Community supports veteran entrepreneur after he announces his small business is closing
By VIRGINIA BRIDGES | The News & Observer (Raleigh, N.C.) | Published: September 2, 2014
DURHAM, N.C. (MCT) — Matt Victoriano has been on a monthlong small-business roller coaster.
“Exhausting,” he called it.
On Aug. 12, Victoriano announced he was closing his nearly 8-month-old coffee shop and bar Intrepid Life Coffee & Spirits in downtown Durham. Ten days later he started a $27,000 all-or-nothing crowdfunding campaign to save the place. Then, he was invited and honored Wednesday at the White House as a “Champion of Change” for his efforts to build the community space that welcomes, caters to and employs veterans.
Victoriano, 34, a former U.S. Marine Corps sergeant who served two tours in Iraq on a four-man scout-sniper team, opened Intrepid Jan. 25 with a mission to create a community and veteran-friendly place that serves coffee and cocktails in a large space with chairs, desks and a bar to do pullups. Victoriano employs two part-timers. One is a veteran.
After he announced he was closing, fans of Intrepid started promoting the crowdfunding campaign on social media and Durham’s active neighborhood email listservs. Others organized events such as a dance party and a silent auction to raise money.
On Aug. 27, Victoriano was among 12 people who were honored in a White House ceremony that celebrated nonprofit organizations and small businesses seeking to help veterans and their families.
The honor fueled the fast-rising tide of capital flowing into Intrepid’s Indiegogo crowdfunding campaign, which surpassed its $27,000 goal over the weekend.
Meanwhile, behind the scenes of the good intentions are the small-business realities, including Victoriano’s more than $18,000 debt owed to his landlord, a seven-month track record of operating at a deficit and a possible move to a new space.
Aaron Averill, owner of the building, asked Victoriano to move out Sept. 7 after he fell five months behind on rent. Averill said this is the third time he has tried to collect unpaid rent from Victoriano. At this point, Averill said, he is concerned whether the 2,000-square-foot space is a good fit for Intrepid.
“There is the rent debt, but there is also the long-term viability of the concept,” Averill said. “We are at a point where we both need to have a paying tenant to pay our mortgage, but, even more importantly, we want it to be a vibrant space that contributes to the community.”
Money is an issue
Averill and his wife, Stacy Jasper, bought the dilapidated building at 106 W. Parrish St. in 2011 and spent more than $1.2 million on the initial renovation.
Averill, co-founder of Durham startup SportTracks, which helps athletes and fitness enthusiasts analyze their physical performance, and Jasper, a medical writer in Research Triangle Park, live on the third floor of the Parrish Street building. A graphic design firm leases the second floor, and Intrepid is on the first.
“This was tremendously emotional for us to actually tell him that he needed to leave,” Averill said. “I think he had a great vision. I think he is passionate, but I think the reality of the business end of it was it just wasn’t a good fit for the space.”
Averill, who is out of town, said Victoriano sent him an email over the weekend, and they will likely talk in person when he returns Saturday.
At this point, however, the lease is legally terminated on Sept. 7. For liability reasons, Averill said, they won’t let Victoriano run a business out of the space without a lease. Victoriano said Monday that he is evaluating his options, which could include a new space or convincing Averill to allow Intrepid to stay on a month-to-month lease.
Casey Steinbacher, president and CEO of Durham’s Chamber of Commerce, said the city can’t afford to lose Intrepid.
“They really epitomize a lot of what Durham is about,” she said. It is organic, authentic and “incredibly collaborative.”
Intrepid’s struggles are not unique to businesses in their first year, she said, and other owners in downtown Durham faced and overcame similar challenges.
“Summertime is the most difficult time in Durham to keep a coffee shop,” she said. “The challenges that he faces are real, but they are not unusual.”
Steinbacher said he can use the momentum to build a more consistent customer base.
Since the beginning, Victoriano said, money has been a problem.
In May 2013, he began paying monthly rent, which started at $500 and increased over time to about $3,190.
Victoriano’s business plan called for him to open in August 2013 with revenues starting at $16,000 and jumping to $30,000 within two months. Due to construction delays, Victoriano didn’t open until Jan. 25.
Intrepid’s expenses average about $15,000 a month, Victoriano said. His revenue peaked at $11,000 in April, dove down to $2,600 and $2,800 in May and June and jumped up to $8,600 in July, he said.
Intrepid’s estimated budget for the space’s renovation, equipment and supplies was $80,000. Intrepid was awarded a $15,000 retail and professional services grant from the city of Durham for interior improvements, such as point-of-sale equipment, displays and furnishings.
Victoriano planned to invest $25,000. Averill and Jasper put up $35,000 and Victoriano’s friends and family contributed $20,000, according to Intrepid’s grant application.
About three months ago, Victoriano considered selling the business and listed it on the website BizBuySell for $75,000. “Owner is burnt out,” was the listed reason for selling. Victoriano said Monday that the business is no longer for sale.
Establish a realistic plan
Establishing and evaluating a realistic business plan is key to exploring the feasibility of a concept and avoiding situations in which a small business is fighting to stay afloat and not generating enough money to cover expenses, said Fred Gebarowski, owner of Cary-based consultant firm Wildcat Business Ventures.
Establishing a business plan means determining how much product has to be sold to cover expenses, how many customers are needed to make that happen, and realistically evaluating whether those numbers are attainable.
Owners have to be careful not to let passion blind them to the reality of expenses.
“For me, it gets down to, how feasible is that goal?” Gebarowski said.
Victoriano said he thinks he can make Intrepid work at its current location if he can sell more alcohol.
He plans to use the money he’s raised to pay his rent debt and hire someone so he can spend more time promoting and planning activities that will bring in a drinking crowd at night. If Intrepid stays put, Victoriano will have to balance those activities with noise levels that could affect residents, including the building’s owners.
Meanwhile, the Indiegogo campaign has the potential to affect future revenue because it includes patrons paying $15, $25 and $100 in exchange for equal amounts of store credit.
Fans of the business, including John Dagenhart, a 61-year-old consulting engineer in Durham, want to help make Intrepid work. Dagenhart has reached out to contacts, potential investors and Bar Rescue, a reality show that tries to turn around failing ventures.
“I’ve got a soft spot in my heart for veterans when they are trying to do the right thing,” he said.
Bridges: 919-829-8917; Twitter: @virginiabridges
©2014 The News & Observer (Raleigh, N.C.). Distributed by MCT Information Services