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Breaking $1 Million in Revenue
In our latest podcast episode, Liz Picarazzi and Sarah Segal discuss their attitudes toward growth and what it would take for them to feel successful.
Here are today’s highlights:
Where are all the new indie bookstores coming from?
Will ChatGPT start replacing employees? It already is.
In Southern California, restaurants are confronting truly shocking gas bills.
Only two slots remain for the 21 Hats Live Event in Chicago!
THE 21 HATS PODCAST
What It Means to Break $1 Million in Revenue: This week, in episode 144, Liz Picarazzi and Sarah Segal talk about their attitudes toward growth, including how they set goals, the tension between revenue and profit, deciding when growth requires additional bodies, choosing between contractors and employees, and how they would use the money if someone were to give them a million dollars to invest in their business. Plus: What will it take for them to consider themselves successful?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Shocking gas bills are pushing restaurants in Southern California to the brink: “The key to Vietnamese restaurant Pho 87’s signature soup — 16 to 20 hours of simmering on the stove — proved catastrophic this month. When owner Tre Dinh opened his gas bill for January, it was more than $8,000. In December the Chinatown restaurant’s gas bill was roughly $800 for November usage, according to Dinh. The bill he received in January leapt to around $2,000, but even knowing another price increase was coming didn’t prepare the restaurant owner for the bill he received in February. He’s one of countless restaurateurs who received a sky-high January gas bill, credited largely to the wholesale cost of natural gas hitting record highs.”
“Traditionally his family raises prices by 25 cents each year; given Pho 87’s latest gas bill, he concedes he’ll have to raise them $1 to $1.50 for entrees, and he just hopes that his customers will understand.”
“‘It just doesn’t end,’ said Paul Cao, the chef-owner of Irvine restaurant Burnt Crumbs. ‘When are we going to get relief?’” READ MORE
People keep opening independent bookstores: “These are optimistic times for independent bookstores in Greater Boston, with four new shops sprouting up in and around Boston since 2020, and more on the way. And what variety bibliophiles have to choose from: There’s a feminist bookstore at Somerville’s Assembly Row, an outpost of a Provincetown favorite coming to the Seaport, and that five-story spectacle on Charles Street. ‘There was a period where there were more stores closing in Boston than were opening,’ said Allison Hill, the CEO of the American Booksellers Association. ‘Now we’re seeing Boston return to being a bookstore town.’”
“The pandemic, far from a death knell, galvanized customers to read more, shop locally, and, as the world reopened, indulge a bit more in offline experiences.”
“Federal funds and other investments helped owners stay afloat, or even expand. And for developers and landlords looking to lure people back to brick-and-mortar shopping, bookstores old and new became model tenants.”
“So, how exactly did independent bookstores change their story? The answer, according to Harvard Business School professor Ryan Raffaelli, lies in the ‘3 C’s’: community, curation, and convening.”
“Raffaelli, who wrote a white paper in 2020 on the topic, says bookstores tend to knit themselves into a neighborhood, offer customers a unique selection of books and ‘sidelines,’ and act as a ‘third space,’ away from home and work, where people can gather.” READ MORE
21 HATS LIVE FROM CHICAGO
Only Two Slots Left: If you’ve been thinking about joining us, now’s the time to register for this intimate, three-day event that is limited to 20 business owners/CEOs, including podcast regulars Paul Downs, Jay Goltz, Liz Picarazzi, Sarah Segal, and Dana White. It starts with dinner on Wednesday, May 17, and runs through lunch on Friday, May 19. You’ll help choose the topics for two deep-dive peer group sessions. You’ll participate in the taping of a 21 Hats Podcast.
Plus: Tour Jay Goltz’s operation. Take an architectural cruise on the Chicago River. And make connections that will last a lifetime.
When: May 17-19.
Fee: $2,750. (All meals, activities included. Travel, hotel not included.)
Questions? Just reply to this email.
Black-owned banks have been disappearing: “But a group of investors led by a former Trump administration policy adviser and a daughter of the late Rev. Martin Luther King Jr. is creating one. Working through a public-benefit corporation called Redemption Holding Co., the group said Tuesday that it plans to buy a Utah bank named Holladay Bank & Trust. It expects to call the new bank Redemption Bank. If the deal goes through, Redemption officials said it would mark the first time that Black investors have bought a nonminority-owned bank.”
“The number of Black-owned banks has declined sharply this century, falling to 16 in 2022 from 47 in 2002, according to the Federal Deposit Insurance Corp. As of the third quarter, the 16 institutions held just over $5.2 billion in total assets, less than 0.03 percent of the assets at all FDIC-insured banking institutions and 1.6 percent of the assets at minority depository institutions tracked by the FDIC.”
“The decline of Black bank ownership has worried some analysts who argue the trend will expand what are known as financial deserts—communities with few or no banking institutions—and increase the likelihood of redlining, a discriminatory practice that excludes neighborhoods with large numbers of racial and ethnic minorities and low-income residents from financial services.”
“A study released in August by the FDIC found that if all U.S. banks had behaved in a manner consistent with minority-owned banks through the 2008 global financial crisis, ‘at least 1.9 million more minority jobs would have been maintained and at least $50 billion more in credit would have been available to small businesses on an annual basis.’” READ MORE
Mark Zandi cautions against getting to caught up in the monthly data reports:
Companies are already replacing employees with ChatGPT: “Earlier this month, job advice platform Resumebuilder.com surveyed 1,000 business leaders who either use or plan to use ChatGPT. It found that nearly half of their companies have implemented the chatbot. And roughly half of this cohort say ChatGPT has already replaced workers at their companies. ... Business leaders already using ChatGPT told ResumeBuilders.com their companies use ChatGPT for a variety of reasons, including 66 percent for writing code, 58 percent for copywriting and content creation, 57 percent for customer support, and 52 percent for meeting summaries and other documents.”
“In the hiring process, 77 percent of companies using ChatGPT say they use it to help write job descriptions, 66 percent to draft interview requisitions, and 65 percent to respond to applications.”
“Nearly all of the companies using ChatGPT said they’ve saved money using the tool, with 48 percent saying they’ve saved more than $50,000 and 11 percent saying they’ve saved more than $100,000.” READ MORE
More Americans are taking on side hustles, but not necessarily because they need the money: “The number of multiple jobholders spiked at the end of last year to more than 8 million, with the share reaching 5 percent of all employed for the first time since the start of pandemic, according to U.S. Labor Department data. The burden of inflation has forced many households to collect additional paychecks to make ends meet. But the increase in people working two or more jobs by itself isn’t a recessionary signal. The number of multiple jobholders declined ahead of and during each of the last three recessions since 2001. And the prevalence of workers with several jobs is more common among those with a higher level of education, according to a 2015 study from the Bureau of Labor Statistics, suggesting it’s more a matter of opportunity than financial necessity.”
“With the rise of remote and flexible work making it easier to juggle several jobs, government data might be underestimating the extent of the gig economy. In their latest work-from-home survey, economists including Stanford University’s Nicholas Bloom found that nearly 10 percent of workers reported having a main job plus at least one other position.”
“‘Public perception is that people take on multiple jobs when the economy is bad because they’re not earning enough in their job,’ said Julia Pollak, chief economist at jobs website ZipRecruiter. The reverse is often true, she said. ‘People take on additional jobs when there are additional jobs to be had.’” READ MORE
The chairman of a coalition of franchisees argues in favor of legislation that would restrain credit card swipe fees: “Despite being hidden from most consumers, merchants pay, on average, between 1.5-3.5 percent of the total transaction amount with every credit card payment. Unfortunately, many small businesses and those with tight profit margins are forced to bake these fees into the price of their goods and services. This means swipe fees act as an inflation multiplier — higher prices result in higher swipe fees creating a vicious cycle of exceedingly expensive products. Part of the reason these fees continue to rise is the lack of competition.”
“Credit card titans Visa and Mastercard have a stranglehold on the industry, dominating over 80 percent of the market share and raising fees indiscriminately, with the latest rate hike occurring last April.”
“Unlike other fees that face competition, like overdraft fees, big banks charge swipe fees set by the major credit card companies. Through this process, companies like Visa and Mastercard have struck exclusivity deals to ensure merchants have no choice but to use their networks to route transactions.”
“As a result, small business owners have no leverage to negotiate. They are forced to accept the excessive swipe fees or forfeit the ability to accept credit card payments altogether. A catch-22 for businesses already struggling to stay afloat.” READ MORE
Started by Japanese immigrants 100 years ago, a nursery in Southern California has managed to survive the Alien Land law, internment camps, and arson: “After the war ended in 1945, the camps were disbanded and the Yoshimuras were allowed to return home. But their business was gone and they were forced to start over. A family friend, Gene Perez, watched over the family’s belongings while they were gone. Many other people in the community who were hostile to the family at the start of the war suddenly became warm to the Yoshimuras, Swanton said. It took years for the nursery to rebuild its stock of flowers, trees and plants.”
“Today, at the entrance to the flower shop, a red anthurium plant sits next to a family shrine, which includes a large photograph of Fred and Mitoko Yoshimura hanging on the wall.”
“‘I can still hear their voices,’ their granddaughter Mary Ishihara Swanton, 55, said. ‘They never leave you. They’re always there.’”
“As Swanton makes her way through the family’s two-acre nursery, she calls her 88-year-old father, Saburo Ishihara, who still works five days a week at the family business and who recently had cataract surgery.” READ MORE
THE 21 HATS DASHBOARD
Coping With HR Issues Without an HR Staff: If, like Gene Marks, you think dealing with employees is a pain, Gene has a suggestion for you: professional employer organizations, or PEOs. It’s a way to outsource all of the functions of HR—even including, if you want, health insurance. Gene also talks about why too many businesses ignore the many resources government has to offer business owners, why it’s time to start preparing for a government shutdown, and why Kevin O’Leary--aka Mr. Wonderful--is a buffoon.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren