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‘I Know I Told You I Wasn’t Going to Raise Rates’
Between gas and labor, inflation is hitting the landscaping business especially hard.
Here are today’s highlights:
Small businesses still refuse to believe they are likely targets for cyber attacks.
At call centers, employee turnover is up to 80 percent or even more.
Not crazy about your digital marketing options? Thank Sheryl Sandberg.
Can an app recreate the experience of browsing a book store?
Here’s how inflation is hitting the landscaping business: “Jaime Coronado started the Grounds Guys of Cinco Ranch in Texas with his son early in the pandemic. While the business got off to a strong start, he says $5-a-gallon gas, soaring labor costs, and ever-pricier equipment repairs are eating into profits. Gas is a particular sticking point, as it powers both his equipment and the large trucks that get all his gear from place to place. ‘If it weren’t for the loans, we’d be homeless right now,’ Mr. Coronado says. ‘Even then, we work 80 hours a week just trying to figure out how to make this company break even.’”
“The Grounds Guys recently let go of a client paying about $40 a cut because Mr. Coronado realized he was losing $17 each time he went and mowed the lawn. He is now focusing on developing a client base in a very compact area to keep gas costs down, adding he spends about $1,000 a month on gas and loses money whenever workers are sitting in the truck.
“Mr. Coronado starts his workers at $15 an hour, citing the hard manual labor in punishing conditions during Texas spring and summer.”
“In St. Louis, Kevin Lange has been maintaining lawns on the same street he grew up on since grade school. He raised rates by $5 across the board at the beginning of the year and is now considering another increase.”
“‘I knocked on the door of a young single mom today and had to say, Hey, I know I told you at the beginning of the year I wasn’t going to raise rates. Well, I just went to the gas station and I have no choice.’” READ MORE
Uber Eats is offering free shipping across the country on gourmet meals from four cities: “Starting June 7, Uber Eats customers in the U.S. can find options for shipping bagels, Cuban dishes, macarons, and chimichurri sauces from popular merchants in Los Angeles, New York City, San Francisco, and Miami. Shipping is free and packages are delivered by FedEx, an Uber Eats spokesperson told Insider. App prices will be set by merchants and reflect ‘the demand for these products, additional packaging, bulk product, and the effort put into preparing for their journeys,’ Uber said in an email.”
“‘People travel from around the world to taste the restaurants of NYC, LA and Miami, so we're excited to make their beloved restaurants accessible to the whole country and expand to additional cities soon,’ Kelley-Chew said.”
“Before Uber Eats, DoorDash waded into Goldbelly's turf In November when it launched nationwide shipping for merchants such as Carlo's Bakery and Katz's Delicatessen. Goldbelly, founded in 2013, is a marketplace that curates legendary foods from around the U.S. and makes them available for national delivery.”
“Uber Eats' move to offer free shipping comes as on-demand food delivery apps diversify their business models to give consumers more choices beyond restaurant meals.” READ MORE
Small businesses are struggling with an increase in cyber attacks—in part because they refuse to believe they are targets: “As small businesses have accelerated their adoption of new technologies for remote work, communication, production and sales during the pandemic, their expanded computer networks have created new vulnerabilities to phishing and ransomware attacks. But many small businesses still don’t expect to be targeted by hackers, so preparing for a cyberattack is well down their list of priorities.”
“‘During the pandemic, small businesses were attacked at twice the rate of larger organizations,’ says Ajay Bhalla, president of cyber and intelligence at Mastercard.”
“‘Too many small businesses incorrectly still expect to be covered for cyber risk under their property and liability policies,’ says Loretta Worters, a spokeswoman for the Insurance Information Institute.”
“General commercial business insurance tends to exclude items like additional legal fees due to a cyberattack, and the cost of repairing digital infrastructure and restoring data.”
“‘Pricing for small-business cyber insurance has gone up between 10 percent and 15 percent annually since the pandemic began,’ says Brian Thornton, chief executive of ProWriters, a wholesale insurance company.” READ MORE
Customer service wait times are soaring: “The average length of a service call rose by several minutes since the pandemic started, according to call-center analytics firm CallMiner. During the Covid-19 lockdowns, callers were so desperate for human contact that they started ‘talking about the pandemic, talking about the vaccines, talking about the political climate,’ said CallMiner’s chief technical officer, Jeff Gallino. In a 2021 study of call-center leaders that Forrester Research did for CallMiner, 68 percent of respondents said the phone was a new ‘empathy channel for customers’ and 70 percent said their agents were dealing with more emotionally charged consumers.”
“Add to that endemic turnover that got worse as remote work enabled employees to easily switch to other types of jobs, and you get waiting times that probably tripled, according to Gallino's estimate.”
“The Covid-19 crisis that has emptied offices nationwide has been a mixed blessing for call centers. At once, it’s made customer-service work more appealing to those who prefer to work from home, but it’s also made it easier for call-center employees to jump to another place.”
“Worker turnover has always run high in customer service, around 50 percent a year, said Jeff Christofis, who oversees staffing giant Kelly Services’ contact center unit. During the pandemic, it has swelled to at least 80 percent — and in extreme cases to as much as 300 percent.” READ MORE
As Sheryl Sandberg leaves Facebook, her legacy is the internet’s default advertising model: “Under her leadership, Google offered two related advertising products, AdWords and AdSense. AdWords was an automated system that had businesses compete for a slot at the top of the Google results page by naming the price they would pay each time a search user clicked on their ad. If AdWords seemed to anticipate customers’ desires by serving them messages tailored to exactly what they were looking for, AdSense tried the same thing, by using software that scanned the content of websites and then served ads tailored to that content.”
“Both systems used software to place ads automatically, and were also designed to work not only inside Google but also across the entire web. All independent bloggers and website owners had to do to start generating ad revenue was to create an account and insert a snippet of code onto their sites.”
“Madison Avenue would eventually embrace AdWords and AdSense, but even more crucially, Google’s offerings became the most important—and at times the only—marketing channel for small businesses.”
“These small advertisers benefited from Google’s lack of minimum spending requirements and the efficiency of the platform; business owners paid only for customers who ended up visiting their websites, not those who ignored the ads.”
“And because these ads spread to the rest of the internet, with major publishers and even rival search engines choosing to carry Google’s ads, the company’s annual advertising revenue went from $86 million in 2001 to about $16 billion by the end of 2007.”
“When she joined Facebook, Sandberg’s marching orders were clear: Do the same thing for us.” READ MORE
Book discovery apps are trying to recreate the experience of browsing a brick-and-mortar bookstore: “Several companies have tried. Two years ago, Ingram launched a discovery website, Bookfinity, which offers users customized recommendations after giving them a survey and assigning them a ‘reader type,’ including beach reader, cool mom/dad and spiritual seeker. Others include Booqsi, a platform that bills itself as a ‘community-focused, Amazon-free alternative to Goodreads,’ and Copper, a new author-centric book discovery app that is designed to connect readers with writers. Another company, Open Road Integrated Media, markets e-books of older titles. David Steinberger, its chief executive, said that in aggregate, it doubles the sales of its clients’ titles.”
“The latest arrival in this increasingly crowded niche is Tertulia, a sleek new app that takes a novel approach to online discovery.”
“Using a mix of artificial intelligence and human curation, Tertulia aggregates book discussions and recommendations from across the web, drawing from social media posts, book reviews, podcasts and news articles to generate reading recommendations that are tailored to individuals’ tastes and interests.”
“Each day, Tertulia generates a personalized list of five books. Elsewhere on the app, users can browse lists of notable titles in different genres, which are ranked according to buzz, rather than sales.” READ MORE
Should shopping malls return to their green roots? “As America contemplates mass mall die-off — analysts predict that a quarter of the United States’ roughly 1,000 malls will close in the next three to five years — reminding ourselves of the mall’s garden origins offers clues as to how they might be transformed. Some should be demolished and returned to nature, but more should be rethought from an ecological point of view. While malls are a wasteful use of land, replacement with new stand-alone buildings with space-hogging parking lots only compounds that wastefulness: Better to add (perimeter buildings, solar panels, trees) and to swap (markets for department stores, classrooms for boutiques).”
“Renderings for the Rise, the under-construction redevelopment of Vallco Shopping Mall in California, designed by Rafael Vinoly Architects, hype the 29-acre green roof as ‘the world’s largest’ and claim it ‘restores the predevelopment character of the Cupertino landscape.’”
“My favorite rebirth-of-the-mall story comes from Detroit. ... In 2021 a developer, Contour Companies, bought the dead mall from the city for $11.1 million. Published plans show 1,500 housing units in new buildings on the parking lots, with lofts, shops and offices in the old mall’s ground level retail spaces and a market in the old department store.”
“While most of the post-1950s additions will be torn down, the 1954 core, exemplifying Mr. Gruen’s dream of bringing downtown to the edge of town, will stay. Oh, and so will the gardens.” READ MORE
THE 21 HATS PODCAST
Fire Your Franchise Consultant: As listeners to this podcast know, Dana White has a remarkable array of opportunities before her, including company-owned hair salons, franchised salons, salons on military bases, hair products, and POS software. But especially since the pandemic, Dana has struggled to get traction. This week, in episode 111, special guest Ami Kassar, an expert in small business finance, guides Dana through a discussion of how she might prioritize those opportunities and get them financed.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren