Buying out the boss

Three tales of employees who took over

 

Photo by Paul Moore.

Will Annett, employee-turned-owner of Pizzazza in Fairhaven, poses Aug. 21.

 

Whether it’s time to retire or just time for a new business venture, divestment needs arise, and owners must decide to either sell to outside interests or promote from within and invest in the potential of a motivated young entrepreneur.

Fred Berman, 63, has been a member of the Whatcom County business community for more than 35 years as a farmer and later as a restaurateur with his wife, Lynn. When he was a young man just getting started as a farmer, his father gave some money to purchase a piece of land — a move he would never forget.

Thirty-five years later, Fred and his wife found themselves owning three food businesses: Pastazza in Barkley Village, Pizzazza in Yorky’s Gas Station & Market and Book Fare inside Village Books.

In 2005, Fred took a job with the state department of agriculture that took him away from the restaurants and left his wife to manage all three businesses.

“My absence made it very challenging,” Fred said. “So we were looking for an exit strategy.”

Last year, the Bermans decided to sell Pizzazza and Book Fare to local entrepreneurs who had worked for them recently and over the years.

Pizzazza, for example, was sold to the Pizzazza manager, Will Annett.

Fred said Annett had a new baby with a second on the way and did not have the financial resources to purchase the business on his own, but Fred also remembered how sometimes a young person needs a helping hand to get started. Fred said he knew Annett could succeed if given a chance.

Fred said they drew up a “very unique sales contract,” which gave Annett the ability to pay over time.

“It was a mentoring opportunity,” he said. “We had the chance to give him an opportunity he would not have had on his own.”

 

Prepping a new owner for Pizzazza

Will Annett, who has more than 18 years of restaurant experience, submitted his résumé to Pizzazza and heard nothing for a year.

One day, Annett said, he received an e-mail from the Bermans that said they had a management position available. In their correspondence, the couple also revealed that they would eventually like to sell the company.

Although the Bermans didn’t immediately see Annett as a candidate, Annett said after a few months they grew to see him as a potential buyer.

“I saw that this could possibly be a good thing for me because I could get in there and work and see the numbers and see if it was a viable business to purchase,” Annett said.

In April 2007, Annett bought his first business, Pizzazza. However, he said the prospect of this first foray into sole proprietorship didn’t scare him at all.

“I am one of those people who enjoy a challenge and learning something new,” Annett said.

With 18 years in the restaurant business, it’s not all new for Annett, but he said owning a restaurant is much different from working in a restaurant.

“Working in a restaurant, you basically cook food and manage people,” Annett said. “When you own your own business, there is a lot more that goes along with it, such as administrative duties and trying to grow your business.”

Fred said Annett, who has now owned Pizzazza for more than a year, would consult with him a lot when he first got started, but during the course of the year those consultations have distilled down to monthly chats.

“When he comes in with his check, we talk and go over his progress,” Fred said. “It’s a two-way street; I think we learn from him and he learns from us.”

Since he began, Annett said, Pizzazza has been doing quite well.

“The sales at the restaurant have been increasing pretty dramatically over the course of the last year and half,” Annett said.

Annett said in that time, he has learned a lot about being a business owner. One area Annett has been working to improve is his marketing approach.

“Marketing is such a big endeavor. There are lots of different ways you can market and some are beneficial and some aren’t,” Annett said.

Annett said one of the best things about owning your own business is that you have the freedom to run your business in accordance with your own values. He said he continues to apply the Bermans’ business philosophy, which promoted buying locally and having a good product in the restaurant.

“When I bought [Pizzazza], I took it to the next level and added a bunch more local ingredients and switched over to a lot more environmentally friendly packaging,” Annett said.

 

Photo by Paul Moore.

Kjirstin Haugland, left, and Anna Dean pose in front of a row of lattés at Lettered Streets Coffeehouse in Bellingham. Haugland and Dean used to be employees of Toad Mountain Coffee Company before starting their own shop.

 

The Lettered Streets Coffeehouse

Anna Dean and Kjirstin Haugland didn’t exactly purchase the business they worked for. But they did pick up where it left off.

In April 2007, Dean and Haugland heard that Toad Mountain Coffee Company’s owner Rob Camandona was going to close the coffee shop where they worked.

“We were so bummed because we didn’t have jobs anymore,” Haugland said.

Camandona said he needed to lose that location in order to maintain other parts of his company.

“I just could not afford to operate in that location any longer,” Camandona said.

Both Dean and Haugland said while they worked for Toad Mountain, they grew fond of the Lettered Streets neighborhood and the business’s quaint but prominent location at the corner of Dupont and F streets.

“I love the building,” Dean said. “I love its presence in the community.”

One afternoon after Camandona had told them Toad Mountain was going to close, Dean said she and Camandona were cleaning and taking inventory when he suggested that she and Haugland start their own coffee shop in the same location.

“And I was like, ‘Yeah very funny, Rob.’ ” Dean recalled.

However, the idea began to bounce around in her head and sound more and more exciting. So one day Dean presented it to Haugland.

“She just looked at me with this funny look and said, ‘You’re going to laugh but don’t laugh. What would you think about starting our own shop?’ ” Haugland said.

Dean said they both giggled at the idea but began to look harder at each other as they began to realize that they might actually be able to pull it off.

“We had so many people around us that if anything happened we felt secure in asking for help,” Dean said.

Camandona said the two made a natural pair.

“They complement each other very well,” Camandona said. “Anna has her experience and her knowledge of day-to-day operations and Kjirstin is smart and creative. They seem to relate very well to each other.”

He said their experiences as employees and managers helped in their hiring and managing approach.

“They have an understanding of what good employees mean to a business,” Camandona said.

After negotiating a lease with the building’s owners, Dean and Haugland began making repairs. They said a mishmash of friends, family and some community members joined in the work party to help get the building ready for opening. The building’s owner even put in a new floor to support their efforts.

“Every time we got scared we weren’t getting something done, we would just turn to one of our friends and say, “Hey, we need something!” Dean said. “They all supported us.”

The Lettered Streets Coffeehouse opened in October 2007 and both Dean and Haugland said they were worried about opening during the onset of winter, which they said is usually a slow time.

“We thought that might be good anyway because at least we would have some time to tread the waters,” Dean said. ”We ended up being really busy instead.”

Camandona said the two stepped into a pretty sweet deal.

“Basically they got to get into a business that had an existing customer base without paying for the business, just the equipment,” he said.

Haugland said she and Dean put in a lot of unpaid time to make sure everything ran smoothly in those first months.

“I think we had prepared for the worst,” Haugland said. “Some said owning your own business is nothing but heartache, but it hasn’t been as bad as I thought it would be.”

With the coffee shop prospering, Dean and Haugland said they are looking to the future.

“I think we would love to expand to get some more space,” Haugland said. “But not now, maybe in like five years.”

 

Ben Scholtz

Giving Mallard Ice Cream a
new flavor

Ben Scholtz, owner of Mallard Ice Cream for the past seven-and-a-half years, also rose from the employee ranks to own one of Bellingham’s most beloved businesses.

Around the turn of the millennium, Scholtz moved from Seattle back to his hometown of Bellingham with his mind set on change.

Scholtz had been living in Seattle for the previous eight years working primarily for non profits and arts organizations. During his last four years there, Scholtz was a manager at the Seattle Arts Museum. But Scholtz said he had grown tired of the non profit game and found himself back in Bellingham looking for something more entrepreneurial.

“I had money saved up and I was, in a sense, changing careers,” Scholtz said. “I really just gave myself permission to work for any business that I thought was interesting on any level, hoping that it might turn into something.”

One day while playing basketball in Fairhaven Park, Scholtz met the then-owner of Mallard Ice Cream, Mike Post van der Burg. Scholtz said he told the owner how he had been to Mallard and really liked the business.

“I liked everything about it,” Scholtz said. “There’s a neat attitude about it.”

Scholtz spoke with the owner several times and eventually he was offered a job as a bookkeeper. At $8 an hour, the job was a long way from his salary at the Seattle Art Museum but that didn’t matter to Scholtz.

“It wasn’t about the money; it was about what I could learn,” Scholtz said. “So with that in mind, I started out doing bookkeeping but requested that I be shown as many aspects of the business as possible because I was interested.”

Once Scholtz got his hands on the books, he realized that Mallard had never made any money.

“He was losing money the whole time,” Scholtz said.

So it was no surprise that after the summer of 2001, Mallard went up for sale.

“He let some people know that he was trying to sell it but at the end of September … he put a sign in the window that said, ‘closed for the season.’ But he had no intention of reopening it,” Scholtz said.

Scholtz said he was told that if the business sold, he would be recommended as a manager. However, being non-operational and with no record of making money, Scholtz said the business was in a poor position to attract a buyer.

“[The owner] was pretty much considering the next step: Have an auction and be done,” Scholtz said. “But then I started asking some of my family and other people whose opinions I respected, whether they thought it would be a good idea for me to buy it.”

Scholtz got a good response from everyone, including Mallard’s former owner. He purchased Mallard soon after.

“Prior to that, I had never thought my next step would be to own a business,” Scholtz said. “I was excited, frightened and very focused all at the same time.”

Since purchasing the business, Scholtz has gone from losing money to forging a viable business that survived a profitable move to Railroad Avenue from Holly Street, which increased overhead but also increased the business’s earning potential.

“I had budgeted out that even if we experienced no growth at all, I could go back to eating Top Ramen and I wouldn’t go bankrupt,” Scholtz said. “But with the increased sales volume here, our bottom-line profitability has become significantly stronger.”

Scholtz said working at Mallard beforehand prepared him for the hills and valleys of owning the business.

“I was able to learn from or avoid mistakes that the previous owner made,” Scholtz said. “My first act of recycling was to take the original energy put into the business and build upon it.”

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