The Boulder Business Podcast: Recent Episodes
Ryan Beckenhauer
The Boulder Business Podcast was designed to highlight and connect local business men and women and their businesses in the Boulder community.
“Chamber 101” with John Tayer
Ryan Beckenhauer [00:00:05] Hello, my name is Ryan Beckenhauer, and you are listening to the Boulder Business Podcast. Today we are with John Tayer from the Boulder Chamber. John, thank you so much for being on the Boulder Business podcast. Ryan, I'm so psyched to be sitting here with you. So let's just kick it off with what is a Chamber? Let's do Chamber 101.
John Tayer [00:00:22] Well, Chambers have a long history of dating back to the 1300's, but fundamentally, they are an association of businesses coming together to share mutual support, to share opportunities for business, to business relations and to represent their interests in a community.
Ryan Beckenhauer [00:00:44] How long have you been involved with the Chamber and is that something you ever thought you'd be involved in?
John Tayer [00:00:49] So my involvement with the Chamber actually dates back to well before I was in this position at the Chamber working for the Chamber, I worked for a pharmaceutical company in town and we had an interest in building connections with the community to make sure that they understood what our business was and to demonstrate that we were good civic partners. And so we found a great partner in the Boulder Chamber. And that is because the Boulder Chamber has excellent ties, not just to the business interests and the community, but to all the activity that's happening to support the quality of life in our community, the education interests, the the environmental sustainability. Through the Boulder Chamber, we were able to access that kind of activity and connection. So for me, getting involved in the Chamber through my old company was my first introduction. I actually served initially was brought in and served on the policy committee. So I called our Community Affairs Council now, and that's the group that advises the board on different policy positions. I then was selected. It was an honor to be selected to sit on the chamber board of directors and then ultimately moved up to be the chair of the board. So I've seen the different activities at the chamber. I had a chance to participate in the governance and all of this well before I even ever considered being an employee of the Boulder Chamber.
Ryan Beckenhauer [00:02:25] How has that role changed throughout this progression?
John Tayer [00:02:28] Well, it's significant. I mean, it's I think, as with most organizations, when you are a member and a participant in a stakeholder, you get one perception of what life is like under the under the roof of an organization like the chamber coming in to the chamber as an employee, as the CEO and president. I came to understand that you're operating a business, a nonprofit business, but a business, nonetheless. And you have to be very cognizant of all the rudiments of business. You need to be selling a product that folks want to buy or to contribute to and invest in. You need to make sure that you have the best staffing to serve the interests of your membership, and you want to make sure that the services you're providing are of value to the stakeholders in the community. And how many how many employees do you have? We have now, I think upwards of 15 with a vacancy that we're we're gonna be filling. Okay. And how many events do you guys do a month? Have a very full events calendar. And why do we have that? One of the key functions of an organization like the Boulder Chamber is to bring business leaders together to connect, to understand each other's business value, to then identify potential business to business relationships. And so we want to create an environment that's fun, dynamic, but allows for all of our members and stakeholder businesses to come together to connect and get to know each other so that they can support each other and build their businesses. Also say that we have our events as a reflection of the character of our organization. So we have some signature events that celebrate entrepreneurship in our community because the Boulder Chamber recognizes that the startup business activity in our community is critical to the success of our economy. We also have events that are just plain fun and meant to bring people together in a relaxed atmosphere that's most conducive for building business relationships. So we have a whole variety of events that then speak to the values of the organization and the goals.
Ryan Beckenhauer [00:04:58] Events are fantastic, John, and that's kind of how we met through all the different networking events that you guys have. Tell us a little bit. What does a chamber do?
John Tayer [00:05:06] So a typical chamber has as one of its foundational activities and values is members support services. And in that category, members support services, I say, falls in the types of things like the events, the business to business relationships, the ability for businesses to market to customers and to other businesses through are services, discount programs, lots of things that support business success. So its members support services. The Boulder Chamber also is an advocacy voice for our membership. So we are strongly engaged in policy activities, representing the business concerns in policy issues and whether they're local issues or statewide interests, things that matter to the success of our businesses. Now, we always say, just to be clear and I yeah, detail more of that later. But, you know, we represent business interests in our community in harmony with the other values, like environmental concerns, like social policy issues. But as I say, somebody has to speak on behalf of business interests, and that's the role of the Boulder Chamber. And then finally, a function of our chamber is economic vitality. And in many communities, you would see that those functions might be separate. You might have a chamber organization that does members support services, maybe some advocacy, a separate organization or maybe a government entity would do the economic development or economic vitality. We call it work. We are fortunate in the Boulder Chamber to have that all under one umbrella, which allows us to do economic vitality, work in synergy with all of our other members, support advocacy activities. Now, what does that mean? What is the economic vitality work? It's the work that is primarily done through our Boulder Economic Council, as you mentioned, and it is the support that we give to building the strength of our economy. Now, we do that a number of different ways. First of all, we are the group that monitors the health of our economy. So we do a lot of analysis of economic indicators. We are constantly assessing certain factors in our economy and the strength of certain industries to see where there may be weaknesses or where we can exploit strengths to continue to strengthen our economy overall. We also work with individual businesses in that capacity because we want to make sure that each business is supported in their success in our community. Primarily in that way, we we will support what we call primary businesses, brought businesses that bring dollars into our community because maybe they sell a product outside. But we want to make sure that they are strong and healthy. If they're there, they need additional staffing support. How do we help them to get training to their workforce if they need additional space in our community, how do we help provide that? So there's a number of things that fall under this economic vitality arm of the chamber. But that's the work that we do in that category through our bolder economic council.
Ryan Beckenhauer [00:08:37] So you mentioned that the primary employers, why is it so important to give such support to these primary employers?
John Tayer [00:08:45] Because primary employers bring resources into our community. So when, for example, a Ball Aerospace sells a satellite to a foreign country, those are dollars and resources that are then reinvested back in our community, which cycle through the economy in terms of great jobs for our workforce, giving them the buying capacity to shop in the stores around our community. It also allows for a business like Ball to work with some of our local businesses to get support services, everything from legal services, etc., to materials and other complementary products that that feed their business. So that is all a critical element of economic strength for any community is to have that kind of income generation of revenue generation coming into the community from outside. What's something that most people don't know about the chamber? Well, you know, it's funny. When I came into this position, there was a lot of things I didn't know about the chamber. And I always say there, you know, other duties as assigned. So one of the more unique thing. The Boulder Chamber has under its umbrella is being the steward of the Boulder Star. Not sure if you're familiar, Ryan, but there's a star up on Flagstaff Mountain that is lit now every year on Veterans Day in honor of our veterans, but also then to celebrate the start of the holiday season. And that stars lit throughout the holiday season all the way through New Year's. And that star sits up there and you might take it for granted as somebody who observes it and enjoys it. But it takes a lot of work to keep it running, to make sure that the light bulbs are not broken, that you deal with any vandalism up there. So we are the stewards of that Boulder star. We have some great partners. A man named Craig Reynolds, I call him the Star Man is the person who is the electrician who's really spearheads the maintenance. He's just a wonderful person. And then I also get to partner with a man named Rex Lacy, a veteran in our community who helps us to do the annual lighting ceremony that leads the color guard celebration that we have in honor of our veterans. So it's a team effort. But the Boulder Chamber, is the lead on the arm. And how do people engage with the chamber? There's so many ways. So first of all, our events are generally open to the public. So if you're not a member that you can you can sign up and register for our events. They are usually a little bit higher fee for entrance. But it's a great way for somebody who's new to town is just starting their own business to test the chamber. The other way, of course, is to become a member. And the rates are very reasonable. We think, to providing great value for our member businesses. And once you are a member, you are we are your partner in your success. So we want to make sure that you are getting the support you need, that you're making the connections that would be useful for building your business and helping you just to navigate through. We'll be at, you know, city complex city regulation or understanding the business climate. We're there with you. So, you know, our members not only just to get to participate in the activities, but we're there, to stand with them and support their success. It's so great. So a number of great ways to get engaged.
Ryan Beckenhauer [00:12:34] And any last words? I think we're going to wrap it up here. Sure.
John Tayer [00:12:38] You know, I just say that it's an honor to serve in the role as the Boulder Chamber present CEO. And we always say that we build community through business. So I talked a lot about the work that we do on behalf of our member businesses. But fundamentally, the work of the Boulder Chamber is about making sure that we have a healthy and sustainable economy so that our community thrives as a whole. So when you think about the Boulder Chamber. Think about it as not just a business association, but it's a community organization that is geared toward making sure that everyone in our community has the opportunity to thrive economically, but also in balance with just all the other things that make a healthy community, environmental, socially, etc, so proud to serve in this role. And I just would urge your listeners to please join us, investments in us and consider becoming members.
Ryan Beckenhauer [00:13:34] Thank you very much, John, for being on the Boulder Business podcast.
John Tayer [00:13:38] Loved it, Ryan. Thanks for inviting me.
Ryan Beckenhauer [00:13:51] The views and opinions expressed by me, Ryan Beckenhauer, contained in this Podcast are those of the author and do not necessarily reflect the official policy or position of BBVA USA. Any content provided by the author are of their own opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anything or anyone.
The Boulder Chamber of Commerce
Website: https://boulderchamber.com/
https://tenantwisdom.com/
Mark's LinkedIn Profile - https://www.linkedin.com/in/caseypartners/
303-665-6000
What is a Sublease? Mark Casey - Tenant Wisdom
Ryan Beckenhauer [00:00:05] Hello, my name is Ryan Beckenhauer, and you are listening to The Boulder Business podcast. Today we are here with Mark Casey, the managing commercial broker at Tenant Wisdom.
Mark Casey [00:00:16] Mark has over 30 years of experience specializing in commercial tenant/buyer representation and subleasing. How are you doing this morning, Mark?
Mark Casey [00:00:24] I'm doing well. Ryan, it's great to be here on this sunny day in Boulder, Colorado.
Ryan Beckenhauer [00:00:29] It's beautiful. Well, let's get right into it. So today's episode is going to be about subletting. So, what is a sublease and how common are they in a standard commercial lease agreement?
Mark Casey [00:00:39] Well, the easiest way to think about a sublease, is that kind of an indirect lease in that instead of leasing the space directly from the landlord who is typically but not always the owner of the property, you're actually leasing it from the tenant in that space. So there's another party involved which adds a little complexity, but it can be very manageable and it can be very good for all parties involved.
Ryan Beckenhauer [00:01:10] When it comes to something business owners should be aware of, you know, when they're looking over the subletting lease agreement front from the sub lessor or the original tenant, you know, what are some things that, you know, they might want to watch out for or maybe pay more closer attention to?
Mark Casey [00:01:25] So because I represent and tenants and subtenants, I'll speak from that perspective first. One of the reasons why subleasing could say office space right now, although it can be industrial, retail space as well, and people have experience subleasing apartments. It's just not my specialty. But in terms of the somebody from the space office space, let's say the advantage to the tenant in the space is that very often they're able to let go of and either extend the cash outflow or actually increase their cash inflow through subleasing all or a portion of the space that they have no longer need from the and we call that person the sub landlord who is leasing that space to the subtenant. For the subtenant, there is the opportunity to frequently lease space on a on a shorter term than they could with a direct lease and very often at a better rate than they could. The landlord actually potentially can win, too, because very often the subtenant stays in the space beyond the subleased term. And so the landlord can get access to a new tenant and avoid a vacancy that they might have otherwise.
Ryan Beckenhauer [00:03:04] That's actually a great segment into the next question I wanted to ask you. So you talked about, you know, some of the complexities that come along with this type of lease. What are some of those pros and maybe a couple of cons of subletting? I know you mentioned a few in the last question, but.
Mark Casey [00:03:20] So, you know, one of the very important things is to be aware of. First of all, it requires the landlord's approval, I've never seen a commercial lease yet that didn't require the landlord's written approval in order to do a sublease. Very often, language is added in the says things like landlord cannot unreasonably withhold approval of a sublease, which is a good thing for a to get the tenant when they're leasing the space from the landlord. But it still requires that approval from the landlord. Another very important factor is because there is this additional party involved, let's say, on the sub tenant in this case and I'm leasing from who we're calling the sub landlord. If they had sub landlord should fail to perform in the significant requirements of their performance as they continue to pay the rent. If they fail to perform on that, the sub tenant can lose their rights to the space. For that reason, it's very important that these sub tenant do their due diligence on the sub landlord. While, the sub landlord is doing their due diligence on the sub tenant, and I should say that a savvy landlord is going to be doing their due diligence on the sub tenant as well.
Ryan Beckenhauer [00:04:58] They definitely seem like they can get a little complex. Well, when it when it comes to finding, you know, maybe the right amount of square footage I'm using the term Goldilocks for just a lack of a better word but you know something that's not too small. You know where they're going to grow quickly or to big, where they're paying for square footage maybe they aren't necessarily using. What is the best way to find out that space?
Mark Casey [00:05:21] Well, that's a very good question, because one thing can pretty much count on is that whatever space amount of space that a tenant leases over the course of one to three years or longer, their needs are going to be changing. And that's so. It's dynamic and that their needs are dynamic in that way. So what we've tried to do is to do a needs analysis on the front end before we even go out and look at space to determine both what the tenant needs on the beginning of the lease, as well as what they're going to be down the road. And so we try to build in our flexibility within that. That might include things like rights over adjoining space, which have given the ability to expand sometimes to try to build in termination clauses should the tenants needs change dramatically. So those are some of the things that we build in. But it all begins on the front end with just a conversation about getting to know the business, the goals, the budget and what they're looking to do. Now, I'd be remiss to mention the obvious here with respect back to the current environment, with the pandemic we're in, which has changed things very significantly, certainly on the retail and restaurant and but also on the office end because companies are not using office users in particular. Many are not using offices in the same way that they did just even a few months ago. And so because that's because more companies are embracing the option of work from home. And they decided, for example, Twitter has decided that their employees can continue to work from home indefinitely even after the safety concerns pass. So that's one of the complicating factors that I would say overall has tended to be on the office side cause companies to take a look at their office needs and to reduce the amount of office their using, not in all cases, but in some cases perhaps they have all hands on deck meetings once a week. And beyond that, many of the people are working remotely and plan to continue that path.
Ryan Beckenhauer [00:07:58] Yeah, it does seem like the landscape has changed dramatically and I would have never thought, you know, three months ago to your point that that we'd be here, to circle back to the due diligence of the subtenant, is it common for the subtenant to ask to see the original lease, or is that something that maybe doesn't happen?
Mark Casey [00:08:19] It does and really should happen as part of the process, because what the subtenant is agreeing to do in the sublease is to abide by the terms of the lease and the rules and regulations associated with it. So it's actually critical that the subtenant carefully look at that and typically they want to have their legal counsel looking at it as well. So that's a very important part of it. And they really can't do that without examining the underlying lease. Now, typically, that is not the first thing that they do. First, usually they look at the space and see how that functions before starting to get into the needs of what the actual lease looks like. But that's very important. And one of the things that can happen under certain circumstances, usually this would be where you've got a sub tenant who is strong financially or stronger than the tenant or someone or they'd be leasing from. And in that case, sometimes what can happen is that the sub tenant can actually do a direct lease with the landlord, which would allow the primary tenant or the sublandlord, in this case, out of their obligations. And that can be very attractive for the tenant to just kind of wash their hands of it and not be on the hook for whether the subtenant performs or not. So that's one of the cool things about a sublease, it can actually turn into an assignment where the primary tenant is, it is able to wash their hands, as I said, or terminate the underlying lease and the landlord and the new tenant or subtenant do a new lease. And you might ask, why would the landlord want to do that? Well, the advantage to them is that particularly if it's a tenant who strong financially, if they end up in a stronger position with this new tenant than they would have been staying on with their current tenant.
Ryan Beckenhauer [00:10:49] That's interesting. I mean, it sounds like it could be a three way win there for everybody.
Mark Casey [00:10:54] Well, it certainly could and that's why it's so important to do that. Do the due diligence there you know like in anything, there are things, times when it doesn't work out so well. And in that case, it can be where the subtenants use, all of a sudden turns out not to be compatible with neighboring tenants. And so, you know, the landlord in the neighboring tenants are unhappy about that since we have a lot of cannabis business in Colorado. That's one of the things that come up if there's no odors or whatever coming from that, where all of a sudden the use has changed and there could be some real difficulty there. The other situation, which again, is why it's so important for the subtenant to do their due diligence, has to do with the sub landlord defaults on their obligations because imagine yourself in the position you're sublet the space you're doing. You're obeying the rules, you're paying the rent and all of a sudden, you get a notice of eviction and it's because the sub landlord defaulted on their obligations.
Ryan Beckenhauer [00:12:15] Do you only work with tenants or do you work with, you know, investors and buyers as well?
Mark Casey [00:12:22] I work primarily with tenants and subtenants, in this case and buyers. And so the fun thing about my business is that some of the people who I have helped me space over the years get to a point in their evolution where they want to buy a building. And I help them with that and help them find a good banker, like yourself who can help them with financing, including things like SBA financing. So, yes, I do work with buyers. I also work with investors, particularly in the area of 1031 exchanges. So in that case, sometimes we have someone who's perhaps owned a small apartment building, for whatever reason have decided to sell it. And they'd like to move into a property doesn't involve managing residential real estate. And I can help them exchange into a net lease commercial property. One of the classic example, is a Walgreens or AutoZone Property or a Kidney dialysis center, where that investor now just pretty much collects the rent and it operates like a bond. It's not a bond, but it has some of the same attributes in the pricing and the performance of the bond.
Ryan Beckenhauer [00:13:48] It's a great time to wrap up. Mark, I really appreciate you coming on The Boulder Business podcast. When someone wants to reach out to you, what's the best way?
Mark Casey [00:13:58] Sure. I got a couple ways. One is my web site, TenantWisdom.com. I'm also on LinkedIn under my name, Mark Casey. Or give me a call at 303-665-6000. We can have a chat and see how I can be of help.
Ryan Beckenhauer [00:14:20] I'll put all that information, I'll put your LinkedIn profile, I'll put the web site and your email. I'll put that all in the show notes. So when someone does want to reach out, they'll be able to.
Mark Casey [00:14:29] Terrific. Well, this has been a lot of fun for me, Ryan, I think it's a great program that you've put together and I wish you and your listeners fun and relaxing weekend.
Ryan Beckenhauer [00:14:41] Thank you, Mark. We appreciate it. Well, you have a great weekend as well!
Ryan Beckenhauer [00:14:46] The views and opinions expressed by me, Ryan Beckenhauer, contained in this podcast are those of the author and do not reflect the official policy or position of BBVA USA. Any content provided by the author are of their opinion and not intend to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.
4506T – IRS Form, Request for Transcript of Tax Return: simply allows your lender to verify with the IRS that the forms you supply to prove your income match those in the possession of the IRS.
ACH – Automated Clearing House: It’s an electronic funds-transfer system that facilitates payments in the U.S.
A/P – Accounts Payables
A/R – Accounts Receivables
Amortization – is simple spreading payments over multiple periods.
Capital – Cash
Debt Service Coverage Ratio – EBITDA or EBITDAR over annualized debt payments of monthly payment X 12.
Debt Schedule – All the debts your business has.
Escrow account – it’s an account that holds cash for a future event like when you pay your mortgage, some banks will include your taxes and insurance in your monthly payment and then pay your taxes and insurance on your behalf when they’re due, out of your escrow account.
Equity – Ownership
Equity Injection – is a fancy way to say, “down payment”.
Frac-CFO – Frac is short for fractional. Which means they’re only on board a “fraction of the time” and that’s what you pay them for.
PFS – Personal Financial Statement – Statement containing information on your personal assets and liabilities, used to create your net worth.
Retained earnings - Earnings of a corporation from the current as well as prior years that have neither been distributed to the shareholders as dividends nor transferred to the surplus account. Corporate earnings accumulated over time.
Section 179 of the IRS code was formed to help small businesses by allowing them to take a depreciation deduction for certain assets (capital expenditures) in one year, rather than depreciating them over a longer period of time like straight-line, declining-balance, and sum-of-the-years' digits.
This episode dives into an important financial statement called the Profit and Loss Statement, sometimes referred to as the P&L or Income Statement. I break it down into three parts: Why we call it a Profit and Loss Statement, How it's structured and How it's useful to business owners for overall strategy and operations. An income statement is structured as follows: Revenue (top line) COGS (Cost of Goods Sold) Gross Profit Expenses Net Income (bottom line) I mentioned there are 4 major "landmarks" in the cash cycle, they are as follows: 1. Raw materials purchased (on credit, A/P or Accounts Payable created) 2. Pay your Suppliers (A/P or Accounts Payable) 3. Sell Finished Goods to Customers (on credit, A/R or Accounts Receivables created) 4. Collect cash from clients (A/R or Accounts Receivables) Asset Management Ratios: DSI - Days in Inventory = Inventory over COGS/365 * This is time between #1 above and #3 above or how long it takes you to "flip" inventory. DSO - Days Sales Outstanding = A/R over Annual Net Sales/365 *This is the time from #3 above to #4 above or the time it takes you to collect your A/R from your customers. DPO - Days Payable Outstanding = A/P over COGS/365 * This is the time from #1 above to #2 above or how long it takes you to pay your suppliers. Cash Cycle = DSI +DSO - DPO * Remember, the cash cycle represents ho long you are using your cash. The longer the cash cycle the more you'll be dependent on lending and vice versa. Any other questions? Please put in the comment section!
The Boulder Business Podcast was designed to highlight and connect local business men and women in our community.