Signs of a Boom?
Today’s Highlights: Economic indicators suggest ‘a supercharged rebound.’ The Biden administration announces PPP changes. And at least one Texas institution has flourished in the blackout crisis.
THE TEXAS BLACKOUT
Amid disaster, Texas’s home-grown, family-owned supermarket showed why it’s special: “H-E-B is a grocery store chain. But it is also more than that. People buy T-shirts that say ‘H-E-B for President,’ and they post videos to TikTok declaring their love, like the woman clutching a small bouquet of flowers handed to her by an employee: ‘I wish I had a boyfriend like H-E-B. Always there. Gives me flowers. Feeds me.’ The storm and its devastation have tested a notion of independence that is deeply ingrained in Texas, a sense that Texans and their businesses can handle things on their own without the intrusion of outsiders or the shackles of regulation.”
“But for many Texans, H-E-B reflected the ways the state’s maverick spirit can flourish: reliable for routine visits but particularly in a time of disaster, and a belief that the family-owned chain — with the vast majority of its more than 340 locations inside state lines — has made a conscious choice to stay rooted to the idea of being a good neighbor.”
“‘It’s like H-E-B is the moral center of Texas,’ said Stephen Harrigan, a novelist and journalist who lives in Austin.” READ MORE
When one H-E-B store lost power, it let shoppers leave without paying: “The show of kindness this week at the H-E-B grocery store in Leander, Tex., has gone viral, a bright spot in a crushing week for Americans weathering a deadly winter storm that left people scrambling for food and clean water after mass power outages. Hennessy’s Facebook post about the episode exploded, and a Friday op-ed in the Houston Chronicle contrasted the generosity in Leander with authorities’ failures: ‘Why H-E-B comes through in a crisis when Texas government doesn’t,’ the headline read.”
“H-E-B did not respond to The Post’s inquiries Friday evening, and a man who answered the phone at its Leander location said staff there could not comment. But the company confirmed shoppers’ accounts on Twitter: ‘yes, this is a true story,’ it commented below pictures of Hennessy’s post.” READ MORE
GOVERNMENT SUPPORT
For two weeks starting Wednesday, the PPP program will accept applications only from companies with fewer than 20 employees: “The officials said the exclusive application window is one of several steps the Small Business Administration and other federal agencies will take to improve access to the Paycheck Protection Program for very small companies and those owned by minorities or located in underserved communities. ... The program overall is slated to end March 31.”
“The administration will announce several other changes to the program, administration officials said, including revisions to how sole proprietors, independent contractors and self-employed workers determine their loan amount.”
“Officials said they had heard from applicants who were approved for loans of just $1 because the rules require them to calculate the loan amount using the net profit listed on their tax returns. The change will allow these applicants to calculate their loan amount using gross income ...”
“The SBA will also set aside $1 billion of program funding for applicants with no employees who are also located in low- and moderate-income communities, the official said.”
“Other planned changes include allowing broader access to the program for applicants with non-fraud felony convictions ...” READ MORE
THE COVID ECONOMY
Economists see evidence of a big boom: “The U.S. economy remains mired in a pandemic winter of shuttered storefronts, high unemployment and sluggish job growth. But on Wall Street and in Washington, attention is shifting to an intriguing if indistinct prospect: a post-Covid boom. Forecasters have always expected the pandemic to be followed by a period of strong growth as businesses reopen and Americans resume their normal activities. But in recent weeks, economists have begun to talk of something stronger: a supercharged rebound that brings down unemployment, drives up wages and may foster years of stronger growth. There are hints that the economy has turned a corner:”
“Retail sales jumped last month as the latest round of government aid began showing up in consumers’ bank accounts.”
“New unemployment claims have declined from early January, though they remain high.”
“Measures of business investment have picked up, a sign of confidence from corporate leaders.”
“‘There will be this big boom as pent-up demand comes through and the economy is opening,’ said Ellen Zentner, chief U.S. economist for Morgan Stanley. ‘There is an awful lot of buying power that we’ve transferred to households to fuel that pent-up demand.’” READ MORE
With no tourists to pick crops, farmers in Asia’s food bowl warn of declining profits and rising prices: “Australia crushed the coronavirus with one of the strictest border-control regimes in the world. But that success is causing trouble for the nation’s farmers, who can’t get the labor they need to pick and plant crops. Backpacking tourists, who typically account for 80 percent of the workforce harvesting fresh produce, have left in droves since the pandemic began, with no arrivals to replace them. Seasonal workers from the Pacific islands are also mostly locked out, despite many nations being considered free of Covid-19.”
“Quarantining laborers on farms has been tried, but it falls well short of what growers need. Few Australians have taken up offers of government money to relocate to rural areas.”
“The labor shortage is hurting the economy: Farmers report declining profits, and some fear foreclosure. Many are now planting fewer crops, which could drive up food prices.” READ MORE
MANAGEMENT
On Saturday, I asked Morning Report readers to talk about the lessons they’ve learned from the crisis. Jaime Echt responded with two moving comments about her craft business that are worth reading in full, but here’s a taste: “Then came the pandemic. But instead of taking a nose dive as I feared, business kept growing. People were hunkering down and enjoying the hobbies they hadn't had time for in the past. This is where my ‘pivot’ came in. I didn't change my product, I changed my approach. There were no more trade shows where I could meet-and-greet, and some retailers were drowning while others seemed to be thriving. To better understand this, I went old-school. I picked up the phone and just started talking to store owners. Or I should say, LISTENING.”
“They told me that things were different. They needed their orders to ship to their homes instead of their stores. They needed to get product samples so they could do Facebook Live videos. Basically, they needed to be heard and supported in new ways that only a small responsive company could.”
“So to answer your question about why I was about to have my biggest month in decades, it's because I spent the past year doing everything I know I should've been doing all along.” READ MORE
THE 21 HATS CONVERSATION
Join us Tuesday at 3 ET for a live webinar conversation with Michael Goldberg, founder of consulting firm Practice Perfect Systems. Medical practices are businesses, too! Michael will talk about why dental practices are about to be disrupted, why few dentists realize what’s coming, and what they should be doing. Bring your own questions. REGISTER HERE
FINANCE
Startup platforms find business opportunity in underserved communities: “The work of IFundWomen and others shows that there is money to be made in supporting entrepreneurs of color. ‘Black and brown entrepreneurs have capital,’ says Melissa Bradley, a longtime social impact entrepreneur and adjunct faculty at Georgetown University's McDonough School of Business. ‘If you prove your value, they will come to you.’ Bradley knows this firsthand. As the co-founder of Ureeka, an online platform to help founders of color grow their companies, she's built a platform to provide coaching, content, and community, all customized for founders of color. And she charges for it—Ureeka's basic package costs $199 a year. It measures its success largely by the revenue growth of its member companies. By that metric, it's doing well.”
“The first group of about 1,000 founders to go through the program were mostly Latinx, and 80 percent of them saw a 50 percent jump in revenue.”
“‘We know it's not just investment,’ says Bradley. ‘They need coaching, they need support.’” READ MORE
GOVERNMENT CONTRACTING
A new order signed by Boston’s mayor could steer $160 million to minority-owned businesses: “An executive order Walsh signed Thursday requires that at least 10 percent of the money the city spends annually on outside contracts for construction and professional services and goods goes to companies owned by people of color. To put that in context, consider that the city spent about $53 million with businesses owned by people of color from 2014 to 2019. If the 10 percent target had been in place during that period, about $216 million would have been steered to these firms, based on figures from the city’s new disparity study.”
“One of the most eye-opening parts of the 703-page disparity study the city formally released this week is that there is no talent shortage in communities of color.”
“Plenty of businesses owned by Black, Latino, and Asian entrepreneurs could potentially land city contracts, but many are not willing to participate in the application process because the odds of winning have historically been so bad.” READ MORE
THE MORNING REPORT PODCAST
Would you prefer an audio version of the Morning Report? You can now get the day’s top news stories for business owners in a four-minute podcast. Subscribe by searching for The Morning Report Podcast wherever you get podcasts. Or you can:
THE 21 HATS PODCAST
Episode 49: How Do We Get Out of This Cage? This week, Laura Zander confronts several big, interrelated issues. Her co-founder and husband, Doug, is ready to step back from the business. That’s a little tricky because the company operates off a 19-year-old platform that Doug built, and only he knows how to make it work. They’ve been trying to hire tech people for Doug to train, but they’ve been through 15 people in 10 years. Do they need to hire a recruiter? Is it time to junk the legacy platform and go with Shopify? If they do that, will they forfeit 19 years of SEO value? All of which has left Laura feeling trapped. “That’s this cage that we’re in,” she says. “What the hell do you do?”
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