store closings loom and millions more jobs remain at risk, this may be the moment when the balance shifts, just the tiniest bit, toward workers. New rules could make it easier to organize and, if their company fails, to be protected. Workers say they want only what they’re owed: fair wages, safe conditions, and the severance, vacation, and other benefits they earned.
When Van Elslander sold Art Van, former executives say, the company was stable, at a growth plateau after years of expansion. T.H. Lee saw an opportunity to acquire other independent furniture sellers and build its digital business.
Sounds like a simple plan, but the furniture industry is tough. Salespeople have to know enough to make shoppers comfortable spending thousands of dollars; importing and delivering bigger pieces is expensive, and goods are easily damaged in transit. To those former executives, it didn’t seem the new owners had any particular enthusiasm for the business.
The longtime chief executive officer left and was replaced by Ron Boire, who’d been a senior executive at three troubled companies: Sears, Toys ‘R’ Us, and Barnes & Noble, where he lasted only a year. Other top executives who’d helped run Art Van for years left.
In came the consultants and East Coast MBAs, well intended but without relevant experience—“battalions” of them, says Diana Sikes, who headed Art Van’s marketing from 2009 to 2018. They were data obsessed, creating new analytics targets that distracted attention from the stores themselves. Sikes says they called a lot more meetings; they missed the forest for the trees. “The focus shifted to pleasing the investors and owners and away from pleasing the customers.” Boire, who left in the fall of 2019, declined to comment.
Soon there were fewer people at Art Van to object. The company cut sales staff and ousted seasoned managers in favor of cheaper substitutes with less expertise. A longtime buyer in the bedding department was replaced with someone who’d worked in lingerie, says Smith, the sales manager. Smith had worked at Art Van for 23 years and says, “The last three years were my worst with the company.”
Tallmadge wasn’t any happier. He’d been rehired in 2017 as a finisher, working on wood, upholstery, and leather, after having been let go more than a decade earlier. His second time around, he noticed the company wasn’t as interested in craftsmanship, or even quality control. Items arrived without crucial components, such as sofa recliners missing their power cords. Part of his group’s job had been to repair pieces for customers or for resale.
Instead, the new managers “kept throwing things out that normally, over the last 60 years, we could have fixed,” Tallmadge says. “Quality, perfection were no longer required. They just wanted to rush things through the [repair] shop and get it back out to stock.” New sofas arrived sporting plastic frames that Art Van used to avoid. “It’s throwaway furniture,” Tallmadge says.
Then the company bungled its digital strategy. The website became a standalone business, with separate merchandise, management, even office space. Rather than generating new revenue, this two-tiered system cannibalized the chain’s retail sales, Sikes and other former executives say.
Meanwhile, the new leasing costs burdened the company, which otherwise had modest debt. Retailers often lease their stores, but owning its real estate had been one of Art Van’s competitive advantages. Suddenly it had to pay rent for more than 100 stores.
Signs that Art Van was struggling mounted in the months before it filed for bankruptcy, Smith says. In fall 2019, deliveries of special orders took weeks or months longer than before, and new vendors began to appear as some old ones gave up on getting paid. What workers didn’t know was that as cash dwindled in late 2019, T.H. Lee was scrambling to try to sell Art Van, secure new financing, or renegotiate store leases.
“I no longer have access to my surgeon, my prosthetic technician, or my insurance, and I’m not even finished with my recovery”
In late April, Tallmadge and several other employees held the first in a series of virtual meetings with T.H. Lee.
They said the private equity firm needed to do better and could afford to. They demanded that each employee receive $1,500, the equivalent of three months of health coverage. That would have come to about $7 million.
The workers say T.H. Lee repeated its offer of $1 million. At a second virtual meeting, the workers again asked for more—if not $7 million, then at least $5 million—and the executives again insisted that wouldn’t be possible: T.H. Lee had lost its entire investment in Art Van.
After that, Tallmadge and the others wrote more letters and extended more invitations to talk. They held two more meetings, and then T.H. Lee went silent. That’s when the former employees decided, on the advice of labor activist group United for Respect, to appeal to the firm’s investors.
The Art Van workers sent a dozen letters and attended three virtual board meetings at pension funds and state investment funds over the next three months. They asked that the organizations halt further investments in T.H. Lee funds until the private equity firm publicly committed to adopt responsible labor practices for all of their portfolio companies, including severance pay for employees who lose their jobs in a bankruptcy.
Julie Ford, who had worked at Art Van for 28 years, most recently in human resources, testified at a meeting of the Board of Trustees of the Employees’ Retirement System of the State of Hawaii in September. “We can’t get our jobs back, but THL shouldn’t have left us with nothing,” she said. “The loss of our family health-care coverage is particularly difficult during the pandemic and recession.”
Later that month, T.H. Lee sent an email to every former employee announcing the establishment of the Art Van Employee Covid-19 Short-Term Disaster Relief Fund. T.H. Lee said it would aim to as much as triple the initial $1 million fund by soliciting another $1 million in donations from its own lenders and matching those amounts. It came up with only another $100,000 in total.
The company said that was its final offer. In late January, right before the deadline for workers to sign up for the fund, several of them got online one more time to ask T.H. Lee for an extension. The firm agreed to a new date in late February.
It wasn’t all that the workers wanted. It wasn’t even all that much. But it was still more than they could have expected only a couple of years ago. For that, they have Toys ‘R’ Us to thank. Its bankruptcy in 2018 was the biggest in retail, and its decision to leave more than 30,000 workers without expected severance payments proved to be a turning point.
Toys ‘R’ Us employees, backed by United for Respect, called on the company’s former owners, which included the private equity firms Bain & Co. and KKR & Co., to create a relief fund. Then they met with lawmakers in Washington and the company’s home state of New Jersey and appealed to pension fund investors.
“Did anyone at KKR lose their job over the failure of Toys ‘R’ Us? Did anyone have their bonuses cut; did anyone have their compensation cut significantly?
Because that’s one of the consequences of free-market capitalism,” Washington State Investment Board member Stephen Miller said to KKR partners at the fund’s June 2018 board meeting, according to a recording heard by Businessweek.
In Minnesota, state investment board members temporarily held back on other potential investments. Just a few months later, KKR and Bain announced a $20 million hardship fund. “Private equity now must think twice about leaving workers with nothing after a bankruptcy,” says Maria Garza Romay, a senior organizer at United for Respect.
Although the fund amounted to less than $700 per worker, it was considered a victory and provided a template for Tallmadge and many more fired retail workers, who have since organized at Shopko Stores Inc., Sears, and other collapsing merchants.
Joseph McCartin, a history professor at Georgetown University, compares the present moment to the dawn of the U.S. labor movement in the 19th century, when early unions fought for the creation of laws guaranteeing that workers would be first to receive payouts if a company went bankrupt.
“What you are seeing around these kinds of struggles is a kind of contemporary revival of that thought, which is ‘What about the workers?’ Everybody else was walking away with their share.”
Executives at private equity firms and at lenders are also being urged or admonished to keep troubled companies alive, though the pandemic has made that all the more difficult. After J.C. Penney Co. filed for bankruptcy in May, U.S. Bankruptcy Judge David Jones ordered everyone involved to reach a deal quickly to keep the chain alive.
“Thousands of jobs and the very essence of the country’s infrastructure are at risk,” he said. Eventually the two mall owners with the most J.C. Penney locations took over the company, preserving, at least for the moment, more than 600 stores and 70,000 jobs. But it has no permanent CEO yet and $1.5 billion in financing.
Back in 2018, Sears Holding Corp. owner Eddie Lampert, who presided over so much of the department-store chain’s decline, made a case that he should be allowed to buy Sears out of bankruptcy to save jobs. U.S. Bankruptcy Judge Robert Drain urged those involved to find a way to accept the company’s only chance at survival. They did, and Lampert reacquired it in early 2019. Since then Sears has closed more than 200 of its 425 locations.
“In large situations, the impact of labor, politics, and PR certainly plays a role,” says Saul Burian, a managing director for the investment bank Houlihan Lokey Inc.’s financial restructuring group. “The outcome in Sears was all about saving jobs—even at the expense of other creditors—and the J.C. Penney case was animated by a strong desire not to repeat the mistakes of, and the mass layoffs experienced in, Toys ‘R’ Us,” he says.
A couple of years after the Toys ‘R’ Us bankruptcy, New Jersey became the first state to pass a law guaranteeing severance to workers who lose their job in layoffs of groups larger than 50. California, Colorado, Illinois, New York, and Wisconsin could follow, Kochan says.
Last spring, Representatives Bobby Scott (D-Va.), Debbie Dingell (D-Mich.), and Steven Horsford (D-Nev.) introduced a bill to guarantee health coverage for workers who lose their jobs, are furloughed, or have hours cut. Massachusetts Senator Elizabeth Warren introduced the Stop Wall Street Looting Act in July 2019, and it’s been with the Senate Finance Committee ever since.
The bill would make private equity owners responsible for the debt their portfolio companies take on, ban them from taking out dividend payments for two years after an acquisition, and elevate worker claims for severance and back payments in bankruptcy.
“For years, private equity has bought up American retail and sold off the parts to the highest bidders, leaving workers worse off or out of work altogether,” Warren said in a statement to Businessweek. “Seeing those workers raise their voices and fight back has given me hope that if we keep fighting, we can make real change to rein in private equity abuse and improve the lives of so many hardworking Americans.”
With Democrats in control of Congress and the White House and workers speaking out about the risks they face, the bills could soon find widespread support. For some, though, these battles come at a cost. After months of negotiating for a better deal for Art Van employees, Tallmadge stepped back to care for his health and finances. He suffered a personal tragedy in November, the death of his 27-year-old son, Alex, from leukemia. Before that, “this fight with T.H. Lee consumed my whole life,” he says.
Tallmadge hasn’t had health insurance since March and hasn’t been able to undergo a planned surgery for a prosthetic leg after work injuries and diabetes required an amputation. “I no longer have access to my surgeon, my prosthetic technician, or my insurance, and I’m not even finished with my recovery.” He’s skipping medications to save money.
Tallmadge says he wasn’t accepted into Medicaid. In October he received the $400 check from T.H. Lee and used it to pay his utility bill. His application for disability is pending. Now he’s preparing to file for bankruptcy, a process he began shortly before the pandemic.
When Art Van folded and Smith lost her insurance, her monthly costs for insulin jumped from a $40 copay to $1,500 and then to $480 after she enrolled in Obamacare. She also lost some health-savings account money and an expected retention bonus. For several months she had to pay her bills out of her savings. Then she found a new job—working for another private equity-owned company.
Jeff Love, who founded a company in Dallas called US Assets Inc., had bought about two dozen former Art Van stores and opened a new chain called Loves Furniture & Mattresses. Smith was hired as a store manager in August, and many Art Van colleagues found a job there, too.
Smith says her pay was almost as much as in her old job, and the benefits were great. At the grand opening of the new Loves store in Canton, Mich., customers asked if it was affiliated with Art Van. No, the workers said, but lots of us used to be.
Loves filed for bankruptcy in early January. In court papers, its interim CEO said disastrous logistical problems cost it sales after a strong start. It tried to sell off its inventory in hopes of raising enough money to reorganize and keep some stores open. But it couldn’t. By the middle of the month, Smith was out of a job again.
She could be bitter, but isn’t. “It’s unfortunate that the effort failed, but a great many new businesses do,” she says. “I knew that going in.”
Then came one more twist at Art Van: In early February the founder’s heirs won bankruptcy court approval to buy the brand for $6 million. They declined to speak about their plans. But after thousands of employees were fired and all its stores closed, Art Van will soon be back in the family’s hands.
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