Can I Go Dig a Hole?
In our latest podcast episode, the owners talk about the pain of losing big clients, how to find new clients, and whether they ever think about returning to their corporate careers.
Good Morning!
Here are today’s highlights:
The heat waves are altering the patterns of daily life for people and businesses: “Happy hour does not exist right now.”
The question of who will take over the family business is especially fraught for immigrant families: “Askandafi said he works up to 18 hours a day, seven days a week.”
The Hollywood writers and actors strikes are costing the economy as much as $4 billion.
The business that benefited most from WFH wants its employees back in the office.
THE 21 HATS PODCAST
This week, in episode 163, Liz Picarazzi, Jennifer Kerhin, and Sarah Segal talk about whether they ever wish they could go back to their corporate lives. For Liz, there was a period during the early days of Covid. For Jennifer, it was when she made the transition from a consulting business to an employee business. These days, none of them can imagine going back—although Sarah did have a rough week recently when she lost two clients. “It's just the way of the world,” she tells us. “When businesses are looking to cut costs, it’s outside agencies that go first. But when it's two of your largest clients in the span of a week, it's like, ‘Really? Can I go dig a hole, put myself in it, and just stay there forever?’”
What she’s actually doing, as we discuss, is figuring out some new ways to attract more clients. We also discuss whether everyone needs a business plan and whether the three owners ever wonder if someone else would do a better job running their businesses.
“One of the things that helped me get out of my couple years of doubting and regretting that I had started a business was creating a business plan. It gave me a sense of control. It gave me a way to direct my energies that didn't make me seem like I was drowning.”
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THE ECONOMY
The heat is making people more nocturnal, and businesses are adjusting as well: “The heat is altering how—and when—people spend their money. Searches for blackout curtains on Amazon rose 113 percent between June and the beginning of August compared with the same time in 2022, according to analytics firm Pattern, as people look for help sleeping during the hottest parts of the day. Lime, an electric-scooter company, has seen a 25 percent uptick in ridership between 9 p.m. and 11 p.m. and a 2 percent uptick between 1 a.m. and 3 a.m. in July compared with February in Austin and Corpus Christi, Texas, where daytime temperatures have consistently surpassed 90 degrees. Many Hyatt hotels, meanwhile, are offering after-dark activities such as cosmic yoga and astrophotography tours in response to demand from guests.”
“Mikael Truesdale, an artisan candlemaker in San Diego has been waking up around 4 a.m. every day to pour candles. If they don’t set before the sun hits the house around 8 a.m., he says they’ll be ruined. The one upside, he says, is that the heat inspired him to make a bestselling pine, cypress, clove, and peppercorn candle to remind customers of cooler times.”
“Some crews working for DPR Construction in Phoenix now start at 4 a.m., an hour earlier than their typical 5 a.m. summer schedule. Since it is still pitch black at that hour, the company hauled in giant light towers ‘that will light up the world,’ says site superintendent Tom Corey.”
“In Phoenix, personal development coach Lauren Russell says she’s experiencing reverse seasonal affective disorder. She doesn’t make plans with anyone until after 9 p.m.—which means on most weekdays, she doesn’t make any plans. ‘Happy hour does not exist right now,’ she says.” READ MORE
SUCCESSION
Who’s going to take over the family business? Ted’s Market customers know what type of service they’ll get at the famed San Francisco deli: warm greetings shouted from behind the counter upon entry, gregarious smiles, and tried-and-true quality sandwich combinations. Ted’s Market, a mom-and-pop shop and deli in SoMa, opened in 1976 and is a well-known staple in the neighborhood. But even as a popular local shop, running a small business is tough, and keeping it in the family is proving to be something of an existential crisis. ‘It’s becoming more and more stressful in San Francisco. Rising wages. Taxes. Tickets left and right. Updated codes,’ said Diaa Askandafi, the owner of Ted’s Market.”
“With the San Francisco minimum wage having increased to $18.07 on July 1 and inflation hitting small businesses hard, restaurants are struggling to keep prices down. Tourists previously accounted for 35 percent of sales at Ted’s, Askandafi said.”
“Now the shop mostly serves locals, many of whom are working class, underlining the need to keep prices low, he said. Askandafi said he works up to 18 hours a day, seven days a week.”
“The story is a familiar one: Family members immigrate to the U.S., open a small business and work hard to send their children to school so they can lead better and easier lives. But what happens to the shop?” READ MORE
HUMAN RESOURCES
The writers and actors strikes are taking a toll on businesses in L.A.: “Owners of small businesses that serve the entertainment industry in Southern California say they are suffering more from the strikes by writers and actors than they did during the Covid-19 pandemic. ‘We are in survival mode,’ Adrianna Cruz-Ocampo told EFE at her shop, U-Frame-It, in North Hollywood, 14 weeks into the strike by the Writers Guild of America. Last month, the Screen Actors Guild – American Federation of Television and Radio Artists declared a strike after also failing to reach a new collective bargaining agreement with the Alliance of Motion Picture and Television Producers. Not since 1960, when future President Ronald Reagan led the SAG, have writers and performers been on strike at the same time.”
“The strikes are estimated to have cost the economy of the United States roughly $4 billion, and that figure could rise sharply if there is no settlement by the end of this month, Kevin Klowden, chief global strategist at California’s Milken Institute, told EFE.”
“‘During the pandemic there was a feeling that everyone was in the same boat, there was support from the federal and state government,’ Klowden pointed out.” READ MORE
Even Zoom wants its employees back in the office: “Video communications company Zoom became a mainstay of the pandemic, allowing employees to work from home and from anywhere in the world as it reopened. But in an unexpected twist, the San Jose-based company now wants its own employees back in the office, joining a growing number of businesses instituting return mandates. Employees who live near an office must work in person at least twice a week, Zoom said in an emailed statement.”
“‘We believe that a structured hybrid approach’ is most effective for the company, it said. The mandate would apply to people living within 50 miles of an office, Business Insider reported. ‘As a company, we are in a better position to use our own technologies, continue to innovate, and support our global customers,’ the statement said of the decision.”
“Despite gaining cult status and growing exponentially during the pandemic, Zoom’s growth trajectory has not remained steady. In February, the company laid off 15 percent of its staff amid global economic uncertainty.” READ MORE
REGULATION
New Zealand figured out how to bring down home prices: “Imagine a bustling neighborhood with a mix of single-family homes, triplexes, apartment buildings, businesses, and public amenities. Rent growth is slow, home prices are reasonable, and there are plenty of affordable-housing options. Families, young people, retired folks, and businesses are all able to coexist, making the area diverse and vibrant. Unfortunately, most American neighborhoods don't look like this. Instead, huge parts of the country have zoning laws that make it illegal to build anything other than a single-unit home. But these laws — originally designed to keep residential neighborhoods separate from manufacturing and to segregate and exclude people based on race — are running up against a harsh reality.”
“American cities, especially those with growing job markets and a healthy influx of new residents, need to build millions of new homes to keep housing from becoming unaffordable. And keeping single-family-only zoning laws in place makes it almost impossible to meet these areas' housing needs.”
“New Zealand stands out as an exceptional example of how to successfully boost housing supply through zoning reform. Facing an urgent housing crisis, the island nation implemented upzoning measures that legalized the building of medium-density housing. Not only did this help to slow down skyrocketing housing costs, it inspired a bipartisan, nationwide expansion of the policy.”
“‘The Auckland example is so particularly groundbreaking because it's no longer a theoretical debate,’ Matthew Maltman, an Australian economist who's closely studied New Zealand's housing reforms, told me. ‘It just makes it a lot easier to sell to people.’” READ MORE
RETAIL
What is Salt Lake City doing right? “This spring, foot traffic in downtown Salt Lake City reached 139 percent of pre-pandemic levels, according to cell phone data tracked by the University of Toronto. And what’s happening in Salt Lake City has some lessons for the rest of the country. On Monday mornings there’s usually a line out the door for the kouign amanns and ham and cheese croissants at Eva’s Bakery in downtown Salt Lake City. Micay Sanchez has worked there for about five years. ‘We are, like, way busier now post-pandemic than the store has ever been,’ Sanchez said. ‘I mean, it is crazy now.’”
“Sanchez said a lot of the customers are people in finance, including lots of folks from Goldman Sachs. ‘A bunch of people transferring here because, you know, big cities like San Francisco and New York City are extremely expensive. Salt Lake City’s not that bad.’”
“A cheaper cost of living, beautiful scenery, and a booming economy helped the Greater Salt Lake area grow by 51,000 people last year. Those new arrivals aren’t commuting downtown to work — office occupancy is still down about 40 percent, said Dee Brewer at the Salt Lake City Downtown Alliance. More people are coming downtown for fun, he said.” READ MORE
PROFILE
In the U.K., chippies are fighting for survival: “War in Ukraine coupled with ongoing complications from Brexit had driven up prices of almost all the goods that fish and chip shops depended on, from live ingredients to oil and salt to packaging. More distressing was the problem of rising energy costs. This meal is prepared using a great guzzler of a range cooker that must be kept on and roiling at all hours of a trading day. As the price of gas and electricity threatened to double, then triple, through 2022, friers were opening their energy bills with gritted teeth. A trade association called the National Federation of Fish Friers said that as many as a third of the UK’s 10,500 shops might go dark, warning of a potential ‘extinction event.’”
“Whether styled as chippy, chippie, chippery, chipper, fishery, fish bar or fish restaurant, whether given cheerful punning titles (the Haddock Paddock, the Plaice to Be) or rootsier names that acknowledged their founders (Jimmy’s, George’s, Low’s, Long’s), these shops proliferated through the 20th century, carpeting the land from the northernmost – Frankie’s, up in Shetland – all the way to the Smugglers, down on the tapering tip of Cornwall.”
“At the Popular in Dundee, the Forbes family issued a plea to customers via Facebook: ‘Use us or lose us.’ Graham Forbes’s son Lindsay had already given an interview to a Dundee newspaper that amounted to a forewarning of closure. A clipping of this article—’Chippers Are Battered By Soaring Costs’—was pinned to the Popular’s fridge on the summer day the family huddled to make a decision.”
“‘This is the end,’ Graham said, ‘isn’t it?’” READ MORE
THE 21 HATS PODCAST: DASHBOARD
There’s Still Time: Yes, it’s August, but Tracy Bech — co-author of “60 Minute CFO” — says it’s not too late to assess where your business stands and take steps to hit your numbers. Tracy also talks about what prompted her to take her own financials seriously, what owners can do if their revenue isn’t meeting expectations, and why she kind of likes recessions but isn’t disappointed we haven’t had one.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren