It’s a Pile of Money
In the latest episode of the 21 Hats Podcast, Paul Downs explains how the Employee Retention Tax Credit could be worth $300,000 to him this year.
Here are today’s highlights:
Should venture capitalists invest in traditional small businesses?
California businesses are being hit with a wave of ADA-related lawsuits.
In June, there were more job openings than job seekers.
THE 21 HATS PODCAST
Episode 72: It’s a Pile of Money: This week, Paul Downs makes two seemingly contradictory points: One is that his business is on track to have its best year ever. The other is that he expects to claim another huge government subsidy, courtesy of the recently enhanced Employee Retention Tax Credit. As Paul says, if you don’t know about the ERTC or if you don’t know that its requirements have been relaxed, you probably should check it out. Meanwhile, Jay Goltz tells us what happened when three employees found out what the others were being paid, and Dana White feels a little deflated after talking to an investment banker. Plus: Paul shares his new strategy for coping with the labor shortage.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
Some guy at a startup accelerator wants VCs to invest in traditional small businesses. But haven’t they suffered enough? “Over the past year, we’ve seen small businesses and startups converge like never before. Small and local businesses had to move online in the digital rush, removing the physical brick and mortar walls that once constrained their growth. Now in the online space, these businesses have greater potential to scale, and essentially, be startups. But they still don’t have access to capital in the same way that trendy startups do. Small businesses get a tiny slice of the venture funding pie, often having to finance themselves through alternative means like commercial lenders or government loans and grants. This is despite small businesses providing 1.6 million new jobs in 2019, and producing nearly a third of the U.S.’ total exports.”
“As the lines between startups and small businesses thin, VCs are starting to sit up and pay attention to SMBs, which offer a huge opportunity not only for returns, but for generating true local impact and creating a more inclusive business sphere.”
“If VC firms created focused funds that not only backed SMBs financially, but also offered strong mentorship matching, then previously local-only businesses could leverage the VC industry’s learnings from the tech startup world to achieve greater growth outcomes in their own communities.”
“For VCs, this represents a new revenue stream that, as of yet, is not being optimized and requires far less seed capital to get started.” READ MORE
Businesses are being hit with lawsuits that attempt to use the Americans with Disabilities Act to extort a settlement: “Business owner Mark Rogers admits he was taken aback and a little confused when the letter arrived from a law firm, offering to represent him in a lawsuit that accuses him of violating the Americans with Disabilities Act. Then he got a second letter from another attorney. And then a third and a fourth letter landed from attorneys, all wishing to represent him. ‘I thought, Uh, oh,’ said Rogers, who owns Lola’s Chicken Shack on Park Street. Rogers had no idea that his restaurant, a popular lunch spot that offers fried chicken in sandwiches and on salads, had been hit with an ADA lawsuit.”
“Rogers said he learned dozens of other Alameda businesses had gotten similar correspondence from attorneys who specialize in defending against ADA lawsuits — and that all of them referenced cases that had been filed on behalf of Orlando Garcia, who has cerebral palsy and uses a wheelchair.”
“A successful plaintiff in an ADA lawsuit can receive $4,000 for each violation under federal law, plus can be entitled to recover their attorney fees.
Rogers said he has no plans to settle the case against him. But he suspects his legal costs could run as high as $30,000.”
“San Francisco District Attorney Chesa Boudin announced a criminal probe into those lawsuits in July.” READ MORE
In Wyoming, Mich., a Black real estate agent and his Black clients were handcuffed during while viewing a listing: “Mr. Brown and Mr. Thorne were looking around upstairs when Mr. Thorne’s 15-year-old son, Samuel Thorne, sprinted up to them from the first floor and said there were ‘a lot of police officers outside,’ said Mr. Brown, 46. That’s when Mr. Thorne, 45, looked out a window and saw a police officer with a gun drawn, hiding behind a tree, Mr. Brown said. Mr. Thorne called out to the officer, who pointed a gun at him, both men said.”
“‘I told myself, If they shoot me first, they’ll stop there and won’t hit my son,’ said Mr. Thorne, an Army veteran. ‘In that moment, I wasn’t afraid of dying. I was just afraid it was going to hurt.’”
“‘Race played no role in our officers’ treatment of the individuals,’ the department’s statement said. ‘While it is unfortunate that innocent individuals were placed in handcuffs, our officers responded reasonably and according to department policy based on the information available to them at the time.’”
“[Mr. Thorne] grew up in Wyoming, Mich., but ‘it’s 100 percent guaranteed I’m not buying a house in that city,’ he said. He said he and his son would keep looking elsewhere.” READ MORE
In June, there were more job openings than job seekers, a record 10.1 million: “The increase was driven by industries such as professional and business services, retail and the accommodation and food services, as pandemic restrictions continued to ease that month and consumers were more willing to dine out and travel. The June increase in job openings came ahead of an uptick in cases tied to Covid-19’s Delta variant. Private measures of job postings through July showed openings remained elevated, though they began to plateau as hiring improved. The continued high number of openings indicates that the variant, so far, isn’t affecting hiring plans. The number of job openings in June exceeded the 9.5 million people who were unemployed that same month.”
“Monday’s report also showed the rate at which workers quit their jobs, a proxy for confidence in the labor market, rose in June to just below the record high touched in April.” READ MORE
Amazon Web Services, the cloud giant, which produces $59 billion a year in revenue, is looking to hire 20,000 people: “To get a sense for the top areas AWS is hiring for, as well as the cloud unit's priorities, Insider looked at the open positions, located all over the world (and many offered remotely, reflecting a larger trend) — and how much those jobs might pay in base salary. Based on how AWS categorizes positions on its jobs page, the most in-demand area at AWS is software engineering with nearly 5,500 open jobs, followed by professional services with over 4,000 jobs, then solutions architects with over 1,500 jobs, and finally sales and marketing combined with over 1,200 jobs.”
“The highest-paid employees at AWS, per that data, can make as much as $185,000 in salary.” READ MORE
THE COVID ECONOMY
Some consumers are rethinking their return to dining out: “Restaurants that survived waves of closures last year had headed into the summer with rising optimism as most of the country ended dine-in occupancy restrictions. Bigger delivery and online ordering business boosted sit-down chains in recent months, including Ruth’s Hospitality Group, and Outback Steakhouse-owner Bloomin’ Brands. However, individual operators and recent industry data now point to a more mixed picture, particularly in U.S. markets hit hard by Covid-19 outbreaks and renewed coronavirus-related advisories. Recent consumer surveys show the Delta variant prompted Americans who say they are the most restricted in their activities to start pulling back their activities again late last month.”
“Jennifer Fertenbaugh, co-owner of a restaurant and events business in Harrisburg, Pa., said she is now considering whether to bring back large, plexiglass screens that she had removed from registers at Café Fresco Center City in June.”
“She is closing the restaurant for a stretch later this month given a crippling labor shortage, and now views it as a good period to take time off.”
“‘It does provide us with an opportunity to watch what happens with cases and take our time in making a decision on how best to respond.’” READ MORE
In New York City, restaurants have yet to find their footing: “New Yorkers began the summer with expectations of a grand reopening — tourists flocking to visit, curfews lifted, and dining and nightlife regaining their former effervescence. But many restaurants are still dealing with fallout from the Covid shutdowns, while scrambling to satisfy a public determined to enjoy a normal summer. ‘Everyone was like, OK, restaurants, go ahead; you can open up again,’ said Tren’ness Woods-Black, an executive of Sylvia’s and a granddaughter of the founder, Sylvia Woods. ‘But it’s not as easy as flipping on a light switch.’”
“Responding to a surge in Delta variant cases, the city announced Tuesday that it would require all restaurant employees and indoor-dining customers to show proof of vaccination, starting Aug. 16.”
“Ms. Woods-Black, who appeared at the announcement, said she supported the policy because she didn’t want to put anyone in danger, and Sylvia’s ‘can’t afford to get shut down again.’ She said its revenues are half of what they were before Covid.” READ MORE
France and Italy have imposed strict vaccine mandates: “France began requiring the passes, which certify that somebody has been vaccinated against Covid-19, on Monday for people seeking to dine at a restaurant, whether indoors or outdoors. The pass is now also necessary to take domestic flights and long-distance busses and trains. France already made the pass mandatory last month for a host of other activities such as entrance to museums, pools, gyms and large sports events.”
“Italy also made the digital health pass mandatory for a range of activities last Friday, although the unvaccinated can still dine at restaurants if they sit outdoors.”
“The certificates, known as the green pass in Italy and health pass in France, display a personal QR code that shows if a person is vaccinated, has recovered from Covid-19, or has freshly tested negative for the virus.” READ MORE
Chicago employers are postponing their office returns: “A growing number of companies are pushing their return to the office back to October and beyond, as the Covid-19 Delta variant fuels a pandemic resurgence across the country. Some companies are also mandating unvaccinated employees either get jabbed before they come back or get a new job. From Northbrook-based pizza chain Lou Malnati’s to online retail giant Amazon, many Chicago-area employees are getting the same message: Stay home, at least for now.” 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