How to Close a Business: Part I
And all the things I am doing on my way back to being a whole person.
This is the first post of a three-part mini series, in response to the many supportive messages and questions I have received following my first post - It’s All Happening at Once, a free letter which you can read here. I also recently sat down with Erin from the Jersey City Times for a conversation about the number of recent small restaurant closures in our local area. 2023 was a very tough year for brick-and-mortars. 2024 continues to be a roller coaster.
If you are thinking about opening or closing a business, perhaps you will find this information to be helpful or interesting. For the record, this series is specifically about what happened with Downtowner. Darke Pines, our primary location, is a completely different business and continues to do well.
I definitely do not want to discourage anyone from reaching for the stars. My hope is that by sharing my story, I can be helpful to anyone out there who’s feeling stuck and looking for a way out. I’m going to tell you more about unfortunate results that can come with the risks of entrepreneurship. These are the sort of things we really don’t talk about enough, but absolutely should. The main take away in this first post? Prepare yourself to cover some emotional and financial losses - they are inevitable.
While I am not personally bankrupt, I am definitely out of a lot of money, especially for a risk that I really felt would “kill it”, and am still responsible for the remaining rent due on the lease at 9 Erie Street. The total amount remaining for 2024 is $40,000. After talking to others, I am super lucky that this is all of the debt I am left holding onto after a business closure. Many former small business owners are in debt with EIDL loans against their personal assets and will have to file for personal bankruptcy. Some owners also close up shop without properly paying out their payroll - that comes with hefty fines from the government. I don’t owe any money to anyone, other than to the landlord.
Shutting down a business will not be the thing to mess you up. Once you have made up your mind, it is just a matter of crossing items off of a checklist. It is the emotional decision process of - to close, or not to close - that will 100% kill your soul. I have gone through this process twice in two years, so while I am no expert, I have relative experience.
Continuing to run a business that -
isn’t serving you or fulfilling your dream
isn’t able to fully pay you for all of the hours you work, outside of the time period you already budgeted to not take any income
is scaling entirely too fast - or worse, not at all
These are all business points you’ll have to consider when you decide to move on from a failed business. And often times, you will feel guilty for not being able to make something work. It sounds a lot like failure, but actually it is something more than that. Something much more complicated than just a business fail, because you have most likely invested a lot of heart and soul into your project.
It can feel really scary to walk away from something you feel like you can’t or possibly shouldn’t quit. Especially something you dreamt of doing for so long - and then, when you are finally able to achieve that thing - boom! it doesn’t work out. Deep down you know you really need to move on with your life: no matter the financial costs of quitting. No matter the feelings of guilt or shame for not being able to hang in there, or to have what it takes to make that thing work.
I spent months trying to find the courage to take action. Any action! It was like I was frozen for two years, in between first closing Downtowner because it was impossible to operate during a pandemic, and then closing it the second time around because pivoting into a market meant I would need to sacrifice my own hopes and dreams of cooking everyday. The only thing I can now say for sure, is that on the other side of letting a dream go, the relief is a welcome respite.
I have recently learned, thanks to a therapist, that sometimes, not growing is totally fine. We don’t need to be growing all of the time; nothing else in nature grows all the time. Or, as my dad says, constantly killing yourself trying to make a dollar.
Resting, standing still, and feeling kinda dead inside are normal—and actually important—parts of what it means alive, despite what all the books about entrepreneurship have to say about “maximizing your potential”. I never felt that I could let the business just be what I wanted it to be: a little sandwich shop.
Pivoting to a retail concept, following the pandemic, definitely meant sacrificing a big part of that initial dream. But by that point, I was completely exhausted of all my creative thinking skills.
Also to be profitable with a retail concept in this age, really means that you need to adapt to something called “phygital”. In other words, stores need to be able to incorporate digital elements into their physical stores to thrive in today’s world. Think cashierless stores like Amazon Go, especially for retailers. The point is that your products need to be available wherever and however a customer prefers to shop. If you work in food, it means offering online ordering and delivery. You really need to offer convenience. All I will say about that is when it comes to food - cheap convenience is not something I am into.
When it came to Downtowner, the cute little shoppy shop, I learned it was pretty much the same thing. I was not interested in spending my days building out a website on Shopify, investing in shipping supplies and scales, investing in the marketing to build up an online store - all of that takes money and time - and is ultimately also a huge risk. And as you will learn below, I had already invested those things.
I had maxed out what I was willing to lose - financially and personally. And when it dawned on me that in order to keep playing the game, meant I would have to give up cooking everyday - I was heartbroken, but also just ready to move on. There is only so much self-sacrificing one can do.
I had dreamed of having my own restaurant since I was 16. From that age, I spent the majority of my nights and weekends working in restaurants. During the day, I worked as a personal assistant to some of the top folks in hotels, finance and sports. While most of my busy office work was spent scheduling meetings, answering phones and booking dinner reservations, I also had a birds eye view into how these kind of folks made really tough decisions every day - like, where to cut budgets, how to market new products, how to create new things, how to get people to interact with their brand more, how to incentivize employees, how to organize complicated things, and how to make things appear at the snap of someone’s hand. I got paid to do the little things for very important people and I worked my way up to earning six figures, simply by being a curious go-getter.
My office schedule never allowed me to take on kitchen work, but I would fill in odd restaurant jobs whenever and wherever needed - I learned how to make people feel welcome, drop hot plates of food, pop champagne table side on a busy night, keep chaotic environments calm, turn tables (i.e. make money), win people over, schmooze, deal with servers, wash dishes, FIFO, expedite, 86, print new menus, carry 10 bags of ice - all while wearing a hostess dress and stilettos. And also, keep the front door glass clean, the flowers watered and tip out servers. No job can be too high or low, if you want to succeed in the food industry. These kinds of restaurants would easily do $40-50k of business - on a slow night. A far cry from my first job in a small town diner walking away with $20 of tips in my pocket after a “busy” lunch service.
When we first started making sandwiches at Darke Pines - I made literally six a day. At first, I begged people to just try half of a sandwich for free. I was definitely surprised (+ so happy!) when they would come back to buy a whole sandwich. From there, we made a roast beef sandwich, the muffuletta, a mortadella sandwich and put my nana’s chicken salad on a croissant. Then came the rice krispy treats (IYKYK!). Pretty soon, we had a group of regulars coming in for lunch.
In August of 2019, when we first saw the For Rent sign on the space that would eventually become Downtowner, I felt both terrified and excited. But with my experience, I felt prepared to face whatever might come my way, months before a global pandemic would turn the food industry upside down.
Let’s Talk Numbers
Security Deposit. Landlord will maintain a security deposit in the amount of $8,563.
I knew then, what I know now: when it’s time to grow, it is time to go! And the best way I know how to do that is to step forward (or inward), feel the fear, and do it anyway. Nothing is impossible. Dream big. Be fierce. Be a boss. All of this is exactly what I was going for in 2019.
Fortunately, we were in very good standing with our small business loan provider, having already paid off our first $25k business loan to open Darke Pines - we were profitable and had zero dollars in debt. We took out a small loan to cover the renovation, new equipment and additional payroll we would need for the opening.
In October of 2019, we put down a security deposit and signed a five year lease for 9 Erie Street. We negotiated three months of free rent at the start, due to the amount of renovation and cleaning the space would need. The space was an absolute dump. We love saving old spaces though, but I will tell you right now - I would think twice before doing it again, without a more understanding landlord. Which is something that is impossible to guarantee, so you need to be a hard negotiator from the start on the lease. Between signing and reviewing and LOI and a lease, you will also need to pay some hefty lawyer fees (anywhere from $3-8k). Oh, you have a friend that’s a lawyer? Trust me - nothing is for free!
The previous tenants damaged the 100 year old walls. The original wooden floor beams had been painted over multiple times with black paint. The AC dripped over customers as they walked into the font door. Will’s parents patched and painted the tin walls matte white. We installed a grease trap in the basement and brand new 3-compartment sink. These were both requirements of the zoning department (a complete joy to work with LOL). Will rerouted the AC to the back of the shop and stripped the floors down to the original wood, then stained and varnished them. We hired a contractor to sheetrock the ceiling and install cabinetry, after spending countless hours measuring out the floor for a deli case, sandwich table, fridge, two prep tables and a brand new slicer. The only space we didn’t really spruce up was the bathroom, lovingly called the outhouse because it didn’t have any heat or air conditioning.
We hired a designer to mock up the logo and menu because by this point I had enough sandwiches, sides and desserts to offer a full menu. I also amped up my production team - I figured if we could serve 50 customers a day/five days a week - we would be able to cover rent, payroll and make some profit. This would be 2-3X’s the amount of sandwiches we were currently serving every week.
If you are keeping up, between the lease, renovations and hiring people - we were out $80k and had not even opened the doors. We did most all of this work during our busiest holiday season at Darke Pines. We were working 24/7 from October through December.
Then came 2020, the year of objectively hard, shitty occurrences, none of which we had caused. We decided to take a few days break at the start of the year, prior to opening the new shop. I spent New Year’s day, crying in an airbnb over a sudden and unexpected miscarriage. If you have been there ladies, then you know - this is about as traumatic of a New Year as it can get. I worked the meat counter at Darke Pines for the remainder of that month, but January remains a blur.
We also started paying the rent on Downtowner ($3500), but neither I nor the space were ready to open for business. Then came February and March, the Downtowner renovation was almost complete (another $7k worth of rent checks), but there were already rumblings of something called COVID.
March 18, the date of our health inspection at Downtowner, would also be the same date our world flipped upside down at Darke Pines. We had passed our inspection, but it wouldn’t be until June of 2020 that we would finally be able to open Downtowner. I would go sit and Downtowner and hold the health department license with my name on it - and still feel so excited to have that piece of paper in my hands.
If you are from Jersey City, you will remember the lines of people we served everyday (THANK YOU!!!!!). We were solely focused on serving our community, saving the business, keeping staff safe and paying our employees. We worked seven days a week, from 6am until 8pm. We moved into Will’s parents apartment to be 7 blocks closer to the shops, just in case something happened. We had back up plans for our back up plans at our main location.
For the first two quarters of 2020, we paid rent on a second location that we could not even begin to think about opening. I was no longer thinking about opening a sandwich shop. I was no longer cooking every day. Our sandwich program paused indefinitely. Our landlord took $1k off of rent for April and May of 2019, but add another $20k to the total money we were out of on the sandwich shop. It wouldn’t be until June of that year, before we would open the sandwich shop. I would also need hire and train all new support staff.
A big part of how I am finding my way back to myself - and living without having a “brand” to manage, has to do with looking at data. I no longer experience the hourly pressure to constantly refresh Square to check sales reports. For those who don’t have a Square business account - checking it routinely is pretty much exactly like checking Instagram. It’s either a very good sales day, and you can’t get over how great your business is and how proud you feel. Or, it’s a really bad day and you scroll the sad little numbers while feeling completely terrified while frantically mapping out your next move.
Not having to look at the Downtowner Square reports is the gift I never saw coming. It took me about two weeks to stop having the urge to check the sales reports. My phone screen time is down like 80%.
I am also on a massive pause from consuming all types of business literature/podcasts/content. If you have anything like this that you think I need to read or hear - please don’t press send. Let’s all thank our therapists for giving us permission to not be constantly working on our self-improvement.
I am on a strict media diet of E!News, celebrity gossip, rom-coms and super cheesy Pinterest quotes and mood boards. I want to read Vogue and drink martinis. Meet a friend at 4pm on a Saturday afternoon for a margarita. I want to cook old French recipes - just for me, not something I need to R+D for work. Over the past two months, I've given myself space to TRY and just CHILL, lay low, be creative and set myself up for a successful year (without launching right into any big changes). That's not to say that I'm not moving forward on any of my goals per se, just that I'm not putting the same crazy energy toward forward motion as I usually do.
One of my main goals this year was to find kitchen work for someone else. And there are a few reasons for that - mainly, because hello- I am $40k in debt. And secondly (& most importantly!), from October 2019 through December 2023 - unless I traveled, my days were spent between three square blocks. Downtowner is on 1st, Darke Pines is on 2nd and we live on 3rd. The same three blocks - every. single.day.
I had a lot of anxiety about this part and had to seriously calm myself down on a park bench before walking into a new kitchen and trailing for a job. I had a very short list of places I wanted to work. Spoiler alert: I got hired! More than anything, it feels really great to work for someone else - to still really want to do a good job. To hear the “well done, chef” and to learn new things. I spent a lot of time at Downtowner alone all day, every day - and it feels really nice to be apart of a team. If you are concerned about how you will feel doing this - all I can say is: you can absolutely do it.
I remember my mom suggesting that I make the time to grieve and to be angry, and I also remember my response: “I'm just too busy to do that right now. I can't afford to. I'll feel things later.” And that is mostly what I have been doing for the past few months. Anytime someone has an idea for what I should do (catering, cook their dinner party or open something else) - I simply say thank you and walk away.
Making the choice to choose myself at the end of this journey was incredibly scary and expensive. The only thing I wasn’t scared to think about was the first question everyone asked when they saw the closing post, “what’s next”? I wasn’t worried about where I would land or what I would do next, because I had completely forgotten what it was like to just be me, a girl who really just loves to cook and serve people.
Here’s what I’ll share in the next two series. If you have any questions, please feel free to send me a reply here or on Instagram. I’ll shout them out with a reply in a future post.
Part 2 - Tight Spaces, a Global Pandemic and no staff
Part 3 - What happens when you pivot in the wrong direction
READER QUESTION
Can you sublease the space or host pop ups at 9 Erie Street? I would love to host a dinner or party in the space!
Our lease (and I would bet almost all leases) contains a clause that we are not allowed to sublet the space. Doesn’t mean it can’t happen, but we brought forward multiple tenants for the landlord’s consideration and he didn’t like any of them. Two smoke shops - he (thankfully!) declined. However, there was also a coffee shop and two bakery concepts that he was not willing to accept. There is currently a For Rent sign on the space, but we are not managing the listing. Once someone signs a new lease for the space or October comes around, whichever happens first, is when I will be free and clear of paying the rent.
In regards to hosting events and pop ups - one, that would require me to manage and work the space. I am also responsible for the liability insurance, plus cleaning and maintaining the space. I am not interested in taking on any additional responsibilities, at this time. It is much easier to just pay the rent than to put myself through managing and working pop ups. I think people generally underestimate how much work it is to cook, clean and serve people. And that is after you get the space ready, cleaned and set up for the event. It just takes a lot of time - and people are not always willing to cover the labor for that sort of work. Also, there’s no kitchen inside of Downtowner. I’ll get into that more in the next post.
People ask me all of the time about cooking private dinners, and I tell them the starting rate is $2500 - that doesn’t include the cost of food, flowers or me working the event. It does cover me and one assistant chef to menu plan, hand shop at the market, boutique butchery, food prep, pack and deliver the food. Everything else - from how much they want to spend on food, to flowers, wine and my team working the party - is additional. And $2500 is only half of what is costs to cover the monthly expenses at Downtowner, so I still would walk away from two events with zero dollars in personal income.
So it is much easier to just pay the rent!
If you are enjoying reading Southern Flavor, consider supporting my work. While some recipes and weekly posts are free to all subscribers, a lot of my recipes are from our business. Thank you for being here, however you can, and for the love and support.
thank you for sharing a part of yourself