How Many Employees Do You Really Need?

The economy is being reshaped by new businesses that are demonstrating how to operate with fewer full-time employees.

Good Morning!

Here are today’s highlights:            

• Podcast: Newark Nuts went from a failing nut shop to competing with Amazon.

• The businesses that took EIDL loans are struggling more than those that didn’t.

• As we approach health insurance season, Gene Marks has some suggestions.

• Was Leonard Riggio a neighborhood killer or a bulwark against Amazon? Or both?

STARTUPS

New businesses are hiring fewer employees: “The average number of people employed by the youngest businesses fell sharply during the pandemic, accelerating a decades-long slide. The rise of these smaller ventures is one of the first signs of how pandemic-inspired businesses have reshaped the economy. Businesses launched between March 2020 and March 2021 had, on average, 4.6 employees, compared with 5.3 employees a year earlier, according to Census Bureau data. That figure was 5.8 at the turn of the century and had been declining gradually until Covid-19 spurred a sharper drop.”

• “Slater McLean and Jack Paley launched Oliver Charles, an online retailer, in February 2020 and sold their first sweaters that September. The pair are the San Francisco-based company’s only employees; they plan to keep it that way for the foreseeable future. ‘We can get four to five times bigger with the current setup we have, maybe adding a few more contractors either outside or within the U.S.,’ McLean said.”

• “Ashlie Ordonez hired three employees as she prepared for the March 2020 launch of Bare Bar, a waxing studio in downtown Denver, with plans to add 11 more people over the next three years. But the pandemic pushed back the start by two months; when the salon finally opened, it couldn’t accept walk-ins or provide half of the services she had planned. Ordonez stepped up marketing and created do-it-yourself spa kits.”

• “A customer-led crowdfunding campaign brought in $60,000, allowing Ordonez to keep two employees on payroll for 18 months. With cash reserves dwindling, she rented out booths to other aestheticians to help cover the $6,400 monthly rent. When her lease expired, Ordonez moved to a smaller space where she pays $830 a month in rent, is the only employee, and offers a wider range of services.”

• “‘The goal is the same, it’s just smaller now,’ said Ordonez, who has begun to rebuild her savings. ‘Start a little smaller. Bring in one person at a time. I’m smarter, more hungry than I was.” READ MORE