It May Be Time to Figure Out TikTok
One key? Understanding the core demographic’s aversion to traditional advertising.
Good morning! .
Here are today’s highlights:
Big retailers are chartering their own cargo ships.
In a tight labor market, employers are reluctant to pass along benefit costs.
Thinking of borrowing from an internet lender? Proceed with caution. Or better yet, don’t.
Businesses are figuring out how to use TikTok: “Brands show up on TikTok in a number of ways. They create their own ads, interspersed in a user’s feed, or, for a premium, they can appear when a user first opens the app. They sponsor hashtag challenges and use various visual and gamification techniques provided by TikTok. Many brands have their own accounts, which they use to announce products, recruit employees, augment offline ads, or just to have a bit of fun. And many work directly with content creators, who often have an innate sense for how to mix entertainment and shill. TikTok is actively fostering this community ... with its Creator Marketplace, which brokers relationships between brands and creators while also providing post-campaign analytics tools.”
“Chandlee and his team have a standing directive for marketers. ‘Don’t make ads. Make TikToks.’”
“Few brands have proved better at following that advice than Chipotle. The company’s VP of digital marketing, Tressie Lieberman, discovered the platform’s power before most.”
“The @chipotle account has more than 1.6 million followers and 30.6 million likes. Anything guacamole-oriented scores.”
“Margaret Johnson believes a big part of success on TikTok involves overcoming the core demographic’s aversion to traditional advertising.” READ MORE
Thinking of borrowing money from an internet lender? “The web is peppered with outfits that dangle enticing rates and describe themselves confusingly as registered loan agents, lending platforms, or loan marketplaces. ‘Most are the equivalent of middlemen between your company and the lender that actually has the cash,’ says Carolyn Scissons, CPA and chief executive officer of FinanceLearningLab.com, a company that assists entrepreneurs with bookkeeping.”
“A Google search of ‘[name of lender] reviews’ will bring up the experiences of others on sites like Reddit.”
“‘A common mistake is focusing on the interest rate,’ says Scissons. She suggests six points to consider: the funds offered, additional fees, term length, collateral required, reporting restrictions, and any special rules about paying off the debt.”
“‘Repayment terms are unique to each loan,’ she says. ‘Are you allowed to actually pay off this loan sooner? Are you paying interest and principal all the way along, or a large principal repayment at the end?’” READ MORE
The latest jobs report offers more evidence that the labor shortage is not about unemployment benefits: “On Labor Day, the federal government let lapse its covid-era jobless benefits, including the supplement which provided an additional three hundred dollars per week to those out of work. The theory was that this harsh move would persuade some of the unemployed to get off their couches and take job vacancies which, according to officials figures, have been running at record levels. What happened?”
“The Labor Department’s employment report for September, which was released on Friday, showed that the labor force—which includes people working and others actively seeking work—declined by a hundred and eighty-three thousand, precisely the opposite of what the tough-love theory had envisioned.”
“Many economists predicted that job growth would rebound from what was seen as a weak August, but instead the level fell to its lowest of the year—a hundred and ninety-four thousand.” READ MORE
On the other hand, the jobs report wasn’t as bad as it looked: “The story of the economy in the second half of 2021 remains one of steady expansion that is more rapid than other recent recoveries. It is being held back by supply constraints and, in September at least, the emergence of the Delta variant. But the direction is clear, consistent and positive. Much of the disappointment in payroll growth came from strange statistical quirks around school reopening.” READ MORE
More cities are attempting to lure remote workers: “Topeka is on a growing list of locations—from Bemidji, Minn., to the state of West Virginia—dangling incentives to entice remote workers. Many companies are offering office-free jobs, and some workers are willing to relocate for cash, cheaper housing or other perks. ‘I’ve had a lot of people ask me, What the hell are you doing in Topeka?’ [Shara] Gaona said. ‘Well, they’re giving me $10,000.’”
“In addition to financial offers, some places are offering extra perks, like a free year at a co-working space in Bemidji, free coffee and martial arts classes in Stillwater, Okla., and subsidized rafting and rock climbing in West Virginia.”
“In Topeka, the sandwich chain Jimmy John’s had kicked in $1,000 for remote workers who moved to one of its local delivery zones, though this promotion just ended, according to an economic-development spokesman.”
“Officials running these programs are betting the U.S. will never completely return to pre-pandemic office life.” READ MORE
In a war for talent, employers are reluctant to pass along increased benefit costs: “Many employers expect their overall medical and pharmacy costs to rise by about 5 percent next year, after a smaller increase last year, according to recent separate surveys by Mercer and another benefits consultant, Willis Towers Watson. As more people get vaccinated for Covid-19 and life gradually returns to normal, workers are expected to seek medical care that they had postponed during the pandemic, pushing up costs. Some employers are also preparing for more workers with serious health issues, like late-stage cancer diagnoses because of delayed screenings, and long-term mental health and substance abuse issues set off by the pandemic ...”
“But employers won’t necessarily pass along all of their higher costs to workers, said Julie Stone, managing director of health and benefits at Willis Towers Watson. ‘Employers are very concerned about losing workers,’ she said.” READ MORE
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Ghost Kitchens has opened its first location in a Walmart in Rochester, N.Y.: “The restaurant is basically a large, open space with white walls and little else. A TV cycled through ads for the brands served by Ghost Kitchens, and acted as the focal point simply because there was nothing else, besides a trash can and larger ads on the windows. It was unlike any other restaurant I'd ever been in. In fact, it reminded me of a doctor's office waiting room more than anything else I could think of — though it didn't have seating. Ghost Kitchens' concept strips a fast food business down to only the most basic elements. Orders are made through large touch screens located throughout the room, requiring no direct interaction between customers and workers.”
“Several dozen brands' worth of menus come out of the same kitchen, which had five workers at the time of my visit.”
“The lack of tables, napkins, condiments, and other things customary at the average McDonald's make it apparent that customers are not meant to linger or eat their food there.”
“Reef Technology, which just signed an agreement to open up 700 ghost kitchens with Wendy's, builds mobile kitchens in parking lots and garages to make food for delivery with fast food partners. It's the largest of these operations in North America, with 5,000 locations.” READ MORE
The big boys are chartering their own cargo ships: “Walmart, Home Depot, Costco, and Target—some of the biggest U.S. retailers by revenue—are among the companies that are paying for their own chartered ships as part of wider plans to mitigate the disruptions, a costly and unattainable option for most companies. Some of the chains are passing along these added costs by raising prices for shoppers. The chartered ships are smaller than those that companies like Maersk operate and move just a small slice of total imports, the executives said. Ships that can hold around 1,000 containers are on average nearly twice as expensive as the cost of moving cargo on a typical 20,000-container vessel, according to freight forwarders.”
“‘It was almost started I think as a joke,’ said Sarah Galica, vice president of transportation at Home Depot. ‘Let’s just charter a ship.’”
“Podzly LLC, a small Papillion, Neb., party-supply retailer that sells online, has about half the inventory it would like because of shipping delays, eating into revenue, said founder Jeremy Podliska.”
“The company is paying about 55 percent more for products it does receive compared with 2019, he said, often broken into small quantities that arrive piecemeal. Chartering a dedicated ship or airplane is ‘just not an option for us as a small company,’ Mr. Podliska said. READ MORE
LOCATION, LOCATION, LOCATION
Tesla’s move to Texas is hardly surprising but there are some issues: “Tesla’s stated mission is to ‘accelerate the world’s transition to sustainable energy,’ and its customers include many people who want sporty cars that don’t spew greenhouse gases from their tailpipes. Texas, however, is run by conservatives who are skeptical of or oppose efforts to address climate change. They are also fiercely protective of the state’s large oil and gas industry. And, despite the state’s business-friendly reputation, Tesla can’t sell vehicles directly to customers there because of a law that protects car dealerships, which Tesla does not use.”
“‘It’s an awkward juxtaposition. This is a state that gets a sizable chunk of its G.D.P. from oil and gas and here comes a virulent competitor to that industry.’”
“Over the years, California granted Tesla hundreds of millions of dollars in tax breaks, something that Gov. Gavin Newsom noted on Friday. But because Tesla will continue to have operations in California, it may still have to pay income tax on its sales in the state ...”
“Whatever incentives they offer Tesla, Texas officials are not likely to change their support for the fossil fuel industries with which the company competes.”
“Once the Austin factory starts producing vehicles, including a new pickup truck Tesla calls Cybertruck, those vehicles will have to leave the state before they can be delivered to customers in Texas.” READ MORE
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THE 21 HATS DASHBOARD
Looking for Answers Gene Marks and I are back today with another 21 Hats Dashboard podcast where we highlight the news stories business owners should be thinking about this week. This week, we talk about how car dealers are profiting despite the chip shortage, the dangers of depending on a platform like Facebook, a possible CRM game-changer, and the many questions that remain to be answered about President Biden’s vaccine mandate. For example, are businesses subject to the mandate if they have 100 employees but the employees all work from home?
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