By coinnews 
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How to, I’m Elizabeth Gore. Welcome to the Big Idea from Yahoo Finance, the show that navigates the world of small business and entrepreneurship. All businesses start with one light bulb moment, and I’m going to take you on a journey with America’s entrepreneurs. As the co-founder of the small business funding platform, Hello Wallace, it has always been my mission to help ensurewhere entrepreneurs have the tools they need to live the American dream. We’re going to get between the spreadsheets with these operators to flow from their smallest failures to their biggest successes. So let’s cowboy up. Today, our big idea question is how do you fund a small business? Today’s industry is restaurants and I love to eat. My special guest this episode is Russell Jackson, a chef, restaurateur, and community leader. He’s also a great dad.Chef Jackson has appeared on shows like Iron Chef America, Food Network Star, and Going Of Menu. He is the owner and chef of Harlem’s fine dining, Michelin star nominated restaurant Reverence. Now, in full disclosure, since we recorded this episode, Chef Jackson had decided to put Reverence on hiatus. This is indicative of the environment small businesses are currently in, where small businesses are riding the highs and lows of the economy, butI love this conversation with Chef. I want to share it with you. He has so much wisdom. There is no one better to answer our big idea question today. How do you fund your business? Here’s my conversation.Howdy chef. I’m so, so happy you’re
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here.Anything for you. Absolutely anything for you.
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Well.Here we talk about the big lightbulb moments, and I just have to know what was your big idea when you were moving in and starting Reverence?
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What was I thinking? How did I end up here again? You know, um, I built Reverence, um, I, I, I built Reverence because there was a need for it. Um, but it was also at the coercion of my very small, very small circle of friends and family when I when I got married.Um, because I had retired. I, I was done with being in the restaurantbusiness.
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Imagine you’re retired though. I mean, it’s almost like a joke.
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And yeah, yeah, and that’s, I think the sad fact of the reality of it is that I retirement wasn’t necessarily really what I wanted to do. I think I, I, I ran away from it because of the pain of closing Lafitte in San Francisco.And, uh, and then getting sucked into the world of of media on doing television and TV shows and things like that. So
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you decided to go back in your own kitchen.
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Yeah, which again wasn’t necessarily the brightest moment in my life, but it’s what I love to do. Um, again, I’m, I’m an African American and I grew up, I grew up in Southern California in the Palisades.Um, we were at the time in the 70s when we moved there. We were one of three African American families that were in that entire area, uh which now that people have better understanding the size and scope of it. Um uh so, very few of us, right? It’d be like 3 people living in in the whole of Manhattan, um, and, uh, uh, you know, it was justIt’s a beautiful community. Uh, it was the first time I had lived in a predominantly African American community. What I do, how I do things, the reason behind why I do things was important to bring to bear, to help to change the conversation and also evolve.African American culinary uh nature, you know, we don’t just cook.Southern cuisine, uh, there’s a wide range of us that cook exceptional levels of, of, of food, and California cuisine and it’s in its aspect, in its own genre, uh, is an impor is an important element to the conversation because it leads the way in so many different cases.So, for me to be able to do that and represent those ideas, uh, uh, within Harlem, within this community, and then to definitively work hard to get back to it in every aspect to from not just being there, but also trying to um create diversity within the workplace, build wealth within the workplace, um, uh, give opportunity for education expansion, uh, and now with us
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the best damn I’ve ever eaten.
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You know, I mean that kind of you got to make that happenforemost,
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you’re one of, I think the the leading experts on on financing a restaurant. Well, you are. I mean, you’ve done such a good job over and over and our actually our big idea question today is how do you think through funding your business andWhether you’re in the restaurant business or anything else, I mean, what are the steps that you take as you prepare to fund your business?
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Well, I, I, I’ve done three different approaches to thisday.
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Walk us through three.
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So, so the first one, my very first one, Russell’s in, in, in, in Los Angeles on Lasanga, uh in uh in the early 90s, um uh was.Self not self fineness, but I had some friends and my family and, and like, um, uh, Marian Williamson kicked some money in and Stephen Bray kicked some money in and uh uh uh a a a guy who owned a uh a high-end model house and my father kicked the lion’s share of money in.Uh, um, that was, and that was tough. That was closing that restaurant was exceedingly difficult, but again, we went through some very unprecedented.
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Oh my goodness
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closing that restaurant.
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Now we call it a and family round and and sometimes, I mean, you and I have backgrounds thatYou know, we didn’t come from high net worth families. And so, um, you know, walking up to one of your family members and asking is tough. And sometimes relationships can change and so on. I mean, would you, would you say to a small business owner, really consider this option? No,
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no, absolutely not.OK,
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OK, I think that’s really fair because umYou know, sometimes that’s our only route, but do you wait, do you self-finance? Do you bootstrap? So what was your
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second? So the second was Lafitte. Lafitte was a multimillion dollar monster that took, uh, we didn’t have any any institutional lending, but we took private, private equity partners. We had a developer that was partnered with us for the build out, um, that.Obviously raised our rent at one point, I think we were paying the highest per square foot restaurant rent in the state of California, and that’s California, I was.Um, but again, another historic landmark property you had to deal with historic society, the waterfront and other federal government agencies to just do the build out. That was, that was an excessive raise.
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So that, so let’s just for our listeners, so when you say raise, if we break it down, you are valuing your business at a certain potential amount andAnd you are saying, OK, so and so, if you put in $50,000 I’m going to give you quote shares or equity.
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It’s essentially an SEC, it’s a traded share. It has, it has an intrinsic value and ultimately, in those situations, like, like for myself, um, uh, I didn’t have the highest amount of equity. I had a percentage that was a reasonable voting block, butUh, the decision was out of my hands in the respect of, do I continue on with this while we’re losing money or do we have to close? And in that case, the investors said, we’re done. So you lose, you lose the ability to have that
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control. That’s a tough thing. We’re at we’re venture backed and you know, it’s tough because you have a lot ofbosses at that point.
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And that’s that’s the thing it’s the only way to get in a restaurant, you know, it’s like.On a Saturday night, and this is, I, I’m putting this example up from a from a true story that walks up on a Saturday night when you’re getting hammered and says, I want to sit at that table, and we, you go, I don’t have a waiter for you. I have no place. I can’t keep you there. And then says, and I want a Diet Coke. Well, we don’t serve Diet Coke. We’ll send somebody out to get one. It’s like I’m sorry, what? I know you and I can’t imagine doing that. All right, so.And again, this is the put the gun to the temple model, um, self-finance. So, uh, I had, I had money that I’d saved up and worked for, uh, and, uh, I went out and I actually got an SBA uh matching loan, uh, that,
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uh can we stop there just for a second. So, um, SBA loans, I think.are critical. And um so how how did you decide to get an SBA loan and why, if I can ask real quick? Well,
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to be very honest, it having gone through so many different levels of development and even trying to get SBA loans when I opened my very first restaurant, the labyrinth of red tape and hurdles and all of the, it’s, it’s, it always seemed like a sheer impossibility. So I applied for the SBA loan in this respect.Um, almost as just trying to turn over a last rock, not having any expectation whatsoever that this was a possibility. So when I got the notification that I had gotten it.I realized that I had turned into a unicorn because I had only heard of one other restaurant group people that a group of people that I knew that had gotten an SBA loan for a restaurant, and they were as different than I as I as I could possiblybe,
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very white. They have lower interest rates too. Is that a fairlike a traditional
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they’re great loans. I mean, they’re not and and I think the type of loans that if I ever go back to deal with the SBA for my own work, uh, I would probably end up doing the 7A program because the idea for me now is I would prefer, and as I’ve learned over through the pandemic, uh, is I would rather own the real estate below me.Landlord. So that would, if you’re going to do an SBA loan, I would probably always say try to go with an SBA loan. It’s still, it’s a, it’s a sizable chunk of down payment that you have to come up with, but the terms are better than any other bank can get for you. Uh, and money comes quickly, system, you know, there are checks and balances and things that you’re going to have to go through, uh, a lot of signoffs that you’re going to have to go through. ButAll in all, the last thing I would say is, is, especially about personal and self finances is figure out how to keep your credit, at least in the 600s. That, that I, yeah, that’s absolutely critical because you can look at my 300 score credit right now and see how incredibly difficult it is to work around anything, you know, and credit’s cre credit’s malleable, it’s flexible. It, it goes up and down every single frigging week, you know, all kinds of different factors, so.If you drop below a certain number, don’t freak out. Don’t start thinking I got to do this and just figure out how to work it back up and, you know, I mean it. Yeah, yeah, but if you want to make moves, just make sure that you’re keeping that in a thought process of if I’m going to take loans out or I’m going to do these things or I’m gonna, I need to, I need to make sure that my personal credit.is in alignment with where I want to ultimately go and then don’t worry about it for a while.
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You alsoapplied for grants,
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right? Oh,
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so many so many grants. I’m also, by the way, a huge fan of small business grants. I think they’re an underutilized resource. I mean, I mean, it’s a lot of paperwork, but it’s, I mean, not free capital, butCome on. No, it’s,
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it’s, it’s accessible capital and, and, you know, the reality of, of grants didn’t kick into for us until we had gotten to, to the pandemic. That’s when we had turned to that idea and fortunately my wife is tenacious andshe,
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she is, so is your son.
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And that’s how we ended up being introduced to heal Alice. So, and without, you know, and then learning so much about the grants programs, the different types of things, uh, we’ve, we’ve been awarded quite a few different grants through the course of the last 5 years of our 6 years of our existence. So, and they’ve been really helpful a lot of times, very timely.Um, you know, like, how am I going to make payroll?
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Well, chef, you, I mean, you’ve been through hell and back. I mean, you know, all of our restaurants are still climbing back from COVID. You had a significant break in.Um, do, so tell me your advice to, so all small business owners are going to go through adversity for something. How do you, how do you get through that both the business and then personally through things like that. And by the way, I have to come in, you paid your employees while you were closed. I mean, it was, it was tremendous, but can you just give that small business owner right now who is just having a hard time?What? You know,
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I mean, and I’ve said this before, um, and I’ve said this with you many times is that you can never give up. You just have to, I mean, you have to keep fighting until you are utterly dead. And maybe that’s the skydiver in me thinking, you know, just keep ripping away at it until, until I’m absolutely done, done, um, uh, but just never give up. And, and I, it’s easy to say, and it’s so much harder to do because, you know, there’s so many different bearing pressures between.Um, uh, uh, feeling bad and the guilt and the, the, the anguish and the stress and the, you know, it’s like I, I, I currently have hives and losing my hair and, you know, you know, I haven’t been able to lose the weight that has been on my frame for the last, you know, it’s likeit’s, it’s,
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it’s a wait, do you love your own food the most? I
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have to. No,really, I, I, and I, I’m.There are moments in time when I’m working I’ll say something and I’ll go, wow, that’s really good. That surprised me. And then there are there but for the most part, I again, I’m the hardest, you know, and I think that as a chef, you have to be
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entrepreneurs we are our worst bosses, aren’t we? It’s so hard on ourselves.
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I mean, it’s it’s an absolute necessity, but you know, I think just the the the the importance for people to remember is that they’re, you’re not alone.You, you know, it may feel like it, but I guarantee you you’re not, that you can’t be in fear to reach out, to even just talk with people that may have had similar experiences.
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We’ve had a lot of my phone calls you and I haven’t we just
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have, you know, talking to people that that can at least whether they can’t necessarily solve the problems for you, but you have that ability to voice things outside of your, your, you know, treadmill, uh, andSometimes those solutions pop in those conversations. Um, so it’s, it’s important to. Yeah, that’s that’s really, really tough and I because I did that for years, I would just in everything and then it would blow up some other ways.
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Chef, hold that thought. We got to take a quick break and we’ll be right back.Welcome back to The Big Idea. I’m Elizabeth Gore here with Chef Russell Jackson. Hey, speaking of problems, so on the show, we talk about the dirty unicorn, which is, you know, the biggest mistake you’ve learned from in business. What’s yours?
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Oh,
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stop it, stop it.
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No, you know, I.I, it’s hard to look back and say, OK, this was a real mistake. I think that, I think.If I look at some of my other ventures, um, giving up when I did might have been construed as a mistake. I don’t, you know,
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that why now you never give up? I think that
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that’s why now I’m, I’m, I’m willing to go, go down with the ship in, in a spectacularly fireball way, um, and keep trying to figure out how to make it work to some degree or another, um, uh, simply becauseI know how hard it is to get back to it. I know the level of effort. I know I that I put into it, the, the importance of it to my family, to my staff, to the community in what we’re attempting to achieve, whether they, whether everybody else realizes it or not, I realize it.
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Well, it’s interesting because you umYou get so much of your time to educate other entrepreneurs, to community one fair wage. By the way, let’s just talk about that really quickly. When does the world inspired one fair wage? Tell us what that is because it’s an important part of your life.
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So one fair wage, I’m a board on the board of directors, uh, it’s a 501c3 program that that was born out of um the attack at the Trade Center. Uh, it was, it was created as a fundraiser for the Windows in the world, uh, families and, and, and organization.Uh, and what it did was it spawned this whole idea of equality, representation, and equal pay, uh, and now we are the, the, the, the tip of the spear when it comes to, uh, uh, representing.Restaurant hospitality workers, uh, to achieve equal pay, uh, uh, uh, pay parity as well as, um, um, a minimum, full minimum wages because there’s so many laws that are on the books across the United States, which still represent, um, uh,Civil War level laws that that and even this state still has uh a carveout for hospitality workers to pay them a subminimum wage. So as a tipped employee that they do a calculation where, well, you’ve gotten so many tips where we can pay you less per hour.And the whole idea is that’s ridiculous. You should be getting the full minimum wage with your tips ontop.
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So I just mentioned that you give so much of your time to your community, obviously to your family, and then I always think about you because you’re so good at the business side of your business, but you also love to be a chef. How do you time manage being in the business or working on the business? I mean that’s a really tough.
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It’sit’s a ridiculous.
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What’s your advice to small business owners?Because if my passion is cooking or doing this or that, and then I still have to do my accounting and everything else, how do you, what’s your advice on time management that I
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thinkprobably one of the best suggestions I can have a a good accountant for God’s sakes, don’t try to do your own accounting in-house. Um, there are enough systems and organizations out there now that help to automate and and really streamline your business uh and make it.And you have to do it early because you, you get a year in and you go, oh, I’ll get around to it. And then all of a sudden there’s this mountain of paperwork to have to deciphering, well, I thought I remember what that was, like, it’s, it’s best to have it set up ahead of time,
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you know, at the end of the day you’re not,
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you willburn so much cash and then and the worst part about it is is your is your biggest equation. Your personal time is your biggest cost factor. Um, the, therunning the calendar, running the schedule, pre-planning, giving yourself enough time and then rest.
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I’m sorry, what is that? Yeah, I know, but like you know I try to carve out your son’s pizza,
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right? Yeah, that’s pizza.The movie and pizzas now, um, but it’s, it’s for me, the importance of having that, that whether we do anything or we don’t do it and don’t fill it up with stuff like take your day and like really don’t answer the phone, don’t answer emails, play games, do whatever, do you go to a movie, yeah, just be there with the people that that love you and and and.That’s probably one of the most fulfilling things and then you get to remember like, oh, this is why I work so hardbecause thisis this moment in time, this place in time, um, just walking with my son to go get groceries on Sunday, I had to stop and look at him and I just said, you know, I absolutely adore and love you and and.Because I get to have this right now. And he’s like, well, I love you too, but OK.You know, at 5 years old, whatever, dad.
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I’m 10 and 13 and I’m getting the whatever now. Oh my God. Now chef, I just want to thank you. I loved your counsel on our big idea question on how do you fund your business today? Um, you know, self-funding, equity, SBA loans, grants. Thank you. And most of all, thanks for feeding me all these years. Thank you for being on the show. My pleasure.At the end of each episode, I like to give a shout out to a small business or entrepreneur who are doing amazing work. Since we’re talking food today with Chef, I’d like to shout out Tratttori Farms in Geyserville, California. Their Dry Creek olive oil is the best in the business. So check them out at tratorifarms.com. We are all out of time, but thank you, chef Russell Jackson for coming on the show and thanks to all of you for joining us. I hope you learned a lot.This has been the big idea from Yahoo Finance. Tune in every week on your favorite streaming service and find videos at yahoofinance.com and listen wherever you get your podcasts. And if you follow on Amazon Music, just ask Alexa to play the big idea. You can also come say howdy to me on any of my social channels at Elizabeth Gore USA. I’m Elizabeth Gore, and as my grandmother always said, hold your head up high and give them hell. See you soon.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.