I Think There May Have Been a Debate Last Night
Bit of a slow day for business news today, as the attention of the world focuses elsewhere.
Good Morning!
Here are today’s highlights:
Lou Mosca talks about the elements of a real business plan.
Yelp wants to do for home-service businesses what it has done for restaurants.
California’s junk-fee ban will have an impact beyond the state.
The “Sam Walton of home building” understood how to make money selling at the low end of the market.
MANAGEMENT
Lou Mosca says it’s not enough to have a plan in your head: “In my last video, I talked about the struggles owners face that worry me. I mentioned three solutions to help get owners back on track. They were: create a plan, maximize profit, implement a pay-for-performance plan. I want to elaborate on what I mean by 'create a plan.' It's a business plan. Most of the owners I speak with through American Management Services have a 'plan' to earn X amount of dollars at the end of the year, but they don't have it in writing. And if they do, they don’t share it with their key folks. Having your plan written out is not just a formality, it's a crucial step that turns your thoughts and ideas into something tangible and actionable. As I explain in the video, there are six principles that should be considered when creating a plan.” CONNECT WITH LOU
MARKETING
Yelp is coming for home-service businesses: “The review site, which generates the vast majority of its revenue from advertising, is planning to spend $40 million this year to grow its business with local-services companies such as plumbers, electricians and movers, capitalizing on strong growth over the past two years. The spending blitz comes as Yelp’s business with restaurants slumps, as the sector struggles to pass along rising costs for food and labor, and diverts advertising to places like food-delivery apps.”
“The company started to see a shift in consumer behavior related to restaurant-related spending in late December. Demand in the services sector, meanwhile, remained much steadier, Schwarzbach said. ‘As people stay in their homes longer, they do seem to be doing projects.’”
“The investment from Yelp involves spending on paid search with sites such as Google to drive traffic for service providers to its website. That helps get more eyeballs onto Yelp’s listings and ratings, providing another reason for those advertisers to spend to boost their presence on Yelp’s site.” READ MORE
REGULATION
California’s junk-fee ban goes into effect July 1: “This Monday, California’s new ‘Honest Pricing Law’ goes into effect, requiring businesses to disclose all costs up front so that the price a consumer sees is the one they pay. It’s a ban on so-called ‘junk fees,’ hidden charges added to the advertised or listed price for everything from hotel rooms and airline tickets to concert tickets and restaurant food.”
“For cruise fans, the impact of the law is reaching far beyond the Golden State. Starting July 1, the world’s largest cruise operators—Carnival, Norwegian, and Royal Caribbean—will begin disclosing up front all taxes, port fees, and other mandatory charges on all cruises, no matter where they originate.” READ MORE
REAL ESTATE
Developers of luxury rental buildings have started offering podcast studios and maker spaces: “Developers of luxury rental buildings are increasingly using amenities—from pickleball courts and podcast studios to ‘jam rooms’— to woo residents like Welander and help their projects stand out from the pack. Over the last decade or so, offerings in rental buildings ‘have grown from a small fitness center and party room to robust suites of amenities,’ says Chris Schmidt, an executive vice president at Related Companies, which owns rental buildings across the country.”
“In Miami, virtually every luxury building has a pool, gym, co-working space, and access to outdoor space, says Andres Campodonico Medina, a real-estate agent based in Key Biscayne, Fla., with Coldwell Banker Realty Global Luxury Bayfront.”
“Lendlease said it is starting to create ‘hobby spaces’ in some of its rental buildings across the country. Its Cascade building in Chicago has a soundproof jam room. Equipped with guitars, a karaoke machine and other instruments, the space is used by residents for jam nights, where residents gather to play music together. A maker space and shop table in the same building allow for woodworking and other crafts.”
“With more people spending at least part of their week working from home, many now prefer extra space in their apartments for offices, says Harkov. Others want smaller, quieter rooms, including podcast areas, said Courtney Gaines, a Dallas-based vice president at Avenue5 Residential, a multifamily property management firm. The Ovation at Galatyn Park in Richardson, Texas, offers a podcast studio, as well as a dog run and an outdoor game room with shuffleboard.” READ MORE
OBITUARY
Donald Ray Horton, the Sam Walton of home-buying: “One afternoon in late 1978, Donald Ray Horton arrived at a bank in Fort Worth, Texas, an hour early for his appointment with a loan officer, just to show how eager he was. He ended up waiting two hours to see the banker. The 28-year-old Horton, who had quit college at 21 to sell real estate in Arkansas, wanted to reinvent himself as a home builder and needed $30,000 to build his first house. He finally got a chance to make his pitch around closing time. After more than an hour of dickering, the weary banker took off his glasses and dropped them on the table, Horton recalled in an oral history recorded in 2019.”
“‘I’m going to loan you the money’ to build the home, the banker said. ‘Not that I think you know what you’re doing, but I think you will sell it.’ The banker ‘was right on both counts,’ Horton said later.”
“The company he founded, D.R. Horton, now has sold more than a million homes. Since 2002, it has been the largest U.S. home builder in terms of annual sales volume. Last year, the company accounted for about one of every seven new homes sold in the U.S.”
“Horton had a lot in common with another folksy entrepreneur with ties to rural Arkansas: Sam Walton, the founder of Walmart. D.R. Horton and Walmart both cater primarily to moderate-income customers. Both rely on high volumes and rigorous cost controls.”
“D.R. Horton was more willing than some rivals to start large numbers of homes without first securing deposits from buyers. This practice, known in the industry as building ‘on spec,’ allows it to build clusters of homes at the same time, lowering labor and transportation costs, rather than putting them up one by one.” READ MORE
THE 21 HATS PODCAST
This Is Not How This Ends: This week, we bring you what we’re calling an Entrepreneurial Fish Bowl with Chris Hutchinson. As you may remember, we recorded one of these at our 21 Hats Live event in Fort Worth, where I shared some of my challenges trying to build 21 Hats and got feedback from the group. We recorded that conversation and turned it into a podcast episode. This time, we’re doing the same thing except it is Jaime Echt, founder and CEO of The Crafters Workshop, who explains her challenges to a virtual group of 21 Hats entrepreneurs. As you’ll hear, Jaime’s challenges are real: Her sales are down. Her customers are aging. Her lease is up. And she’s not sure what she should do next. We’re going to see if a group of 21 Hats Founding Members can offer some support and advice.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren