News

Guest of the Stable: Entreprenurial risk and Washington St.

The following is a guest of the stable article submitted under the pseudonym John Witherspoon. 


Why do I think that most of the
commenters that post here are not really plugged in to the local business
community and have never had the responsibility of running a business and have no experience with entrepreneurial
risk.  It is funny how over educated desk
jockeys or risk adverse employees love to blather on about how nasty and
avaricious business owners ”should” spend their money and run their business. As
an aside, even the hated real estate folks are business owners; I know a few
that failed miserably in that industry.  
And yes, it is a responsibility to run a 
business.  In any successful
business, the owner gets paid last.  All
expenses come first. Rent, utilities, costs, technology hardware and software
and business insurance (make sure you have employee theft and business
interruption riders in your CGL policy or suffer the consequences) have to be
paid, along with license fees, entity filing fees, accountant, bookkeeping and
payroll services.  On top of that is the
initial startup equity plowed into the business.  
Now consider health insurance options and
possible profit sharing or 401k plans to retain key and valued personnel.  Employers actually worry about hiring and
keeping good and honest employees.  I am
well aware of the theft rate in the hospitality business, especially in the
smaller cash driven restaurants and bars. Let’s not forget the building code
and fire inspections that can kill a business. 
At least Hoboken has finally put the past blackmailing, City Hall code
enforcement employee-built inspection dynasty in its rear view mirror.  

Then there is a line of credit to
even out the sales season.  Perhaps a
small business loan to factor inventory, as you have to buy it first and then
figure out how to sell it at a profit (even liquor). Both are tied to your
personal credit and almost always require a second mortgage on your home.  If a business fails, almost every business
owner not only loses their business (and their income) but their financial
security and their home.  Now add in the
salaries of employees.  The unemployment
insurance, sales taxes (which are personal, non-dischargeable liabilities of
the owner if not promptly paid), state and federal income taxes and don’t
forget the tax that each employer pays for the privilege of having an
employee.  If you are in the hospitality
arena, the cost of a liquor license is not cheap. And that license can be taken
away (and your business shut down for a period of time) if you don’t run it
correctly and your bouncers don’t do their jobs.  Every night-time establishment has
essentially placed the success/failure of their business in their security
employees.  Try that one on for size and
see how easily you sleep on any Thursday, Friday and Saturday night.
Spare me all of the moaning and
groaning about how business owners should spend their money.  Spare me the moaning and groaning about what
businesses on Washington Street are or will or should be successful. If you
don’t like the mix of businesses, put your big boy/girl pants on and start a
business that you want to see exist.  Take
the risk, and according to the old adage, “Put your money where your mouth is.”
Most businesses in Hoboken are on 20 year leases, generally a five  year initial term and two five year
extensions ( which have rent escalation clauses).  Most leases have real estate tax pass-throughs
or percentage rent clauses.  That is
typical in any commercial lease.  If you
think that landlords on Washington Street should be more benevolent, then buy
up a building or two and then rent it out on a charitable basis. 

Grow up, we live in a free market
economy.  Consumer preferences drive
businesses. Product driven business are reeling from the onslaught of internet
sales, even hardware stores.  Check out Amazon.  Anyone notice the fleet of UPS and FedEx
truck in town – all day, every day? Ever check out the lobbies of most condo
buildings and the sea of packages that appear every day, disappearing during
the evening rush hours into the ever increasing in value condos of the
recipients?   It is 2014. Commerce is
undergoing a technology revolution.  A
business is guaranteed to fail if it does not adapt to that reality and find a
way to provide goods and services that consumers want and will pay for and
still make a “profit” at the end of the year. 
Even putting up a website to generate sales and revenue, even in food
delivery, eats into every business’ bottom line, but the internet has become
ubiquitous in commerce because of the ease of on line ordering in the comfort
of your home and tracking “points” with credit card usage. 

As to zoning issues, Washington
Street is part of a designated Historical District and any alterations, modifications,
rebuilding must first have applications presented to the Historical Commission
Baird approval.  However, that approval,
thankfully,  is discretionary and not
binding on the Zoning Board.  The past
two to three years has witnessed, IMO, a serious overstepping of boundaries by
the Commission, which has added unnecessary and expensive delays and costs to applications
pending before it.  300 Washington is
just one example. I am familiar with the facts regarding that application and
am aware that a lot of stuff happens between professionals that does not see
the light of day in the public hearings. 
There are many more examples other than 300, and most businesses dread
having to appear before the Historical Commission. There is more than one
architectural firm that will no longer appear before the Historical Board
simply because the approval process has become too bizarre.  Since the log-jam of Zoning Board appointments
finally was broken with the election of Jim Doyle, the Zoning Board has been
effective in plowing through the significant back log of applications. Not everyone
is going to agree on all applications, but having any application take 2 years to get
through the Historical Board  is unacceptable.
Every small business is a love/hate
affair.  It is 24 hours a day.  It can become a demanding mistress. Worry
about the phone not ringing or not enough orders coming in online, not enough
seats in the seats or competition down the block (or even next door) or that
midnight call of a fire or natural catastrophe wrecking your inventory is part
of the deal.  But then there is the
reward (financial and personal) from successfully running and owning your own
business, having some greater sense of control over your own destiny. Dealing
with the changing technology driven economy affects every part of the business
community, large or small. Car rentals, taxi cab owners, taxi cab drivers,
restaurants, retail stores, nail salons, hair salons, laundry and dry cleaners,
liquor stores, convenience stores, pharmacies, real estate brokers, newspapers,
magazines, professional services; each have their own issues with adapting to
2014 and surviving. 

Most of the simplistic and
overwrought comments are amusing in their naivete and lack of practical real
world experience in owning and operating a successful business.

Just my opinion. Let the bashing
begin!

Leave a Reply