1 00:00:01,080 --> 00:00:03,960 Speaker 1: Hi, it's West Kasova. We're taking a break this week, 2 00:00:04,040 --> 00:00:07,440 Speaker 1: so here's an episode you might have missed. Thanks so 3 00:00:07,520 --> 00:00:10,320 Speaker 1: much for listening. We'll be back on Monday with a 4 00:00:10,360 --> 00:00:20,720 Speaker 1: new big take Ollie All Day Yet. Jared Pollium begins 5 00:00:20,720 --> 00:00:24,520 Speaker 1: this Monday morning. Like many mornings, he's weighing out six 6 00:00:24,680 --> 00:00:28,480 Speaker 1: hundred pounds of malt. That's the grain used to make beer. 7 00:00:28,880 --> 00:00:32,040 Speaker 2: These specialty malts add these specific flavor profiles that we're 8 00:00:32,040 --> 00:00:35,120 Speaker 2: looking for in each beer, so they'll always be different depending. 9 00:00:35,240 --> 00:00:39,280 Speaker 1: Jared and and Chow are co owners of Lost Generation, 10 00:00:39,520 --> 00:00:43,320 Speaker 1: a micro brewery in Washington, d C. They're also married, 11 00:00:43,760 --> 00:00:46,440 Speaker 1: and they're showing me around where they make their signature 12 00:00:46,520 --> 00:00:50,400 Speaker 1: ales pilsners and laggers and then seal them into cans. 13 00:00:50,680 --> 00:00:53,080 Speaker 3: When we first opened, we were kind of the neighborhood bar, 14 00:00:53,240 --> 00:00:56,360 Speaker 3: so can sales weren't quite as prominent. But now that 15 00:00:56,440 --> 00:00:59,320 Speaker 3: we're making a name for ourselves as a great brewery, 16 00:00:59,440 --> 00:01:01,800 Speaker 3: then a lot more cancils are starting to go out 17 00:01:01,840 --> 00:01:02,080 Speaker 3: the door. 18 00:01:02,840 --> 00:01:05,800 Speaker 1: And Jared opened the brewery less than a year ago 19 00:01:05,920 --> 00:01:08,960 Speaker 1: in a former Nabisco factory that's one hundred and twenty 20 00:01:09,080 --> 00:01:12,080 Speaker 1: years old, and today they're getting started on a batch 21 00:01:12,160 --> 00:01:15,600 Speaker 1: of one of their original creations, the sour ale made 22 00:01:15,600 --> 00:01:18,800 Speaker 1: with passion fruit the hopper. 23 00:01:19,160 --> 00:01:21,440 Speaker 2: So that it can go through the mill and get crushed. 24 00:01:22,080 --> 00:01:24,119 Speaker 2: We have to open up the husks of the mall 25 00:01:24,680 --> 00:01:27,720 Speaker 2: so that way it can extract the maximum amount. 26 00:01:27,480 --> 00:01:30,200 Speaker 1: Of water from it. Lost generation is part of a 27 00:01:30,319 --> 00:01:33,280 Speaker 1: wave of small businesses that have opened in the US 28 00:01:33,360 --> 00:01:36,319 Speaker 1: in the last few years. You might imagine the pandemic 29 00:01:36,360 --> 00:01:39,920 Speaker 1: would have put a damper on entrepreneurs, but it's actually 30 00:01:40,080 --> 00:01:43,520 Speaker 1: the opposite. In twenty twenty two alone, more than five 31 00:01:43,720 --> 00:01:48,200 Speaker 1: million small businesses were registered. That's up forty two percent 32 00:01:48,320 --> 00:01:52,559 Speaker 1: from pre pandemic levels. Bloomberg's end a current dug into 33 00:01:52,640 --> 00:01:56,680 Speaker 1: why small businesses are having a moment and the challenges 34 00:01:56,760 --> 00:01:59,520 Speaker 1: owners are facing in this uncertain economy. 35 00:02:00,040 --> 00:02:03,120 Speaker 4: Ultimately, at a core of any successful economy is innovation 36 00:02:03,760 --> 00:02:06,440 Speaker 4: and a willing mistake on risk, and lots of people 37 00:02:06,440 --> 00:02:08,160 Speaker 4: I spoke to you said I haven't seen this kind 38 00:02:08,200 --> 00:02:12,240 Speaker 4: of scale of ambition for some time in the US economy. 39 00:02:12,639 --> 00:02:15,280 Speaker 1: We'll hear more from Enda in just a bit, and 40 00:02:15,400 --> 00:02:17,920 Speaker 1: later on we'll talk to a bakery owner who just 41 00:02:18,160 --> 00:02:20,520 Speaker 1: entered a new chapter with her business. 42 00:02:20,680 --> 00:02:22,799 Speaker 5: It is a very scary time, but it's also a 43 00:02:22,880 --> 00:02:25,919 Speaker 5: very exciting time. We've been wanting our own space for 44 00:02:26,000 --> 00:02:29,880 Speaker 5: a very long time, and we were very lucky to 45 00:02:29,960 --> 00:02:31,200 Speaker 5: grow during the pandemic. 46 00:02:37,200 --> 00:02:41,040 Speaker 1: I'm Westkasova today on the big take the pandemic small 47 00:02:41,080 --> 00:02:55,679 Speaker 1: business boom. The tap room in the Last Generation Brewery 48 00:02:55,840 --> 00:03:00,280 Speaker 1: is equal parts nineteen twenties and twenty twenties. You can 49 00:03:00,320 --> 00:03:03,519 Speaker 1: see the original bones of the building everywhere. 50 00:03:03,360 --> 00:03:09,240 Speaker 3: Original cathedral wooden ceilings, original interior exposed brick. 51 00:03:10,080 --> 00:03:13,680 Speaker 1: Really, and then there are the contemporary features, a vibrant 52 00:03:13,800 --> 00:03:17,840 Speaker 1: mural by a local artist, and industrial grade brewing machinery 53 00:03:18,040 --> 00:03:20,919 Speaker 1: that you can see through a Florida ceiling glass wall 54 00:03:21,240 --> 00:03:23,880 Speaker 1: in the back of the tap room. Jared and Anne 55 00:03:23,960 --> 00:03:27,400 Speaker 1: say the Lost Generation theme is a nod to the 56 00:03:27,480 --> 00:03:29,720 Speaker 1: past and to their own business story. 57 00:03:29,919 --> 00:03:33,560 Speaker 2: The Lost Generation is a reference to the art movement 58 00:03:33,760 --> 00:03:37,680 Speaker 2: of the nineteen twenties and thirties. With Hemingway Fitzgerald, they 59 00:03:37,720 --> 00:03:42,200 Speaker 2: found that the art and inspiration from where they were at, 60 00:03:42,280 --> 00:03:44,120 Speaker 2: you know, whether it be New York or the Midwest 61 00:03:44,200 --> 00:03:46,600 Speaker 2: or anything like that, was lacking in their time period 62 00:03:46,640 --> 00:03:49,120 Speaker 2: and it wasn't speaking to them. So they went out 63 00:03:49,160 --> 00:03:54,120 Speaker 2: to places that had thriving artistic inspiration to really find themselves, 64 00:03:54,280 --> 00:03:58,520 Speaker 2: and that's how Anne and I did it as well. 65 00:03:58,600 --> 00:04:01,320 Speaker 1: They'd been planning to open this brewery for more than 66 00:04:01,360 --> 00:04:05,240 Speaker 1: a decade, building on the experience they'd gain in the industry. 67 00:04:05,640 --> 00:04:10,800 Speaker 1: They were set to begin work in early twenty twenty, so, yeah, 68 00:04:11,000 --> 00:04:12,880 Speaker 1: you can probably guess where this is heading. 69 00:04:13,080 --> 00:04:16,760 Speaker 2: We were supposed to sign our lease in March of 70 00:04:16,839 --> 00:04:21,960 Speaker 2: that year, and then the landlord, their representative, took a vacation. 71 00:04:22,040 --> 00:04:23,640 Speaker 2: So they asked if we could push back to April 72 00:04:23,680 --> 00:04:26,479 Speaker 2: first for signing the lease, and we said, yes, you know, 73 00:04:26,520 --> 00:04:28,560 Speaker 2: we can wait two weeks, it's fine. And then the 74 00:04:28,600 --> 00:04:31,720 Speaker 2: pandemic hit and the landlord was like, hey, so we're 75 00:04:31,720 --> 00:04:35,120 Speaker 2: still good for April first, right, And you know, we 76 00:04:35,160 --> 00:04:37,120 Speaker 2: had never seen anything like this before, and it was 77 00:04:37,200 --> 00:04:39,280 Speaker 2: all of it's our entire life savings, and so we 78 00:04:39,920 --> 00:04:42,559 Speaker 2: backed away, you know, cautiously, and then we honestly weren't 79 00:04:42,560 --> 00:04:45,839 Speaker 2: certain that we'd ever revisit this again, since you know, 80 00:04:45,880 --> 00:04:49,680 Speaker 2: there's so many businesses in the hospitality industry. We're just 81 00:04:49,880 --> 00:04:52,320 Speaker 2: struggling so hard during that period of time, and it 82 00:04:52,400 --> 00:04:53,919 Speaker 2: was just a very rough thing to watch. 83 00:04:54,800 --> 00:04:57,920 Speaker 1: A year later, they did revisit it, and they secured 84 00:04:57,960 --> 00:05:01,679 Speaker 1: the location. But banks were much more cautious about lending 85 00:05:01,760 --> 00:05:03,800 Speaker 1: money to restaurants and bars. 86 00:05:03,839 --> 00:05:07,080 Speaker 2: And they weren't giving loans anymore to those types of businesses. 87 00:05:07,440 --> 00:05:11,240 Speaker 2: So we fought bank after bank after bank looking for 88 00:05:11,360 --> 00:05:14,839 Speaker 2: anyone who would extend alone. And we did find a 89 00:05:14,880 --> 00:05:18,719 Speaker 2: wonderful bank that did. However, the down payment had doubled 90 00:05:19,240 --> 00:05:20,640 Speaker 2: from what it was pre pandemic. 91 00:05:21,520 --> 00:05:23,480 Speaker 1: And why did they tell you? Is it just more risk? 92 00:05:24,040 --> 00:05:24,640 Speaker 4: Absolutely? 93 00:05:24,839 --> 00:05:28,240 Speaker 2: Yeah, Like you know, going into the pandemic, we were 94 00:05:28,279 --> 00:05:31,000 Speaker 2: more like a middle aged driver for a car insurance company, 95 00:05:31,000 --> 00:05:33,200 Speaker 2: and coming out we were now a sixteen year old 96 00:05:33,240 --> 00:05:37,359 Speaker 2: with a red car, and so just yeah, they I 97 00:05:37,360 --> 00:05:39,680 Speaker 2: mean you could just see the bankers just hear our 98 00:05:39,720 --> 00:05:41,560 Speaker 2: thing and say, hey, that's a great business plan. You 99 00:05:41,560 --> 00:05:44,040 Speaker 2: have so much experience, but I'm sorry, like I ran 100 00:05:44,080 --> 00:05:46,679 Speaker 2: it up the flagpole, We're just not doing that industry 101 00:05:46,760 --> 00:05:49,159 Speaker 2: right now. And in fairness, I mean, there were still 102 00:05:49,200 --> 00:05:53,520 Speaker 2: so many of the restaurants and bars that were still 103 00:05:53,560 --> 00:05:56,240 Speaker 2: had not yet fully defaulted or anything, and so we 104 00:05:56,240 --> 00:05:58,560 Speaker 2: were coming out of the pandemic, they hadn't even seen 105 00:05:58,600 --> 00:06:00,760 Speaker 2: who was or wasn't going to serve and so like, 106 00:06:01,160 --> 00:06:03,279 Speaker 2: I get it. But it did make it very tough 107 00:06:03,320 --> 00:06:06,600 Speaker 2: for us to actually solidify alone, but obviously we were 108 00:06:06,640 --> 00:06:09,559 Speaker 2: able to. It cost us more. We had to really 109 00:06:09,600 --> 00:06:11,760 Speaker 2: scround our life savings and dig into some pots that 110 00:06:11,800 --> 00:06:14,760 Speaker 2: we promised we would never would, but we made it work. 111 00:06:16,440 --> 00:06:19,719 Speaker 1: Anne and Jared always knew that opening a brewery would 112 00:06:19,760 --> 00:06:24,320 Speaker 1: require hefty upfront costs. First, there's the machinery. The brew 113 00:06:24,400 --> 00:06:27,479 Speaker 1: house behind that glass wall in the back is full 114 00:06:27,520 --> 00:06:31,520 Speaker 1: of enormous tanks for mashing, boiling, and fermenting the grain. 115 00:06:31,880 --> 00:06:36,000 Speaker 1: There's also the canning operation for to go beer, which 116 00:06:36,120 --> 00:06:39,159 Speaker 1: was a condition of their loan in case COVID shut 117 00:06:39,200 --> 00:06:42,440 Speaker 1: down their tap room. Then there are the raw materials 118 00:06:42,560 --> 00:06:46,120 Speaker 1: like grain and hops that come from all over. Some 119 00:06:46,200 --> 00:06:49,359 Speaker 1: of it comes from the Pacific Northwest, like Oregon, but 120 00:06:49,520 --> 00:06:53,320 Speaker 1: also from as far away as Germany and New Zealand. 121 00:06:53,800 --> 00:06:56,720 Speaker 1: But on top of all that, there are the economic 122 00:06:56,800 --> 00:06:58,479 Speaker 1: challenges you can't plan for. 123 00:06:58,960 --> 00:07:03,680 Speaker 3: So we had over budgeted and overestimated to make sure 124 00:07:03,680 --> 00:07:06,200 Speaker 3: that we were covering our costs. And yet because of 125 00:07:06,320 --> 00:07:09,479 Speaker 3: supply chain issues, because of you know, things that were 126 00:07:09,480 --> 00:07:14,160 Speaker 3: happening post pandemic, it was more challenging. 127 00:07:13,920 --> 00:07:16,240 Speaker 2: And then shipping things freight and all of that became 128 00:07:16,440 --> 00:07:20,200 Speaker 2: much much more difficult, and so a twenty thousand dollars 129 00:07:20,800 --> 00:07:23,960 Speaker 2: freight costs suddenly becomes almost forty thousand dollars. 130 00:07:24,280 --> 00:07:27,960 Speaker 1: And so it's like, despite the false starts and high costs, 131 00:07:28,320 --> 00:07:30,960 Speaker 1: Jared and and say, the business in its first year 132 00:07:31,160 --> 00:07:34,240 Speaker 1: is doing better than they expected. Their staff of ten 133 00:07:34,360 --> 00:07:36,239 Speaker 1: even got a pay raise this summer. 134 00:07:36,400 --> 00:07:42,320 Speaker 3: We are very lucky. Honestly, we've exceeded projections. We usually 135 00:07:42,360 --> 00:07:45,360 Speaker 3: most businesses expect to lose money within the first year, 136 00:07:45,400 --> 00:07:46,640 Speaker 3: and we are not in that position. 137 00:07:47,120 --> 00:07:49,520 Speaker 2: Yeah, and we've even had quite a few saturdays where 138 00:07:50,160 --> 00:07:51,960 Speaker 2: she'll send me outside and I have to start being 139 00:07:51,960 --> 00:07:54,320 Speaker 2: a doorman because we want to make sure that we 140 00:07:54,360 --> 00:07:58,160 Speaker 2: don't go over capacity. A place will just be absolutely packed. 141 00:07:59,840 --> 00:08:03,600 Speaker 1: So that's the story of one micro brewery in DC. 142 00:08:04,200 --> 00:08:06,760 Speaker 1: But now let's take a look at the bigger picture 143 00:08:07,120 --> 00:08:11,160 Speaker 1: and why small businesses like Lost Generation are popping up 144 00:08:11,160 --> 00:08:14,960 Speaker 1: in record numbers. And that's where Bloomberg's end a current 145 00:08:15,080 --> 00:08:17,960 Speaker 1: comes back into the picture. The last time, and it 146 00:08:18,120 --> 00:08:21,560 Speaker 1: was here we were talking about President Biden's industrial policy, 147 00:08:21,600 --> 00:08:24,480 Speaker 1: how he was trying to bring big business in manufacturing 148 00:08:24,560 --> 00:08:27,800 Speaker 1: back to the US, and it says it's actually small 149 00:08:27,840 --> 00:08:30,480 Speaker 1: businesses that are the backbone of the economy. 150 00:08:30,960 --> 00:08:33,160 Speaker 4: It's kind of one of the untold stories almost of 151 00:08:33,200 --> 00:08:35,840 Speaker 4: the US economy over the past few years. Everybody built 152 00:08:35,880 --> 00:08:38,640 Speaker 4: up their savings during the pandemic thanks to the physical 153 00:08:38,640 --> 00:08:41,480 Speaker 4: similus and money that they were saving anyway. And you know, 154 00:08:41,480 --> 00:08:43,760 Speaker 4: another factor in all of this is just the ease 155 00:08:43,840 --> 00:08:47,520 Speaker 4: of startups nowadays. You know, there are websites actor offering 156 00:08:47,559 --> 00:08:50,120 Speaker 4: you to set up an e commerce portal in a 157 00:08:50,200 --> 00:08:52,679 Speaker 4: matter of half an hour or two hours. You can 158 00:08:52,720 --> 00:08:55,280 Speaker 4: be up and running in a short time. And by 159 00:08:55,320 --> 00:08:57,480 Speaker 4: the way, instead of paying for the expensive NBA, you 160 00:08:57,600 --> 00:08:59,920 Speaker 4: just go on YouTube and you watch some online program 161 00:09:00,480 --> 00:09:02,440 Speaker 4: or you listen to somebody and you get up and running. 162 00:09:02,440 --> 00:09:05,360 Speaker 4: This is what's happening out there. Then throw in the 163 00:09:05,480 --> 00:09:08,400 Speaker 4: general influence world that we're in now, the Elon Musks 164 00:09:08,400 --> 00:09:10,440 Speaker 4: of the world. Everybody wants to be the next Elon Musk. 165 00:09:10,559 --> 00:09:13,360 Speaker 4: And that's great, that's ambition. That's what drives economies. But 166 00:09:13,400 --> 00:09:16,480 Speaker 4: there is absolutely a point that with the pandemic changing 167 00:09:16,520 --> 00:09:19,280 Speaker 4: work practices the way it has, even with the return 168 00:09:19,320 --> 00:09:21,800 Speaker 4: to offices on their way, But broadly speaking, people realize 169 00:09:21,840 --> 00:09:23,920 Speaker 4: I don't need to commute to have a job, I 170 00:09:23,920 --> 00:09:25,840 Speaker 4: don't need to live in the city center. And you 171 00:09:25,840 --> 00:09:27,880 Speaker 4: know what, a laptop on home, downing on table, I 172 00:09:27,920 --> 00:09:30,880 Speaker 4: can do so much more anyway. So they're taking chances, 173 00:09:30,920 --> 00:09:34,120 Speaker 4: they're taking risks with ideas that they once had rather 174 00:09:34,280 --> 00:09:36,720 Speaker 4: necessarily maybe say the only root for me in life 175 00:09:36,760 --> 00:09:38,800 Speaker 4: is the nine to five kind of a schlep. They're 176 00:09:38,800 --> 00:09:40,240 Speaker 4: having a look at what their options are. So it 177 00:09:40,320 --> 00:09:42,760 Speaker 4: is definitely part of the mix that the mindset has 178 00:09:42,800 --> 00:09:44,160 Speaker 4: shifted a bit, and a lot of it is down 179 00:09:44,200 --> 00:09:44,800 Speaker 4: to the pandemic. 180 00:09:45,400 --> 00:09:48,920 Speaker 1: And it says small businesses are now powering the US 181 00:09:49,040 --> 00:09:52,040 Speaker 1: economy in a way we haven't seen for a long time. 182 00:09:52,600 --> 00:09:55,320 Speaker 4: It is one of the biggest drivers of economic growth 183 00:09:55,640 --> 00:09:59,440 Speaker 4: in the US. Of the country's thirty million small companies, 184 00:09:59,559 --> 00:10:02,600 Speaker 4: they have created more than two thirds of the new 185 00:10:02,679 --> 00:10:05,480 Speaker 4: jobs creating in the US between nineteen ninety five and 186 00:10:05,480 --> 00:10:08,679 Speaker 4: twenty twenty one. These small companies, they really are one 187 00:10:08,679 --> 00:10:12,679 Speaker 4: of the biggest bullwarks of the jobs market in America. 188 00:10:12,720 --> 00:10:15,240 Speaker 1: And what do we know about the kinds of businesses 189 00:10:15,400 --> 00:10:17,520 Speaker 1: they are or what are they making, what are they selling? 190 00:10:18,000 --> 00:10:21,040 Speaker 4: It's across the spectrum of activities. Where I spoke to 191 00:10:21,080 --> 00:10:23,400 Speaker 4: one company, for example, who's in the business of selling 192 00:10:23,440 --> 00:10:26,360 Speaker 4: graduating mementos. That might be a school ring or a 193 00:10:26,360 --> 00:10:28,959 Speaker 4: school hoody for instance. These are the kind of businesses 194 00:10:28,960 --> 00:10:31,280 Speaker 4: that operate at the heart of your local community. It 195 00:10:31,280 --> 00:10:34,800 Speaker 4: could be anything from the bakery up to increasingly online 196 00:10:34,920 --> 00:10:37,320 Speaker 4: or e commerce. That's obviously a whole new opportunity for 197 00:10:37,320 --> 00:10:40,640 Speaker 4: people whereby that's see an opportunity to sell products online 198 00:10:40,679 --> 00:10:43,160 Speaker 4: or sell the service online. That's giving people a new outlet. 199 00:10:43,760 --> 00:10:47,160 Speaker 1: And is it less expensive to start a business than 200 00:10:47,160 --> 00:10:47,720 Speaker 1: it used to be. 201 00:10:48,520 --> 00:10:50,640 Speaker 4: Well, here's where you get into the trade offs. I mean, 202 00:10:50,760 --> 00:10:52,800 Speaker 4: certainly it isn't easy of setting up a business, that's 203 00:10:52,840 --> 00:10:54,679 Speaker 4: for sure. As we just spoke about, You've got all 204 00:10:54,679 --> 00:10:57,360 Speaker 4: this knowledge online and of course the process is much 205 00:10:57,360 --> 00:10:59,440 Speaker 4: smoother than it was. But this is where we go 206 00:10:59,480 --> 00:11:01,240 Speaker 4: back to the cost of doing business nowadays. I mean, 207 00:11:01,280 --> 00:11:03,280 Speaker 4: you are dealing with the higher industrates, you are dealing 208 00:11:03,320 --> 00:11:05,320 Speaker 4: with the labor costs. So it depends on how advance 209 00:11:05,400 --> 00:11:06,760 Speaker 4: of where you are in that stream. If you have 210 00:11:06,800 --> 00:11:08,800 Speaker 4: your own financing and you can kind of lean on 211 00:11:08,840 --> 00:11:11,360 Speaker 4: yourself or your whatever kind of family workers. You have 212 00:11:11,400 --> 00:11:13,480 Speaker 4: to get the thing up and running, you're okay. But 213 00:11:13,520 --> 00:11:15,360 Speaker 4: if you really need staff to walk in the door, 214 00:11:15,720 --> 00:11:17,319 Speaker 4: or if you really need a big loan, obviously that's 215 00:11:17,360 --> 00:11:18,160 Speaker 4: expense for the moment. 216 00:11:18,600 --> 00:11:20,640 Speaker 1: When you look at a company like Amazon, where you 217 00:11:20,840 --> 00:11:23,040 Speaker 1: just know you're going to find some version of what 218 00:11:23,200 --> 00:11:25,920 Speaker 1: you want and it's all easy to order and it's 219 00:11:25,920 --> 00:11:29,480 Speaker 1: going to come quickly. How can a small online commerce 220 00:11:29,520 --> 00:11:33,480 Speaker 1: business even compete with that shipping costs? Even people knowing 221 00:11:33,520 --> 00:11:35,480 Speaker 1: that they exist, There's no doubt. 222 00:11:35,480 --> 00:11:37,439 Speaker 4: I mean, that's the challenge. But there's a local aspect 223 00:11:37,440 --> 00:11:39,200 Speaker 4: to it. So it's a local appeal if you're in 224 00:11:39,200 --> 00:11:41,480 Speaker 4: the local community or you're selling something that's related to 225 00:11:41,520 --> 00:11:43,400 Speaker 4: the local community. Like I mentioned to you earlier about 226 00:11:43,400 --> 00:11:45,760 Speaker 4: the graduation momento, is that kind of thing. That market 227 00:11:45,840 --> 00:11:47,920 Speaker 4: is out there and there's a hunger and an appetite 228 00:11:47,960 --> 00:11:51,800 Speaker 4: for that amongst say communities around the country. But obviously, 229 00:11:52,160 --> 00:11:54,199 Speaker 4: you know, if you're a small company and you want 230 00:11:54,200 --> 00:11:57,080 Speaker 4: to go online against Amazon, well that's probably a David 231 00:11:57,200 --> 00:11:58,320 Speaker 4: versus g All life story. 232 00:11:59,360 --> 00:12:02,160 Speaker 1: When we come back what it takes for these small 233 00:12:02,200 --> 00:12:13,120 Speaker 1: businesses to survive in this rocky economy. So we've heard 234 00:12:13,120 --> 00:12:16,320 Speaker 1: how millions of new businesses are popping up all across 235 00:12:16,360 --> 00:12:20,120 Speaker 1: the United States, but it's not always easy for them 236 00:12:20,240 --> 00:12:24,839 Speaker 1: to survive in this unpredictable economy. I asked, and what 237 00:12:24,920 --> 00:12:27,200 Speaker 1: the numbers tell us about how many of these small 238 00:12:27,240 --> 00:12:29,839 Speaker 1: businesses will actually make it. 239 00:12:29,840 --> 00:12:32,720 Speaker 4: It's tough to track at the moment how many of 240 00:12:32,760 --> 00:12:36,439 Speaker 4: these businesses will actually survive to what you might call 241 00:12:36,480 --> 00:12:39,640 Speaker 4: it being an established business, say the five million established 242 00:12:39,720 --> 00:12:42,119 Speaker 4: last year. It will take a few years to understand 243 00:12:42,440 --> 00:12:44,760 Speaker 4: how many of them thrived, how many of them are 244 00:12:44,800 --> 00:12:47,520 Speaker 4: employing staffed? Way are saying and our bone feed the 245 00:12:47,559 --> 00:12:52,760 Speaker 4: business versus how many were someone's interesting idea on the 246 00:12:52,760 --> 00:12:55,120 Speaker 4: couch with their laptop and they registered with the authorities. 247 00:12:55,160 --> 00:12:57,280 Speaker 4: I'm setting up this new business dot com right. It 248 00:12:57,320 --> 00:12:59,280 Speaker 4: takes a while to figure that out because there is 249 00:12:59,320 --> 00:13:02,120 Speaker 4: a high attrition. Right all this has been For example, 250 00:13:02,200 --> 00:13:04,800 Speaker 4: at the moment, inflation is hurting these small business people. 251 00:13:05,000 --> 00:13:06,520 Speaker 4: If you go to get a loan from your bank, 252 00:13:06,559 --> 00:13:08,840 Speaker 4: it's expensive at the moment, the bank might not even 253 00:13:08,880 --> 00:13:10,480 Speaker 4: want to give it to you. Then there are some 254 00:13:10,520 --> 00:13:13,000 Speaker 4: other issues in the US. For example, demographics is a 255 00:13:13,080 --> 00:13:16,480 Speaker 4: challenge like a longer term structural challenge. There's really practical 256 00:13:16,559 --> 00:13:18,960 Speaker 4: issues too, like childcare. You know, you can set up 257 00:13:19,000 --> 00:13:20,960 Speaker 4: your business on your laptop. That's great, and then you 258 00:13:21,000 --> 00:13:22,600 Speaker 4: want to go and do it and you realize you've 259 00:13:22,640 --> 00:13:24,960 Speaker 4: got this problem with childcare for example, and of course 260 00:13:24,960 --> 00:13:27,240 Speaker 4: the labor shortage that we all know about. So you know, 261 00:13:27,480 --> 00:13:29,120 Speaker 4: as I say to you, there is a headline, and 262 00:13:29,120 --> 00:13:31,440 Speaker 4: it's a very positive headline and it's real, but under 263 00:13:31,440 --> 00:13:33,200 Speaker 4: the bonnet, there are a lot of complications that do 264 00:13:33,320 --> 00:13:36,280 Speaker 4: weigh against some of these businesses properly maturing. 265 00:13:37,040 --> 00:13:39,840 Speaker 1: So it's impossible to talk about employment in the US 266 00:13:39,880 --> 00:13:43,200 Speaker 1: without talking about healthcare because so many of us have 267 00:13:43,240 --> 00:13:44,839 Speaker 1: our health care tied to jobs, and it's one of 268 00:13:44,920 --> 00:13:47,559 Speaker 1: the things that workers want the most and employers have 269 00:13:47,640 --> 00:13:51,160 Speaker 1: a hard time paying for because it's so expensive. How 270 00:13:51,160 --> 00:13:54,319 Speaker 1: many of these small businesses can afford things like benefits, 271 00:13:54,320 --> 00:13:56,600 Speaker 1: healthcare for h one k, these kinds of things that 272 00:13:56,640 --> 00:13:57,800 Speaker 1: people expect. 273 00:13:58,000 --> 00:13:59,840 Speaker 4: It's an expense, But if your business is getting up 274 00:13:59,880 --> 00:14:02,920 Speaker 4: in running and it's successful, well then you know the 275 00:14:02,920 --> 00:14:04,480 Speaker 4: incentive is there. You want to have your staff and 276 00:14:04,520 --> 00:14:06,720 Speaker 4: you want to pay the benefits. There are companies out 277 00:14:06,720 --> 00:14:09,400 Speaker 4: there that specialize in bundling the services you need. So 278 00:14:09,480 --> 00:14:12,720 Speaker 4: you need your payrolls, you need your healthcare, you need, 279 00:14:13,040 --> 00:14:14,760 Speaker 4: you know, whatever it is for your staff. There are 280 00:14:14,800 --> 00:14:17,200 Speaker 4: companies out there that do all of these services for 281 00:14:17,320 --> 00:14:20,360 Speaker 4: small businesses, so you don't need to you know, hire 282 00:14:20,360 --> 00:14:23,320 Speaker 4: your own, say, your own accountant or in house kind 283 00:14:23,360 --> 00:14:25,320 Speaker 4: of staff to handle the benefits side of it. You 284 00:14:25,320 --> 00:14:27,680 Speaker 4: can make your own savings through outsourcing it through different 285 00:14:27,680 --> 00:14:30,640 Speaker 4: companies to specialize in. And that's one way companies can afford 286 00:14:30,840 --> 00:14:33,360 Speaker 4: to manage this this side of it. What happened, of course, 287 00:14:33,360 --> 00:14:36,560 Speaker 4: to have a full time staff member processing benefits and 288 00:14:36,560 --> 00:14:37,640 Speaker 4: payrolls and that kind of thing. 289 00:14:39,080 --> 00:14:42,000 Speaker 1: Let's hear from another small business owner who's dealing with 290 00:14:42,040 --> 00:14:44,880 Speaker 1: the kinds of challenges that Enda is talking about right 291 00:14:44,920 --> 00:14:49,160 Speaker 1: now and has been all through the pandemic. Rose Avenue 292 00:14:49,200 --> 00:14:52,720 Speaker 1: Bakery is also located here in DC. They open their 293 00:14:52,760 --> 00:14:56,880 Speaker 1: doors in March of twenty twenty, right as COVID lockdowns began. 294 00:14:57,400 --> 00:14:59,960 Speaker 6: When you walk in, there's a foyer area. 295 00:15:00,480 --> 00:15:04,040 Speaker 5: On our left side is a rustic wall with some plants. 296 00:15:04,240 --> 00:15:08,280 Speaker 5: My partner really wanted it to be minimalists, a little 297 00:15:08,320 --> 00:15:10,840 Speaker 5: bit of modern, but a little bit homey as well. 298 00:15:11,320 --> 00:15:15,040 Speaker 1: We have said I first met co owner Paula Wong 299 00:15:15,200 --> 00:15:17,880 Speaker 1: late last year when we did an episode about the 300 00:15:17,920 --> 00:15:20,800 Speaker 1: state of the economy. You might remember her talking about 301 00:15:20,800 --> 00:15:23,920 Speaker 1: the high cost of ingredients like eggs and flour and 302 00:15:24,000 --> 00:15:28,320 Speaker 1: more unusual ones like uzu. Since last year, Rose Avenue 303 00:15:28,360 --> 00:15:31,280 Speaker 1: Bakery moved out of their shared space and found a 304 00:15:31,400 --> 00:15:35,280 Speaker 1: new home in a former dunkin Donuts location. I went 305 00:15:35,320 --> 00:15:37,960 Speaker 1: by to check it out. Paula, Great to see you again. 306 00:15:38,160 --> 00:15:38,920 Speaker 6: Nice to see you. 307 00:15:39,440 --> 00:15:41,000 Speaker 1: The first thing you notice when you get to the 308 00:15:41,040 --> 00:15:43,960 Speaker 1: counter are all the different kinds of pastries, sweet and 309 00:15:44,040 --> 00:15:46,840 Speaker 1: savory that are displayed behind the glass. 310 00:15:47,200 --> 00:15:50,040 Speaker 5: And it's a take on a Filipino street food that's 311 00:15:50,120 --> 00:15:53,680 Speaker 5: like a spring worlled wrap plantain with jackfruit. It features 312 00:15:53,840 --> 00:15:57,920 Speaker 5: a roasted plantains with brown sugar and a caramel glaze. 313 00:15:58,440 --> 00:16:01,880 Speaker 1: It's also Paula says business is going well. Lots of 314 00:16:01,920 --> 00:16:05,560 Speaker 1: customers from the old location have now become regulars at 315 00:16:05,600 --> 00:16:08,360 Speaker 1: the new one, and she and her co owner Rose 316 00:16:08,400 --> 00:16:11,720 Speaker 1: Wind have been able to offer more variety on the menu. 317 00:16:11,880 --> 00:16:14,920 Speaker 5: At our previous location, we were only able to serve 318 00:16:14,920 --> 00:16:17,800 Speaker 5: maybe two or three kinds of savory items. Now half 319 00:16:17,840 --> 00:16:21,400 Speaker 5: our weekend menu is savory items because it's very popular 320 00:16:21,400 --> 00:16:24,320 Speaker 5: in DC. Of course, brunch is this like epic thing 321 00:16:24,840 --> 00:16:27,840 Speaker 5: on the weekend, so we do get a brunch rush. 322 00:16:28,320 --> 00:16:31,320 Speaker 5: We've got to expand on our sweet menu as well. 323 00:16:31,680 --> 00:16:34,520 Speaker 5: We still have our iconic donuts like the Passion Food 324 00:16:34,520 --> 00:16:36,800 Speaker 5: pond on block stestimy donut and. 325 00:16:36,800 --> 00:16:38,880 Speaker 1: What are you selling these for and how does it 326 00:16:38,920 --> 00:16:40,480 Speaker 1: compare to say a year. 327 00:16:40,520 --> 00:16:43,800 Speaker 5: Again, some of the items have maintained their price, like 328 00:16:43,840 --> 00:16:47,240 Speaker 5: the cookies, it's still at three twenty five. We increase 329 00:16:47,320 --> 00:16:50,080 Speaker 5: the donut prices by twenty five cents each. The Queen 330 00:16:50,080 --> 00:16:52,840 Speaker 5: of months have stayed also the same price. But our 331 00:16:53,000 --> 00:16:56,600 Speaker 5: savory items like the sandwiches, especially with bacon, we had 332 00:16:56,600 --> 00:16:57,960 Speaker 5: to increase the price by a dollar. 333 00:16:58,160 --> 00:17:01,640 Speaker 6: So just because of how expensive meat can be. 334 00:17:02,280 --> 00:17:04,880 Speaker 1: Paula says they've had to raise some prices in part 335 00:17:04,920 --> 00:17:08,560 Speaker 1: because ingredients are more expensive, but also to meet other 336 00:17:08,720 --> 00:17:10,000 Speaker 1: unexpected costs. 337 00:17:10,359 --> 00:17:14,280 Speaker 5: It's been still challenging, especially because we've moved here and 338 00:17:14,359 --> 00:17:17,439 Speaker 5: there's costs to moving and getting a new bakery up 339 00:17:17,440 --> 00:17:20,320 Speaker 5: and running. Of course, our profit margins are a little 340 00:17:20,359 --> 00:17:22,399 Speaker 5: slim because we're in a new space. 341 00:17:22,480 --> 00:17:24,880 Speaker 6: The cost of utilities we're not. 342 00:17:24,880 --> 00:17:27,879 Speaker 5: Really anticipated in like because we were in a shared 343 00:17:27,920 --> 00:17:28,720 Speaker 5: space before. 344 00:17:29,040 --> 00:17:31,399 Speaker 6: When things break down, it's on us to fix. 345 00:17:31,440 --> 00:17:33,320 Speaker 5: We had a lot of issues with our HVAC during 346 00:17:33,320 --> 00:17:36,399 Speaker 5: this summer, so having somebody to look at that almost 347 00:17:36,400 --> 00:17:38,160 Speaker 5: every week got very costly. 348 00:17:40,160 --> 00:17:43,120 Speaker 1: One major cost of running a business like Rose Avenue 349 00:17:43,560 --> 00:17:46,640 Speaker 1: is paying employees. There are six bakers in the back, 350 00:17:46,920 --> 00:17:50,520 Speaker 1: three managers, and five part time employees in the front 351 00:17:50,560 --> 00:17:53,280 Speaker 1: of the house, plus Paula and her partner Rose. 352 00:17:53,520 --> 00:17:56,320 Speaker 5: The earliest person comes in at three o'clock. They start 353 00:17:56,359 --> 00:17:57,960 Speaker 5: to day. They pull out all the doughnuts from the 354 00:17:58,000 --> 00:18:01,440 Speaker 5: refrigerator that've been proofing overnight, because our Brioche show does 355 00:18:01,520 --> 00:18:02,879 Speaker 5: prove for several days. 356 00:18:03,440 --> 00:18:04,920 Speaker 6: Then the bakers kind of trickle. 357 00:18:04,680 --> 00:18:08,240 Speaker 5: In between three and four and they bake off everything 358 00:18:08,359 --> 00:18:09,359 Speaker 5: fresh every day. 359 00:18:09,640 --> 00:18:11,400 Speaker 6: They fry the doughnuts fresh every day. 360 00:18:11,960 --> 00:18:14,080 Speaker 5: Around seven o'clock is when our front of the house 361 00:18:14,080 --> 00:18:15,840 Speaker 5: starts coming where they wiped on the table. 362 00:18:16,160 --> 00:18:19,880 Speaker 1: I asked Paula how expanding the business has impacted her 363 00:18:19,920 --> 00:18:23,280 Speaker 1: ability to pay these early risers of living wage. 364 00:18:23,560 --> 00:18:26,800 Speaker 5: We're lucky that we've maintained the same ladies that were 365 00:18:26,840 --> 00:18:29,880 Speaker 5: with us at our old location, but you know, because 366 00:18:29,920 --> 00:18:31,600 Speaker 5: of this big place and. 367 00:18:31,560 --> 00:18:32,520 Speaker 6: How busy we are now. 368 00:18:32,560 --> 00:18:35,760 Speaker 5: We really need extra help back there, but unfortunately it's 369 00:18:35,800 --> 00:18:38,040 Speaker 5: been very hard to find help. 370 00:18:38,680 --> 00:18:41,160 Speaker 1: Why are you having trouble finding people? It's a big 371 00:18:41,240 --> 00:18:42,480 Speaker 1: challenge that's getting in your way. 372 00:18:42,840 --> 00:18:45,080 Speaker 6: I think because everything is so costly. 373 00:18:45,280 --> 00:18:48,199 Speaker 5: Everybody wants a little bit more money, which is you know, 374 00:18:48,600 --> 00:18:52,560 Speaker 5: normal for sure, But because we are a small business, 375 00:18:52,960 --> 00:18:57,960 Speaker 5: we can only afford salaries within our price range obviously, 376 00:18:58,040 --> 00:19:01,800 Speaker 5: so there is this competition with where we're going to 377 00:19:01,960 --> 00:19:05,360 Speaker 5: get that money for salaries and. 378 00:19:05,320 --> 00:19:07,160 Speaker 1: What sort of benefits are you able to offer. 379 00:19:07,720 --> 00:19:09,280 Speaker 6: We have paid time off here. 380 00:19:09,440 --> 00:19:14,200 Speaker 5: We also offer health benefits, which is not typical of 381 00:19:14,280 --> 00:19:17,920 Speaker 5: the food industry. My partner and I don't make Liverpool 382 00:19:17,920 --> 00:19:22,000 Speaker 5: wages ourselves, and we're putting in our own personal money to. 383 00:19:22,000 --> 00:19:23,240 Speaker 6: Keep this place afloat. 384 00:19:23,359 --> 00:19:25,760 Speaker 5: So it is a very scary time, but it's also 385 00:19:25,760 --> 00:19:28,600 Speaker 5: a very exciting time. We've been wanting our own space 386 00:19:28,680 --> 00:19:32,760 Speaker 5: for a very long time and we were very lucky 387 00:19:32,800 --> 00:19:34,200 Speaker 5: to grow during the pandemic. 388 00:19:35,080 --> 00:19:47,720 Speaker 1: After the break, can this small business boom last? One 389 00:19:47,760 --> 00:19:51,200 Speaker 1: of the more surprising takeaways from this small business surge 390 00:19:51,520 --> 00:19:54,960 Speaker 1: is who's actually starting these companies, And it told me 391 00:19:54,960 --> 00:19:58,879 Speaker 1: about two groups in particular who've made gains in entrepreneurship, 392 00:19:59,240 --> 00:20:03,480 Speaker 1: women and black business owners. A payroll company called Gusto 393 00:20:03,760 --> 00:20:07,719 Speaker 1: has been tracking these changes in business ownership over the years. 394 00:20:08,000 --> 00:20:11,280 Speaker 1: They found that in twenty twenty one, forty nine percent 395 00:20:11,600 --> 00:20:15,199 Speaker 1: of new business owners were women. That's up from twenty 396 00:20:15,280 --> 00:20:18,520 Speaker 1: nine percent since the start of the pandemic, and black 397 00:20:18,600 --> 00:20:22,400 Speaker 1: new business owners tripled from three percent in twenty nineteen 398 00:20:22,760 --> 00:20:24,840 Speaker 1: to nine percent in twenty twenty one. 399 00:20:25,680 --> 00:20:28,040 Speaker 4: Women are being given a better opportunity to get in 400 00:20:28,080 --> 00:20:29,320 Speaker 4: on this in a way that they haven't been in 401 00:20:29,320 --> 00:20:33,159 Speaker 4: the past. The African American community is also notably featuring 402 00:20:33,160 --> 00:20:35,000 Speaker 4: in setting up these new businesses, and that is being 403 00:20:35,040 --> 00:20:38,240 Speaker 4: welcomed as you know, an example of where diversity is 404 00:20:38,280 --> 00:20:40,840 Speaker 4: making some progress. But you know, they're facing the same 405 00:20:40,920 --> 00:20:43,760 Speaker 4: challenges as everybody else. That's that's the downside of all this. 406 00:20:44,240 --> 00:20:45,639 Speaker 4: So obviously a long way to go there, but at 407 00:20:45,720 --> 00:20:48,200 Speaker 4: least making some progress. And there is the argument that 408 00:20:48,200 --> 00:20:51,760 Speaker 4: that's an opportunity for a group of entrepreneurs by part 409 00:20:51,760 --> 00:20:53,760 Speaker 4: of society that weren't getting in on a small business 410 00:20:53,760 --> 00:20:54,440 Speaker 4: act in the past. 411 00:20:55,160 --> 00:20:57,879 Speaker 1: I asked, and where all this goes from here, whether 412 00:20:57,920 --> 00:21:01,080 Speaker 1: small businesses will keep opening it such a fast pace, 413 00:21:01,600 --> 00:21:05,240 Speaker 1: and whether they'll continue to be such a powerful economic engine. 414 00:21:05,640 --> 00:21:07,640 Speaker 4: You know, there are open questions at the moment given 415 00:21:07,680 --> 00:21:10,159 Speaker 4: what's happened with inflation, So there is an air of 416 00:21:10,200 --> 00:21:13,200 Speaker 4: caution out there, and it's probably is feeling that you know, 417 00:21:13,280 --> 00:21:17,359 Speaker 4: the boom will will flatline at some point. But listening 418 00:21:17,400 --> 00:21:20,040 Speaker 4: to people though, they do say ultimately at the core 419 00:21:20,080 --> 00:21:24,240 Speaker 4: of any successful economy is innovation and a willingness to 420 00:21:24,280 --> 00:21:26,399 Speaker 4: take on risk, and lots of people I spoke to 421 00:21:26,400 --> 00:21:28,440 Speaker 4: you said they haven't seen this kind of the scale 422 00:21:28,960 --> 00:21:32,640 Speaker 4: of ambition for some time in the US economy. Despite 423 00:21:32,680 --> 00:21:36,400 Speaker 4: the challenges, it is an undeniable positive for any economy 424 00:21:36,560 --> 00:21:38,639 Speaker 4: to have so many people willing to set up a 425 00:21:38,680 --> 00:21:41,800 Speaker 4: new business and of course spurge upcraation. So right here, 426 00:21:41,880 --> 00:21:43,760 Speaker 4: right now, I would say to you, this looks like 427 00:21:43,760 --> 00:21:46,200 Speaker 4: a positive story with a lot of potential for the 428 00:21:46,280 --> 00:21:49,000 Speaker 4: US and any other economy. But of course, who's to 429 00:21:49,000 --> 00:21:50,640 Speaker 4: say what I would say you maybe twelve months. 430 00:21:50,480 --> 00:21:55,760 Speaker 1: From now for Paul along of Rose Avenue Bakery and 431 00:21:55,760 --> 00:21:59,960 Speaker 1: and show of Lost Generation Brewery. The RoadHead isn't certain 432 00:22:00,600 --> 00:22:04,080 Speaker 1: in business large or small, It never is. But they're 433 00:22:04,119 --> 00:22:06,560 Speaker 1: focusing on what brought them here in the first place, 434 00:22:06,960 --> 00:22:09,440 Speaker 1: an idea and a community to serve. 435 00:22:09,760 --> 00:22:12,920 Speaker 5: We get lots of messages from loyal customers who have 436 00:22:12,960 --> 00:22:15,280 Speaker 5: told us during the pandemic this was their weekend treat. 437 00:22:15,520 --> 00:22:17,000 Speaker 6: They awaited by. 438 00:22:16,880 --> 00:22:20,760 Speaker 5: The computer for our pre order selections, and now they 439 00:22:20,840 --> 00:22:22,719 Speaker 5: love being able to come into the cafe. 440 00:22:23,280 --> 00:22:27,280 Speaker 3: We are luckily in an area where people understand that 441 00:22:27,359 --> 00:22:29,719 Speaker 3: raw materials have gone up, and so they're willing to 442 00:22:29,840 --> 00:22:33,359 Speaker 3: support local business, and so they're willing to spend These 443 00:22:33,400 --> 00:22:37,480 Speaker 3: prices are to keep us afloat. You know, we don't 444 00:22:37,480 --> 00:22:41,399 Speaker 3: ever try to be these multimillionaires. You know, we just 445 00:22:41,520 --> 00:22:43,880 Speaker 3: want to do what we love and love what we do. 446 00:22:45,320 --> 00:22:47,200 Speaker 1: Thanks for listening to us here at The Big Take. 447 00:22:47,320 --> 00:22:50,600 Speaker 1: It's a daily podcast from Bloomberg and iHeartRadio. For more 448 00:22:50,600 --> 00:22:54,879 Speaker 1: shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or 449 00:22:54,920 --> 00:22:57,640 Speaker 1: wherever you listen, and we'd love to hear from you. 450 00:22:57,720 --> 00:23:01,080 Speaker 1: Email us questions or comments to Big Take at Bloomberg 451 00:23:01,119 --> 00:23:04,480 Speaker 1: dot net. The supervising producer of The Big Take is 452 00:23:04,600 --> 00:23:09,040 Speaker 1: Vicky Ergolina. This episode was produced by Senior producer Catherine 453 00:23:09,080 --> 00:23:13,239 Speaker 1: Fink and Molly NuGen Philde Garcia is our engineer. Our 454 00:23:13,280 --> 00:23:17,600 Speaker 1: original music was composed by Leo Sidron. I'm Weskasova. We'll 455 00:23:17,600 --> 00:23:19,640 Speaker 1: be back tomorrow with another big take.