Something Is Going to Happen
In this week’s Dashboard podcast, Mel Gravely, CEO of a Cincinnati construction business, says he’s preparing for the worst.
Good morning!
Here are today’s highlights:
Most business owners don’t know what their business is worth.
Texas is rated highly as a place to do business—but poorly as a place to live.
Tracy Britt Cool, once considered a successor to Warren Buffett is looking for companies to buy.
Mel Gravely expects the economy to take a hit but is still trying to fill openings.
THE 21 HATS PODCAST
Dashboard: Something Is Going to Happen: This week, Mel Gravely, CEO of Triversity Construction in Cincinnati, joins Dashboard to explain why—even though he has a healthy backlog of work lined up for 2023—he’s more than a little concerned about where the economy is headed. He also talks about how the labor shortage in his industry started well before the Great Resignation and why he doesn’t see it ending any time soon. And then there’s the challenge of bidding for future contracts without knowing what your materials or labor are likely to cost. Plus: He talks about what he’s learned in the year since he published his book, “Dear White Friend,” in which he sought to start a real conversation with other business owners about race.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
VALUATION
Most business owners don’t know what their business is worth: “A whopping 98 percent of small businesses polled by M&T Bank over the past two years didn’t know the value of their companies. This is especially troubling, given that for most business owners, their company is their most valuable asset. ... Many business owners may be too overwhelmed with day-to-day operations to focus on having their company valued. Others don’t want to spend the money or simply don’t realize the importance of having an objective third-party measure of its worth.”
“‘A lot of business owners don’t understand the value of their business before they sit down with a buyer at the negotiating table,’ [said Brett Dearing, partner and exit planning specialist with the wealth management firm Cerity Partners.]”
“An appraisal could cost anywhere from around $5,000 to around $50,000, according to valuation professionals. Be sure to be specific with the appraiser about the reasons you are seeking a valuation so they deliver what you’re asking for.”
“Some of the assumptions that go into a valuation for estate planning purposes or issuance of equity compensation could be decidedly different than for raising capital or selling a business, said King: ‘One size does not fit all.’” READ MORE
FINANCE
Tracy Britt Cool was once considered a possible successor to Warren Buffett: “Now, Ms. Britt Cool, 37, is parlaying her nearly unparalleled access to the mind and methods of one of the world’s most renowned investors to build her own investment firm, Kanbrick. In doing so, she is perhaps the most direct inheritor of a style of investing that Mr. Buffett perfected over many decades and distilled into pithy principles. Among them: Find companies that have ‘moats,’ or defensible business models. Don’t go outside your ‘circle of competence,’ meaning businesses you don’t understand.”
“She is also quick to establish that Kanbrick is not a traditional private equity firm that buys companies only to sell them a few years later, usually after stripping out costs.”
“Neither is Kanbrick championing cryptocurrencies or risky start-ups in ways that promise to remake the investing world. Similar to Berkshire, the firm wants to buy old-school businesses that are easy to understand and hold them for the long term.”
“The universe of potential acquisition targets, though, is large. Mr. Humphrey said roughly 30,000 businesses in the United States — many of them owned by their founders or families — had annual operating profits between $10 million and $50 million.” READ MORE
LOCATION, LOCATION, LOCATION
A CNBC report found that Texas is the fifth best state for business but the second worst to live in: “The 2022 version of CNBC's ‘Top States for Business’ study found that Texas scored just 72 out of a possible 325 points in the ‘Life, Health and Inclusion’ category, earning an ‘F’ grade. CNBC said quality of life was given ‘particular attention’ in this year's study and considered factors like crime rates, environmental quality and health care. For the first time in 2022, the availability of childcare was also a factor. The inclusiveness of state laws, including protections against discrimination and voting rights, was also among the factors.”
“‘Skilled workers are still flocking to Texas despite longstanding quality of life issues,’ CNBC wrote. ‘When they arrive, they are finding limited childcare options, a stressed health care system with the highest rate of uninsured, new curbs on voting rights and few protections against discrimination.’”
“Texas was named the fifth-best state for business, with high rankings in workforce (second), economy (eighth), technology and innovation (fourth), and capital access (third). The top four states were North Carolina, Washington, Virginia and Colorado, respectively.” READ MORE
HUMAN RESOURCES
In Texas, smaller companies are trying to adapt to the new abortion reality: “Small businesses based in states like Texas where officials are implementing bans on most or nearly all abortions face choices. Given the costs and insurance policies, many smaller companies especially find it a challenge to balance expenses, legal risks, and employees with different views on a divisive issue. Some say failing to strike the right balance will put them at a significant disadvantage in recruiting and retaining talent. Some companies have already changed their policies; others don’t plan to make any changes.”
“Max Hoberman spoke to attorneys for the independent videogame company he runs about covering travel costs for employees if they needed to leave Texas to get an abortion. The lawyers warned of legal risks, so Mr. Hoberman made another offer: The company, Austin-based Certain Affinity, would help some employees move out of the state for good.”
“Ron Horne, CEO of Pennco, a Houston-area manufacturer of municipal water treatment chemicals, has made a different decision: He says he is leaving it to employees to cover the cost of treatments—including abortions—that don’t already fall under the company’s health insurance plan. ‘If you couldn’t get a dental treatment in Texas, I doubt that I would pay for you to get it somewhere else.”
“QuestionPro, which operates an online platform for market research and surveys, has told employees to simply submit a report for their travel expenses if they need to travel out of state for an abortion so the company can cover the cost even if it isn’t covered by QuestionPro’s health plan.”
“‘Submit it as a reimbursement request and we will approve it,’ said CEO and founder Vivek Bhaskaran, who has about 250 employees, including 25 in Texas. ‘We have a lot of faith in our employees. We are so small that we trust each other.’” READ MORE
Can employees be fired for posting about their salary on TikTok? “Last month, Lexi Larson posted on her TikTok account about how she got a new job in the tech industry that raised her income from $70,000 to $90,000. The video received 168,000 views. For the next two weeks, she posted more videos about how she got that job. Larson said soon after her employer discovered her TikTok account, she removed some videos fearing her bosses might get angry. In a later video, Larson said she was fired for her posts.”
“‘So, TikTok got me fired,’ said Larson, who goes into detail about knowing that talking about her salary is federally protected by law under the National Labor Relations Act and why she took down some videos.”
"’They ended up firing me because they said me having this account was a safety concern because I could post something private,’ Larson said.”
“Larson, who did not respond to USA TODAY's request for comment, didn't name her former employer and also chose not to pursue legal action.” READ MORE
THE ECONOMY
Retail sales rose 1 percent in June, more than expected: “The rise in June followed a decrease of 0.1 percent in May, which was revised up from a 0.3 percent fall, a decline that, when it was first reported, surprised economists who were tracking whether consumers were feeling the pinch of higher inflation and interest rates and cutting back on spending. The retail sales data does not adjust for price increases, so the jump in many categories reflected consumers paying more for the same amount of goods and services.”
“Spending at gas stations rose by 3.6 percent in June, as Americans felt lots of pain at the pump. Excluding gas, retail sales were up 0.7 percent in June, which was also above economists’ expectations.”
“Overall, nine out of the 13 main sales categories increased from last month.” READ MORE
MARKETING
Urban Legend is an adtech startup that’s building an influencer platform: “This model is the brainchild of Urban Legend’s 35-year-old founder and CEO, Ory Rinat. Rinat spent the early part of his career working in Washington’s media circles before becoming director of digital strategy for the Trump White House. The idea for Urban Legend arose from many currents in American public life, including ‘the rise of influencer marketing, the increase in trust in those people, and also the rise of individuals to be their own media brand,’ he says. In both retail and influencer politics, he says, small is big: ‘Our creators range from 3,000 to 14 million followers,’ Rinat tells me, but the majority are ‘micro-influencers’ (those with 100,000 or fewer followers) and ‘nano-influencers’ (fewer than 10,000).”
“Urban Legend keeps its largest asset carefully hidden away inside its servers: an army of 700 social media influencers who command varying degrees of allegiance from audiences that collectively number in the tens of millions.”
“The company has painstakingly cultivated this roster to reflect every conceivable niche of society reflected on the internet: makeup artists, Nascar drivers, home improvement gurus, teachers, doulas, Real Housewives stars, mommy bloggers, NFL quarterbacks, Olympians, and the occasional Fox News pundit.”
“These influencers are paired with clients on Urban Legend’s private platform, the Exchange, where buyers spell out the parameters of the message they want to push to the public and set a budget.”
“Influencers snatch the best available offers from a menu and are then free to craft the campaign’s message, molding it to the rhythms and vernacular of their followers.” READ MORE
OBITUARY
Andre Chin, co-owner of Artisan Boulanger Patissier in Philadelphia: “The couple, working side by side since 2002 with few helpers, have supplied breads, rolls, croissants, sandwiches, and pastries not only to the neighborhood around Passyunk Crossing but to a list of banh mi shops that use their crispy-on-the-outside, tender-on-the-inside French baguettes. The shop, at 1218 Mifflin St., had to close sporadically over the last couple of years because of Mr. Chin’s health and after [his wife, Amanda] Eap was diagnosed with breast cancer in 2021. She said the bakery would reopen in about a month.”
“A native of Cambodia, at age 15 he fled the war raging in Southeast Asia and landed in France, where he studied cooking and baking in Paris. He was working at a Paris hotel in the 1980s when, during a visit to Philadelphia, he walked into the West Philadelphia doughnut shop owned by Eap’s father.”
“Their younger son, Ryan, said he remembered his parents getting up at 4 a.m. to start work. ‘He was so hard-working,’ he said. ‘Selfless. He never had time for his own things.”
“In 2013, they moved Artisan to the current location ... That same year, as well as in 2015 and 2016, the couple jointly made the list of semifinalists for the James Beard Award for baker.” READ MORE
THE 21 HATS PODCAST
How Would You Spend $10,000 a Month on Marketing? Shawn Busse, Hans Schrei, and Sarah Segal explain what they would do with an extra $10,000 a month to spend on marketing. As we all know, there’s a lot going on right now. No one’s entirely certain where the economy is headed, and no one’s entirely certain where digital marketing is headed. So it seemed like a good time to ask our regulars where they would place their bets if we offered them each an imaginary pot of money to promote their brands.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren