Maybe You Should Ask Your Customer
Carey Smith says Big Ass Fans grew 43 percent a year for 20 years primarily because it called every customer to ask what went wrong.
Here are today’s highlights:
Got a partner? Gene Marks says you need a buy-sell agreement.
Yes, SEO is important. But it’s not everything.
Health insurance prices rose nearly 30 percent over the past year.
How many American malls will be operating in 10 years?
Not sure if you’re on the right track? Carey Smith, founder of Big Ass Fans, says the key is market research: “In the businesses I've owned, we talked to our customers obsessively. We wanted to know everything we possibly could about their needs, desires, and dissatisfactions with our products. We then used that knowledge to conduct market research on how to solve their frustrations. This—and the fact that we owned our manufacturing facilities—allowed us to swiftly improve our products and expand the product line to meet market demand.”
“That was my approach at Big Ass Fans, where we grew on average 43 percent annually over nearly 20 years. We took what most people thought was a boring, basic product and turned it into something unique, over and over again.”
“At the fan company, we had a team that called each customer—not to hear what we did right, but to learn what went wrong. We asked pointed questions about every step, from ordering to installation to that first flip of the switch.”
“Yet for some reason, very few young entrepreneurs we meet today at my investment firm, Unorthodox Ventures, seem to have the stomach for it. They'd rather bask in praise. Ask questions? Well, never.”
“Currently, we work with a food company that has been able to launch new flavors and quickly add retail partners because it does its own manufacturing in its own facility. The company was able to double retail distribution in 2021, adding more than 1,000 stores in the second half of the year.” READ MORE
Here’s what you should cover in your buy-sell agreement: “Your company needs a buy-sell agreement if it has more than one partner, or multiple investors, or if family members are employed now or could be in the future. A good version of this document will serve as a road map for any future ownership issues that may arise. For example, what if an owner unexpectedly dies or gets divorced? What if an owner wants to increase ownership or sell a stake? What if new investors want to come in? Or what if a shareholder becomes incapacitated, is found guilty of a crime, or otherwise can’t perform the duties?”
“Unfortunately, even though the U.S. Small Business Administration reports that more than half of U.S. small businesses are owned by people older than 50, it turns out that only one-third of these owners — according to a recent study from accounting firm PwC — have formal succession plans in place.”
“For starters, you’ll want the agreement to always show a current list of all owners and the number of shares they hold in the company. Next, you’ll want to define your ‘triggering event’ that would require all the owners to consult the buy-sell agreement.”
“‘The last thing a business owner wants is to be in partnership with a spouse of a former owner who’s now deceased,’ said Steven Fromm, an estate planning lawyer based in [Philadelphia]. ‘And it’s also possible that the spouse doesn’t want to be dependent on the company’s success.’”
“Finally, what if there are disputes? In that case you’ll want to make sure you’ve got some sort of resolution mechanism laid out in the agreement.” READ MORE
When it comes to websites and content, it’s not all about SEO: “First, let me say that search engine optimization is hugely important for any website. If you’re going to the trouble of building a website, it is absolutely worth putting in the extra effort to optimize it for search. But notice that I’m talking about your entire website here, not just your content program. Content is one part of SEO, just as SEO is one part of content marketing. If your SEO strategy starts and ends with keywords, you’re probably not going to see much ROI. The reverse is true, too: if your entire content strategy is focused on optimizing for search, you’re probably not getting the most value you can from your content. That’s because SEO is a really indirect way to derive value from content.”
“Think about it: you’re writing content to make your site perform better in search with the hope that people using search engines find your website, visit it, and then decide to sign up for your newsletter (or whatever). That’s becoming less and less likely, for a few reasons.”
“The second problem with SEO: it’s slow. The conventional wisdom says to expect SEO results within three to six months of launching a program – an eon in startup terms. And that timeline assumes you’re going all-out on content and SEO, meaning you have at least one FTE dedicated to each.” READ MORE
Health insurance prices rose nearly 30 percent over the past year: “That is one of the steepest increases of all products tracked by the BLS report—only eggs (30.5 percent increase), margarine (44 percent), airfare (42 percent), food in employee facilities such as canteens (91 percent), and fuel and gas (58 percent and 33 percent, respectively) had higher increases year-over-year.”
“Health insurance prices increased more in the past year than they did in the entire decade between January 2006 and January 2016.”
“Beyond inflation, the reasons behind the increase in health insurance costs is to be found in the fallout from covid. The pandemic drove up costs for insurers that had to pay for testing, treatment, and vaccines without out-of-pocket charges and copays for patients.”
“Now, those expenses are being paid by policyholders under the guise of increased premiums.” READ MORE
Mortgage rates near 7 percent, hitting a 20-year high: “The latest climb has been particularly painful for the housing market, putting homeownership out of reach for many would-be buyers because of the added monthly cost of paying a mortgage at a higher rate. A buyer that earns the median household income and puts 20 percent could afford a home costing roughly $339,000 this week. That buyer could have afforded a home costing almost $449,000 in January, according to listings website Realtor.com, which is operated by Wall Street Journal parent company News Corp. The median existing home cost $389,500 in August.”
“The higher rates have further cooled the housing and mortgage markets. The volume of mortgage rate locks is down 30 percent over the past three months and almost 60 percent from last year’s levels, according to Black Knight, a mortgage technology and data provider.”
“‘The phones are just not ringing,’ said Michael Menatian, president at Sanborn Mortgage Corp. ‘It’s really, really quiet.’” READ MORE
Mark Zandi reacts to the latest inflation report:
Ten years from now, there may be as few as 150 American malls still operating: “The total number of U.S. malls has declined from an estimated 2,500 in the 1980s to about 700 today, according to Nick Egelanian, president of retail advisory firm SiteWorks, which tracks U.S. mall performance. Many were turned into open-air retail, an expensive and difficult undertaking that often takes decades. Some were demolished. Others remain standing, but aren’t operating and stand as vacant ‘ghost towns.’ Mr. Egelanian expects the number of malls to continue to decline over the next 10 years to an estimated 150 nationwide.”
“The survivors will be top-tier properties, with updated infrastructure and the best fashion and luxury retailers as well as dining and entertainment, he said.”
“Many malls are struggling because their anchor tenants, department stores, have seen declining market share since the 1980s due to the rise of more convenient and lower-cost discount stores, Mr. Egelanian said. In more recent years, online shopping has further depressed foot traffic to malls.” READ MORE
Addressing emissions should not be a concern for big business only: “It can be tough for a business to know where to begin. How big is its footprint? What should it set as a goal? Tools like the U.S. Environmental Protection Agency’s Center for Corporate Climate Leadership can help a business develop targets appropriate for a company’s industry and size—their self-assessment tools are a good place to start. Additionally, the United Nations SME Climate Hub provides a target that virtually any small business can adopt: to halve emissions by 2030 and achieve net-zero by 2050.”
“The goal is for a company to consider every action it has direct control over—Scope 1 emissions—and search for more sustainable solutions. As an example, HVAC contractors, electricians, and plumbers with large fleets should think about transitioning to electrical vehicles.”
“Building operations account for 39 percent of all global emissions, according to the World Green Building Council (other estimates peg it closer to 50 percent), which is why switching to renewable energy like solar panels, installing dimmable windows that automatically darken when the sun is brighter, or using smart building software that throttles down electricity when it’s not needed are all critical steps a company can take to reduce its Scope 2 emissions.”
“Small companies should analyze every link of their supply chain, which helps reduce Scope 3 emissions. What are the raw materials made from? How far are they traveling? If a company uses cotton, is that cotton coming from a sustainable source?” READ MORE
A lot of people installed pandemic ponds. Now what? “Pandemic lockdowns sparked interest in building koi ponds, while a subsequent surge in home sales left some sellers at a loss for what to do with their orphaned koi. Finding new homes for koi and moving them is a whole lot more complicated than driving a rescue dog or cat to a new place. It can require wading into muddy waters to try to lure the bashful fish to the surface. It demands gentle transport in carefully packed coolers, then quarantining the fish before introducing them to new ponds.”
“[Kevin] Varilek, who runs Lehigh Valley Koi Rescue with his wife, Jennifer, out of their Northampton, Pa., home. They perform up to 150 koi rescues each year, and calls have increased as the pandemic has subsided.”
“People have a lot of reasons for giving up their beloved koi, a variety of carp originally bred in Japan and prized for their vivid colors. They retire to warmer climates or assisted living and can’t take their fish with them.”
“New homeowners are overwhelmed when they realize their backyard water feature is a complex ecosystem teeming with fish that can grow to the size of something you might catch while deep-sea fishing. Many simply don’t realize how long koi will live—from 30 to 80 years.” READ MORE
Earlier this year, we spoke with Greg Wittstock, who turned backyard ponds into an industry and then almost lost his business.
THE 21 HATS PODCAST
Dana Opens in Dallas: This week, Dana White tells Paul Downs and Jay Goltz how her move to Dallas is going, including hiring a manager, firing a publicist, tweaking her business model, and for the first time, confronting competition. Dana also explains the surprising way she managed to get the financing to open her first salon on a military base, which she now thinks could be up and running by the end of the year. Plus: Paul has had to make adjustments to handle a sudden influx of business. And Jay is still looking for a head of HR. Should he post the ad on ZipRecruiter or Indeed? Should he offer a salary range in the ad? And is it reasonable for him to expect a follow-up note after an interview?
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Thanks for reading, everyone. — Loren