‘I Like Recessions’
In today’s Dashboard podcast, Tracy Bech talks about helping entrepreneurs who do not have financial backgrounds and finding opportunity in economic downturns.
Here are today’s highlights:
What do you think is the biggest mistake business owners make?
Meet the Shopify Mafia.
And you think your family business has issues?
As an entrepreneur and an advertising guru, Dan Wieden just did it.
THE 21 HATS PODCAST: DASHBOARD
I Like Recessions: This week, Tracy Bech, who is CEO of Starboard Collectives and who specializes in helping business owners who don’t have a financial background—she was once one herself—talks about the two most important ratios for business owners to watch if they think we’re heading into a recession. She also talks about why she actually likes recessions, or at least sees opportunities in them.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
What’s the biggest mistake business owners make?
Shopify encourages employees to start side-hustles: “The idea is that by experiencing what it's like to use its products to run a business, they can experience more empathy for Shopify's merchant base and discover areas for improvement. Even the company's president, Harley Finkelstein, runs his own Shopify store, Firebelly Tea, which he cofounded with the DavidsTea creator David Segal last year.”
“A number of former Shopify employees — members of the so-called ‘Shopify Mafia’ — have founded or focused full-time on startups of their own, from direct-to-consumer snack brands to software companies focused on parenting, renting, and the creator economy.”
”Backbone Angels is a collective of female Shopify employees — some current and some former — who have come together to invest in startups founded by women.”
“In its first year, Backbone invested more than $2.3 million in more than 40 startups. Seventy-two percent of that investment went to first-time founders, the group told Insider in March.” READ MORE
Gene Marks says business owners shouldn’t worry about the IRS getting $80 billion in increased funding: “If you own a small business, it’s highly probable that you file some sort of a pass-through tax return like a partnership or an S-corporation. In 2019, 9,093,343 of these returns were filed and 5,283 of them were audited. No, I’m not missing any zeros. That’s less than 0.1 percent of all small business tax returns. The audit rates for individuals between $50,000 and $500,000 are also around 0.1 percent. That’s one-tenth of 1 percent.”
“Let’s say the number of small businesses audited triples over the next 10 years. Using the above numbers we’d see a ‘whopping’ 15,849 businesses under scrutiny.”
“Meanwhile, 9,077,494 will remain untouched. There are better odds of winning roulette in Vegas than being picked for an audit.”
*As an accountant and a business owner, it may surprise you that I’m in favor of the $80 billion going to the IRS. Why? Because the more this agency can do to improve its efficiency, the quicker we can get our questions answered.”
“And the more that the agency can leverage technology to do its grunt work, the greater the likelihood that I will deal with them less and my clients more.” READ MORE
TikTok is launching live-shopping in the U.S.: “According to a report from Financial Times, the short video app has been talking with California-based TalkShopLive to provide infrastructure for live-shopping features on TikTok. This tech will allow creators and brands to sell goods through videos on the platform. TalkShopLive takes a 10-percent commission from sellers for providing its services, and TikTok is likely to cover that cost for the initial phase of the project.”
“TikTok began offering ecommerce features last year by partnering with Shopify to let business accounts integrate their catalogs to a dedicated tab on their profiles.”
“Plus, the company gave brands tools to create, run, and monitor ad campaigns on the platform.”
“In June, TikTok also started testing a dedicated Shop feed to highlight products sold by merchants on the app.” READ MORE
Projections for holiday spending are turning bleak: “Data provided by market research firm NPD Group shows 29 percent of U.S. consumers are considering a tighter spending budget this holiday season, due to increased negativity about the economy and personal finances. ‘Consumers are ready to get out and celebrate over the 2022 holiday season, but last year’s optimism has taken a beating as financial concerns have them feeling a bit more grinchy this year,’ said Marshal Cohen, chief retail industry adviser for NPD. One in five holiday shoppers say they will spend less over the holidays because their economic situation has changed and more than one in 10 consumers will be spending less on gifts so they can spend more on holiday entertaining-related expenses, like food, drink, and decorations.”
“‘Ongoing talk of a possible recession is creating a self-fulfilling prophecy,’ said Anthemos Georgiades, chief executive officer of Zumper, a housing rental site.”
“Seventy-six percent of U.S. residents surveyed for the company’s annual report said they think we’re in a recession.” READ MORE
Home builders are stuck with homes they can’t sell: “The co-founder of a rental-home investment company, Kinloch Partners, is looking for a deal on homes so he can rent them out while the single-family rental market is hot. [Bruce] McNeilage says he has received as many as 10 calls a week from builders eager to sell their homes in bulk and reduce inventory, now that traditional family buyers are backing away with mortgage rates at a 15-year high. Builders have offered to sell him thousands of completed or planned homes at discounts of up to 20 percent of what they would likely charge prospective home buyers. ‘We are being cold-called by builders we don’t even know,’ Mr. McNeilage said. ‘They’re saying, Nobody is going to qualify for financing. We’re going to suck wind on this. Let’s contact investors and see if they want an entire subdivision.’”
“Dean Myerow, co-founder of Fort Lauderdale, Fla., rental owner and developer Southern Waters Capital, said he is in contract to buy 20 new homes a month from a builder in Florida.”
“The builder’s retail business has dried up in recent months amid higher interest rates, Mr. Myerow said. He estimated the discount to retail he will receive on the homes is between 15 percent and 20 percent. ‘We think rental rates will remain very strong,’ he said.” READ MORE
In India, three brothers operating competing restaurants with similar names and nearly identical menus are having an epic feud: “The three brothers behind Moonrakers agree it began as a true family endeavor. The oldest, S. Ramesh, and his then-wife founded Moonrakers in the 1980s, inspired by a visit to a pub of the same name they had visited in Britain. For years, the middle brother, Mr. Vivekanandhan, and the younger one, B. Anand, took shifts there after school to help build the business. It eventually made it into a Lonely Planet guide. According to Mr. Vivekanandhan, the trouble started when his younger brother struck out on his own. In 2011, Mr. Anand opened a second Moonrakers about 150 feet away. Mr. Vivekanandhan, who held the trademark, took his younger brother to court. The judge ordered Mr. Anand to pick a different name.”
“Mr. Anand, 45, went with Moonrocks. His signs also call it a ‘unit of Moonrakers.’ He said he has every right to use the name after pouring years of sweat into the business.”
“Besides, he said, it was his eldest brother who thought up the name, not Mr. Vivekanandhan. ‘He has a sharing problem,’ he said, referring to Mr. Vivekanandhan.”
“Mr. Vivekanandhan said he is on a mission to destroy Moonwalkers and Moonrocks. In May, he opened a Moonrakers outpost just down the street, with underground parking, air-conditioning, and a rooftop terrace. He said he has cornered 75 percent of the total revenue of the three restaurants.”
“The oldest, Mr. Ramesh, said he stays above the fray. ‘I feel sad for these guys,’ he said. ‘They don’t have brains.’” READ MORE
Dan Wieden, co-founder of influential advertising firm: “Wieden cofounded ad agency Wieden and Kennedy, based in Portland, Oregon, with late partner David Kennedy in 1982. The agency went on to famous advertising campaigns for companies like McDonalds, Bud Light, and Old Spice. But the agency is best known for helping a certain sneaker company become one of the most recognizable brands on earth. Nike's ‘Just Do It’ was famously dreamed up by Wieden and first appeared in a TV commercial for the brand in 1988. ‘Thank you Dan, for throwing the doors wide open for people to live up to their full potential,’ the Wieden and Kennedy Twitter account said in a post announcing his death. ‘We will miss you so much.’”
“The firm is also known for seeking out unique perspectives by hiring people without traditional advertising backgrounds. Matt O'Rourke, a former creative director at the agency, said Wieden once explained that approach by asking, ‘Why would I hire ad people?’”
“Wieden, who famously said he would never sell the agency, transferred ownership into a trust before he died in an effort to ensure Wieden and Kennedy would remain independent indefinitely.” READ MORE
Thanks for reading, everyone. — Loren