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Tuesday, December 6, 2022

How One Small Business Found Sweet Success During the Pandemic

The three brothers gathered in their Bronx living room to talk through their options. It was approaching midnight at the end of another long day. They had devoted all of themselves to Sol Cacao, the chocolate bar business they had founded five years earlier. Now, on a May night in 2020, two months into the pandemic, they were at a loss. They went around the room, and none of them had anything positive to report.

“No one is reordering,” said Dominic Maloney. The oldest of the three brothers, he has a round face, a shaved head, and the most growly New York City accent of the three. He was 30 at the time of COVID.
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“No one is paying any invoices,” said Daniel Maloney. The businesses that were selling their bars—specialty stores, mainly, cheese shops and gift stores and other small retailers—were themselves in dire straits and holding on to what little money they might have. Daniel, the youngest, was twenty-seven and wore his hair in twists. The most talkative of the three, he served as the company’s de facto company spokesperson.

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Sol Cacao had bills of their own that needed paying, including the rent. “The landlord gave us no relief,” said Nicholas Maloney, the middle brother. Like both his older and younger brother, he has an open, friendly face and a quick smile. He sometimes leaned back and closed his eyes when talking, or held his hands together as if in prayer to say thank you. “He’s the spiritual one,” his brothers said teasingly.

The three brothers talked about giving up. They shared an apartment in a part of New York City that had been hard-hit by COVID-19. The wail of ambulances in the background was a constant. Their cash reserves were gone, and their store of beans—the cacao beans they needed to make their chocolate bars—had been depleted. And even if the next day they received a shipment that was already several weeks overdue, they had almost no orders to refill. June’s rent was due in a few weeks. They were three young Black men raised by immigrant parents. They didn’t have much in the way of resources to fall back on, and sympathy in the U.S. wasn’t exactly high for three men of color who had been born somewhere else.

The high-quality chocolate market was expanding, much like coffee and wine before it, and since 2015, the Maloneys had been fighting for their share. Yet, now, it was not a global giant like a Nestlé or Hershey that was doing them in, or one of the white-owned chocolate bar companies that seemed to have the connections and access to resources that they did not. Instead, it was a microscopic virus.

***

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The story of small business has always been one of survival. Technology evolves, tastes change, markets shift, new competitors emerge. Technology rendered blacksmiths and buggy makers obsolete, and later video rental stores and 24-hour photo shops. Neighborhoods morph, causing closures. Recessions wipe out businesses that had been limping through good times.

Survival has gotten only harder in recent decades. Walmart and other big-box stores popped up on the edge of Main Streets around the country. Chains continue to chew up entire sectors of the economy. Private equity firms and other deep-pocketed investors with national or global ambitions hired teams of MBAs to implement just-in-time inventory management systems and other efficiencies at their restaurants, retail outlets, or manufacturing plants, driving down prices. The internet created opportunities for entrepreneurs but also represented a whole new category of threat.

Read more: Tech Stocks Are Falling. That’s A Bad Sign For The Economy

Meanwhile, the rent a small business paid soared along with insurance premiums and the price of practically everything, including the price of the cacao beans the Maloney brothers buy on the global market. Add globalization to the list of challenges confronting small business owners. Giant chocolate makers rely on what in the in the trade is called “bulk” cacao beans: cheaper, lower-quality beans from various farms typically grown on industrial farms in West Africa. Sol Cacao specializes in “origin” bars, made using beans from a single locale. Just like wine producers, the Maloneys speak of terroir, and regional distinctions for their bars from Madagascar, Ecuador, and Peru. They were part of the broader farm-to-table movement, where traceability and a respect for those growing the food, is central. They followed fair-trade practices. But that also helped to explain how Big Chocolate could sell its bars at around half the price as theirs.

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COVID added new stresses unique to each business. A great strength of Vilma’s Beauty Salon in the small city of Hazleton, Pennsylvania, was that it had always been a communal and intimate space. But in the pandemic, that became the biggest liability shop owner Vilma Hernandez. Her employees hovered over customers at the shampoo bowl. She and the other stylists leaned into faces while cutting and styling their hair. Hernandez had eight people working for her in March of 2020 but her once-crowded shop left them with little to do. The governor’s shutdown order, when it came, was largely superfluous. “People were scared,” she said. “I was scared.”

The central threat to Sol Cacao’s business was the severe limits on in-person encounters “Traditionally, most of our money came from demos and in-store efforts,” Dominic said. “Any place we got to tell our story in person.” They manned tables at festivals and farmers’ markets and other large public events and did in-store tastings. “That’s how we got reorders,” Daniel said. There was never any question Sol Cacao could continue operations through Covid. As food producers, they were deemed essential. But demos and in-person events would be discontinued indefinitely.

The Maloneys liked to say chocolate ran through their blood. Their great grandparents grew cacao beans in Trinidad and Tobago, where the three were born, as did their grandparents. Chocolate began as way for them to connect with their heritage but, steeped in the craft, they became evangelists for the curative properties of high-quality dark chocolates. For them, making and selling their bars became a calling. Chocolate as an everyday ritual was a healthy pleasure, they argued, if not a way of being. They also saw themselves as building Sol Cacao not just for themselves but for their adopted borough, if not black entrepreneurship itself. “We didn’t want to be a statistic, another black-owned business that closed down,” Daniel said.

Yet that May, late at night in the apartment the three shared, their prospects felt dire. One in three small businesses in the U.S. shutters its doors before celebrating a second anniversary. Half close within five years of opening. Seventy percent are dead within a decade. The three bothers couldn’t even count on help from PPP, the program the government established to help small businesses survive the pandemic. It was the Paycheck Protection Program – but Sol Cacao had no payroll.

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“We had to face reality,” Daniel said. “And the realities of what the numbers were telling us was not good.”

* * *

It’s never a good time for a pandemic. But from the perspective of a modest-sized chocolate maker, this one could hardly have come at a worse time. The lockdown killed their Easter and Mother’s Day, which are two prime holidays in the industry. “Once you’re past Mother’s Day, the bikini effect takes over,” Daniel explained. “May comes and everyone’s like, ‘Oh, chocolate’s bad, it’s gonna make me gain weight.’” There was also the more practical issue that bars melt in the heat and can make a mess. Summers had always been about keeping the business alive until September. With no opportunity to offer in-store samples, 2020 seemed destined to go down as their toughest, if not their last.

“I’m posting on social media more than I’ve ever posted,” Daniel said. “I’m reaching out to people, calling people, doing everything I can.” He set a target of at least $100 in sales a day, yet there were many days they did not come close to meeting even this modest goal. “I’m working harder than ever to get the word out,” Daniel said, “and that would translate into three bars sold that day.” They temporarily lowered the price of a bar to $5.99, figuring people were strapped for cash, but that just meant earning less on the few orders that came in.

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Then, on May 25, George Floyd was arrested in Minneapolis on suspicion of passing a counterfeit $20 bill. Two members of the Minneapolis police force pinned down the forty-six-year-old Floyd’s back and legs, while a third officer, Derek Chauvin, kneeled on Floyd’s neck for eight minutes and forty-six seconds. Floyd repeated, “I can’t breathe,” at least sixteen times before he lost consciousness and died. The horrific video of George Floyd’s murder sparked protests around the country, along with a racial reckoning and a push for racial justice that would help a small black-owned chocolate maker struggling to make it in an industry dominated by whites.

The “George Floyd effect,” as Daniel called it, saved Sol Cacao. “After George Floyd, there was this move to support local black businesses,” he said. “For the first time, we got visibility and had people—I mean, people we would never even imagine—reaching out to us and supporting us.”

Bloggers and others who wrote about chocolate were among those contacting the Maloneys. People of color generally were the workers who planted and harvested the planet’s cacao beans, which grow in tropical climates. But the owners were overwhelmingly white. The Maloneys were featured in an article in Eater ran about “chocolate makers decolonizing the industry.” New York Makers, an online magazine, spotlighted their bespoke approach to producing chocolate. A local news site profiled the bean-to-bar makers behind the Bronx’s first chocolate factory.

“We had been telling our story for five years,” Dominic said.

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“And finally people were listening,” Nicholas said, finishing his brother’s thought.

The surprise for the Maloneys was that the horror of Floyd’s death was so deeply shared (a poll in June 2020 showed that 71 percent of white Americans agreed that racial discrimination was a “big problem”). The resulting racial reckoning meant the country, or at least many (Trump spent much of the summer decrying the “mobs” that had taken over the country’s biggest cities), were looking more deeply at institutional racism and the wide range of privileges whites blindly enjoyed at the expense of people of color. Many tried to do their small part by buying the Maloneys’ chocolate bars. Stores the Maloneys had contacted in the past got in touch with them. Others cold-called Sol Cacao—something that had never happened in its first half-dozen years. Normally, discussions with a store stretched on for months, but a couple put in an order shortly after first contact.

The nimble entrepreneur through COVID increased his or her chances of survival. Cusumano’s is an upscale Italian restaurant just outside of Scranton that was able to stay in business because of the creativity of chef-owner TJ Cusumano. A state-ordered shutdown in March of 2020 meant his dining room remained closed for nearly three months. He could do take out, but his food was meant to be eaten hot on a plate, not soggy in a bag. Cusumano implemented Taco Tuesdays, and watched YouTube instructional videos to learn the finer points of barbecue. “The idea was good old Southern barbecue here in northern Pennsylvania,” TJ said. Both helped the restaurant cover its monthly bills.

Sol Cacao stayed alive by pivoting to online sales. Individuals had always had the option of buying directly through the Sol Cacao website, but online purchases had never amounted to more than 10 percent of their sales. Almost all of their revenue came from sales to stores. That summer, though, online orders equaled half their revenues. Much of the rest were the corporate sales the Maloneys ramped up to cater to businesses interested in buying their bars for their customers or employees. The globe was suffering, and chocolate seemed a way for people to show they cared. One large corporation hired the brothers to do a virtual tasting for its sustainability department, which led to more jobs like it. “People were looking to get outside their confined space and find different things for team-building,” Daniel said.

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“You could definitely see the human spirit play out in terms of gifting,” Daniel said. “We’re getting a lot of notes saying, ‘Hey, I want to send bars to my colleagues who have been there for me,’ ‘I want to send these to someone to say thank you for support through hard times.’”

The Maloneys braced for an end to the special attention accorded many black businesses in the aftermath of Floyd’s murder. The attention and heightened sense of justice was decades overdue, but they also recognized that there might be a kind of half-life to people’s attention span.

For the moment, though, the three brothers were pleased. Their sales between May and September of 2020 were three times what they had been one year earlier. “The summer saved the company,” Daniel said.

Added Dominic, “That gave us hope that we could get back on track in the fall.”

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* * *

That December proved the best in the company’s history. They were along by Martha Stewart Living magazine, which had included Sol Cacao in a feature about “20 Chocolate Bars Perfect for Gifting.” Their repeat orders in the early months of 2021 were especially gratifying. “We always knew that we were making some of the best chocolate,” Dominic Maloney said. “But now it was recognition from a much larger audience.”

More good things happened for the Maloneys in 2021.They received $10,000 from BeyGood, a small business Small Business Impact Fund created by the NAACP and the singer Beyoncé, to help black- owned businesses in five cities, including New York. A short time later, Amazon gave the company a $10,000 small business grant. For a moment, the brothers played their small part in Amazon’s well-funded efforts to cast itself as a friend of small business. They used the two grants to increase manufacturing capacity.

Nearly three years into the pandemic, the Maloneys continue to thrive. Individual and corporate sales remain strong, and retail had picked up again as an outlet for its bars. Sol Cacao had even started selling in select Target stores. Mainly the three brothers felt fortunate that they still had a company to run. That’s a mantra voiced by a lot of small business owners who in the spring of 2020 were frightened that the pandemic would mean the end of their dream: They had survived.

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“We’re here and we’re still selling and still growing the business,” said Daniel Maloney. “And I consider that a big victory.”

Adapted from SAVING MAIN STREET by Gary Rivlin, published by Harper Business, a division of HarperCollins Publishers. Copyright © 2022 by Gary Rivlin.

from TIME
via Time.com

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