Here are today’s highlights:
Napa Valley wineries are uninsurable.
People are selling used cars for more than they paid for them.
A business owner decides to address the issue of race.
Victor Hwang, founder of Right to Start, says President Biden’s executive order is a game-changer for entrepreneurs: “The executive order addresses competition broadly, but several elements are especially important for entrepreneurs. The White House seeks to make changing jobs easier, raise wages, and increase economic mobility by banning or limiting non-compete agreements and reducing unnecessary, cumbersome occupational licensing requirements. It also pushes to increase opportunities for small businesses by directing federal agencies to promote greater competition through procurement and spending decisions.”
“There are three ways this executive order points to a fundamental shift. First, it elevates recognition of these entrepreneurial barriers to the highest visibility ever. The damaging impact on entrepreneurs of non-compete agreements and excessive occupational licensing requirements has been a focus of research for decades.”
“Second, the executive order puts the entirety of the federal government on notice. Tackling entrepreneurial decline is now clearly stated as a priority of President Biden.”
“Third, the executive order heightens the visibility of these issues at state and local levels of government. That's where many of these barriers primarily exist.” READ MORE
Economists believe the red-hot U.S. economy peaked in the second quarter but expect the expansion to continue: “Economists surveyed this month by the Wall Street Journal, on average, estimated that the economy expanded at a 9.1 percent seasonally adjusted annual rate in the April-to-June period. That would mark the second-fastest pace since 1983, exceeded only by last summer’s rapid rebound, when businesses started to reopen after lockdowns and governments began easing pandemic-related restrictions. Many economists also estimate U.S. gross domestic product surpassed its pre-pandemic levels in the second quarter.”
“The survey respondents see growth cooling to a 7 percent pace in the third quarter and drifting down to a 3.3 percent rate in the second quarter of 2022.”
“They forecast the economy to grow 6.9 percent this year, measured from the fourth quarter of last year to the same period of 2021, then declining to 3.2 percent next year and 2.3 percent in 2023.”
“With more moderate growth, the rates of job gains and inflation should ease as well, the economists said.” READ MORE
People are selling their used cars for more than they paid for them: “The recent jump in used-vehicle pricing is the latest in what has been a topsy-turvy year for the U.S. car business. Consumer demand for cars and trucks is near an all-time high, but car companies are struggling to keep up, slammed by a global computer-chip shortage that is curtailing factory production on the new-car side. As a result, buyers unable to find what they want in showrooms are flocking to the used-car lot, where inventory is also being constrained by fewer people turning in leased vehicles and rental-car firms holding on to vehicle fleets longer because they are unable to find replacements.”
“Prices for used cars and trucks leapt again, by 10.5 percent, in June, according to the Labor Department, contributing to an overall rise in the consumer-price index and further stoking fears of U.S. inflation.”
“‘We have a long way to go before prices come down,’ said Tyson Jominy, an auto analyst with research firm J.D. Power.” READ MORE
An appellate court has upheld the CDC’s Covid restrictions on Florida-based cruises: “A three-judge panel from the 11th U.S. Circuit Court of Appeals issued a temporary stay at 11:50 p.m. Saturday, just minutes before the lower-court order would have taken effect. Florida had sued U.S. health authorities to overturn a conditional-sailing order put in place by the Centers for Disease Control and Prevention in October. The state claimed that the order—which set up a framework for cruise lines to restart operations by completing several phases, including test sailings without regular passengers—was overly burdensome and would effectively keep most cruises shut down through the summer or longer.”
“The CDC’s requirements allow ships to begin regular sailings without first conducting test cruises if they attest that 95 percent of crew members and passengers are fully vaccinated against Covid-19.”
“But Florida, as well as Texas and Alabama, which also have cruise ports, passed laws barring businesses from requiring ‘vaccine passports’ or proof of vaccination.” READ MORE
With the prime minister in isolation, England’s Freedom Day is not off to a great start: “The episode illustrates the widening ripple effects of the health service’s highly sensitive test-and-trace app, which has notified more than 500,000 people in the past week that they should isolate themselves because they had come into contact with someone who tested positive. The cascade of isolations has begun to cause staff shortages in pubs, restaurants and other workplaces. A major line of the London Underground, the Metropolitan, was closed Saturday evening because multiple staff members were pinged by the app. The Piccadilly and District lines were also affected.”
“British news media have called July 19 ‘Freedom Day,’ but for thousands of people who are either infected or have been in contact with an infected person, that phrase will ring hollow.” READ MORE
Last month, at the Tugboat Institute Summit, I heard one of the best talks I’ve ever heard at a business conference and one of the few to get a standing ovation. It was given by Mel Gravely, who is CEO of TriVersity Construction and who is about to publish a book called “Dear White Friend.” Tomorrow at 3 ET, Mel will join me for a 21 Hats webinar conversation about how he managed to become CEO/owner of a construction business, why he chose to write a book addressing race from the perspective of a business owner, and how he, too, has struggled to hire for diversity. Bring your own questions. REGISTER HERE
Napa Valley winemakers are now uninsurable: “Last September, a wildfire tore through one of Dario Sattui’s Napa Valley wineries, destroying millions of dollars in property and equipment, along with 9,000 cases of wine. November brought a second disaster: Mr. Sattui realized the precious crop of cabernet grapes that survived the fire had been ruined by the smoke. There would be no 2020 vintage. A freakishly dry winter led to a third calamity: By spring, the reservoir at another of Mr. Sattui’s vineyards was all but empty, meaning little water to irrigate the new crop. Finally, in March, came a fourth blow: Mr. Sattui’s insurers said they would no longer cover the winery that had burned down. Neither would any other company.”
“Desperation has pushed some growers to spray sunscreen on grapes, to try to prevent roasting, while others are irrigating with treated wastewater from toilets and sinks because reservoirs are dry.”
“If the heat and drought trends worsen, ‘we’re probably out of business,’ said Cyril Chappellet, president of Chappellet Winery, which has been operating for more than half a century. ‘All of us are out business.’” READ MORE
Subway tried to give away a million free sandwiches, but franchisees say almost no one wanted them: “Some Subway franchisees reported having fewer than 20 people show up for the giveaway, which left them with large amounts of excess inventory. In contrast, Chipotle workers and customers said some stores were overwhelmed by a July 6 free burrito promotion. An operator of Subway restaurants in the Midwest said one of his stores had four people stop in to redeem a free sandwich. A multi-unit West Coast franchisee interviewed by Insider said he had just 10 to 20 show up at each of his stores, but the expectation given by Subway was operators should prepare to limit the giveaway to the first 50 people in line.” READ MORE
Dollar General plans to hire 50,000 new employees by Labor Day: “So far in 2021, Dollar General has already opened, by leaps and bounds, more stores than any other brick-and-mortar retailer and accounts for roughly a fourth of all new stores this year, according to Coresight Research tallies. Today, Dollar General's store count stands at more than 17,400, serviced by 27 distribution centers. In March, Chief Operating Officer Jeff Owen said the company thinks it could add a total of 13,000 additional stores, which would nearly double the company's already voluminous store count.”
“Along with its traditional stores, Dollar General is also expanding its Popshelf concept — launched last year and targeting middle-income suburban women — as well as Dollar General Plus and its smaller footprint DGX format.” READ MORE
The latest trend in startups? Founders are throwing showers for their new-born ventures: “Across the United States, especially in New York City, entrepreneurs are appropriating the baby shower, an event previously reserved for expectant parents, usually mothers. The idea is that if building a business is just as comprehensive (and expensive!) as having a baby, why not build in the same kind of communal support? Some business showers include games, decorations and catering. Some founders even ask for gifts, providing links to business registry websites that have also become popular. Business showers generally differ from launch parties because they occur at the very early stages of a startup, sometimes when the business is still just gestating as an idea.”
“‘I would say the beauty of a business shower is it’s kind of a new concept, and it’s kind of whatever you want to make of it,’ said Dulma Altan, founder of Makelane, a master class for female founders.”
“It offers a free virtual kit called Startup Stork to help people plan business showers. Over 1,300 have been downloaded in 2021.” READ MORE
THE 21 HATS PODCAST
Episode 68: Does It Matter What You Name Your Business? When Dana White chose a name for her business, she decided she wanted a name that had meaning—both for her and for the women she hoped to reach. When Laura Zander picked a name for her business, she thought she was going to be selling coffee. And when Jay Goltz chose a name for his business, he very strategically chose the perfect name to rank well in—wait for it—the Yellow Pages. This week, Dana, Laura, and Jay talk about what they consider the most important decisions they made in building their businesses—including why Dana closed her most profitable location, why it took Laura 15 years to find an operations person, and what Jay figured out about employees who struggle to grow with the business.
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