A Life-Changing Lesson
Before the pandemic, Dan Kahn writes, his favorite phrase was “Don’t do your best, do MY best,” which he thought was the highest form of management: “What a fool I was.”
Here are today’s highlights:
Google is offering a powerful CRM function for free.
Some businesses have already started reducing their spending.
If your marketing depends on Facebook, it might be time to think about alternatives.
More investors are demanding that startups do the unthinkable and make money.
Dan Kahn, president of Kahn Media (and a friend of 21 Hats) learned an unexpected lesson from the pandemic: “Until March 13, 2020, I was under the impression that leadership meant sitting in the trenches with your team and showing them what to do. Then doing it with them and watching as they took every action to ensure they repeated every task the exact way I showed them and maintained my extremely high standards. Success reinforced that notion. Over a dozen years, we grew an average of 20-25 percent per year. Clients were happy, and the business was healthy. I ran a tight ship and kept a close eye on every manager and employee. My favorite phrase was ‘Don’t do your best, do MY best,’ which was management at its highest form in my mind. I knew how to do every job in the company and was willing to prove it daily if necessary. What a fool I was.”
“By ‘managing’ these people with the expectation that they needed to perform every task the way I would, I was cloning my best work experience but also my limitations and blind spots.”
“That’s when I realized that I was doing the wrong job. The CEO should not be in the trenches with the team showing them how to do every task.”
“The amount of change my little firm has undergone over the past two years and how much better we are today in terms of both client and employee happiness is shocking.”
“We have employees in seven states, people who work full-time remotely or in the office, and many who split the difference. Pay is higher, benefits are better, people seem happier, and it shows in their work.” READ MORE
Gene Marks says Google is offering a powerful CRM function for free: “When you purchase a mainstream CRM system you’ll want to integrate it with your website so that you can capture leads. You may also want to set up chat functionality to answer questions. Better yet, you may want to leverage AI so that standard or common questions are automatically answered, which saves everyone a lot of time. This is standard CRM stuff, and if you’re not doing this you should be. But now Google is offering a new function that will help accomplish these tasks, even if you don’t have a CRM system. The company has quietly expanded its Q&A capabilities in its Business Profile.”
“The function will allow you to create up to ten FAQs with questions of up to 40 characters and answers to up to 500 characters. You can also include links to your website.”
“By setting up your questions you can capture visitors Googling you and direct them to where you want.”
“If you configure your responses the right way, you can capture their lead information too by offering them some type of call to action on your website, like a whitepaper, brochure, or other type of asset.” READ MORE
Mark Zandi says the economy is bending not breaking—but there is much to be nervous about:
Economists say it could be years before the Inflation Reduction Act reduces inflation: “There are several ways elements of the deal could ease pressure on prices, economists said. First, the agreement calls for a 15-percent minimum corporate tax rate and higher taxes on certain forms of income. It also includes money to beef up tax enforcement at the Internal Revenue Service. By reducing the amount of money people and businesses have available, the plan would lower overall demand in the economy, which, in theory, should relieve some price pressure. Likewise, the overall reduction in the federal deficit in the proposal would have a similar effect of curbing the country’s total demand for goods and services. ‘It’s the flip of stimulus,’ Mr. Zandi said. ‘It’s fiscal restraint.’”
“Economists at Goldman Sachs estimate the proposal’s overall spending and revenue effects would represent less than 0.1 percent of the U.S. economy in the first part of the decade and about 0.2 percent after 2028.”
“‘I personally think that we’re going to be wrestling with inflation for many years to come,’ said Jason Furman, an economist at Harvard University. ‘So help two years from now is welcome.’” READ MORE
Meanwhile, gas prices are plummeting: “The average price for a gallon of gas nationwide now stands at $4.278, down more than 12 cents from just a week ago, and more than 60 cents from a month ago. The lower prices are due, at least in part, to simple economic forces. On Monday, AAA pointed to ‘low domestic demand for gasoline,’ a marked change from recent trends, and one likely caused in part by the high prices themselves.” READ MORE
Does your marketing strategy depend on Facebook? (I’m just saying!): “Facebook is at a perilous time in its history as Mark Zuckerberg bets his company on uncertain success in the metaverse. Confusion at the company is reminding some of Yahoo. Once the biggest internet company, it faltered amid similar threats and never recovered. ‘It's fair to wonder if Facebook is hitting a Yahoo moment,’ said a tech industry veteran who has worked closely with Facebook executives. It's possible the social media company may never be as dominant as it was over the past decade, the person added. Yahoo was the go-to for internet search in the late 1990s and into the 2000s.”
“It was undone by emerging rivals, a sluggish response to changes in digital advertising, and the emergence of Web 2.0.”
“Today, Facebook is looking at its first real new competitor in TikTok, a disruptive new privacy playbook in digital ads, and an explosion of Web3 startups and technology.”
“Facebook has a history of failing at many things it's tried. There's been Facebook Home, Facebook Dating, Deals, Credits, Inbox, Places. There were Original Shows. Commerce and Shop have been big pushes for years and still have not taken off.”
"’Anything they've tried to build on their own hasn't succeeded,’ a source with knowledge of the company said.” READ MORE
The U.S. just gave out record-breaking dollars to small businesses, but fewer contractors got the money: “Federal agencies hit a new milestone after awarding $154.2 billion in contracts to small businesses in the last fiscal year. That figure, which was $8.5 billion higher compared to FY 2020—another record-breaking year—amounts to roughly 27 percent of the total number of federal contracts awarded by the government. Notably, that's a few percentage points north of its stated 23 percent goal, but the overall number of small contractors has dwindled.”
“In FY 2021, 65,000 small businesses received contracts, down about 40 percent over the last decade, according to SBA Administrator Isabel Guzman, who acknowledged the problem and offered fixes.”
“One of the major issues behind this phenomenon, the SBA says, is bundling, or the practice of consolidation that makes contracts so large that small and medium-sized businesses cannot take them on.”
“The amount of contracting dollars awarded to women-owned small businesses fell short of the SBA's stated 5 percent goal for the year. In FY2021, the spending among this group clocked in at 4.63 percent, from 4.85 percent the year prior.”
“Guzman says that the agency is working towards expanding the small-business supplier base to ensure that more small businesses can participate.” READ MORE
Candace Nelson, co-founder of cupcake chain Sprinkles and investment firm CN2 Ventures, says that with startup capital drying up, founders need to shift strategies: “Over the past decade, venture-capital money was funneled into startups with an expectation for revenue growth and market share, with profitability a concern for the distant future. Well, the future has arrived. As an angel investor privy to regular pitches by startup founders, I can attest that the buzzword of the day is profitability. So what can you pare back that doesn’t directly affect your product or consumer experience? Can you join with other companies to share employees, or even barter services or products?”
“As a small-business owner myself, there are no more vanity measures or ego projects. Gone are the vintage Italian fixtures at my restaurant—the knockoffs will do just fine.” READ MORE
Other businesses have started reducing their spending as well: “A report released Thursday by the finance automation platform Ramp found that small business spending on electronics dropped by 59 percent between May and June. Many small businesses spent 28 percent less on shipping, 14 percent less on advertising and 11 percent on SaaS and software purchases over the same time period, the report showed. ‘I advise my clients and followers on social media to pull back on all unnecessary spending to see what the economy brings with it in the second half,’ said Brian Moran, chief executive of Small Business Edge, which provides guidance to small enterprises.”
“For most small businesses, employee-related costs are a top expense, so it’s an easy place to attempt to shave costs. Don’t jump the gun. The cost to hire and retain talent is particularly high now, so letting people go unless you really have to can be ‘penny wise and pound foolish.’”
“If you’ve tried other avenues and still need to curb costs, consider furloughing workers rather than firing them outright, said Joshua Oberndorf, a CPA at EisnerAmper. Let them know how valuable they are to your business and your intention to bring them back as soon as possible, he said.” READ MORE
THE 21 HATS PODCAST
Are there enough hours in your day? This week, Paul Downs, Sarah Segal, and Laura Zander discuss their daily routines, how those routines have been affected by the pandemic, whether they think they’re working too much or too little, and whether they would join a peer group where they would be exposed to owners who are working harder and, perhaps, having greater success. Plus: Laura places her bet on influencer marketing, Paul says his new marketing campaign has already paid off, and Sarah explains why none of her employees have ever asked her for a raise.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren