Solving the Silver Tsunami
In our latest podcast episode, we explore a new model for selling hard-to-sell businesses.
Good Morning!
Here are today’s highlights:
Your employees may be less engaged and more lonely than you think.
Owners have to keep learning if they want their businesses to keep growing.
Home owners have started moving just to find cheaper home insurance.
At the world’s best taco stand, “the secret is: there is no secret.”
THE 21 HATS PODCAST
How to Sell a Business That Won’t Sell: We’re calling it a We-SOP. The term, coined by Jay Goltz, refers to a business transition that is something of a do-it-yourself ESOP, or employee stock ownership plan, but without the expense and complication and debt of a full ESOP. It’s a transition that lets owners get money out of what has been their life’s work. It’s a transition that lets loyal employees keep their jobs and preserve the company’s culture. And it’s a promising solution for the Silver Tsunami of retiring Baby Boomers because it can provide a sales path even for owners who have never managed to extricate themselves from their day-to-day operations.
And in this week’s episode, we take you through an example of how it can work. Jay introduces us to Jill and Paul Choma, co-owners of a business, Gilded Moon Framing, that Jay recently guided through the We-SOP process. As you’ll hear, all three believe that what has worked—at least so far—for Jill and Paul could also work for many other business owners.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
HUMAN RESOURCES
A new report finds that employers think their employees are more engaged and more loyal than they really are: “Leaders across a variety of industries tend to overestimate employee engagement, revealing a major gap between what leaders think and what worker’s experience — and potentially leading to an ‘engagement crisis,’ according to a May 16 report from Right Management, a talent and career management brand under ManpowerGroup. In a survey, 83 percent of leaders responding said they believe their workforce is fully engaged, but only 48 percent of employees said they would categorize themselves as fully engaged.”
“‘Right Management’s research is a wake-up call to leaders everywhere. Employees are not as engaged and loyal as leaders think they are,’ Karel van der Mandele, SVP of Right Management North America, said in a statement. ‘Fortunately, the research also shows what leaders need to do to improve engagement, and that is to invest in their talent and career development.’”
“Investments in employee development can improve engagement and retention, according to the report. Employees want to be engaged and productive but need additional support from leaders to meet their needs.”
“Companies can prioritize employee engagement by offering career management and talent development opportunities, particularly for mid-career and middle-layer workers.” READ MORE
American employees are experiencing an epidemic of loneliness: “Employers and researchers are just beginning to understand how workplace shifts over the past four years are contributing to what the U.S. surgeon general declared a loneliness health epidemic last year. The alienation affects remote and in-person workers alike. Among 1-800-Flowers.com’s 5,000 hybrid and fully on-site employees, for instance, the most popular community chat group offered by a company mental-health provider is simply called ‘Loneliness.’”
“It is a marked shift from even a decade ago, when bonds fostered at work helped compensate for declining participation in church, community groups and other social institutions. As the American workday becomes more faceless and scheduled, the number of U.S. adults who call themselves lonely has climbed to 58 percent from 46 percent in 2018, according to a recent Cigna poll of 10,000 Americans.”
“The disconnection is driving up staff turnover and worker absences, making it a business issue for more employers, executives and researchers say. Cigna, the health-insurance company, estimates that loneliness is costing companies $154 billion a year in absenteeism alone. ‘Work is social, it’s a lot more than a paycheck,’ says James McCann, founder and chairman of 1-800-Flowers.com.”
“Ernst & Young has asked managers to use the first five minutes of team calls to engage in conversation ‘as real human beings,’ says Frank Giampietro, whose title, chief well-being officer for the Americas, was created in 2021 to help support employees during the pandemic. The professional-services firm is also training employees to spot and reach out to co-workers struggling with issues such as isolation. To date, more than 1,600 employees have taken the training.”
“Last year, [Julie] Rice co-founded Peoplehood, a company that runs ‘gathers’ to improve connectivity and relationship skills, and employers are signing up. One, a beauty-services business with hundreds of field employees who never see each other, asked Peoplehood to host a series of gatherings for workers to meet and share job advice. Another, a marketing company with far-flung employees, requested help after surveys showed staff wanted to feel more connected.” READ MORE
Your periodic reminder that there’s a problem with 401(k) plans: “One of the biggest selling points of 401(k) retirement plans is the chance to earn ‘free money’ in matching contributions from your company. This perk mainly benefits high earners, a new study suggests. Nearly half of the $200 billion companies contribute to workers’ 401(k)s goes to the top 20 percent of earners, research by Vanguard Group found. The lowest-earning workers get 6 percent of the money.”
“The 401(k) has risen to become the backbone of how many Americans plan for retirement, replacing pensions that were more popular in previous decades. Along with the company match, 401(k) plans offer tax advantages designed to help people build a comfortable nest egg. But economists, researchers and others have said these plans are falling short of what is needed to provide a secure retirement for all Americans.”
“In Vanguard’s research, the company found employer contributions, including the match, have been a boon to the high earners already most likely to have saved for retirement. Fiona Greig, global head of investor research and policy at Vanguard Group, said new formulas for company matches are needed to ensure greater benefit for all workers.”
“Some companies are using alternative approaches, including a match that caps payments at a set dollar amount, which the study finds more equitably distributes employer contributions.” READ MORE
MANAGEMENT
Alan Pentz says business owners need to keep learning: “In fact, I think you need to become a learning machine. Why? The skills required to scale revenue, grow teams, and streamline systems/margins change as the topline revenue targets change and the number of employees changes. Businesses tend to plateau at the $1 million, $5 million, and $10 million to 15 million. I’ve seen it many times. Here’s what few business owners realize about WHY this happens — the skills that get you to these benchmarks, are NOT the skills that will propel you beyond them.”
“Unfortunately, many times, the company can grow faster than the people running it. That means you’ll probably have to bring a certain number of key leaders in from outside the company. Of course some of your people will be able to handle that growth, but you need to supplement them with others who have been through it before.”
“But more importantly you need to grow as the owner — your knowledge, skills, execution — are always the bottleneck on your next phase of growth. ... Here are some ideas for how you can support your growth.”
“Get a peer group: Entrepreneurs Organization, Vistage, Hampton, Strategic Coach, etc. It doesn’t really matter where you go but peers going through the journey with you are invaluable. Plus you aren’t paying them so they’ll tell you the truth.” READ MORE
At the first taqueria in the world to earn a Michelin star, the genius is in the simplicity: “The taco guy didn’t quite get the fuss. ‘I didn’t realize the magnitude of the whole thing,’ recalled Arturo Rivera Martínez. ‘I had no idea of what a Michelin star was.’ He does now. El Califa de León, the modest taquería where Rivera has labored over a sizzling grill for more than two decades, was awarded a star last week in the first-ever Michelin Guide Mexico, instantly turning him and the rest of the staff into epicurean heroes.”
“As the news spread, the line outside began to grow. This week it stretched more than two blocks alongside street stands selling everything from toys to underwear and cellphone cases. Newcomers settled in for waits of at least two hours. ‘We’ve never seen anything like it,’ said co-owner Mario Hernández Alonso, 66, as he answered nonstop questions from journalists swarming his shop. ‘My parents would never have imagined it.’”
“A few soft drinks are the only libation. No beer, wine, or tequila, no time or space for contemplation. Nor will one find cheese, sour cream, lettuce, tomato or any of the fillings common in the United States that often overwhelm the essential fusion of meat, tortilla and sauce. ‘As my father used to say: The secret is: There is no secret, just high-quality meat and fresh ingredients,’ Hernández said. ‘It’s a question of simplicity.’” READ MORE
INSURANCE
People have started moving just to find more affordable home insurance: “Most people hate moving. So it says a lot about how expensive—and hard to come by—home insurance has gotten that some homeowners are up and moving as a result. A new survey by real-estate brokerage Redfin shows that 12 percent of Florida residents who are planning to move in the next year are doing so because of rising insurance costs. Nationally, 6 percent said the same.”
“With both inflation and natural disasters increasing and insurers pulling out of high-risk markets in droves, home insurance premiums have skyrocketed recently. Data from Quadrant Information Systems and Bankrate shows that the average homeowner has seen a 23-percent increase in just the past year. (Renters insurance has jumped 8 percent since 2021, with many of the same trends behind it.)”
“‘It puts consumers in a challenging position,’ says Travis Hodges, managing director of VIU by Hub, an insurance comparison platform. ‘You can bear the financial strain of home insurance or risk the potential for significant financial losses in the event of property damage.’”
“Some homeowners—many of them in Florida, California, or Texas, where catastrophic weather events are becoming increasingly common—are even seeing their policies non-renewed or canceled entirely. It’s ‘a scary position’ to be in, Hodges says” READ MORE
FINANCE
A venture-backed lender to startups is faltering, rattling its clients: “The lender, Ampla, spent years courting small direct-to-consumer brands with low rates and a pitch that it understood their needs. In recent weeks, its top executives have been searching for a buyer, two people familiar with the firm’s finances said. Last week, Ampla, which is based in New York, said it would lay off half its 62 workers. Ampla has also tightened or frozen clients’ lines of credit and told many customers to find other lenders, leaving them in the lurch, according to half a dozen former and current clients.”
“Its troubles appear to be part of a broader reckoning for direct-to-consumer businesses, some of which are no longer growing as rapidly as they once were or are struggling financially. Investors that were eager to back such firms are now being much more cautious.”
“Ampla customers say that the firm offered them loans at favorable interest rates and that the money allowed them to buy inventory and run marketing campaigns. On its website, the firm posted testimonials from current and former clients that described how Ampla loans allowed them to increase sales or secure distribution through large retailers.”
“At the end of last month when [Ben] Perkins got on a quarterly call with his Ampla account representative, he was told that &Collar’s credit line had been frozen. The representative suggested that the company find another lender. ‘It very much blindsided us,’ Mr. Perkins said. ‘We were not expecting it.’” READ MORE
POLICY
Big business has changed its mind on the Inflation Reduction Act: “Two of Washington’s most powerful Republican-leaning industry groups are gearing up to defend President Joe Biden’s climate law if the GOP retakes the White House next year — setting up a potential collision between big business and a future Trump administration. The U.S. Chamber of Commerce and the American Petroleum Institute largely opposed the Inflation Reduction Act two years ago, when Congress passed it entirely with Democratic votes. Both groups have railed against major aspects of Biden’s climate strategy, especially his efforts to change rules on federal environmental reviews and pause natural gas export approvals.”
“But the IRA also contains hundreds of billions of dollars in tax breaks and spending that could benefit key members of both powerhouse trade groups — including money for advanced manufacturing of clean energy technologies. Oil companies in particular have expressed interest in potential business opportunities offered by the climate law, such as projects that would produce hydrogen fuel and capture and store carbon dioxide.”
“‘Business is going to defend the Inflation Reduction Act,’ said Christopher Guith, senior vice president at the Chamber’s Global Energy Institute, adding that the Inflation Reduction Act is instrumental for ‘energy security, competitiveness, and the business case for the energy transition.’” READ MORE
LITIGATION
When businesses sue a city for deteriorating business conditions: “It’s a sunny Thursday afternoon as Don McFarland, owner of 97-year-old Fisherman’s Wharf mainstay Sabella & LaTorre, stands behind the bar observing his bustling restaurant and the tourists cracking crab open at the tables outside. ‘Do you see any homeless people sleeping in my doorway?’ McFarland said, with an edge of annoyance in his voice. ‘Do you see any poop in my doorway? Do you see broken windows? No.’ McFarland’s diatribe is a direct response to a new lawsuit filed against the city by Herringbone Tavern Inc., owner of Tarantino’s and The Grotto, two shuttered historic restaurants prominently located in the [San Francisco] neighborhood. Both restaurants largely stopped operating in 2020 and have since vacated their storefronts.”
“In the complaint, the restaurants’ owner, Chris Henry, blamed his business struggles on the deterioration of the area, which he said is San Francisco’s fault. He claims the city's inability to ‘maintain the character of Fisherman's Wharf’ equates to it breaching its legal responsibility as a landlord.”
“Neighboring businesses fully admit the pandemic has brought some tough times, but McFarland and other local shop owners called foul on Herringbone Tavern holding the city responsible for its own business failures. On the contrary, McFarland said, the Port of San Francisco has tried to ease burdens and issues he’s brought forward, like by offering rent concessions during the early days of the pandemic and by cracking down on illegal vendors in the area.”
“‘It’s kind of absurd,’ McFarland said. ‘When you’re allowed to operate while you don’t pay rent, it takes a lot of nerve to sue.’” READ MORE
Thanks for reading, everyone. — Loren