‘I Pray Every Day’
In Manhattan, the owner of a barber shop near Grand Central Terminal awaits the return of office workers.
Here are today’s highlights:
While other movie-theater chains got crushed, this one says it doubled.
There’s a new appeals process if your PPP loan isn’t forgiven.
Shopify is betting big on its Shop app.
And in our latest 21 Hats Podcast, we discuss how business owners can win the Great Resignation.
THE 21 HATS PODCAST
Why Not Become the Strategic Buyer? This week, Shawn Busse, Karen Clark Cole, and Jay Goltz compare notes on some of the many choices they’ve made building their businesses, such as the emphasis they’ve placed on growth, the risks they see in growing through acquisition, and—as Karen has recently experienced—the rewards of being acquired. They also discuss whether The Great Resignation, despite forcing companies to pay higher wages and work harder to find and keep talent, just might be a good thing for business owners. As Shawn says, “This puts more people into the marketplace looking for businesses where culture matters, where the owner has compassion and empathy, where families are valued, just on and on and on. And if you're that employer, you win.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
THE COVID ECONOMY
More Americans are going to restaurants, stadiums, and the airport—but not yet to the office: “Millions of office employees who fled business districts in December after the Omicron variant surged continue to work at home, despite the plummeting rate of Covid-19 infections and hospitalizations. Remote work remains the more popular option even as a number of states have announced plans to roll back mask requirements at indoor venues, businesses, and schools as the spread of the Omicron variant fades. Thousands of companies that closed their offices in March 2020 have yet to announce return plans. An average of 33 percent of the workforce returned to the office during the first week of February in the 10 major cities monitored by Kastle Systems, which records building-access-card swipes.”
“The number has been slowly rising from 23 percent during the first week in January, when even companies that had brought back workers were sending them home because of renewed health risks.”
“Meanwhile, the return rate to movie theaters in the first week of February was 58 percent of what it was before the pandemic, according to a Kastle analysis of industry statistics.”
“Restaurants were nearly three-quarters as full as they were before Covid-19, and air travel had recovered to about 80 percent.”
“In Manhattan, about 10 to 15 customers a day pass through the First Class Barber Shop near Grand Central Terminal. Before the pandemic, the daily average was 50 to 60, said the owner, Nikita Shimunov.”
“‘I pray every day,’ he said.” READ MORE
The prices that suppliers charge other businesses rose in January: “The Labor Department on Tuesday said the producer-price index, which generally reflects supply conditions in the economy, rose a seasonally adjusted 1 percent in January from the prior month, the sharpest rise since May 2021 and a pickup from December’s revised 0.4 percent rise. Producer prices rose 9.7 percent on a 12-month basis, nearly the same as the prior month. The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 0.8 percent in January from a month earlier, the biggest increase since January 2021.” READ MORE
While other movie theaters were getting crushed during the pandemic, this one claims to have doubled: “[Founder Mitch] Roberts began showing cult classics like Grease and The Goonies to sparse indoor crowds and rented out idle auditoriums to gamers who wanted to play Fortnite on a 65-foot screen. He improvised new revenue streams: painting the exterior of two multiplexes white to serve as drive-in screens, turning nine acres of cow pasture into paintball courses and packaging gallon jugs of margaritas and at-home movie night snack kits for pickup and delivery. While many competitors remained shut, he generated buzz with a summer drive-in film festival and a faux pumpkin patch offering horror flicks and Halloween milkshakes, both spiked and alcohol-free. ‘[Others] took the batten-down-the-hatches approach,’ he says. ‘We took the remind-people-there’s-a-place-for-you-here approach.”
“Only 25 years old, he had built Austin-based Evo Entertainment up to six sites in Texas with 57 screens, 38 bowling alleys, full meal service, 200 arcade games—and a hefty $42 million in debt.”
“Nevertheless, Evo’s revenues fell 60 percent to just $20 million in 2020. Roberts stayed afloat only due to temporary forbearance from his bank and then $21 million from the federal government from a fund specifically earmarked for shuttered entertainment venues. ‘An absolute miracle,’ he says.”
“Now with 16 locations, 148 screens and 108 bowling lanes, Roberts expects more than $125 million in sales this year.” READ MORE
Shopify is betting big on its Shop app: “The Shop app started off as Arrive, a package-tracking app that Shopify launched in 2017. Arrive rebranded as Shop in April 2020, with new features like the ability to shop from local businesses and receive exclusive product updates from brands that users have shopped from before. Shopify has since added new features to the app, including the ability to search for products across merchants and to send gifts with just a text. The company has indicated in earnings calls and on its careers page that many more features are on the way.”
“The growth of Shop is important for several reasons, analysts say. It offers an opportunity to establish Shopify as a stand-alone consumer brand that can compete more directly with Amazon for customer dollars.”
“But a key part of the app's evolution is that it entices merchants to sign up for more of Shopify's services, especially payments, where it competes with players like PayPal, Apple, and Square.” READ MORE
With the changes brought on by the pandemic, more B2C ecommerce businesses are finding they have B2B customers: “But B2B buyers have a different set of expectations when making repeat purchases, which can prove challenging for B2C merchants to execute on e-commerce. For example, B2B buyers prefer to pay by invoice, not with commercial credit or debit cards. The challenge for B2C companies is that accounts receivable, back-end operations aren't set up to support invoicing and payment on terms. If retailers can't support the processes and methods of payment preferred by B2B buyers, they run the risk of losing the opportunity to serve this audience.”
“Payment terms, or trade credit, have always been a mainstay in B2B sales. In fact, 82 percent of B2B buyers would choose a vendor over others if that vendor offered invoicing at checkout with 30-, 60- or 90-day payment terms.”
“Retailers must address the revolutionary changes to customer expectations brought on by both a new digital generation and the permanent shifts from COVID. B2B buyers now expect their purchases to be transacted with the ease and convenience of an Uber transaction.” READ MORE
Blitzz helps businesses offer remote video tech support: “Blitzz's software is used by companies across a range of industries, including automotive, construction, utilities and telecom. Besides remote video customer support, it also lets companies handle virtual home and equipment inspections, compliance audits and insurance claims, reducing the need for onsite visits. With artificial intelligence and augmented reality, technicians can even draw on the screen in real time to identify key switches, valves or other points of interest. ‘We're FaceTime on steroids for enterprises,’ says [CEO Rama] Sreenivasan.”
“The BMW rep asks permission to text a Blitzz video link directly to the customer's phone. Once the customer clicks the link, the two can communicate face-to-face.”
“Instead of relying on verbal cues and descriptions, BMW technicians can see firsthand what customers are describing.”
“One customer complained their plug-in hybrid vehicle wouldn't charge properly. Over video, the technician spotted that a pebble from the customer's gravel driveway was blocking the charge port.” READ MORE
There’s a new review process for PPP loans that aren’t forgiven: “On January 27, 2022, the Small Business Administration, the agency in charge of administering the PPP, quietly issued a procedural notice outlining a new review policy for borrowers who got a partial loan forgiveness decision from their lender, or were instructed to apply for less forgiveness than they wanted. As of January 27, if you want to appeal a partial forgiveness decision you will have 30 days--from receipt of a lender's post-remittance notification--to tell the lender. The lender must then file for a loan review on behalf of the borrower within five days. The same process applies to borrowers whose lenders prevented them from applying for full forgiveness.”
“Previously, borrowers were required to make any appeals directly to the lender, and those appeals would reportedly only get escalated to the SBA after the borrower's appeal had been rejected twice.”
“In recent weeks, business owners have become increasingly vocal about run-ins with bankers over the forgiveness process. Some cited early confusion over what qualified as eligible wages, while others complained that lenders were flat out wrong.”
“Last week, The Intercept reported that several Bank of America clients who only received partial forgiveness had banded together and founded a Facebook support group. Many founders expressed frustration with the review process at BofA, noting that they found it difficult to get people at the bank to return calls.” READ MORE
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ColdSnap, a Massachusetts company, is trying to be the Keurig of ice cream: “ColdSnap’s single-serve aluminum pods are each roughly the size of a Red Bull can and deliver a variety of frozen treats, including dairy and non-dairy ice cream, frozen smoothies, frozen cocktails, and more. The recyclable pods are shelf-stable for nine to 12 months. Once the pod is inserted into the top of the ColdSnap machine, a camera inside reads the pod’s QR code to determine exactly how it should be frozen. Then, using what [founder Matthew] Fonte calls ‘a compressor-condenser-evaporator technology,’ the machine pulls heat from the pod to flash-freeze the ingredients inside. All of this occurs inside the pod so there’s no cleanup necessary.”
“‘By eliminating all the freezing, we save tons of money, tons of energy, and we are able to reduce the carbon emissions associated with making ice cream by 35 to 75 percent,’ Fonte said.”
“The company is currently focusing on developing the ColdSnap brand and plans to start sales early this year with about 100 machines for commercial clients in the Boston area, like office break rooms or university cafeterias.”
“Fonte declined to share pricing details but said the number will depend on purchasing volume; the company is floating the idea of leasing the machines to businesses. Pods will range from $3 to $4 each.” READ MORE
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