I Have Been Hiding From My Numbers
Some business owners are intimidated by their finances. It doesn’t have to be that way.
Good morning!
Here are today’s highlights:
Over the past four decades, the average markup has risen to more than 54 percent.”
A case study show how “results only” remote work can work—and then be ignored.
Why small shippers are bearing the brunt of the supply-chain issues.
HUMAN RESOURCES
Back in 2005, Best Buy launched a “results only” pilot program that let employees decide when and where they wanted to work: “The strategy worked. By 2008, more than eighty per cent of the employees at the corporate headquarters were operating in a results-only work environment. The reduced voluntary turnover saved Best Buy money, which Ressler and Thompson estimated to be in the millions. Employees participating in R.O.W.E. self-reported higher productivity and improved well-being.”
“But then, suddenly, these changes at Best Buy were reversed. In the spring of 2013, Best Buy’s newly appointed CEO, Hubert Joly, canceled the program.”
“As a company spokesperson clarified, in a press statement describing the change, ‘bottom line, it’s all hands on deck at Best Buy, and that means having employees in the office as much as possible.’” READ MORE
COMPETITION
Behind President Biden’s executive order is a lot of evidence that the economy has become less competitive: “The decline in competition has had big implications for the broader economy, this research finds, including fewer thriving startup companies, a less-dynamic job market, stagnant worker wages and restrained economy-wide productivity. Democrats have responded by making boosting competition a key part of their agenda. Mr. Biden’s executive order encourages U.S. agencies to push back against corporate consolidation and business practices that might stifle competition across a range of industries, from Big Tech to airline baggage fees.”
“The research that finds market dominance by big firms suggests it goes beyond tech companies, such as Google and Amazon, to encompass hearing aids, banking, beer, mobile-phone services, airlines and others ...”
“In 1980, markups averaged 21 percent, according to research by economists Jan de Loecker, Jan Eeckhout and Gabriel Unger. Over the past four decades, the average markup has risen to more than 54 percent.”
John Haltiwanger, a University of Maryland professor, finds that the share of U.S. jobs at young, small firms declined to 16 percent in 2018 from 26 percent in 1987.” READ MORE
The Biden order also addresses the “right to repair”: “The limited lifespan of AirPods is exactly the kind of problem that the ‘right-to-repair’ movement wants to fix. Repair shops and lobbyists that support repair reform want lawmakers to implement a variety of rules, including increased access to manuals and official parts and consumer protections around warranties. But one of their most important requests is for companies to design products with repair in mind, instead of packing gadgets with unlabeled parts and sticking them together with glue, forcing users to use a knife to take them apart. This desire puts repair advocates at odds with hardware companies like Apple, whose business models depend on customers upgrading to the latest model every few years.”
“PodSwap is a Miami company founded by Emma Stritzinger and Emily Alpert which aims to keep AirPods ‘out of the landfill.’”
“They believe they’re the only company performing AirPod battery replacements, although other companies ‘refurbish’ old AirPods, the founders told CNBC.” READ MORE
FINANCE
'I Have Been Literally Hiding From My Numbers': “Laura is an old friend of mine,” writes 21 Hats contributor Steven Wilkinson. “She is a superb consultant and facilitator and has an awesome reputation for her work teaching managers and leadership teams how to increase their productivity. In all the years we have known each other, I had never really talked to her about her financial success. I assumed she was doing fine, making a good living and that her business was thriving. It wasn’t and she wasn’t.”
“Like a lot of business owners, Laura is very good at a lot of things — but intimidated by her financials. It doesn’t have to be that way.”
“I felt all this shame and frustration come welling up and that familiar panic.” READ MORE
You can also sign up for Steven’s workshop (21 Hats readers get a 10-percent discount by using the code 21HATS).
The SBA is making it easier to apply for forgiveness of loans for more than $2 million: “After months of requiring financial documentation proving need from borrowers with PPP loans of $2 million or more, the Small Business Administration took steps this week to roll back some of those requirements. The effort marks an about-face for the agency that landed in hot water after allowing publicly traded companies to access the program intended for small businesses. It also signifies a swifter forgiveness process for some borrowers. On Tuesday, the SBA began informing lenders that it plans to eliminate the loan necessity review for PPP loans of $2 million or more, adding that it intends to publish a FAQ on the subject ‘shortly.’”
“In October, the agency began asking lenders to provide loan necessity questionnaires to both for-profit and nonprofit borrowers with PPP loans of $2 million or more. Smaller borrowers, rather, simply had to self-certify the potential for need.” READ MORE
THE ECONOMY
Higher inflation just might stick around: “Economists surveyed this month by The Wall Street Journal raised their forecasts of how high inflation would go and for how long, compared with their previous expectations in April. The respondents on average now expect a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2 percent in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3 percent a year in 2022 and 2023. That would mean an average annual increase of 2.58 percent from 2021 through 2023, putting inflation at levels last seen in 1993.” READ MORE
Rent prices are soaring as Americans head back to the city: “Rents are starting to surge in many parts of the country as the economy reopens and young people return rapidly to cities. On top of the influx of millennials and Gen Z renters coming back after staying with family or friends, people who can work from anywhere are still relocating to lower-cost cities, and the hot home sale market has caused some baby boomers to sell their family homes and rent again now that their kids are grown.”
“Nationwide, rent prices are up 7.5 percent so far this year, three times higher than normal, according to data from Apartments.com.”
“Analysts expect rent prices to keep climbing for the foreseeable future, a major burden for renters and a warning sign that higher inflation could linger far longer than the White House and Federal Reserve keep predicting.” READ MORE
OPPORTUNITIES
Weddings are back and sales of engagement rings are soaring: “Fine jewelers say they saw massive spikes in demand and sales in April and May, following more access to Covid-19 vaccinations throughout the United States. Sales numbers skyrocketed this spring forThe Clear Cut, a New York-based engagement ring company that sells its gems online. Customers are on the hunt for engagement rings now because they can ‘finally travel’ and propose on vacation, Clear Cut's co-founder and chief operating officer Kyle Simon told CNN Business. The company has been inundated with requests from couples who are ‘fighting for wedding venues,’ he said, and sales quadrupled in May 2021 compared to the year prior.” READ MORE
LOGISTICS
Small shippers are bearing the brunt of the supply-chain problems: “With retail giants like Walmart and Amazon.com rushing to restock to meet booming demand from U.S. consumers, smaller competitors are battling over dwindling cargo space on boxships coming in from Asia. Those who want immediate shipments often must pay about three times the going freight cost, according to brokers and cargo owners. Shipping delays and high freight rates are among several challenges facing American businesses, which also are dealing with rising costs for products and a shortage of available labor. These factors weigh especially heavily on small businesses, which tend to have fewer resources to absorb price increases and less leverage either to negotiate lower rates or pass along the higher costs to customers.”
“Things aren’t expected to get better in the near term. Container ship operators say retailers started booking cargo space for year-end holiday merchandise in June, three months before the start of the traditional peak shipping season.”
“‘It’s a big challenge to find a ship,’ said Eram Siddiqui, the owner of New York-based Hudson + Bleecker, which sells travel bags and accessories. ‘Pre-pandemic, we brought in our containers for $3,500 to $4,500 and the waiting time to sail was 10 days. That container now is $17,000 and it won’t move until September.’” READ MORE
CLIMATE
Christmas trees, doughnuts, and fish: assessing the heat damage to businesses in the Pacific Northwest: “Some businesses installed new equipment or restricted hours. Others are still assessing the long-term damage. A few benefited from the heat.”
“Wheat in Washington, worth about $800 million a year, is the state’s fourth-largest agricultural commodity. The industry, anticipating drier years to come, is funding breeding programs to create more drought-tolerant varieties, Mr. Bailey said.”
“At Voodoo Doughnut in Portland, known for its strangely decorated treats, workers walked out for two days. Employee Max Fleisher said the storefront’s small air-conditioning unit wasn’t adequate to keep them cool.”
“In Lynwood, Wash., King Heating & Air Conditioning expects to see more business this year than ever before. The family-owned business received more than 700 inquiries about installation or repairs on June 28, the hottest day of the heat wave in the Seattle area. It typically takes a week to get that many calls.” READ MORE
THE 21 HATS PODCAST
Episode 67: Why Did Your Business Succeed? This week, we talk about how much of success is making the right decisions, how much is being in the right place at the right time, and how much is just luck. “I think that's the thing nobody wants to talk about,” Paul Downs tells us, “because it implies that there's a lot to success that is out of the control of the entrepreneur, and we're much more attracted as human beings to stories of people who have agency and are like, ‘Oh, there's a problem. I did this, and I won.’ That's what we like to hear.”
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