Flexible Workplaces Can Be a Big Advantage for Small Businesses
A new study shows flexible businesses achieving higher performance and better retention.
Good Morning!
Here are today’s highlights:
TikTok is challenging Google with a visual search tool.
Gene Marks has some very basic suggestions if you want to avoid getting hacked.
A school bus factory in Illinois is trying to rewrite the rules of manufacturing.
Business owners expect artificial intelligence to have a dramatic impact on their businesses.
HUMAN RESOURCES
Small businesses may be using flexible work policies more effectively than big businesses: “A new study by human resources and payroll services platform Gusto Inc. shows smaller companies that have embraced remote work cite higher performance, better employee retention, and strong corporate culture built on a foundation of flexibility. As small companies compete with deep-pocketed giants for talent, those gains could provide an edge. ‘SMBs are increasingly looking to extend the flexibility that their workforce enjoys,’ said Gusto Economist Liz Wilkie. ‘Not only to attract them, but to keep them less stressed, more able to manage their lives, and to build a culture and a team that works for them.’”
“Fully remote small businesses are nearly 2.5 times more likely to say they are finding high-quality candidates for their open positions — a boon in an environment in which small businesses still struggle to fill jobs.”
“Companies that started in the past three years are 31 percent remote and 46 percent hybrid for their workforces, far higher percentages than more-established companies. Only 22 percent of younger companies are fully in the office, according to Gusto. Overall, companies that were 100 percent on-site before the pandemic are split between hybrid work and being fully in the office, with 8 percent fully remote.”
“Some small businesses also are offering four-day workweek arrangements, with 10 percent of the companies in the Gusto survey saying they have that setup. Another 14 percent of small businesses are considering it — shifting an idea once on the fringes to something a significant number of businesses are trying or considering.” READ MORE
Small businesses are also ramping up the use of artificial intelligence in hiring and managing employees: “According to the results of a newly released survey by payroll firm Paychex, more than 75 percent of human resources leaders at companies with 20 or more employees said they plan to use artificial-intelligence tools over the next 12 months. That includes AI tools for tracking applicants, assessing employee satisfaction and identifying potential candidates online. Among respondents from companies with 5 to 19 employees, 51 percent said they plan to use the burgeoning technology in the year ahead.”
“The report identified other ways AI tools could help companies, including to gather employee feedback and synthesize the data to help highlight areas of improvement. Chatbots can also answer basic employee queries and help skill-building and training activities.”
“A recent report from FreshBooks found that small business owners are optimistic about the prospects of AI tools, with 25 percent saying they are currently using or testing them. Two out of three business owners told FreshBooks they will try generative AI for work within the next 12 months.”
“Overall, about 66 percent of business owners told FreshBooks they disagree with the idea that AI will replace their jobs, but 44 percent said they themselves expect to hire fewer people because of the capabilities that AI presents.”
“In fact, 60 percent of the small business owners surveyed by FreshBooks said they believe AI will dramatically change their business within the next five years.” READ MORE
CYBERSECURITY
Gene Marks has some suggestions for how businesses can (mostly) avoid being hacked: “Change how people can access your network. Subscribe to a password management application like LastPass or Keeper which, although not impenetrable, will help you and your employees implement complex passwords using symbols and other irregular characters. In addition to deploying complex passwords, it’s also critical to implement multi-factor authentication so that anyone trying to get access receives a text message with a special code to use or has to use a special code generated elsewhere.”
“Whether your employees are using Microsoft Windows, Apple iOS, or Google Android, make sure that everyone is upgrading their operating system when reminded. That way they’ll be running the most recent security patches.”
“Combine this with local security software like Malwarebytes, Avast, and Norton to ensure that everyone’s device is protected with current defenses, and use an IT firm to help manage these changes, particularly for your remote workers.”
“Study after study has shown that the biggest security threat is ourselves: owners and employees of businesses who mistakenly click on ‘phishing’ links or download and open unknown documents that release malicious malware. The best way to minimize this risk is through regular training from an IT firm or using special software that tests employees on the latest threats.” READ MORE
MARKETING
TikTok is challenging Google’s hold on search: “TikTok is testing a new visual-search tool within its shopping feature that could dial up the pressure on search-giant Google. The tool will allow users to take a photo and use it to search for inventory within TikTok's shop tab, Adweek reported. TikTok confirmed to Insider the tool is being tested in select markets outside of the U.S. (TikTok's shopping feature is currently only available in the U.K. and seven markets in Asia, and is being tested in the U.S.) The short-video app has already become a go-to search engine for Gen Zers looking for restaurants or how to do things, threatening Google's search dominance.”
“One of Google's own studies found that around 40 percent of 18 to 24-year-olds go to TikTok or Instagram instead of Google Search or Maps when looking for a place for lunch, Bernstein analyst Mark Shmulik wrote in May report, citing Google's SVP of knowledge and information speaking at Fortune's Brainstorm Tech conference last year.”
“‘ChatGPT gets all the buzz, but it might not be the most imminent threat to Google's search dominance,’ Shmulik wrote in a passage from the AI-focused report called, ‘I'm more scared of TikTok.’”
“TikTok's influence isn't confined to Gen Z. The company said in March that the app had 150 million monthly active users in the U.S., making it part of the routine for about 45 percent of the country.” READ MORE
PAYMENT
The latest fight over credit card swipe fees is heating up: “The fees have more than doubled over the last decade, leading some business owners to look for new and creative ways to claw back their profits. They’re also stirring debate in Washington, pitting payments giants against the small business masses. The swipe fees aren’t new, but the worsening problem comes at a time when Main Street businesses across the country are increasingly struggling with changing macroeconomic conditions.”
“The Federal Reserve’s biannual survey of banks’ debit card transactions estimates that it costs banks an average of 4 cents to process a transaction, regardless of the total ticket cost. That’s down sharply from about 8 cents per transaction a decade earlier. Although the central bank does not conduct the same survey for credit-card transactions, the processes used for debit and credit cards are similar.”
“Swipe fees in the U.S. are among the highest in the world, according to an analysis by payments consulting firm CMSPI. The European Union cracked down on similar increases, capping fees in 2015 at 0.2 percent for debit card purchases and 0.3 percent for credit card purchases. In the U.S. the average rate for Visa and Mastercard was 2.22 percent in 2021, according to market research firm the Nilson Report.”
“Bob Jones, president of regional retailer American Sale, which operates eight pool and outdoor living stores in the Chicago area, said the processors feel less like vendors and more like business partners. ‘Their fee is based on a percentage of the sale. So, effectively, they’re 2-percent partners in my business, because that’s what they take,’ Jones said. ‘Actually, I would say even more because they take the 2 percent right off the top.” READ MORE
FINANCE
The maker of the Instant Pot has filed for bankruptcy: “America’s mania for the Instant Pot once seemed as never-ending as its appetite for soups and stews and chilis. But now, the maker of the viral kitchen gadget, whose debut in 2009 spawned legions of fans, has declared bankruptcy. Instant Brands, which makes the Instant Pot as well as products by venerable brands Pyrex and CorningWare, filed for Chapter 11 bankruptcy protection in a Houston court.”
“The Instant Pot’s premise — offering home cooks the hands-off ability to produce foods with long-simmered taste in a short amount of time — made it a rare disrupter of the kitchen status quo. Its brand name is synonymous with the category it spawned, the multicooker, in the manner of Xerox, Thermos and Tupperware.”
“Its introduction in 2009 by a Canadian company was followed by the creation of scads of Facebook groups, YouTube channels, cookbooks and blogs all dedicated to its use. Headlines even jokingly referred to its ultra-enthusiastic fan base as a ‘cult.’”
“Others have noted that the quick-fix appeal of the Instant Pot might have diminished once people were spending long stretches of time at home. And the air fryer has become the latest darling of the appliance aisle.” READ MORE
Here’s how billions in Covid relief money was stolen: “Fraudsters used the Social Security numbers of dead people and federal prisoners to get unemployment checks. Cheaters collected those benefits in multiple states. And federal loan applicants weren’t cross-checked against a Treasury Department database that would have raised red flags about sketchy borrowers. Criminals and gangs grabbed the money. But so did a U.S. soldier in Georgia, the pastors of a defunct church in Texas, a former state lawmaker in Missouri and a roofing contractor in Montana. All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal Covid-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.”
“An Associated Press analysis found that fraudsters potentially stole more than $280 billion in Covid-19 relief funding; another $123 billion was wasted or misspent. Combined, the loss represents 10 percent of the $4.2 trillion the U.S. government has so far disbursed in Covid relief aid.”
“How could so much be stolen? Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic’s early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy.”
“Most of the looted money was swiped from three large pandemic-relief initiatives launched during the Trump administration and inherited by President Joe Biden. Those programs were designed to help small businesses and unemployed workers survive the economic upheaval caused by the pandemic.” READ MORE
MANUFACTURING
A school-bus factory in Illinois is trying to rewrite the rules for manufacturing: “The most confounding thing about a Lion Electric school bus is that it’s so simple. Workers start with a few steel beams, a couple of dozen fiberglass panels around a metal body shell, and an electric motor that has 20 parts and is as big as a picnic basket. Diesel engines for large trucks, in contrast, have 2,000 parts. They’re as big as grizzly bears. The Lion Electric factory is confounding, too, mostly because it’s not in Mexico or China or some southern U.S. state where companies go to escape labor unions. The factory is in Joliet, 30 miles southwest of Chicago, on a bluff 60 feet above the Des Plaines River.”
“It’s an unlikely place for zero-emission manufacturing to flourish. But, during the spring of 2021, Gov. J.B. Pritzker beat out a site in Texas and won the Lion Electric plant for Joliet with a new type of strategic argument.”
“Pritzker convinced the Canadian company that in suburban Will County, electricity is not just cheap, reliable, and abundant. It’s also — thanks to a statewide commitment Pritzker was then shepherding through the legislature — on its way to being carbon-free by 2050.”
“Clean energy was a big plus for Marc Bedard, the Lion Electric chief executive officer. Bedard wants to run a zero-emission enterprise, and he’s telling suppliers that someday soon he’ll refuse deliveries from fossil fuel-burning trucks.” READ MORE
THE 21 HATS PODCAST
This week, Hans Schrei and Shawn Busse talk about why they put their businesses through accelerators, and Paul Downs explains why he might have done the same thing if accelerators had existed back when he started his business—“although,” he says, “I was probably too dumb to realize the value of it.” Hans, who just completed a 13-week accelerator program with his partner, Luis, also tells us how Wunderkeks fared while he and Luis were in the program, what they got out of it, and why they felt it was worth giving up the equity that was the price of admission. Plus: why Shawn went to an employee’s college graduation and how Paul managed to take a vacation. Oh, and Paul also talks about what surprised him about the recent 21 Hats event in Chicago.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren