Steven J. Goldberg
Walt Whitman High School
It’s a New Morning in Washington
“Small businesses are the engine driving this economy,” says Nydia M. Velázquez, Chair, House Committee on Small Business. With the recession devastating our nation, businesses all over the country have a great weight on their shoulders. Should businesses reduce quality to cut costs? Should employees be paid bare minimum wage? Should businesses still try to stay green, even though it might increase costs? With so many concerns facing the United States, I didn’t know where to start. I needed to find a company that was impacted by the economic crisis, but was trying to deal with the crisis effectively. After a bit of research, I found Quartermaine Coffee, a small business located in Bethesda, MD that roasts coffee and sells it wholesale to restaurants, grocery stores, and other businesses. It also operates a retail shop and coffee lounge. Since its beginning in 1991, Quartermaine strives for quality not quantity in the Washington area and up and down the East Coast. To get a personal insight into the economic challenges facing Quartermaine, I talked to the CEO and founder, Roger Scheumann.
One of the main problems facing companies today, particularly small businesses, is the difficulty in obtaining credit. Due to the poor loans they previously made, banks are reluctant to lend money to small businesses. Those coffee grinders don’t come cheap, so having loans is imperative to a small business like Mr. Scheumann’s. As a result, Mr. Scheumann has decided to increase internal cash flow. For example, if he sells coffee to a local restaurant group, the restaurant group has to pay him back in a 30 or 60 day time frame. Because the company wants all the cash it can get, Quartermaine is making sure that restaurants pay for the products on time.
At the same time credit has been tightening, personal disposable income has dropped (Bureau of Economic Analysis). The days of splurging are over for most in the Washington Area and cutting the cost of your daily coffee is just one great way to do it. To survive and compete with national companies such as Starbucks, Quartermaine needed to devise a way to retain its high quality at a low price. “A couple of years ago, you could find the best coffee, and no matter the cost, people would buy it,” but now says Mr. Scheumann, “They are not willing to pay more for the premium brand.” To counteract this, Mr. Scheumann and his team have personally visited several countries where the beans are grown. They experiment and test coffees to find the coffee with the best value. By spending more time finding a high value coffee, Mr. Scheumann is able to maintain his customers and keep down his costs.
With unemployment at 11.1% in the District and 7.2% in Maryland, it is tempting for employers to hire cheap labor to get the job done (Bureau of Labor and Statistics). This is effective for a short period of time, but to maintain a successful company, employees need to be experienced, knowledgeable, and friendly. As I walk into Quartermaine for an ice tea, the man in front of me is ordering his usual decaf coffee. Just one of the regulars in town, the cashier strikes up conversation with the frequent buyer and asks how everything has been going. After a minute or so when the drink is ready, the customer leaves with a smile on his face. This is the goal of Quartermaine, to please the customer. By having a trained and sociable staff, the customers are pleased and will likely return. Although you may save four bucks an hour by hiring an inexperienced worker, it is not worth the long run risk of having an unhappy customer. Quartermaine is all about quality and to maintain that quality, experienced and knowledgeable staffs are necessary. To ensure that employees are knowledgeable and experienced, Quartermaine requires employees to commit to work for Quartermaine for a year. During this time, employees learn the business, and bonds and connections are established between employee and customer.
For small businesses, the ongoing discussions about healthcare reform are not just partisan debates. Over the past decade, employer-sponsored healthcare premiums have increased 119% (National Coalition on Health Care). At last count 46 million Americans are without healthcare and the government has spent millions of dollars and hours attempting to reform it (National Coalition on Health Care). For a small business like Mr. Scheumann’s, employee benefits are imperative to keeping a happy work environment and retaining employees. Currently, Mr. Scheumann offers healthcare benefits to all his employees and pays 60% of the premiums the insurance company charges. Although premiums rise every year, Mr. Scheumann believes that employee benefits should not be cut, even in tough economic times. Going above and beyond is how to create and maintain a successful business. Currently, Quartermaine is trying to get dental plans for its employees and is working with other local businesses to do so.
Small businesses power the Unites States economy. Firms with less than 500 people are responsible for employing over half the private workforce (U.S. Small Business Administration). Companies such as Starbucks have closed hundreds of stores nationwide due to the recession. To survive, Quartermaine has established relationships with local restaurant groups that want the quality, service, and local name recognition of Quartermaine. Chef Geoff’s, Black’s Restaurant Group, and Mia’s Pizza are just some of the local restaurants that sell Quartermaine coffee by name in their restaurants. Quartermaine benefits by being associated with high quality local establishments.
The recession has been accompanied by a continuing rise in energy and fuel prices. This has hurt small companies such as Quartermaine who rely on local power companies and gas prices. Quartermaine has responded by using diesel trucks, which obtain a lot more miles per gallon than other gasoline driven vehicles. Quartermaine has also reevaluated truck routes to minimize the excess amount of fuel they use. Quartermaine’s stores are also powered by a wind farm and it is considering redoing the lighting in their stores. Since the recession has started and fuel prices have skyrocketed, companies have reviewed their energy bills to see what they can cut. By being green, Quartermaine is attracting customers and keeping costs down.
Quartermaine has been very actively involved with charities and social events in the Washington D.C area. Quartermaine has sponsored baseball teams, races, and fundraisers throughout the area. Even with the recession at hand supporting people that live in and around the Washington D.C area is important to businesses that are looking to attract customers for the future.
Just one example out of the thousands in the area, Quartermaine is striving to succeed as a Washington-based company. Companies in the Washington area need to take the long term approach to business. By working together and uniting, small Washington companies can grow off one another and at the same time push the economy forward. By reviewing bills, honoring employee benefits, and retaining a decent cash flow, companies in the Washington areas can not only deal with the economic problems effectively but also responsibly and morally. By having a long-term view of the economy and your company, you not only break free of the current economic problems but stay strong for the problems to come in the future.
- Bureau of Economic Analysis. “PERSONAL INCOME AND OUTLAYS: AUGUST 2009.” National Economic Accounts. N.p., 28 Sept. 2009. Web. 1 Oct. 2009. http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm.
- Bureau of Labor and Statistics. Bureau of Labor and Statistics. N.p., 19 Sept. 2009. Web. 1 Oct. 2009. http://www.bls.gov/news.release/laus.nr0.htm.
- National Coalition on Health Care. “Health Insurance Coverage.” National Coalition on Health Care. N.p., 2009. Web. 1 Oct. 2009. http://www.nchc.org/facts/coverage.shtml.
- Scheumann, Roger, Mr. Telephone interview. 27 Sept. 2009.
- U.S. Small Business Administration. “Small Business Continues To Drive U.S. Economy.” U.S. Small Business Administration. N.p., Oct.-Nov. 2005. Web. 1 Oct. 2009. http://www.sba.gov/advo/press/05-46.html.