Greetings from Fort Worth!

At the latest 21 Hats Live event, there were no speakers—only participants.

Good Morning!

Wish You Were Here!

This very impressive group of entrepreneurs has been hanging out in Fort Worth this week, comparing notes, getting inspired, and having some fun. Thursday we took a tour of Laura Zander’s Madelinetosh factory (above) and got a remarkable education in the complexities of yarn production and how she’s built her business. We also had an enlightening conversation about what everyone’s been figuring out about using artificial intelligence in their businesses.

MANAGEMENT

In this week’s video, Lou Mosca reminds us that accountability starts at the top: “In my journey of engaging with thousands of independent business owners annually, a common theme emerges: the quest for value from their teams, the quest for accountability. However, the essence of accountability transcends the simplistic view of employee performance. It's a culture that originates with us, the leaders. Accountability is the backbone of our organizations, shaping how we lead, communicate, and address challenges. It's about setting clear expectations, roles, and timelines, ensuring everyone knows what's expected. The truth I've learned is that accountability must be ingrained in our very being before we can expect it to reflect in our teams. Talking about accountability isn't enough; living it is.

THE ECONOMY

The hiring boom continues: “Employers added a seasonally adjusted 275,000 jobs last month, according to the Labor Department, exceeding economists’ expectations. The unemployment rate rose to 3.9 percent. Average hourly earnings rose 0.1 percent from the previous month, below Wall Street’s expected 0.2 percent, and a significant slowing from a revised 0.5 percent in January. While hiring continued at a brisk pace in February, the Labor Department revised lower its readings from the previous two months. The economy added 229,000 jobs in January, down from the 353,000 positions officials had estimated last month.”

• “The report offers a fresh snapshot of the U.S. economy, which has muscled through the highest interest rates in 20-plus years with consistent job growth and some of the lowest unemployment rates in a half-century.” READ MORE

FINANCE

Small business owners are carrying more debt than before the pandemic: “While about 28 percent of small businesses report they have no outstanding debt — roughly the same as the 29 percent  in 2019 — about 39 percent of small-business owners reported having more than $100,000 in debt. That's a notable increase from the 31 percent that reported more than $100,000 in debt in 2019. About 40 percent of business owners reported between $1 and $100,000 in debt in 2019, a number that fell to 32 percent in 2023, according to the 2024 Report on Employer Firms: Findings from the 2023 Small Business Credit Survey, released Thursday by the 12 Federal Reserve banks.”

• “Higher levels of debt for some businesses may stem from the roughly $390 billion in Covid-19 Economic Injury Disaster Loans authorized by Congress and handed out by the Small Business Administration largely in 2020 and 2021. Those loans, at 3.75 percent, carry a 30-year term but the SBA has repeatedly offered deferments, hardship payment plans and more options for the growing number of small businesses struggling to repay.”

• “About 44 percent of small-business owners reported they had received an EIDL loan, while overall 28 percent said they still had an outstanding balance.”

• “Overall appetite for financing has cooled somewhat, since about 40 percent of small businesses applied for loans in 2022, dropping to 37 percent in 2023 — roughly in line with 2019.”

• “Small-business owners seeking loans, lines of credit, and merchant cash advances have had mixed success in recent years. Those fully approved for financing fell from about 62 percent in 2019 to just 51 percent in 2023. Those partially approved grew from about 19 percent to roughly 28 percent, according to the report.” READ MORE

THE 21 HATS PODCAST

Can Jimmy Beans Wool Sell Yarn on LinkedIn? This week, Shawn Busse and Laura Zander discuss what exactly Laura’s job should be. She’s CEO, of course, and she’s been focused on acquisitions and growing the business, but she’s never really found someone to take over the big role she used to play, which leads to these questions: Should she go back to being her own chief marketing officer? Or does she need to go out and spend real money to hire one? And then, toward the end of the conversation, Laura actually devises a plan on the spot to sell yarn in a surprising and creative way, which perhaps answers the very question we’d been discussing. Plus: Shawn explains how having the right partner can make or break a business as he celebrates having made his final payout to his own former partner.

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