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Building Resilience in Business: The Second Gear Story with Russ Towers · Epic Entrepreneurs

• 0:28
  Bill Gilliland: Hi there, welcome to this week's episode of Epic Entrepreneurs.
• 0:31
  Bill Gilliland: I'm here with my friend Russ Towers from Second Gear.
• 0:34
  Bill Gilliland: How's it going, russ?
• 0:36
  Russ Towers: What's going well, bill.
• 0:37
  Russ Towers: We've had a pretty amazing last few months coming out of the flood and relocating and reopening and we just went through the holiday season in a new location.
• 0:49
  Russ Towers: So it feels good to be kind of back in business.
• 0:52
  Russ Towers: We never worked totally out of business but yeah, it's a relief to kind of be somewhat back to normal in business.
• 1:00
  Bill Gilliland: Yeah, let's come back to the flood, but let's back up first.
• 1:03
  Bill Gilliland: I do want to talk about that because I do think it's an interesting story and your response to it.
• 1:08
  Bill Gilliland: I think there's some lessons in there story and your response to it.
• 1:14
  Bill Gilliland: I think there's some lessons in there, but tell us a little bit about Second Gear and how you got involved in Second Gear and all that Sure.
• 1:19
  Russ Towers: Yeah, okay.
• 1:19
  Russ Towers: Well, like a lot of small businesses, second, gear was started kind of out of a personal experience that I had shortly after moving to Asheville.
• 1:28
  Russ Towers: My wife and I moved here in 2000.
• 1:30
  Russ Towers: I had a worked in corporate real estate in Charlotte and Atlanta, but we had family here.
• 1:37
  Russ Towers: So anyway, we moved here in 2000.
• 1:40
  Russ Towers: She already had family here, so we had some some familiarity with Asheville.
• 1:45
  Russ Towers: And early on I was looking for a road bike and I also was interested in buying.
• 1:51
  Russ Towers: We moved here.
• 1:52
  Russ Towers: A big draw was for the outdoor experiences here, the outdoor opportunities, as well as being in a smaller city.
• 2:00
  Russ Towers: So anyway, I was looking for a road bike.
• 2:03
  Russ Towers: I was also interested in buying other equipment.
• 2:08
  Russ Towers: You know whether it was a kayak or other things.
• 2:10
  Russ Towers: I wanted to try some outdoor endeavors that I had never done before, but I didn't have the gear.
• 2:13
  Russ Towers: At the same time I was.
• 2:15
  Russ Towers: Also I went from working in salaried commercial and investment real estate to being a real estate broker, all commission.
• 2:23
  Russ Towers: So I didn't have a blank check to spend on gear and you know.
• 2:29
  Russ Towers: So I was looking for a road bike.
• 2:31
  Russ Towers: I was looking for a used road bike, but that was hard to find.
• 2:35
  Russ Towers: This is back in early 2000,.
• 2:36
  Russ Towers: Like we moved here in 2000.
• 2:38
  Russ Towers: So I eventually found a used road bike and through one of the stores here they don't typically carry road bikes.
• 2:47
  Russ Towers: That was back before Craigslist and other platforms where you could find things online.
• 2:53
  Russ Towers: So I bought this used bike and a little bit later it kind of occurred to me that a lot of people in Nashville were on a budget this is before remote work and people were moving here for lifestyle but they weren't earning a lot.
• 3:08
  Russ Towers: So a lot of people were on a budget like me.
• 3:10
  Russ Towers: And at the same time I was doing a lot of real estate brokerage activity, particularly on Haywood Road in West Asheville.
• 3:17
  Russ Towers: This is like 2002, 2003.
• 3:21
  Russ Towers: And so I had this idea you know, like wow, why isn't there a place in Asheville where you can buy used gear and some technical wear?
• 3:30
  Russ Towers: We weren't really thinking about clothing, and so that was kind of the spark for the idea, coming from a personal experience and then just also, you know, connecting with other friends here in the area that I was making that were kind of in that same boat of, you know, wanting to save but also wanting to get out and experience the outdoors affordably.
• 3:47
  Russ Towers: So, you know, we started the business and we were kind of putting it together in 2003.
• 3:54
  Russ Towers: We started in a really small space on Haywood Road, at 415 Haywood, in the same building that now houses Harvest Records, and so we started out with just 1,200 square feet, and so we started out with just twelve hundred square feet, very, very low key, very bootstrap At the time when I started.
• 4:15
  Russ Towers: I'll just add and kind of take a pause you know I mentioned, I was working in commercial and investment real estate by 2004.
• 4:25
  Russ Towers: When we opened I had gotten fairly established here in the brokerage community and so I wasn't looking to open second gear as a launch point for my career, to move into something else.
• 4:35
  Russ Towers: I was looking more.
• 4:36
  Russ Towers: I was more interested in just kind of this, this entrepreneurial opportunity.
• 4:40
  Russ Towers: Haywood Road was really up and coming at the time with a lot of new businesses and it just seemed like that would be a good place and a good fit for a business like this in Asheville.
• 4:51
  Russ Towers: So, and you know, not knowing where it would go from there, it was just kind of starting very small scale, very manageable.
• 4:59
  Russ Towers: I didn't have retail experience.
• 5:01
  Russ Towers: I didn't have, I wasn't a gear expert, so I was exceedingly underqualified to run the business.
• 5:07
  Russ Towers: But I figured it was small enough that I could kind of we could kind of figure it out because it was only 1,200 square feet, it was consignment based, we weren't investing tens and hundreds of thousands of dollars into a business.
• 5:21
  Russ Towers: So that was kind of the launch point in 2004, very small scale, just kind of to see where it would go as an entrepreneurial endeavor.
• 5:34
  Bill Gilliland: Yeah, and so then, what happened?
• 5:40
  Bill Gilliland: I mean, how did?
• 5:40
  Russ Towers: you, yeah, so early on, what happened?
• 5:42
  Russ Towers: So I partnered initially with three other guys that all three of those guys were former outward bound instructors and outward you know.
• 5:52
  Russ Towers: So they had the outdoor experience and one of the three we opened the store together, buffalo McMurray.
• 5:58
  Russ Towers: And Buffalo is still with the business.
• 6:00
  Russ Towers: He's 84 years old, he, he.
• 6:07
  Russ Towers: So that was 20 years ago.
• 6:09
  Russ Towers: He was in his early sixties.
• 6:09
  Russ Towers: So Buffalo and those guys had the gear knowledge and I had some business knowledge and kind of the behind the scenes.
• 6:14
  Russ Towers: And so you know, like I said, we started out really small, 1200 square feet, thinking it was going to be mostly, uh, the product mostly would be hard gear and technical apparel.
• 6:27
  Russ Towers: But quickly it became apparent that people had a lot more clothing that they wanted to move and move on from than they did hard gear or in addition to hard gear.
• 6:37
  Russ Towers: So we outgrew that space really quickly.
• 6:40
  Russ Towers: You know, all these outdoor brands have technical wear but they also have a lot of just lifestyle wear and that's like a lot of people in Asheville are wearing, you know, back then and still, whether it's Patagonia or Columbia or LL Bean or whoever, that's just kind of the Asheville look and the same with a lot of other outdoor communities, outdoor towns, so we really outgrew that space very quickly.
• 7:09
  Russ Towers: We were there for four years.
• 7:10
  Russ Towers: We outgrew it within about two.
• 7:12
  Russ Towers: We moved across the street to 444 Haywood Road in 2008.
• 7:19
  Russ Towers: We went from 1,200 square feet to about 2,000 square feet.
• 7:23
  Russ Towers: One bay there.
• 7:24
  Russ Towers: We expanded in 2011 to another bay that was in that space, so we went to about 2,000 square feet.
• 7:33
  Russ Towers: When we moved across the street the first four years in 1,200 square feet, it put us on the map.
• 7:39
  Russ Towers: People found us, but it just was not big enough to financially be viable.
• 7:44
  Russ Towers: We just couldn't sell enough in that small of a space.
• 7:47
  Russ Towers: When we moved across the street in 2008 into 2,000 square feet and later 4,000 square feet, that's when we really kind of, I guess, got settled in or became financially viable, became profitable, and in 2012, I was still involved with real estate.
• 8:08
  Russ Towers: All during this time I was still doing brokerage, really up until about 2012.
• 8:14
  Russ Towers: In 2011, like I said, we expanded into a second bay and the owner of that building was a real estate client of mine by name of Bruce Smith and that building from 1973 to 2008, bruce's family operated Ace Appliance not Ace Hardware, but Ace Appliance.
• 8:33
  Russ Towers: It was an independently owned store and Bruce was a real estate client of mine.
• 8:38
  Russ Towers: He closed and retired in 2008.
• 8:42
  Russ Towers: And the property went on the market for sale.
• 8:44
  Russ Towers: It's a mercantile building built in the 20s.
• 8:48
  Russ Towers: Upstairs was boarding house apartments that had not been occupied for years.
• 8:51
  Russ Towers: Well, that property was on the market for a couple of years.
• 8:55
  Russ Towers: I was not representing him because I wanted to own, I wanted to buy the building, so it would have been a conflict.
• 9:01
  Russ Towers: So in late 2012, some partners and I bought the property, including the building behind that was Ace Appliances' parts and service department.
• 9:12
  Russ Towers: We did an 18-month historic renovation to the property, re-established 10 apartments upstairs.
• 9:19
  Russ Towers: We redid all the four retail bays, including second gear.
• 9:23
  Russ Towers: We operated while we were still renovating during that time, operating one bay at a a time, and then renovated the building behind us that had been their parts and service department and that became um as crossfit ashville.
• 9:38
  Russ Towers: We have 10 apartments upstairs.
• 9:40
  Russ Towers: We had a restaurant king daddy's chicken and waffles uh, we had a retail next to us that's now occupied by whist, and then we had the two bays and we kind of you know, we brought the whole business back to or the whole building back to that 20s look and that was.
• 9:56
  Russ Towers: So that was 2012 through early 14.
• 10:00
  Russ Towers: And that was really where the business took off was in 2014.
• 10:06
  Russ Towers: After we did those renovations, several other businesses opened.
• 10:10
  Russ Towers: Several restaurants opened up on Haywood Road in 2014.
• 10:14
  Russ Towers: And that's when West Asheville really became from being kind of a tourist destination to a big tourist destination, particularly for a younger audience that was into food and beverage and quirky shops and things like that.
• 10:28
  Russ Towers: So just one last thing during that kind of to that point of our development or our growth, we had a downtown store briefly from well, for three years from 2012, 13 and 14 to try to tap into the tourist market.
• 10:44
  Russ Towers: But after we bought the building, the property in West Asheville and renovated it and tourists started coming over to West Asheville, we determined we really didn't need to be downtown and that downtown store was not profitable for us.
• 10:56
  Russ Towers: So we closed that store in the end of 2014, beginning of 2015, and really focused in West Asheville.
• 11:04
  Bill Gilliland: So we were there up, and you know, up and up through early on.
• 11:10
  Russ Towers: Uh, in 2020 we started looking at moving to the river arts district because we had outgrown the space in west ashville and that was kind of all during covid and all that craziness and you know kind of unknown of what was, what was going to happen next yeah.
• 11:26
  Bill Gilliland: so I mean it sounds cool and you all, this growth and everything, and maybe a misstep or whatever going downtown, but there had to be challenges along the way with this growth.
• 11:41
  Bill Gilliland: So what are some of the challenges and maybe what are some of the things you learned?
• 11:44
  Russ Towers: Yeah, well, first and foremost, you know, early on, this is no breaking news for anybody that started a business from scratch and you know having to build that up was, you know, just cash flow challenges.
• 11:56
  Russ Towers: Early on, you know, felt like kind of month to month check to check.
• 11:59
  Russ Towers: You know we were a consignment business, which was great.
• 12:04
  Russ Towers: We weren't having to buy all of our product up front but we also had vendors and we had some new product.
• 12:09
  Russ Towers: But you know, each month at the beginning of the month we had to pay rent, we had to pay all the consignors for everything that you know sold the prior month.
• 12:17
  Russ Towers: We had payroll, we had, you know, other overhead.
• 12:20
  Russ Towers: So you know, the first few years were really challenging and you know, until we moved across the street from our original location it was really tenuous of you know.
• 12:31
  Russ Towers: Could we continue to be in business?
• 12:33
  Russ Towers: But when we moved across the street, got a little bit more space and a little better exposure on Haywood, then we really, you know, kind of felt established financially and established as a business.
• 12:46
  Russ Towers: You know, early on there were some challenges with you know, I was operating, I was kind of juggling both my brokerage career and trying to run behind the scenes second gear and you know not having really a full-time manager, one of my other partners in the business who started out as one of our first employees.
• 13:09
  Russ Towers: She wasn't one of the original owners.
• 13:10
  Russ Towers: She was going to do the same thing, kind of operating second gear on the side.
• 13:13
  Russ Towers: So we really weren't to a point where we were 100% committed, where we had a manager who was an owner.
• 13:20
  Russ Towers: And so in 2009, that partner she moved out, she and her family moved out to Utah, to Salt Lake City, and we brought on a manager who was full-time, who then eventually became an owner.
• 13:36
  Russ Towers: And that also was that was part of the growing pains of having somebody there.
• 13:40
  Russ Towers: That was kind of day, you know, 40 hours a week or so, day in and day out, managing vested interest.
• 13:46
  Russ Towers: I continued to do real estate, but it was also, as Second Gear was growing, being more and more involved in the business.
• 13:52
  Russ Towers: So, yeah, those were some of those early challenges of just having that focus and kind of digging out or not digging out, but just getting financially healthy without having to take on a whole lot of debt.
• 14:09
  Russ Towers: You know, we, as I said, in 2012, we went downtown.
• 14:13
  Russ Towers: That was not financially, it didn't work out.
• 14:16
  Russ Towers: We were losing money down there while making money in West Asheville, so we'd work the whole year and then break even and that just felt like, you know, pounding your head against the wall.
• 14:24
  Russ Towers: You're working all year for you know, just to be at par.
• 14:27
  Russ Towers: So yeah, then, and then when we bought the building and went through the whole renovation process, like I said, we we closed down one site, one, one of the bays, while we operated in the other bay and then flip-flopped and that was about a year and a half of having to live through, you know, all that renovation work upstairs next to us behind us.
• 14:49
  Russ Towers: So there were some challenges but it was well worth it when that was all done come mid-2014.
• 14:58
  Russ Towers: Also, during that time, kind of operating the business early on, it was really a lot of the tasks were just kind of done by committee where everybody did everything.
• 15:06
  Russ Towers: There was not a whole lot of well, you're the HR guy or you're the marketing person or you're the buyer, well, you're the HR guy or you're the marketing person or you're the buyer.
• 15:15
  Russ Towers: It was just we weren't big enough to have that specialization.
• 15:18
  Russ Towers: So it was.
• 15:19
  Russ Towers: You know it was OK to operate like that.
• 15:21
  Russ Towers: But you know, in hindsight that made it challenging because there was, you know just kind of everybody doing everything, and so it could get a little disjointed sometimes and feel a little unstructured.
• 15:32
  Russ Towers: But that was kind of the nature of a small business back then.
• 15:36
  Bill Gilliland: Yeah, when do you?
• 15:36
  Bill Gilliland: I mean, it's an interesting question, like you were, you were, I mean you were doing what you financially could and you had a whole bunch of people more or less working part-time, a few full-time people, but the people running it it seems like we're more or less part-time.
• 15:50
  Bill Gilliland: Like how, you know what was the decision?
• 15:54
  Bill Gilliland: Was it scary to go with a full-time manager, or was that just like a natural progression?
• 15:59
  Russ Towers: No, no, that wasn't scary.
• 16:01
  Russ Towers: It was kind of like we really need this, that's what the business is missing, because Lissa and I were both, like I said, working kind of part-time with second year part-time with our other endeavors and, no, we felt like and at that time I was taking very little or no compensation, so, no, it didn't feel scary, it just felt like gosh, this is what we really need to do.
• 16:20
  Russ Towers: The business has grown to that where it needs that focus and somebody that is there, you know, every day, or you know, full time.
• 16:30
  Russ Towers: And then we started adding and that person had some background.
• 16:34
  Russ Towers: He had worked in REI.
• 16:35
  Russ Towers: At REI he had some good business experience and we started adding other people to the team.
• 16:40
  Russ Towers: That it went from.
• 16:41
  Russ Towers: It kind of went from when we first opened up.
• 16:45
  Russ Towers: We were hiring people that had outdoor gear, knowledge and kind of generalist.
• 16:50
  Russ Towers: And as we've grown through the years, and particularly in those kind of in that 2008, 9, 10, as we were really getting established, then we started to be a little more focused and better at hiring people who not only had some outdoor experience maybe they had retail experience, whether it was in the outdoor retailing or other retail where they had some other skills that we needed at that point.
• 17:11
  Russ Towers: You couldn't just get by on just knowing having done some camping and doing some kayaking.
• 17:17
  Russ Towers: You had to have some other skills at that point because this business was growing and the clientele coming in, you know they needed to know more and want to know more.
• 17:25
  Russ Towers: We were selling more new product to go along with used product and you know we brought somebody on the team who's still on the team, who's one of the owners and also worked at REI and he had really good experience with retailing and retail sets and ordering.
• 17:39
  Russ Towers: So we were ordering more and Chris was doing, you know, taking on more of that role and one of the other partners.
• 17:45
  Russ Towers: So we started then divvying up and having a little bit more people having their own silos that they were working within, but still kind of all working together in this small, small business that was, you know we were.
• 17:56
  Russ Towers: We were seeing like 20% annual growth in revenue every year.
• 17:59
  Russ Towers: So it was a lot of.
• 18:01
  Russ Towers: It was just kind of trying to keep up with that growth and how to manage that and how to how to grow in managing the business during that time.
• 18:10
  Bill Gilliland: So in some respect, the demand was just there.
• 18:13
  Russ Towers: Oh yes.
• 18:14
  Bill Gilliland: Yeah, and so you were just responding to what the market was telling you.
• 18:20
  Russ Towers: Absolutely yeah.
• 18:21
  Russ Towers: Some of our best growth was during the recession era, like 2008, 9, 10, when people still wanted to get outside but maybe they couldn't spend as much.
• 18:35
  Russ Towers: So we were a good alternative for that, because people were willing to buy things used or you know, along with some new accessories, and so, yeah, that was a really good period for us.
• 18:46
  Russ Towers: Yeah, it was so.
• 18:48
  Russ Towers: And then, when times after the recession, when particularly tourism was really taking off in Asheville and all these people are coming into Asheville to visit friends and family, or whether or they're just coming to visit, in general, they would find us particularly, you know, after 2014,.
• 19:05
  Russ Towers: They were coming to West Asheville or they found us downtown, when we were downtown and had both stores going, so it seemed to also thrive when, when the economy was really good and when tourism was was really good as well, so we were really fortunate from from that standpoint.
• 19:20
  Bill Gilliland: Yeah, when you started moving to new gear as well.
• 19:24
  Bill Gilliland: Then you have new and great use stuff, so cause you're not putting the junk out there.
• 19:29
  Bill Gilliland: So it's yeah.
• 19:30
  Bill Gilliland: I mean, yeah, people have a choice and they choose.
• 19:33
  Bill Gilliland: You know they can, they can, they can make a good decision.
• 19:36
  Bill Gilliland: I mean it's like yeah, it, it, it makes, it makes a lot of sense, all right, so when?
• 19:43
  Bill Gilliland: How did you decide to go full-time?
• 19:45
  Bill Gilliland: Like?
• 19:45
  Bill Gilliland: When did that become an?
• 19:47
  Russ Towers: option.
• 19:48
  Russ Towers: That was a pretty easy decision, but not easy decision.
• 19:51
  Russ Towers: That was pretty clear cut decision in my mind.
• 19:53
  Russ Towers: And so, as I mentioned before, we opened a downtown store in March of 2012.
• 19:59
  Russ Towers: And you know, that was a few months leading up to negotiating the lease, prepping the space.
• 20:03
  Russ Towers: We opened that store while we also had the shop in West Asheville and at that point I was doing brokerage.
• 20:11
  Russ Towers: I'm coming out of the recession, so you know, the commercial real estate market wasn't awesome.
• 20:16
  Russ Towers: I'd been doing brokerage for about I guess at that point, a little over about 12 years and I felt like, well, and that was all commission and I felt like I wasn't really doing either one of them.
• 20:29
  Russ Towers: Well, bill, I felt like, when I was at Second Gear and focused on Second Gear, I really, you know, there were real estate clients I should have been attending to, or properties I should be focused on, or finding new real estate business.
• 20:41
  Russ Towers: And then when I was doing that, I felt like, well, there was stuff at Second Gear.
• 20:45
  Russ Towers: Second Gear is thriving, growing and there's really things I should be focused on.
• 20:48
  Russ Towers: I felt like, you know, I really need to commit to one or the other.
• 20:52
  Russ Towers: And so I committed to second gear and paid myself a basic, very modest hourly rate and thought you know this business is growing, I've birthed it and you know it's got a life of its own and I really want to see this through.
• 21:08
  Russ Towers: I think it has potential.
• 21:09
  Russ Towers: I'm going to put my cards, my chips, on second gear.
• 21:13
  Russ Towers: I still kept my real estate license and then, fortunately later that year is when I had the opportunity to buy the property with some partners on Haywood Road.
• 21:24
  Russ Towers: So I really went from doing brokerage and being having a client base of real estate clients to really focused on my own properties and then ended up managing that property on Haywood and managing all those apartments because I was right underneath that second year.
• 21:41
  Russ Towers: So it really really lent itself well.
• 21:43
  Russ Towers: So I was really fortunate to be able to shift, to have really still be in both of those industries, but not letting a bunch of real estate clients down, and being able to really focus on my own business.
• 21:59
  Bill Gilliland: Yeah, I really get out of the sales of real estate and get into the investment of real estate.
• 22:03
  Bill Gilliland: Yeah.
• 22:04
  Russ Towers: And I love doing that.
• 22:04
  Russ Towers: It was great the 12 years I was in brokerage here.
• 22:07
  Russ Towers: I'd moved to Asheville not knowing really anybody much in this market and I really wanted to be involved with work in a city.
• 22:14
  Russ Towers: I'd worked in real estate but regionally out of Charlotte and part of the draw here was I wanted to be in a smaller market and really be connected to a city or to a town and I really got that opportunity over 12 years to help businesses find locations, to help people sell or lease their properties and really was dialed into what was going on in Asheville and that was really satisfying to to have that opportunity.
• 22:38
  Russ Towers: And I'm still involved, you know, in the real estate community and the business community here because of those early connections that I was had the opportunity to be involved with.
• 22:48
  Bill Gilliland: You can't know enough good people right.
• 22:51
  Russ Towers: That's yeah.
• 22:51
  Russ Towers: And that was a big attraction to Asheville was how interconnected everybody was and supportive of and you know you couldn't.
• 22:58
  Russ Towers: You know in Atlanta or Charlotte or bigger cities it's hard, I think it would be hard or maybe impossible to start small businesses from scratch, you know.
• 23:08
  Russ Towers: But Asheville was a great market, a great opportunity for that.
• 23:13
  Bill Gilliland: Yeah, and I like the way you did it.
• 23:14
  Bill Gilliland: I mean you started small and you just grew it as the market was telling you.
• 23:20
  Bill Gilliland: Hey, you're doing some stuff right.
• 23:21
  Bill Gilliland: Yeah, I mean you're doing.
• 23:23
  Bill Gilliland: You got to do some things wrong to learn, but you know along the way, but, but there's but you were doing a lot more right and so or at least enough right to continue to grow.
• 23:32
  Bill Gilliland: So that's awesome.
• 23:34
  Bill Gilliland: Well, let's divert a little bit.
• 23:35
  Bill Gilliland: Let's talk a little bit about the hurricane and the flood and your response to that and what that looked like to you.
• 23:44
  Bill Gilliland: I mean, it's an unprecedented disaster, but every business is going to go through something.
• 23:55
  Bill Gilliland: It may not be on the scale of this, but it's something.
• 24:00
  Bill Gilliland: There's something that I call them an oops.
• 24:02
  Bill Gilliland: It's an oops, it's likely not your fault, it's likely just something that happened.
• 24:08
  Bill Gilliland: So let's talk about overcoming an ute.
• 24:12
  Russ Towers: Yeah, that's a very PG way to say it as opposed to what I saw the flood but let me give you a little background about how we got there and how we drew upon past experience that I think helped me and helped Second Gear, hurricane Helene.
• 24:29
  Russ Towers: So in late 2019, early 2020, it was really evident that we had outgrown our space on Haywood Road.
• 24:40
  Russ Towers: We were in 4,000 square feet.
• 24:42
  Russ Towers: We had been in that footprint really for 10 years, just about 10 years since 2011.
• 24:48
  Russ Towers: So eight, nine years.
• 24:52
  Russ Towers: At that point, all the mean, all all the while sales are just growing and the space is getting more and more jammed up with product and less shoppable.
• 25:00
  Russ Towers: But we're still successful.
• 25:02
  Russ Towers: But but, excuse me, but we really needed to find a bigger space.
• 25:05
  Russ Towers: So we started looking in the river arts district, because that's where we felt like we could find a big enough space and with enough parking.
• 25:16
  Russ Towers: And at that time also, all of that infrastructure was being done was underway down in the River Arts District and it just seemed like, you know, it was up and coming, much like Haywood Road had been when we opened up in 2003, 2004.
• 25:30
  Russ Towers: It was not, we weren't pioneering, but we were definitely catching the early part of the upswing.
• 25:36
  Russ Towers: So so we started looking at the space on Riverside Drive back in April of 2020, right in the early stages of COVID.
• 25:47
  Russ Towers: So you know, during during those early stages of COVID, when we reopened in May you know we kind May like a lot of businesses there was no playbook for how to operate during a pandemic and we were closed for nine weeks or something like that, from mid-March to May.
• 26:03
  Russ Towers: When we reopened, it was just blowing up.
• 26:07
  Russ Towers: Everybody wanted to get outside.
• 26:08
  Russ Towers: You had to be separate, it had to be distance, all that.
• 26:14
  Russ Towers: So, um, we, we lived through that.
• 26:16
  Russ Towers: So, um, in in 2020.
• 26:20
  Russ Towers: So we, we ended up getting the financing.
• 26:23
  Russ Towers: It was really hard to get the financing to to, uh, renovate the space down on riverside.
• 26:29
  Russ Towers: And then the connection to where we were on haywood Road, the building that we moved to at 99 Riverside up until 2008 had been Ace Appliances Warehouse and that Ace Appliance was again the client that I had as a real estate client, bruce Smith, and Bruce hired me back in 2009, after he closed Ace Appliance, to sell or lease his warehouse at Riverside and we sold it to Darren Green here in Asheville and Darren had Old Wood Company and he had operated Old Wood Company and they're making furniture from 2010 until 2019.
• 27:04
  Russ Towers: And so that building went.
• 27:06
  Russ Towers: He closed that up and was investing in other real estate, kind of focused on other things.
• 27:11
  Russ Towers: And so in early 2020, that property was on the market.
• 27:16
  Russ Towers: I knew Darren and it looked like it would just be a great fit for what we wanted to do.
• 27:21
  Russ Towers: So we worked out a lease agreement, we worked out the financing.
• 27:25
  Russ Towers: That was really challenging during COVID and I am going to get to Helene, but this all kind of ties back together.
• 27:31
  Russ Towers: So we, you know, we signed the lease and at the end of 2020 and beginning of 2021, you know, we're still coming out of COVID we started renovating that space for our, for our use, and so it was great.
• 27:46
  Russ Towers: We had basically a blank canvas.
• 27:48
  Russ Towers: We were going to bring in two other businesses with us to share the space, to kind of tie.
• 27:52
  Russ Towers: We brought in sugar and Snow, a gelato cafe, an Asheville adventure company, and they ran their electric bike tour.
• 27:59
  Russ Towers: They were going to run their electric bike tours and their whitewater trips out of there and then we would have the bulk of the space 10,000 square foot building.
• 28:08
  Russ Towers: Second Gear was going to occupy about 8,000 of the 10.
• 28:12
  Russ Towers: We had some shared common spaces, but we were able to design that space exactly to fit our needs.
• 28:19
  Russ Towers: We were basically doubling our footprint and we were going to have room to grow and we had control of that space for 15 years.
• 28:27
  Russ Towers: Three five-year options we put in.
• 28:30
  Russ Towers: So we renovated the space basically from February of 21.
• 28:34
  Russ Towers: We opened up in September of 21, while we were still operating up on Haywood Road, and we invested about $500,000 into the outfit of that building and that property and with the intent and with the plan that, okay, we can be here for at least 15 years and we're going to spread that investment out over, we hope, 15 years or even longer.
• 29:00
  Russ Towers: So we had just and you know we were, we took the first year to kind of get everything dialed in, operating within a new, new space.
• 29:10
  Russ Towers: Now we're much more structured, you know, now we have 16, 18, 20 employees, seasonal employees.
• 29:16
  Russ Towers: People now have their very specific roles.
• 29:18
  Russ Towers: We have buyers, we have HR people, we have a marketing lead, we have I'm doing a lot of finance.
• 29:24
  Russ Towers: We have, you know just, you know very, very specialized roles and it had really matured as a business so that you know that took us up to September of 24.
• 29:39
  Russ Towers: And you know we have things dialed in.
• 29:41
  Russ Towers: It's going great.
• 29:43
  Bill Gilliland: I know it's a beautiful space, beautiful business.
• 29:44
  Bill Gilliland: It was really cooking yeah.
• 29:47
  Russ Towers: It's thriving.
• 29:48
  Russ Towers: You know the economy here is thriving, the tourism's good.
• 29:51
  Russ Towers: Yeah, it's thriving.
• 29:52
  Russ Towers: You know the economy here is thriving, the tourism's good.
• 29:53
  Russ Towers: Yeah, it wasn't.
• 29:54
  Russ Towers: Yeah, we had some some downturn in the economy, a little bit with tourism, but all in all we felt like things were just cranking along and we kind of had the joke like, well, just don't F it up you know that was right, yeah Things are.
• 30:07
  Russ Towers: Yeah, things are going well, we've got a great staff.
• 30:09
  Russ Towers: Yeah, things are going well, we've got a great staff and, um, but all along my only concern being down there was the threat of a storm or a threat of a flood in 2004, when Ace Appliance was in there again, kind of giving you back background when Bruce Smith had Ace Appliance in there, it was full of full of appliances and after Francis, the hurricanes Francis and Ivan, that building had a foot of water in it.
• 30:38
  Russ Towers: But that was kind of the extent of the damage.
• 30:41
  Russ Towers: When Oldwood Company was in there, when Darren was in there, for 10 years more or less, they never had water in that building.
• 30:46
  Russ Towers: Water came up to the building but not, and the floor sits about four or five feet, about five feet off of the ground.
• 30:55
  Russ Towers: About, oh, two months or so before the storm, maybe in August, john Boyle interviewed me and some other people about the threat of flooding down in the River Arts District and John just popped in one day and I kind of shared oh, right before we opened in 2021, in August of 21, we had water damage from Tropical Storm Fred, much more of an impact over in Canton, but it didn't get into the building just came up to the building.
• 31:27
  Russ Towers: We weren't open yet, but it left all this silt and debris in the parking lot.
• 31:35
  Russ Towers: So we had to deal with that.
• 31:36
  Russ Towers: So we had a little bit of experience from what I knew from the past and what happened, you know, right before we opened and what, what could happen.
• 31:43
  Russ Towers: So, yeah, and so John, John, does this article that came out on September 17th, the Asheville Watchdog article about flood potential and what businesses you know were doing to you know, address that.
• 31:58
  Russ Towers: Whether it was flood insurance or so forth, we did have flood insurance on our contents, fortunately, yeah, good.
• 32:05
  Russ Towers: So yeah, that kind of takes us up to right before the storm and um you know it.
• 32:14
  Bill Gilliland: Yeah, so the storm's unprecedented.
• 32:16
  Bill Gilliland: Yeah, I mean water's 27 feet or whatever, above normal Right Wipes out pretty much the river arch district.
• 32:26
  Bill Gilliland: But what's your like what?
• 32:29
  Bill Gilliland: What is how?
• 32:30
  Bill Gilliland: How did you attack it?
• 32:32
  Russ Towers: Well, I kind of attacked it two ways, you know.
• 32:35
  Russ Towers: One was my home's in West Asheville and I was down there.
• 32:38
  Russ Towers: You know we tried to prepare for it.
• 32:41
  Russ Towers: You know we didn't have time to get things out of the store, out of the business when I pulled up there Thursday morning before the storm.
• 32:48
  Russ Towers: We had a plan to get some things out of there, but there was already water to the building.
• 32:51
  Russ Towers: The city was closing down the street, you know from all the rain before.
• 32:58
  Russ Towers: So we had to go to plan B, which was to get stuff off of the floor.
• 33:00
  Russ Towers: Our hope was maybe we get a foot of water in here like 2004.
• 33:04
  Russ Towers: Well, that didn't happen.
• 33:06
  Russ Towers: Everything got wiped out.
• 33:07
  Russ Towers: You know, part of the building collapsed.
• 33:10
  Russ Towers: There was water up to the roof.
• 33:12
  Russ Towers: We lost 100% of everything, including consigned items that the general public brought in, as well as all the inventory that we own and all of our fixture, all of our equipment.
• 33:23
  Russ Towers: So I looked at it kind of two ways.
• 33:26
  Russ Towers: I looked at as the water receded and you could see the damage and it was obvious well, we're not going to go back into that building.
• 33:35
  Russ Towers: And I thought well, this is a 20-year-old business, it's thriving, it's financially successful, we've got 18 employees at the time.
• 33:47
  Russ Towers: You know many of those people work full time.
• 33:50
  Russ Towers: Their livelihoods depend on it.
• 33:52
  Russ Towers: We have great community support.
• 33:55
  Russ Towers: It just didn't seem like, well, this is the time that we just were going to close the business.
• 33:59
  Russ Towers: I mean, we could have closed the business, but it didn't seem like that made sense to close the business.
• 34:05
  Russ Towers: We had too much of a good thing going, too much support.
• 34:09
  Russ Towers: We also also had a COVID loan, an idle COVID loan still in place that you know personal guarantees on that, you know, back from 2020.
• 34:20
  Russ Towers: So if you walk away from, if you close the business, then you know somebody's got to pay for that, that loan.
• 34:25
  Russ Towers: Those are not forgivable loans.
• 34:27
  Russ Towers: So that was motivation to keep going as well.
• 34:29
  Russ Towers: So there was all that motivational part, but at the same time, I guess the part of the you called it an oops.
• 34:37
  Russ Towers: I didn't call it an oops, I called it something much more salty about oh man, how do you temporarily close business?
• 34:49
  Russ Towers: How do you unwind this location and all the things that are going to be involved with temporarily pausing this?
• 34:54
  Russ Towers: All the vendors we had to deal with, all the services, all the staff we had to let some staff go initially, how do we get financing for that?
• 35:03
  Russ Towers: How do we get grants?
• 35:04
  Russ Towers: How are we going to fund this?
• 35:06
  Russ Towers: You know all the hundreds of moving parts of running a business behind the scenes and then trying to.
• 35:12
  Russ Towers: You know how do you run a business and how do you do this during a natural disaster when you don't have, initially, the first few days, you don't have power, you don't have water.
• 35:20
  Russ Towers: You're just personally trying to survive as well.
• 35:23
  Russ Towers: So it was kind of that, all of that anxiety and all that pressure and all that struggle of how do you do that, but also knowing that, ok, this is a solid business that's worth saving.
• 35:35
  Russ Towers: If we can figure this out, we can make it work.
• 35:38
  Russ Towers: But figuring it all out that was that was tough right off the bat.
• 35:44
  Russ Towers: Yeah.
• 35:46
  Bill Gilliland: Yeah, I mean it's, yeah, it's.
• 35:49
  Bill Gilliland: I mean it's a, it's a, it's a great story.
• 35:51
  Bill Gilliland: I mean it's a.
• 35:52
  Bill Gilliland: It's probably not one you want to live through again, but it's awful.
• 35:56
  Bill Gilliland: But deciding to stay open, I think, is a decision.
• 36:03
  Bill Gilliland: You just made the decision and figure it out.
• 36:09
  Russ Towers: Yeah, in early October.
• 36:10
  Russ Towers: That's how I started attacking this.
• 36:12
  Russ Towers: I thought pretty early on, ok, what's out there that we could move into quickly.
• 36:17
  Russ Towers: You know, one of the silver linings in our situation, in Second Gear's situation, with our building being uninhabitable, unrepairable, was you know.
• 36:26
  Russ Towers: Ok, well, we can move on right away.
• 36:28
  Russ Towers: Let's you know, we're not going to spend months trying to clean up and you know, gut a building and clean up like a lot of businesses are having to do in Biltmore Village or in the River.
• 36:38
  Russ Towers: Arch or other places.
• 36:39
  Russ Towers: So we could just move forward and it occurred to me pretty quickly like oh, there's the Frugal Backpacker space up in the Westgate Shopping Center.
• 36:48
  Bill Gilliland: Yeah, nice place.
• 36:49
  Russ Towers: Has been available for a while.
• 36:51
  Russ Towers: Will Gay, who's the owner of Frugal and Diamond Brand Retail.
• 36:55
  Russ Towers: Will's been a longtime consigner and I knew that space fairly well from being at Earth Fair being that shopping center.
• 37:03
  Russ Towers: And we looked at other spaces and knew it didn't need much work, that we could get in there pretty quickly.
• 37:10
  Russ Towers: So I shifted gears pretty quickly on moving forward and looking at that space and other spaces and negotiating a lease.
• 37:18
  Russ Towers: It took about a month to negotiate a lease agreement.
• 37:21
  Russ Towers: I worked with Austin Walker, who's a longtime investment partner with me and a longtime real estate broker here in Asheville and worked with FIRC.
• 37:33
  Russ Towers: The Fraga family owns Westgate Shopping Center.
• 37:35
  Russ Towers: They provided us a very reasonable, very workable lease agreement there for us to get back on our feet.
• 37:43
  Russ Towers: So those things just kind of fell in place.
• 37:46
  Russ Towers: We got some grants that and I also need to mention we started a GoFundMe campaign very early on to support our staff that we let go and the staff that we kept on a recovery team and to help us get back on our feet financially with.
• 38:04
  Russ Towers: You know, we lost $125,000 of product that we owned, of product that we owned.
• 38:11
  Russ Towers: So, yeah, working out things with vendors.
• 38:12
  Russ Towers: So yeah, things fell into place fairly quickly and we signed a lease on November 15th and got to work on getting the space ready and we opened up on December 10th.
• 38:24
  Russ Towers: So it was a quick turn.
• 38:27
  Russ Towers: We spent 18 months from start to finish.
• 38:29
  Russ Towers: To get down to the River Arts District, we spent 18 days.
• 38:33
  Russ Towers: It seemed like to get started at Westgate.
• 38:37
  Bill Gilliland: It was crazy.
• 38:38
  Bill Gilliland: Yeah, there's a lot of lessons there, but I think it's a checklist.
• 38:43
  Bill Gilliland: It's just a long one.
• 38:45
  Russ Towers: Yeah, we didn't want to wait till spring also and lose momentum.
• 38:49
  Russ Towers: We didn't want to miss the holiday season.
• 38:51
  Russ Towers: We didn't want to lose key people.
• 38:54
  Russ Towers: You know we could have waited till the spring and some businesses are going to do that and I'm not saying that's right or wrong, but we, being a retailer, we didn't and December being a big month for this, we didn't want to lose that momentum and then be starting from kind of from scratch and being starting from a you know further behind come spring.
• 39:13
  Russ Towers: And we also, frankly, I wanted to protect our place in the market and I didn't want somebody else to come in and do what we're doing.
• 39:21
  Bill Gilliland: Yeah, yeah, in other words, basically, you went on offense instead of trying to play defense, and I think there's a lesson there.
• 39:28
  Bill Gilliland: Man, I think you and I could probably talk all day.
• 39:31
  Bill Gilliland: Let me ask you one last question.
• 39:35
  Bill Gilliland: Usually, I ask people this.
• 39:36
  Bill Gilliland: The question is what do you wish you had known before anything?
• 39:46
  Bill Gilliland: This could be life, or it could be business.
• 39:47
  Bill Gilliland: I'll let you pick the time frame.
• 39:48
  Bill Gilliland: But what do you know now that you wish you had known earlier?
• 39:51
  Russ Towers: In business in general or related to the flood.
• 39:54
  Bill Gilliland: It could be either or both.
• 39:59
  Russ Towers: Gosh, I think what I wish I had known early on was that when you're opening a business, starting a business, it takes on a life of its own.
• 40:10
  Russ Towers: And I've coached and helped the foundations class at Mountain BizWorks, working with a lot of startup businesses and so, having gone through a startup and as a business, evolved of just how much work it is behind the scenes to operate a business and in front of the scenes as well, but just how much energy that it takes if you are really committed to running your own business and you know, had I, and for me personally, I was trying to juggle two careers at one time and you know, maybe I should have moved out of brokerage earlier and focused on my own business earlier and it might have been that much more successful early on.
• 40:55
  Russ Towers: I don't know.
• 40:56
  Russ Towers: But just just not having just being naive about how much work it takes to operate even a small little dinky retail business selling used clothing and gear.
• 41:07
  Russ Towers: And you know, if you really want to do it right, you really have to put the energy into it to run it professionally.
• 41:12
  Russ Towers: And yeah, so I guess you know, you just can't, you can't half-ass it.
• 41:17
  Russ Towers: You don't have to know everything, but you, you can't half-ass it.
• 41:22
  Bill Gilliland: No, I get it.
• 41:23
  Bill Gilliland: You got to commit, you got to commit.
• 41:24
  Bill Gilliland: Yeah, well, there's a lot of lessons here.
• 41:27
  Bill Gilliland: There's a lot of lessons, thanks, thanks for taking time to be with us.
• 41:30
  Russ Towers: Thank you for the opportunity to share my story, our story.
• 41:33
  Russ Towers: That's cool.
• 41:36
  Russ Towers: Yeah, yeah, it's cool.
• 41:36
  Russ Towers: I'm happy to talk to you in the future again.
• 41:38
  Bill Gilliland: Oh yeah, yeah, I think we got.
• 41:39
  Bill Gilliland: There's a lot more stuff.
• 41:41
  Bill Gilliland: There's a bunch of questions I have that we need to unpack at some point.
• 41:44
  Bill Gilliland: So we'll have, we'll have.
• 41:45
  Bill Gilliland: We'll have a number two at some point.
• 41:49
  Russ Towers: Okay.
• 41:49
  Bill Gilliland: Yeah.