Is This a Good Time to Start a Business?
While we could be headed into a recession, that’s not necessarily bad for startups.
Here are today’s highlights:
Another company gives the four-day workweek a shot.
Gene Marks thinks Hubspot is missing just one big thing.
Why the comeback of American manufacturing is misleading.
Small businesses may be facing spikes in health insurance in 2023.
A reminder that a recession can be a good time to start a business: “2008 was the worst recession I had ever seen in Arizona. And of course, I started my garage-door business months prior. Already in debt, we did everything we could to survive—from running jobs to fixing trucks to managing angry customers—and thank God we pulled it through! Well, let me share with you a study I came across recently. When I read it, it blew my mind. It came from the Kauffman Foundation, and here's what they discovered in their research: ‘...more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America's fastest-growing companies.’”
“Marketing is what brings customers to your business. You need to keep marketing and selling no matter what. Yet, I've seen entrepreneurs slashing their marketing spend in bad times -- that's like shooting yourself in the foot just when you start to bleed!”
“While keeping expenses low is important, hire as soon as you can. You can't do it all; if you want to scale your business, you will need help.”
“Who you need to hire first will depend on two things: 1) what you're good at and 2) what you're not good at.” READ MORE
Kift is selling remote work in national parks: “For $925 a month (or $425 a month on the annual plan, and a lower sliding-scale price for those who need it), members can bring their vans to one of the company’s four compounds, which it calls clubhouses. They can also rent a remodeled Mercedes-Benz Sprinter van from the company for an extra $2,500 a month. Functionally, the locations are RV parks with better branding, friendlier neighbors, and more bougie amenities. Instead of traveling alone, hunting for internet and a flat place to park each night, groups of 25 or so travelers live together around one stationary building for about a month.”
“Each of these setups has a kitchen, long tables for laptop work and conference calls, fast Wi-Fi, and, as the website promises, ‘shared values, healthy lifestyles, and a life of exploration to work, celebrate, create, share stories, and laugh and cry together.’” READ MORE
A Kansas City clothing brand, Charlie Hustle, experimented with a four-day workweek this year: “Employees of the company started getting every Friday off work without a reduction in their pay or an increase in hours this summer. The results were clear: The brand saw a significant boost in employee morale, and no decline in sales or profits. Last month, leadership officially made the change permanent, giving 21 employees three-day weekends every week.”
“[Greg Moore, the company’s chief operating officer] told The Star that the change has led to smaller, less frequent meetings and allowed the company to reassess some practices, including cutting meetings that weren’t proving beneficial to employees. He said the focus is ‘very much results over work.’”
“Charlie Hustle has put some collaborations and project ideas on hold for next year while it navigates the limits on how much work it can manage, but Moore said none of these changes have hurt profits so far. In fact, he said the company is on track to have its ‘biggest revenue year ever.’”
“Charlie Hustle CEO Chase McAnulty said that offering nontraditional hours may give his company an advantage attracting new talent and retaining the workers they already employ.” READ MORE
Gene Marks thinks Hubspot has become a very good CRM option that is missing just one thing: “What was once a popular inbound (and outbound) tool aimed towards marketers, the platform has evolved into a full-blown customer relationship management system. For a while I would tell companies evaluating HubSpot that it was a ‘good marketing platform with a CRM add-on.’ But that’s not necessarily true anymore. It’s now a very good all-around CRM platform. And getting better. By better I mean that the company is expanding the capabilities of its software to slowly (but surely) turn it into a suite of business applications that can perform most tasks that a company needs. Just look at the features that the company announced this week at its Inbound Conference.’”
“HubSpot rolled out expansions to its payments capabilities, which now allows merchants to better customize their payments and there will soon be capabilities to connect those details with HubSpot payments transactions and to its quote-to-cash solutions that do quoting, billing, and contracts.”
“The company also added new AI features to help identify problems in a database including the automatic flagging and resolving of errors before data is published. There’s also a new ‘custom object builder’ which will help enforce more consistent data entry with property validations and a ‘data quality command center’ with insights and analytics on data integrity.”
“All you need to do is look at the platform’s new features and expanded modules and it becomes obvious: What was once just a marketing application now has a ‘sales hub’ a ‘service hub’ and an ‘operations hub.’ It’s doing quoting, billing, and contracts. It’s receiving cash. So what’s next? Well, isn’t that obvious? It’s accounting. And I bet that’s coming too.” READ MORE
Small businesses are likely to pay more for health insurance in 2023: “Premiums for many Affordable Care Act health-insurance plans are set to rise sharply next year, a sign of how rising labor costs and other expenses are starting to ripple through the healthcare economy. Consumers, who generally can begin signing up for plans on Nov. 1, probably won’t feel much impact because of enhanced federal subsidies, but small employers are likely to face the brunt of higher rates because they don’t get similar government help, according to health-insurance specialists.”
“Insurers on the ACA marketplaces are proposing median monthly premium increases of 10 percent, according to a Kaiser Family Foundation review of proposals made by 72 insurers in 13 states. Some insurers are seeking rate increases as high as 20 percent.”
“The proposed increases vary widely among insurers and markets. Also, state regulators don’t always approve the full increases sought by insurers.”
“‘Small businesses will get hit the worst,’ said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, because they lack the bargaining power that larger companies have during negotiations with health insurers.”
“Bob Jennings, chief executive of 3D Color, a Cincinnati maker of prototypes for consumer goods brands with 21 employees, said he was looking at rate increases in 2023 of 14 percent to 23 percent.” READ MORE
OPINION: The comeback of American manufacturing may be overstated: “What red-blooded American doesn’t love the idea of bringing home manufacturing jobs? But it gets the issue wrong in a few interconnected ways. Contrary to myths that we’ve stopped ‘making’ things in the United States, we already manufacture a lot of stuff here. In fact, we manufacture nearly the most ‘stuff’ on record, as measured by the inflation-adjusted value of those products. We just happen to make that stuff with fewer workers than we used to, because technological advances have led to huge productivity gains. To oversimplify: U.S. factories still make things, but those things are increasingly produced by robots.”
“This is true even for some of the iconic American industries that have supposedly petered out. The United States produces about as much steel today as it did three decades ago, for example, with about half as many workers.”
“Hence the new restrictions for EV tax credits in Biden’s Inflation Reduction Act. Under the law, these subsidies will go only to cars whose supply chains are moved out of not just China but also Japan, the European Union and many other ‘friendly’ countries.”
“Why belabor this labor history? It’s to show that it is risky to count on a supposed manufacturing comeback to power a jobs boom in the years ahead.” READ MORE
Mortgage rates have hit their highest level since 2008: “The average rate on a 30-year fixed mortgage rose to 5.89 percent, topping an earlier high from June, according to a weekly survey by Freddie Mac released Thursday. This time last year, rates were below 3 percent. And mortgage rates look set to continue rising. The Federal Reserve has been lifting rates to try to curtail inflation, which has driven up borrowing costs across the board. The central bank currently appears to be on a path to lift rates another 0.75 percentage point this month.”
“The housing market is a key focus for the Federal Reserve because rising costs there are a major component of this year’s sky-high inflation.”
“It also is an area where Fed policy can have an outsize impact because the housing market is so sensitive to interest rates. Higher rates can add hundreds of dollars to a buyer’s monthly mortgage costs.” READ MORE
THE 21 HATS PODCAST
We have a meeting with Costco! This week, Hans Schrei and Sarah Segal talk about what it takes to break into Costco. How do you get on their shelves? If you do get there, how do you make sure your product will fly off of those shelves? And if you succeed, will you have the financing you’ll need to ramp up production? Along the way, Sarah offers some tips on enlisting Costco influencers, and Hans explains the inner workings of Wunderkeks’ equity crowdfunding campaign, where you can invest as little as $150 and where the company hopes to raise $1 million. Plus: Sarah responds to listener Buzz Park’s suggestion of how to avoid getting ghosted by potential clients after you’ve prepared elaborate and expensive proposals.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
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