So You Bet the House?

Today’s Highlights: Stephanie Stuckey buys a business four times the size of Stuckey’s. The SBA is in no rush to clarify PPP eligibility. And why manufacturers are struggling to keep up.


Episode 50: So You Bet the House? This week, Stephanie Stuckey tells Paul Downs and Jay Goltz, both of whom have manufacturing operations, about her decision to buy a manufacturing plant and bring production of Stuckey’s snacks in-house. We talk about her conflicted concerns about a minimum wage hike, what it takes to build a strong culture in a repetitive-task environment, why she paid above book value for the company she bought, and how she managed to finance the purchase of a business that is four times the size of Stuckey’s. She’s very happy with the SBA loan she got, but it was not an easy process: “I had to take out an additional life insurance policy and list the bank. I was just waiting for them to call me and tell me my firstborn son has to be collateral as well.”


With consumer demand snapping back, manufacturers are struggling to keep up: “Without restaurants to visit and trips to take, Americans bought out stocks of cars, appliances, furniture and power tools. Manufacturers have been trying to catch up ever since. Nearly a year since initial coronavirus lockdowns in the U.S., barbells, kitchen mixers, mattresses and webcams are still hard to find. A global shortage of semiconductors has forced many car makers to cut production in recent weeks. ‘Everyone was caught flat-footed,’ said Jack Springer, chief executive officer of Malibu Boats Inc.”

  • “Consumer spending on long-lasting goods in the U.S. rose 6.4 percent last year but domestic production of those goods fell 8.4 percent, according to federal data, leading to shortages and higher prices.”

  • “Supply chains typically get beaten up during recessions. As sales decline, companies draw down inventories to conserve cash instead of purchasing more parts and materials. Entire pipelines of supplies get cleaned out.”

  • “‘With three, four or 5,000 components in a car, you only need one to keep it from getting out of the factory parking lot,’ said Pin Ni, president of Illinois-based Wanxiang America. ‘The global supply chain is not as strong as people thought,’ Mr. Pin said.” READ MORE


The debate about requiring employees to get vaccinated continues: “‘My first piece of advice to employers who require vaccinations is to contact your insurance broker and find out exactly what coverages you have that may apply to a mandatory Covid vaccination policy,’ said Claude Schoenberg, an employment attorney based in Bala Cynwyd, Pennsylvania. ‘You need to know what protection you might have in case an employee suffers an adverse reaction to a mandated Covid vaccine. You should consider whether that amount of insurance protection is sufficient.’ Then there’s the issue of whether just a single one-size-fits-all policy makes sense. Schoenberg is advising his clients to ask themselves whether a Covid vaccination policy would be beneficial to all operations.”

  • “He suggests considering whether some operations are more safety sensitive than others or if some employees are more at risk than others to contract Covid, based on their work location and proximity to other employees.”

  • “‘What do I care if an employee gets vaccinated or not?’ one owner of a small service company told me this week. ‘If he or she gets sick, that’s their problem. I know I’ll be getting vaccinated so I won’t likely get sick, and neither will others in my office who do the same.’” READ MORE


Businesses are still struggling to figure out some of the PPP II eligibility rules, and the SBA doesn’t seem to be in a hurry to clarify: “Many privately owned small businesses are grappling with the SBA’s rules around affiliation and the criteria for how to measure revenue declines, accountants and corporate advisers say. Affiliates are typically businesses that have common equity owners or are controlled by the same entity. Entrepreneurs frequently run more than one small-business entity. Lacking additional SBA guidance, a company could interpret that the revenue test should be applied to itself and its affiliates combined, said David Merzel, a principal at accounting firm Kaufman, Rossin & Co. If the combined entities meet the requirement, it appears that each affiliate applying for the loan would initially be eligible, he said.”

  • “‘There are many unanswered questions from the SBA,’ Mr. Merzel said. The agency last month gave guidance on how to calculate eligibility for a second PPP loan for a borrower with affiliates, but accountants said it is still too broad.”

  • “For companies that share ownership, it is unclear which of them could qualify for a second loan, especially if an affiliate such as a management or holding company received the first loan, said Lisa Simpson, a vice president at the American Institute of Certified Public Accountants, a professional organization.”

  • “It is unclear whether the SBA will address affiliate-related concerns before the program expires.” READ MORE



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Sweetgreen and Momofuku are investing in Foxtrot, a fresh take on the convenience store: “Foxtrot distinguishes itself with its hybrid, locavore model vs. your typical 7-Eleven. The shelves are stocked with products made by local artisans in addition to major consumer brands. In Chicago that will include coffee from Metric, Do-Rite’s old-fashioned doughnuts, and IPAs from Pipeworks Brewing. Customers order via an app. The chain also specializes in private label products, notably candy gummies. The best-selling online items are wine and ice cream; the average order is $50. ‘We sell a lot of bottles of small producer wine, with cans of White Claw. Customers know we have both of those things,’ says Foxtrot CEO Mike LaVitola.”

  • “Foxtrot, which started in 2014 and has 10 stores in Chicago and Dallas, is planning to open nine more this year, starting with Washington, D.C. on March 1.”

  • “In 2020, a 55-percent increase in store sales combined with a 200-percent-plus increase in e-commerce led to an overall revenue increase of more than 100-percent year over year, according to Foxtrot, although they declined to disclose exact sales figures.”

  • “LaVitola says the pandemic has given his company an opportunity to speed up expansion plans. Because of their hybrid retail and delivery guarantee, store location is especially key to Foxtrot’s business plan.”

  • “‘This is the corner store reimagined,’ says Barber. ‘No one is going into bricks and mortar with this digital strategy.’” READ MORE


A Seattle startup that makes software to manage sales reps has been valued at more than $2 billion: “Highspot’s software helps roll out training content for sales representatives, provides them coaching and playbooks, as well as organizing slide decks and marketing materials used to win over customers. The software, used by companies like General Motors Co. and Nestle SA, tracks which materials are most effective for which clients, logging what gets read and to what extent. The idea is to help clients convert the strategy and plans executives have in their head into something companies can sell, said Highspot Chief Executive Officer Robert Wahbe.”

  • “There's a famous Harvard Business Review article that 70 percent of strategic initiatives don’t work,’ said Wahbe, a former Microsoft Corp. executive.”

  • “‘Sometimes it’s not because the strategy isn’t right, it’s because they can’t translate it to the actions taken every day by their frontline sales team. We allow them to do that.’” READ MORE


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The virus’ death toll has passed half a million: “The United States reached a staggering milestone on Monday, surpassing 500,000 known coronavirus-related deaths in a pandemic that has lasted almost a year. The nation’s total virus toll is higher than in any other country in the world. It has far surpassed early predictions of loss by some federal experts. And it means that more Americans have died from Covid-19 than did on the battlefields of World War I, World War II and the Vietnam War combined.”

  • “The United States accounts for about 20 percent of the world’s known coronavirus-related deaths, but makes up just 4.25 percent of the global population.”

  • “In Los Angeles County, the toll is about one in 500 people. In Lamb County, Texas, where 13,000 people live scattered on a sprawling expanse of 1,000 square miles, the loss is one in 163 people.” READ MORE


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