Can an Entrepreneur Raise an Entrepreneur?
In the latest episode of The 21 Hats Podcast, the owners talk about the impossible balancing act of building a business and raising a family.
Here are today’s highlights:
As the cost of shipping rises, it gets harder to compete with Amazon.
Desperate restaurants are trying out new business models.
When your employees say they’re doing okay, 84 percent don’t mean it.
There’s a new kind of cyberattack to worry about.
Can an Entrepreneur Raise an Entrepreneur? This week, in episode 77, Jay Goltz and Diana Lee discuss the dangers of mixing entrepreneurship and parenting. As it happens, Jay and Diana were both raised in family businesses, but they offer contrasting approaches to the challenges of raising a family and building a business. Plus: what the upheaval in the auto industry means for Diana, how to think about the president’s vaccine mandate, and whether Jay has resolved his crazy double-billing problem with AT&T.
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For the self-storage industry, the pandemic has set off a space race: “Operating costs, including taxes, electricity and some labor, have been low compared with other real estate classes, like hotels and senior housing. The structures tend to be sturdy if spartan. And improved technology allows for smartphone reservations as well as contactless operations with fewer on-site employees. Even the cost of advertising, now largely online and through comparison aggregator sites like Sparefoot.com, have declined, because high occupancy rates have decreased the need. ‘Why advertise if you don’t have the units?’ Mr. Sakwa said.”
“Storage-industry technology is drawing entrepreneurs like Zack Widmann, the founder of ZHW Properties, who with a partner bought three facilities that ‘had no tech, no websites and no rent increases’ in several years. Improvements in those areas have resulted in 95 percent occupancy, in line with the current market.”
“And on Neighbor.com, a peer-to-peer platform, homeowners can rent out extra space in their homes or commercial landlords can lease unused square footage at a small fraction of the price charged by storage companies — think Airbnb for storage.” READ MORE
The cost of shipping is making ecommerce more expensive and competing with Amazon more difficult: “FedEx on Monday said shipping rates would go up an average of 5.9 percent next year across most of its services, the first time in eight years that it or rival United Parcel Service has strayed above annual increases of 4.9 percent. UPS is expected to release its rate increase for 2022 in the coming weeks. The two carriers have moved in lockstep with their annual price increases since at least 2010, according to Transportation Insight, a supply-chain management and logistics firm. The move away from a 4.9 percent annual increase shows how the pricing power has shifted to carriers like FedEx, UPS and the U.S. Postal Service, which have seen demand for their shipping capacity and home delivery soar during the pandemic.”
“Some shippers are instituting fees to offset rising costs. The online sports merchandise retailer Fanatics Inc. recently added a $1.99 handling fee to help cover some of the warehousing and packaging costs.”
“Online sellers may have a hard time abandoning free shipping, though, especially since Amazon continues to set the floor on what shoppers want.”
“‘It’s a real dilemma,’ said John Haber, a president of parcel consulting at Transportation Insight, ‘because you have to compete with Amazon and Amazon is not going to stop offering free shipping.’” READ MORE
There’s been a lot of talk about live-streaming. Does it actually work? “Sellers and buyers alike praised the instantaneous interactivity of live shopping. ‘I found it to be a really interesting way of connecting with the consumer,” said Christopher Limon, the owner of Passport, a small chain of men’s boutiques along the California coast, who has both bought and sold on the app. Through Ntwrk he’s sold everything from Huf T-shirts made with the artist Steven Harrington to a weighty coffee-table book by Virgil Abloh, artistic director of Louis Vuitton ‘s menswear. These are products he could have sold in any of his stores, but he likes the split-second feedback that tells him if his customers are feeling an item or not.” READ MORE
American workers are not okay, and most employers don’t know it: “A new report found that about 84 percent of employees report that they rarely mean it every time they say they’re ‘fine’ or ‘good.’ In fact, about two-thirds of employees have clinically measurable mental health symptoms of anxiety or depression, according to SilverCloud Health’s 2021 Employee Mental Health and Wellbeing Checkup, which surveyed over 2,000 employed U.S. adults in July 2021. Although only about 10 percent of workers reported having severe symptoms, over half, 55 percent, are experiencing mild to moderate distress.”
“Often workers keep quiet about mental health struggles out of fear that just by admitting it, even to a colleague, word will get around, and their employers and managers will find out and penalize them ...”
“Those experiencing any mental health symptoms report they are unproductive for about three and a quarter hours during the typical workday, while those in severe mental distress can lose up to half an average workday.”
“Those dealing with even mild depression or anxiety are three, four times as likely to quit owing to mental health, the report found. And this affects all levels of employees; the survey found managers were actually more likely to quit than non-managers.” READ MORE
Desperate for workers, some restaurants are exploring new business models: “She started as a server at age 15, and quickly discovered how stressful it could be to earn only the federal minimum wage for tipped employees (now $2.13 an hour) and hope that tips would make her whole. Her husband, Matt, a cook, was never entitled to a share of diners’ largess. So last spring, when the couple opened Ruby’s West End, a cafe in Portland, Maine, they decided that every aspect of their restaurant would diverge from business as usual. Ms. Stum, 30, spurned pricey subscriptions for reservation and scheduling software, and instead used that money to help pay every member of her small team $12.15 per hour, Maine’s full minimum wage. She also added a 20 percent service charge to every check, to be shared with the kitchen staff, which traditionally doesn’t benefit from tips.”
“‘I knew that was something I wanted to be a part of,’ said Ms. Shipsey, 23, who is now Ruby’s morning manager.”
“On a good day, the service charge can lift her wages to as much as $27 an hour, on par with what she earned downtown.”
“In a two-week survey released on Monday, One Fair Wage, an advocacy group for service workers, found more than 1,600 restaurants that were paying an average wage of $13.50 plus tips across 41 states — states where earlier this year the vast majority of restaurants paid a tipped minimum wage of $5 or less.” READ MORE
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Uber is facing an existential wave of litigation in Europe: “If Uber becomes a traditional taxi company that owns its cars and pays salaries to its drivers, would it still be Uber? That's the question its executives now face as courts across Europe decide on the status of its drivers. With thousands of its drivers pushing to be recognized as employees, a core component of the company's business — flexible drivers working flexible hours — is at risk. Last week, a Dutch judge ruled that Uber drivers should be classified as employees and are entitled to benefits that come with that status. A similar ruling was delivered by the U.K. Supreme Court in February, which reclassified drivers as ‘workers,’ meaning they are entitled to minimum wage, working time protections and holiday pay.”
“More than 100 similar court cases are progressing all over Europe, and while many have sided with Uber, the majority are taking the side of drivers.” READ MORE
THE COVID ECONOMY
The OECD says the delta variant is slowing but not derailing the global recovery: “In its latest quarterly report on the economic outlook published on Tuesday, the Paris-based research body lowered its growth forecasts for the global and U.S. economies in 2021, the first downgrade since December of last year, when new infections were surging. But it also raised its forecasts for next year, indicating that some output has been delayed by, rather than lost to, the Delta surge. It also raised its forecasts for inflation this year, but continues to expect that the pace of price rises will ease in 2022 as vaccination programs advance in Asia and other parts of the world.”
“‘We still think it’s transitory,’ said Laurence Boone, the OECD’s chief economist. ‘The disruption of supply chains is mostly due to the vaccine situation.’” READ MORE
If you understand what’s happening in the car rental business, you understand the U.S. economy: “While most other industries have experienced less severe swings, the same basic dynamics apply. These dynamics explain why inflation and product shortages spiked earlier in the year — and why they are starting to abate but are not yet close to pre-pandemic norms. In the spring and summer of 2020, the industry was in a state of collapse as people stopped traveling. With a glut of cars — a much higher supply of rentals than demand — prices plummeted; major rental car companies sold off hundreds of thousands of vehicles; and Hertz went bankrupt.”
“The price to rent a car or truck was 23 percent lower in May 2020 than it was before the pandemic started.”
“At the peak on June 19 this year, the average price of a rental car excluding taxes and fees was $123 a day, according to the transportation app Hopper, up from less than $50 at the start of the year.”
“But high prices have a funny way of fixing themselves, at least to some degree. Those considering renting will toy around with different modes of transport if rental cars become very expensive.” READ MORE
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Introducing a new form of cyberattack that’s threatening millions of consumers and small businesses: “‘Smishing’ is a form of ‘phishing’ using SMS or text messages instead of email messages to entice recipients to click on phony links that draws them to sites where either personal information is exchanged or malware is unknowingly downloaded. Many of my smaller clients and their employees have already seen these messages on their mobile phones. They usually come in the form of a text that appears to come from a bank, a utility company, a government agency (such as the IRS), a delivery service or some other seemingly credible source. Fake messages related to Covid testing and contact tracing have also contributed to the rise in this activity.”
“The best way to counter these attacks is to simply be more aware.”
“While corporations such as banks and delivery services may send text messages from time to time, they’ll almost never require customers to respond with personal information.” 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