Answer the Question!

In the latest 21 Hats Podcast episode, Marcus Sheridan talks about what he believes should be the foundation of any marketing strategy: answering the questions you don't want to answer.

Good morning!

Here are today’s highlights:

• Mexico may not be the “nearshoring” fix many had hoped.

• District attorneys say they are cracking down on bogus disability lawsuits.

• As the pandemic eases, brick-and-mortar stores are mounting a comeback.

• A franchised coffee chain is growing by hiring people with developmental disabilities.

THE 21 HATS PODCAST

The Magic of Answering Customer Questions: This week, in a special bonus episode, Marcus Sheridan talks about the revolutionary strategy that he used to save his pool-building business during the Great Recession and that he’s been preaching ever since. That strategy is to volunteer answers to the questions your customers always ask—especially the questions you’ve been taught not to answer, at least not until you absolutely have to, such as those about pricing and potential problems with your product or service. In this conversation, Sheridan also explains how to implement a content marketing strategy, why he isn’t a big proponent of social media, and what most business owners get wrong about marketing.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

MANUFACTURING

Companies are learning that nearshoring may not be the panacea they’d hoped: “U.S. importers who are studying shifting their sourcing from the Asia-Pacific region to Mexico and deeper into Latin America are finding it tougher to find suppliers with the right raw materials, production quality, and networks for getting their own components that have been established in manufacturing hubs like China and Southeast Asia. Reproducing that capacity and re-creating clusters of suppliers under a nearshoring strategy will take years, experts say.”

• “Omar Troncoso, a partner in the consulting firm Kearney based in Mexico City, said the firm saw ‘an amazing increase in the number of clients trying to nearshore’ over the past year.”

• “Although 70 percent of CEOs have planned, are considering, or expect to move manufacturing to Mexico, only 17 percent have already done so, according to a recent Kearney study of American manufacturing executives.”

• “Many companies are finding that capacity in Mexico is tight and that certain pieces of equipment or components can’t be made there, like expensive molds for plastic goods that have to be brought in from China, said Mr. Troncoso.” READ MORE

LITIGATION

Is someone finally cracking down on the wave of disability lawsuits? “Industry associations and business owners say serial plaintiffs filing dozens or hundreds of cases are increasingly using the 1990 Americans with Disabilities Act to extract tens of thousands of dollars in settlements — and not to promote access as the landmark civil-rights law intended. ​​Authorities have started to crack down. This week district attorneys in California announced a civil lawsuit against a law firm they say has filed ‘thousands of fraudulent, boilerplate lawsuits against small businesses.’”

• “In New York, the number of ADA lawsuits has soared to 2,744 from 125 in 2013, according to Seyfarth Shaw. California accounts for more than half of the 11,452 federal suits filed last year over disability issues.”

• “Among them are hundreds of cases brought by a plaintiff represented by Potter Handy, the law firm that is now the focus of a lawsuit by district attorneys in San Francisco and Los Angeles.”

• “The district attorneys claimed in a press release that Potter Handy ‘likely defrauded tens of millions of dollars’ from California small businesses.”

• “In recent years, ADA cases have expanded to the virtual world. More than 4,000 lawsuits against websites, apps, or video content were filed in 2021, a 15 percent increase from the previous year, according to UsableNet, an accessibility consultancy.” READ MORE

HUMAN RESOURCES

A franchised coffee chain is growing by hiring people with developmental disabilities: “While businesses across the U.S. struggle to find enough employees, Bitty & Beau’s coffee shops say their attrition rate is near zero and they’re inundated with applications every time a location opens. That’s because the chain primarily hires workers from a demographic advocates say has an unemployment rate above 80 percent: people with intellectual and developmental disabilities. ‘There’s an untapped labor force of people with disabilities in every community,’ says Amy Wright, who co-founded the company with her husband, Ben, six years ago. ‘Most of our employees have never had a job before.’”

• “Almost 90 percent of the 350-plus employees at Bitty & Beau’s 11 locations have a disability, doing everything from working as baristas to helping plan strategy in the corporate office.”

• “The cost of opening a location ranges from $350,000 to more than $700,000, including a $40,000 franchise fee (roughly in line with what big fast-food chains charge).”

• “‘We’re trying to shift the way society thinks about people with disabilities from charity to prosperity,’ Ben Wright says. ‘You can run a profitable business that employs people with disabilities.’” READ MORE

SOCIAL MEDIA

The pandemic has changed the way restaurants use social media: “A consistent presence on social media has been important for restaurants for years, but when the coronavirus upended daily life, it became essential. Suddenly, Instagram and Facebook pages were the clearinghouse for basic information — takeout specials, new hours, sudden closings — that websites and Google weren’t nimble enough to handle. The tenor of restaurants’ social media posts has changed, too, said hospitality consultant Liz Einhorn. Pre-pandemic, ‘a lot of it was more show and tell,’ she said, restaurants showcasing dishes and enticing customers. Now, ‘there’s more transparent conversations about challenges they’re facing.’”

• “Social media is a platform for restaurant owners to communicate the reasoning behind price increases, service fees, longer waits, and other changes to policy or service.”

• “Einhorn cites Middle Child Clubhouse as an example. The all-day bar/restaurant has maintained a requirement that its customers show proof of vaccination even after the city’s mandate lapsed, and it’s used Instagram to remind patrons why (staff chose to).” READ MORE

SMALLBIZ TECH

Fenway Park is going cashless: “Officials announced this week that Fenway is leaving loose change behind this season — and presumably forever. Instead, fans will be required to use credit cards or touchless smartphone payments for purchases in the concourses and stands. That means that a rumple of dollar bills won’t be enough to buy the beer, burgers, peanuts, and pretzels that fuel baseball season.”

• “People who bring cash to a game will have to load it onto a Mastercard at one of three Cash-2-Card exchange kiosks.”

• “Hawkers will pass a handheld payment unit to seated fans in the stands, meaning no one will have to pass their credit cards to a stranger ...”

• “A tipping system is ‘built into the software for all points of sale,’ he added, though customers will still be free to tip in cash.” READ MORE

ECOMMERCE

That pandemic shift from stores to ecommerce may not have been as permanent as some hoped: “E-commerce companies that were counting on a broad secular shift are now facing slowdowns, and the prospect of expensive investments in bricks-and-mortar retailing while speeding up delivery times. It turns out there are limits to buying stuff on screens. Foot traffic to malls and bricks-and-mortar stores has rebounded since vaccines and booster shots became widely available and the worst waves of the virus receded. Sales slowed at many digital storefronts specializing in apparel, home furnishings, and other categories where many consumers prefer to see in-person and touch what they are buying.”

• “This March was the first month since the pandemic hit during which e-commerce sales declined from the same period a year earlier while in-store sales rose, according to Mastercard SpendingPulse, which tracks transactions made over the Mastercard payments network as well as survey-based estimates for spending with cash and checks.”

• “The drop in online spending was 3.3 percent, the first year-over-year decline since November 2013. The rise for bricks-and-mortar stores was 11.2 percent.”

• “‘We’ve got over 100 years as a society of going into a store to buy something,’ Bernstein Research analyst Mark Shmulik said. ‘That muscle memory doesn’t just switch off because you were forced to buy things online a couple of times during a pandemic.’” READ MORE

RETAIL

An explosion of pot shops in Toronto has led to a fight for survival: “The options along Queen Street West are bountiful. You could start at Toronto Cannabis Authority, with a sign outside suggesting customers ‘warm up with hot cannabis infused beverages.’ You could take a few steps down the sidewalk and enter Friendly Stranger, which trades on nostalgia for tokers who picked up their first bong here, long before cannabis was legalized three and a half years ago. Or you could dash across the street to the Hunny Pot, which made headlines in 2019, when it became the city’s first legal cannabis store and saw an overnight line of customers. And that’s just in 1,000 square feet. Walk two minutes and three more options appear.”

• “Just 12 existed in the sprawling city of 2.8 million back in March 2020. Today, 430 compete for customers, with another 88 in the approval process, even as some struggle to stay open amid the stiff competition.”

• “By the time Lula Fukur’s license was finally approved, and she opened her first of two cannabis shops on Queen West last year, there was already one across the street, with another three opening two blocks away.

• “‘There’s too many of them,’ she said, sitting at the end of her cavernous, artfully decorated and noticeably empty store, Cori, on a recent afternoon. ‘Definitely half of us will shut down. Everyone is burning money at this point.’” READ MORE

FINANCE

Once again, venture capitalists are warning that the spigot is about to run dry: “At posh conferences, they buzz about falling valuations for start-ups. On CNBC, they bemoan the sudden lack of initial public offerings. On Twitter, they warn of a coming downturn. It is a familiar refrain. For the past decade, such warnings have cropped up repeatedly in start-up land. The industry is in another bubble, investors and commentators caution, conjuring the 1999 dot-com era and the dramatic collapse and recession that followed. Jobs disappeared, fortunes vaporized, and reputations were tarnished.”

• “The message since has carried those scars: The boom times are ending. Buckle in for a rough ride.”

• “Yet every time, more money has flooded into start-ups. Instead of a collapse, things got bubblier.” READ MORE

PROFILE

In India, a married couple, Ruchi Kalra and Asish Mohapatra, have both founded their own unicorns: “Mohapatra is CEO of B2B raw material supplier OfBusiness, which became a unicorn last April when a $160 million funding round led by Softbank Group gave it a valuation of $1.5 billion. Now it’s worth $5 billion. Oxyzo, a financial services firm spun out of OfBusiness that Kalra, 38, heads as CEO, reached a $1 billion valuation last month after raising $200 million in a funding round led by Alpha Wave and co-led by Tiger Global, Norwest Venture Partners, Matrix Partners, and Creation Investments.”

• “‘The quality of entrepreneurship in India in the last 18 to 24 months has just shot through the roof,’ says Mohapatra. The couple are also angel investors and have provided seed capital to 20 startups so far. ‘The interest level among those who want to be startups; people who want to work for startups has really spiked.’”

• “‘In India, you won’t win business unless you are cheaper. That is why we always provide products at a lower price of similar or better quality than other players,’ says Mohapatra.”

• “Six months after launching OfBusiness, the pair started Oxyzo to provide loans to small- and medium-sized businesses buying raw materials. Kalra led the new finance arm, while Mohapatra was in charge of OfBusiness; they split a staff of 50 evenly. “ READ MORE

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