small business owners insight.

[LivingAlmostLarge]

So my pseudo SIL (bil girlfriend) owns a sushi franchise in a grocery store. Last night finally we video conferenced with her too finally. She got to tell us how exhausted she is and what is going on and why she's doing what she's doing. She's working 7 days week because she can't afford to pay an employee. She is lucky to sell 20 boxes of sushi at $6 a box. Typically she was selling 80-90 boxes a day. But you probably asked like I did "why can't you just close?"

Because if she closes she loses the franchise because of an agreement with the store. She doens't pay rent to the grocer. Instead she pays a % of the money made to them. So since they are open they enforce her to be open selling something. She's young (30) and healthy. But she said other franchise owners who are older are in the position of having to hire and pay someone to "work" while losing money so they don't lose the franchise. And you can imagine the cost of hiring someone and not making enough to pay them. She said further in her strip mall with grocery store, most of the restaurants are all closed. They aren't doing takeout unless like her they might lose the franchise so they have to stay open to keep it.

Of course she'll be lucky if she or another worker at the store tests positive for the virus because then they would be forced to close for 2 weeks. She said since she's friends with other restaurant owners (small ones) that most are done. They are going to let their leases run out and are going to do something else. They can't come back. I'm guessing this will kill commercial real estate.

[disneysteve]

I've said a few times in other threads that many, many businesses, small and large, will not survive this.

There will be a lot of vacant properties in a few months.

[~bs]

Did she try talking to the grocer? many people are more understanding in these times. It reminds me of texashuckster not willing to ask his landlord for help. Everyone needs help in these times, by helping her the landlord helps themselves.

[disneysteve]

I think we're going to see a huge shift in contract law as a result of this episode. This situation is so unprecedented that nobody was really prepared for the ramifications. Sure, she may have a deal with the grocer but I'm sure her contract doesn't say anything about temporarily suspending the terms in the event of a national emergency.

[creditcardfree]

Small business are the backbone of the economy and put millions of people to work everyday. The longer this goes on the more horrific it is economically. There is a significant correlation to negative health outcomes for every 1% rise in unemployment, primarily due to stress which impacts immune system, mental health ect.

LAL, I pray for your SIL that we get this economy back up and running very, very soon.

[~bs]

I think we're going to see a huge shift in contract law as a result of this episode. This situation is so unprecedented that nobody was really prepared for the ramifications. Sure, she may have a deal with the grocer but I'm sure her contract doesn't say anything about temporarily suspending the terms in the event of a national emergency.

Are you sure? Have you seen the contract? Have you heard of force majeure clauses in many contracts?

[disneysteve]

Are you sure? Have you seen the contract? Have you heard of force majeure clauses in many contracts?

I am admittedly not a lawyer. I don’t even play one on tv. There just seem to be a lot of stories about people and businesses having to do things that make no sense recently because they have contracts requiring it. I’m just assuming that those contracts didn’t have any type of provision that applies to the current situation. I could be wrong.

[TexasHusker]

The CAREs bill that the President just signed is a huge boost to any small business that employs people. That is, small businesses that have been doing things the right way with their books and employment law. I talked to a contractor today who does remodels and she's trying to stay afloat. But she often pays her help in cash, her 1040 isn't reflective of her actual income, and it's going to be hard to get help. To get the help, you are going to need to prove up the legitimacy of your business with tax returns, W4s, payroll records, etc. And that is only fair. Taxpayers do not need to be bailing out folks who haven't been paying in and running their businesses properly.

As for leases, contract law, etc., I think landlords want to work with tenants. They don't want the empty space. The landlords do not want to crush small business with heavy-handed dealing. That backfires. Now if you default on them, that isn't good. But if you have a good relationship with your landlords - which you should if you are smart - they will work with you. I have one landlord who is a jerk, so I expect not any help from them whatsoever.

[~bs]

The CAREs bill that the President just signed is a huge boost to any small business that employs people. That is, small businesses that have been doing things the right way with their books and employment law. I talked to a contractor today who does remodels and she's trying to stay afloat. But she often pays her help in cash, her 1040 isn't reflective of her actual income, and it's going to be hard to get help. To get the help, you are going to need to prove up the legitimacy of your business with tax returns, W4s, payroll records, etc. And that is only fair. Taxpayers do not need to be bailing out folks who haven't been paying in and running their businesses properly.

As for leases, contract law, etc., I think landlords want to work with tenants. They don't want the empty space. The landlords do not want to crush small business with heavy-handed dealing. That backfires. Now if you default on them, that isn't good. But if you have a good relationship with your landlords - which you should if you are smart - they will work with you. I have one landlord who is a jerk, so I expect not any help from them whatsoever.

off the top of my head, the cares act provides a large (reasonably) low interest loan to smaller businesses
payroll tax deferral to be paid back 2021 or 2022
50% payroll tax credit for employee wages up to $10k paid from 3/20-12/20

Yeah, those are the worse. It's normally the large reits that are the most heavy handed. For some reason they like to squeeze their tenants until they fold, then attempt to find new ones rather than keep the good ones they have. For a few of our locations, we had these types of landlords already say pay up on april rents, no relief will be provided. For these types of landlords (pricks), it's helpful to have drafted the agreement with a force majeure clause. Normally written into contracts, then never given a second thought... until something crazy like this happens, then everyone is scrambling trying to figure out if their contracts have the provision. lol

What is a Force Majeure Clause

A Force Majeure Clause is a contract provision present in most commercial contracts that excuses a party’s performance of its obligations under the contract when certain circumstances arise beyond the party’s control making performance inadvisable, commercially impracticable, illegal, or impossible. Force Majeure Clauses provide a list of extreme events (generally called force majeure events) that, if they occur, can excuse a party’s performance under the contract. Force Majeure Clauses can vary greatly in language and length; however, many include events like epidemics or pandemics, along with war, terrorist attacks, “acts of God,” famine, strikes, and fire in the list of events excusing overall performance or delay in performance.


https://www.natlawreview.com/article...s-and-covid-19

[LivingAlmostLarge]

We'll see. yes it is a huge boost but she said it might be too late anyway for many. Her parents bought her the franchise and will help her bail out financially. But she said many of the other owners are not in that situation. So it doesn't matter. They can't make it.

[riverwed070707]

off the top of my head, the cares act provides a large (reasonably) low interest loan to smaller businesses
payroll tax deferral to be paid back 2021 or 2022
50% payroll tax credit for employee wages up to $10k paid from 3/20-12/20

Yeah, those are the worse. It's normally the large reits that are the most heavy handed. For some reason they like to squeeze their tenants until they fold, then attempt to find new ones rather than keep the good ones they have. For a few of our locations, we had these types of landlords already say pay up on april rents, no relief will be provided. For these types of landlords (pricks), it's helpful to have drafted the agreement with a force majeure clause. Normally written into contracts, then never given a second thought... until something crazy like this happens, then everyone is scrambling trying to figure out if their contracts have the provision. lol

What is a Force Majeure Clause

A Force Majeure Clause is a contract provision present in most commercial contracts that excuses a party’s performance of its obligations under the contract when certain circumstances arise beyond the party’s control making performance inadvisable, commercially impracticable, illegal, or impossible. Force Majeure Clauses provide a list of extreme events (generally called force majeure events) that, if they occur, can excuse a party’s performance under the contract. Force Majeure Clauses can vary greatly in language and length; however, many include events like epidemics or pandemics, along with war, terrorist attacks, “acts of God,” famine, strikes, and fire in the list of events excusing overall performance or delay in performance.


https://www.natlawreview.com/article...s-and-covid-19

I work with contracts regularly and have invoked a dozen force majeure clauses in the last 6 weeks. Are you saying that tenants should be able to use force majeure to get out of paying rent for a place they continue to occupy? That's not how force majeure works or what it's intended to protect. The only way I can see it applying in a landlord-tenant situation would be for example if the building burnt down, the tenant cannot be held to their lease agreement nor the landlord held to providing the tenant a place to live - both parties are relived of their contractual obligation due to inability to provide the service contracted. In no way does a force majeure say if there is a pandemic, you don't have to pay your rent, the same way you are not excused from paying your rent if you lose your job because you're still occupying the dwelling. You can't use the service and just not pay for it regardless of if the circumstances are in your control

[Scallywag]

It's normally the large reits that are the most heavy handed. For some reason they like to squeeze their tenants until they fold, then attempt to find new ones rather than keep the good ones they have. For a few of our locations, we had these types of landlords already say pay up on april rents, no relief will be provided.

REITS are "heavy handed" because they have to pay dividends to their investors, no matter what, OR apparently risk losing their tax status.

Large apartment REITS are just as bad as commercial REITS, apparently. My cousin lives in an apartment complex that is mostly rented out to people who work at a nearby factory. Factory closed on March 20, and furloughed all its workers. On March 28, my cousin received a group email to all tenants specifying that rent is due on April 1 (as always) and that tenants having or anticipating trouble with being able to pay should contact the following:

State housing authority

Local church

A town charity that advertised "rent help".

Nothing in the email said anything about working with tenants and everything about how they have to pay their investors the quarterly dividend. I understand that you have to pay rent if you occupy the premises but they knew the factory had closed, and rather than offer some help (partial rent for the time being, extension on rent due date etc) they just wanted to remind tenants to make sure to pay on time or beg from local charities if they couldn't pay, but expect nothing from the landlord!

[~bs]

^

I know the reason why, just that I don't prefer working with them. I guess a similar argument can be made for big box retailers vs small mom and pop grocery stores.

[MollyClarkson]

Many even large businesses will not be able to survive, not talking about small businesses. This is a really difficult time for local businesses. That is why there are so many ads for various products and services. By the way, it is best to promote your business through some local websites that are visited by many local residents. One of these sites is the San Diego business directory. There are a huge number of different offers from local businesses. In general, this is a great site for both business owners and buyers.

[Sockerman]

Heya this is Suraj.Patil,
Glad to know your keen interest in building a company/startup , I am not any expert but I am a business freak like you even.
At the intially stages what I would like to suggest you as tips -
1) Think about those business plans which you are good into, or your area of interest lies.
2) Before starting up any company, survey of the market is very much essential.
3)To be a successful businessman you should be very ethicated. (Work issues)
4)Comeup with innovative ideas, that can be compatible in the market.
5)Make your workers or fellow workers feel happy .
6) Hard work, Dedications ,and Patience should be your mantras.
7) Business is not about how hard you work, Itz all about how smart your work can be, so better be smart. With hard work smart also is needed.
8) Put up your savings or Profits in other investments also.
9)Diversifying your business fields will help you reap more fruits .
10) Last but not the least, start up your company with your passion, so that each step you climb ahead will make u feel more passionate about it even.And all the big companies started never became big in a day or two , so just work on it and
"TO BUILD , YOU SHOULD START FIRST "
Stay motivated, stay confident
ALL THE BEST.