Offering Family Businesses a Little Hope
As we discuss in our latest podcast episode, it’s almost as if they were designed to create conflict. While there are no guarantees that anything will work, there are coping strategies that can help.
Good Morning!
Here are today’s highlights:
Why do business owners keep going? It’s about control, says Gene Marks.
Amazon finds another way to damage its third-party merchants.
Would you even know if your remote workers were taking a vacation?
The doomsday economy is thriving.
THE 21 HATS PODCAST
Family Businesses Aren’t Dysfunctional. They’re Disastrous: This week, in episode 204, Jay Goltz and special guest Cathy Caroll talk about family businesses, with Jay asserting that they are even more combustible than most people realize and with Cathy offering some smart coping strategies. We start with Cathy explaining how her own experiences in a family business propelled her to write a book, Hug of War, and to become a family business coach. Why are family businesses so difficult? Well, says Cathy, it’s because you’re trying to combine a family mindset with a business mindset, which she says, is like “living in socialism and capitalism simultaneously.”
Of course, she says, it also has to do with mixing love and money—“You’re just gonna get sparks”—and with the brutal challenge of transitioning from one generation to the next, when every decision can feel like a repudiation or rejection. Still, it was that stew of anxiety, resentment, and trauma that helped Cathy find her calling, which is to help others do in their family businesses what she could not in hers.
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THE ENTREPRENEURIAL LIFE
Gene Marks asks why 91 percent of business owners are happy: “Some 91 percent of the 1,290 business owners recently surveyed by the employee scheduling software maker Homebase said that they were happy with their jobs. Who are these happy people? And why are they so darned happy? It’s not the small business story we usually hear. The National Federation of Independent Businesses says small business owners’ optimism has been below average for 29 months and their uncertainty is the highest it’s been since 2020. Small businesses are ‘struggling’ to make rent and ‘racking up’ credit card debt. Many are ‘facing recession,’ some say they ‘can’t survive’ and others say they’re ‘feeling the pinch’ or ‘stuck in an economic nightmare.’”
“And yet with all of these challenges, all of these headaches, all of these concerns, the Homebase survey says that basically all of them are happy? Is this possible? Yes, it is.”
“Those same clients of mine who complain, kvetch and carp? The fact is they wouldn’t have it any other way. Even with all these headaches, most wouldn’t have it any other way. They enjoy running their businesses. They would never go back to being an employee for someone else. Happiness is relative. And they’re relatively happy.”
“Why? It’s because of control. Like most people running a business, I can deal with all the bullshit, all the headaches and all the stresses. I can deal with the hours, the responsibilities and the risk. I can deal with all of this because the decisions are mine to make. Every problem I have is owned by me.” READ MORE
ECOMMERCE
Amazon makes a mistake, does nothing to help, and tanks a mom-and-pop business: “Paul and Rachelle Baron were an Amazon success story. The washable swim diaper they designed for their infant son quickly became a best-selling product as the online retailer’s algorithm worked its magic. Satisfied parents left five-star ratings and glowing feedback, elevating the diaper in search results and steering more shoppers their way. The momentum seemed unstoppable. Then one scathing review changed everything.”
“‘The diaper arrived used and was covered in poop stains,’ a shopper wrote in a review with a one-star rating. ‘Nothing could have been more disgusting!! I am assuming someone returned it after using it and the company simply did not check the item and then shipped it to us as if it was brand new.’”
“Amazon.com has committed to inspecting each return for issues before reselling it. But selling returned products as new is a major and growing problem, according to consultants who advise merchants how to navigate the online marketplace. When the practice spawns negative feedback, merchants say, the damage increases exponentially.”
“The Barons told Amazon repeatedly that they weren’t at fault and that the review should be taken down. Yet it remained on the site, inflicting lasting harm. The couple says they’re $600,000 in debt, including a loan secured by their home that complicates the prospect of filing for bankruptcy. They make enough selling diapers to pay down debt and order more inventory, they say, but it’s not a living.”
“‘The last four years have been an emotional train wreck,’ Paul Baron said. ‘Shoppers might think returning a poopy diaper to Amazon is a victimless way to get their money back, but we’re a small, family business, and this is how we pay our mortgage.’ Amazon removed the review a few hours after Bloomberg published this story.” READ MORE
HUMAN RESOURCES
Pay raises are declining, as fewer companies struggle to attract and retain employees: “Companies are shelling out less for pay raises in 2024 than they did last year — and expectations for the future are dropping too. About 47 percent of American companies surveyed by advisory and consulting firm WTW said their salary budget for 2024 are lower than the previous year, with the median pay raise dropping from 4.5 percent in 2023 to 4.1 percent this year. The drop in salary budgets comes as the labor market has cooled substantially over the last two years. Just 38 percent of employers said they had trouble attracting and retaining talent, down from 57 percent just a year ago.”
“According to Payscale’s 2024 Compensation Best Practices Report, 60 percent of organizations are now publishing pay ranges in job postings, up from 45 percent last year. That increase is at least in part the result of new legislation and recruiting pressures.”
“The changing practices also are drawing questions from employees, with 27 percent of organizations saying workers are asking more questions about pay, according to Payscale, and 14 percent saying they've had employees quit their jobs because they saw ads with higher pay elsewhere.” READ MORE
The “quiet vacation” is this summer’s hottest getaway: “Legions of workers aren’t taking paid time off this summer. That doesn’t mean they’re going without a break. It’s all about the art of quiet vacationing, the latest genre of carving out leisure time during the workday. Instead of requesting time off—and using up finite vacation days—some staffers are indulging in mini-vacations on the clock, while maintaining the facade of working remotely. Like its precursors quiet quitting and lazy-girl jobs, the quiet-vacationing concept took off on social media and is playing out in real workplaces this summer. Millennials have been blamed for overindulging, but data shows it happening across the workforce. A recent Harris Poll survey of nearly 1,200 working Americans found over a quarter have taken unauthorized time off.”
“On-the-sly vacationing isn’t just about working less, say those who are taking part. Instead, many practitioners say they do it because they get too few paid vacation days and want to use them judiciously.”
“Or, they feel workplace pressure not to take them. ‘I feel guilty using my vacation days,’ says a 37-year-old from Chicago whose contract-tracing job lets her work mostly remotely.”
“Pressure to always be ‘on’ prompts nearly 80 percent of workers not to take the maximum amount of vacation time they do get, the Harris survey shows. So ‘they’re going to work around it and not put themselves in a position of vulnerability,’ says Libby Rodney, the Harris Poll’s chief strategy officer.”
“Even employees at companies with unlimited vacation-day policies say they don’t want to appear as if they’re taking too many days off. Nicole Walker, a 33-year-old customer-support staffer at a shipping company with unlimited time off, isn’t a quiet vacationer per se. When she travels somewhere fun with her family, she’ll still work a full day, sometimes from the beach, then switch to vacation mode once she’s wrapped up her day.” READ MORE
BUSINESS MODELS
Maybe the New Jersey diner isn’t doomed: “So much for the narrative about the death of the diner as imminent, underway, or inevitable, due to factors that may include changing tastes, new competition, rising real estate values, the reluctance of younger generations to take over family-run businesses, or all of the above. ‘It’s a good business,’ said Yilmaz Kangal, 45, who owns the Millville Queen Diner in Millville, the Queen II Restaurant in Vineland, and expects to reopen the Malaga as the Jersey Diner in a few months. Post-pandemic, ‘we’re back to normal,’ he said. ‘I’m growing, but staying local because I don’t want to be too far from my businesses.’”
“‘We have a Pandora right down the road from Geets,’ said Saban Pamuk, who along with a cousin owns the company. The firm also owns the Medport Diner, the potential closing of which earlier this year sparked an online petition and an outpouring of support. ‘Diners are a community place,’ said Pamuk, who’s 52 and is, like Kangal and Tsiknakis, from a diner family.”
“‘Diners are forever in New Jersey, and the key is community. Some of our customers come in for breakfast, lunch, and dinner. And we get involved in the towns, sponsoring things and being a gathering place. You can’t say that about national chains that are competing with us.’” READ MORE
RETAIL
Crime has fallen around the country—even in San Francisco: “Long the bane of San Francisco leaders and the city’s tourists industry, property crime has declined by 34 percent compared to the first six months of last year, according to new police statistics. The drop is part of a continued downward trend of reported major crimes in the city—one that has in most cases seen them fall below or near pre-pandemic levels. ‘The property-crime drop is really driving the majority of our reduction in crime,’ San Francisco Police Chief Bill Scott said at Wednesday’s police commission. ‘Car break-ins, and larceny in general, is down significantly.’ While the media narrative in certain quarters has been slow to shift, the same can’t be said for the underlying reality.”
“Larceny thefts, which includes hot-button issues like car break-ins and retail thefts, dropped 40 percent to 10,522 so far this year, compared to last year’s 17,648 reported larcenies through six months—which was down from the 18,433 thefts reported in the first six months of 2019.”
“Scott attributed the trend to the department’s focus ‘on the right people’—meaning organized crews that operate across the Bay Area, including one that specialized in stealing high-end watches. The department used bait cars and other tactics to target criminals in highly trafficked areas, which Scott said helped SFPD make more than 400 retail-theft arrests this year.”
“Criminologists, however, say there are many reasons for the safer streets, and those factors are not always attributable to police—especially considering crime rates are dropping nationwide as life returns to normal after the pandemic.” READ MORE
PROFILE
More entrepreneurs are betting on the doomsday economy: “When it comes to surviving the apocalypse, you could do a lot worse than the West Virginia branch of Fortitude Ranch, a constellation of five survivalist compounds across the United States and one of a growing number of businesses aiming to seize on Americans’ deepening anxieties about the future. Set on a rise above the lush valley cradling the Lost River in eastern West Virginia, about two hours from Washington, D.C., the 50-acre property backs up against the George Washington and Jefferson National Forests. A handsome guesthouse, built of dark timber slats, anchors the property.”
“Two large, boxy dormitories, also timber but more rustic, as well as a bare-bones bunker, are designed to house more than 100 members. They are each expected to pay $2,000 to $20,000 (depending on the level of accommodation) to join Fortitude Ranch, and another $1,000 per year per person in dues to call this their ‘home fort,’ meaning they will head there when catastrophe strikes.”
“Inside a locked armory, assault rifles and crossbows repose on wall pegs. On a tabletop sits a 50-caliber rifle, which could be used to take out the engine block of an approaching vehicle. An inert radiation detector is positioned nearby. Guard towers ring the property. The dormitories have balconies with clear, continuous sightlines along the edge of the forest.”
“The companies that have staked their claim in the doomsday economy include American Reserves, which offers prepper essentials like a 12-month supply of food ($2,799.99) and an emergency crank radio ($59.99); Fieldcraft Survival, which offers classes ($250) across the country on ‘traditional bushcraft and modern survival skills,’ including setting traps and tying knots; and those offering luxury bunkers, such as the Vivos xPoint complex outside of Edgemont, South Dakota, where membership goes for $55,000.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Don’t Sleep on the SSBCI: This week, John Arensmeyer, founder and CEO of Small Business Majority, reminds us that the State Small Business Credit Initiative is sending billions of dollars through the states specifically for small businesses. Because every state is handling the money differently and there is no one-stop shop for information, there is some confusion—but the money is real and John explains how to figure out if you qualify. Plus: He also explains why he’s surprised some business groups are celebrating the recent Supreme Court decisions on regulation, why his organization favors the ban on non-competes, and why he thinks the small business tax break contained in the soon-to-expire Trump tax cuts can be improved.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren