Postcards From the Titanic

Executive Summary:
In what I am calling the 5th Business Extinction Event, the Snoqualmie
Ridge merchants are facing economic hardship, and I am attempting
to capture it for history.

Prologue:
I’m a small businessman, so almost by definition I am an optimist. I
wake up every day and try to squeeze two dimes together to make a
quarter, because that extra nickel is the difference between success
and failure. But I’m also a process person, a project manager by
nature, and like any good PM I’m always going to perform a post-
mortem to evaluate how the job went. This is a unique situation
because I can capture the moment while there is still enough time to
perhaps perform some CPR. Regardless there are lessons to be
learned by many parties, from business owners to citizens, from
developers to politicians. Thanks for your time.
                       -Steve Pennington

Chapter 1: Greetings from the Titanic

Yesterday was the first business closing of what will most likely be
several on the Ridge. Call the current situation “1 Dead, Several
Wounded”. But before we get caught up in any finger pointing or name
calling, let’s look at the history of Business Extinction Events in
Snoqualmie. This isn’t all-inclusive, and I am sure my research has
some holes, but for our purposes it will do.

1)        Event 1: The Mill Closes… Snoqualmie was foremost a lumber
town, and when the mill shut down in 1989 (Finishing Plant in 2003),
the population dropped and local business suffered
2)        Event 2: Snoqualmie Ridge Opens (Early 2000s)… This was a
localized die-off, primarily impacting Historic Downtown. When the new
businesses started opening in the Ridge Marketplace, combined with
the library moving, it drained economic energy from downtown. The
Parkway opening and thus providing a quick route from I-90 to
Snoqualmie Falls, bypassing Downtown, was a major setback as well.
Merchants from that era tell tales of an uncooperative and
unsympathetic city government. Many still blame the signage on I-90
being changed from Exit 27 to Exit 25 for the demise of their business.
3)        Event 3: The Great Recession (2009-11)… As the name
implies, the economy shrank, a large percentage of homes in
Snoqualmie went into foreclosure, and businesses started to fold. This
era was notable for the Ridge because it was the end of Retail in terms
of merchandise. No clothing, shoes, toys or scrapbooks would be
available after this point. This fit into the overall city government vision
of the Retail area being services, not mercantile.
4)        Event 4: Downtown Construction on Railroad Avenue (2014)…
Again, this was localized. Parking became difficult, traffic became
lethargic, noise and dirt were prominent and impacted overall
customer satisfaction. The city, having learned somewhat from Epoch
2 (with strong reminder from the survivors of that period) did a more
thorough job of supporting merchants with signage and better
communication, but the die was cast for many businesses. Ironically,
many Snoqualmie residents rediscovered exit 27 as a route to the
upper valley and never returned to Railroad as a route to Mt Si HS or
North Bend.
5)        Event 5: Safewaygeddon… This name is admittedly unfair to the
good people of Safeway, as the problem is much bigger than just their
store opening. This is the current extinction event and the focus of this
paper.

As we sit here on the deck of this proud ship, waiting for the water to
start lapping at the rail, admiring the natural beauty of the iceberg that
was the catalyst of our fate…

Chapter 2: Iceberg Ho!

The opening of Safeway, Bartell’s and Starbucks 2 & 3 weren’t a
sudden event. Planning, approval and construction took a couple
years, so there was plenty of time to make a plan. Many people have
been free with advice like “you could have sold”, “you knew this was
coming, you should have saved for this” or my personal favorite “no
way will businesses on that side of the parkway impact the existing
businesses”. Let’s take a moment to dig into this advice a little bit.

•        You Could Have Sold: True, very true. Consider for a moment
though that most small business owners have every bit of their
personal finances tied up in their business. Now imagine that someone
has made an announcement, the very same announcement that
prompted them to sell, that has decimated the value of their business.
What happens when you try to sell a business in that climate? You get
offered an amount that doesn’t nearly make you whole financially, so
often riding out the event is more attractive. We have several
businesses currently available via brokers, but who would buy them?
There has even been at least one physical confrontation because
someone tried to sell their business to a friend, but didn’t disclose the
full slate of businesses about to open. The businesses have lost value,
the real estate is going to turn over. Cue more dentists, physical
therapists and realtors, as per the vision for a service economy on the
Ridge.
•        You Could Have Saved: My first response to this is usually “how
many months can you live without your income?” I’m not sure why so
many people think that a business’s budget is any different than their
household’s. But that’s a visceral response, and not constructive. The
bare reality is that businesses, especially small businesses, run on
very small margins. It takes very little to disrupt cash flow, and any
disruption longer than 2-3 months will surely be devastating. Little
problems start to build up. Power bills get pushed back, rent starts
getting tardy, late fees start building. I was at a financial presentation
once where the speaker said “remember, any 50% drop will require a
100% recovery”. It becomes impossible, almost immediately, to catch
up without a cash infusion. Add to this the simple fact that most small
businesses have really rough credit to begin with. Getting refinanced,
finding investors or getting new loans when the business plan is “stay
alive” isn’t going to work.
•        Businesses Over There Can’t Hurt You: There is another variation
of this that I specifically get for my business, “Your Business is Unique,
You Are Fine”. There are several false assumptions in play here. The
vision from city government is that having more square footage of
grocery store on the Ridge will help plug a gaping “leak” that we have
financially. People have been spending a large percentage of their
monthly budget in Issaquah/Redmond/Bellevue, and not enough gets
captured here. This will ultimately be good for the city budget, but we
need time and a much stronger effort by the city to help educate
people on this need. Meanwhile we are looking at a diffusion of money
across more businesses, so each business is capturing less. You can’t
triple the number of Starbucks and expect sales to triple, there’s going
to be a drop in sales at the existing one. This is particularly close to my
heart because the existing SBUX is a neighbor, and we have a
wonderful symbiotic relationship. When they drop it directly impacts
me. I’m using my business here as an example, but the problems are
consistent across the board. Businesses rely on each other in many
ways, and weakness in one impacts us all.

Chapter 3: To the Lifeboats!

I’m a Free Market guy, so I completely understand that the strong
survive and the weak fade away. There isn’t reason for handouts or
special treatment for our local businesses, but it’s important that we
ensure the Invisible Hand isn’t a closed fist. It’s also important that the
decisions we make are intentional. It’s exciting to ponder what new
businesses will fill the openings, not only of the soon-to-pass
businesses, but in the retail spaces of the new hotel and other spots.
But it is also possible that we would miss the old ones. To build
community we need to have some modicum of consistency and
longitude, not a constant turnstile.
Will we miss having an independent coffee shop on the Ridge? Some
of us will for sure, whether it was for the coffee, the atmosphere or the
partnership. It’s certainly easy to dismiss this closing as unrelated to
the larger changes in the business climate, but in my opinion it is the
canary in the coal mine. Where will the line be drawn, if at all? Will we
miss a sandwich shop? A doughnut shop? A grocery store? Or will the
city’s vision of a service-only business district truly come to pass?
If it helps to clarify what is at stake: will our community be richer if all of
our businesses are staffed by employees and not owners? Or will we
be like the Issaquah Highlands and feature only big-name businesses
that can provide a better tax base? The decision is in our hands.

More Coming Soon...


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