Suppose You Fired Yourself?
It’s an exercise, Ami Kassar says, that all business owners should consider.
Here are today’s highlights:
The economy’s streak of strong jobs gains continued in May.
A record number of small businesses had openings in May—and a near record raised wages.
Are fees and surcharges the best way for businesses to combat inflation?
Tricia Groff really didn’t like the latest 21 Hats Podcast episode: “Oh, my gosh, it was painful.”
Ami Kassar, founder of small business loan broker MultiFunding, says the primary job of a business owner is to get fired: “Over the last 12 years of building my company, I have constantly been trying to eliminate my role by empowering team members to do what I do. What I have learned is the cheese keeps moving. As I can offload tasks and functions to others better at them than I was, the company grows. And then there are new tasks and initiatives in front of me. Think about what you spend your time on? How would you do it if you had to give up 80 percent of it in 60 days? Try it. The exercise will open you and your company up to all kinds of possibilities.” READ MORE
Programming note: In next week’s 21 Hats Podcast, Ami offers Dana White some tough love, as he walks her through her financing options and helps her prioritize her many opportunities.
The U.S. added 390,000 jobs in May, extending the streak of strong gains: “The job market is coming off an exceptional stretch in which demand vastly exceeded the supply of available workers. Employers added more than 400,000 jobs a month for 12 consecutive months, the longest period of such strong employment growth in records dating back to 1939. Competition for workers amid a severe labor shortage has driven up annual wage increases above 5 percent every month of this year. By contrast, wage gains averaged 3.2 percent in the 12 months to February 2020.”
“A survey of manufacturers also released Wednesday found that employment in U.S. factories contracted slightly in May, snapping eight months of growth. But respondents indicated they still planned to expand their workforces, an indication that labor demand remains healthy.”
“A Federal Reserve survey released Wednesday reported that labor-market tightness had started to ease, allowing wage increases to level off.” READ MORE
A record 51 percent of small businesses had job openings in May: “A near-record 49 percent of small-business owners said they raised compensation. ‘The labor force participation rate is slowly rising but small businesses continue to have a hard time filling their open positions,’ Bill Dunkelberg, NFIB chief economist, said in a statement. ‘The number of job openings continues to exceed the number of unemployed workers which has produced a tight labor market and added pressure on wage levels.’”
“A quarter of small firms said they are planning to raise worker pay in the next three months. That’s below the record 32 percent seen in each of the final three months of 2021, but still historically high.”
“Two-thirds of owners reported hiring or trying to hire in May, up eight points from April, but of those respondents, 92 percent reported few or no qualified applicants for the positions they were trying to fill.” READ MORE
An economist makes the case that we are NOT headed into recession: “The pandemic was an economic shock that produced clear winners and losers. Now that we've reopened the economy, many of the winners from the early part of the shutdown and recovery are seeing their fortunes change. The losers of this latest shift—most notably tech companies and those big-box retailers—are prominent, and their problems are generating disproportionate interest. But while these industries may face a kind of localized ‘recession,’ the U.S. economy is still expanding, and the likelihood of contagion that would lead to a true recession remains low.”
“As people were stuck inside during the pandemic, spending on physical goods skyrocketed. This makes intuitive sense: People were spending a lot of time at home, so they bought stuff they could use there.”
“American consumers are picking up the pace across the service industries. They're going out to restaurants, heading to the movies, and taking to the skies.”
“That's the real story here: Spending is shifting, not declining. And a shift in spending does not signal a recession.” READ MORE
Here’s one way businesses are dealing with inflation: “Rather than raise menu prices, restaurants are using new fees and surcharges to stick inflation into the fine print. Fees for a ‘noncash adjustment,’ ‘fuel surcharge,’ or ‘kitchen appreciation’ have been showing up on more bills lately. Industry analysts say this wave of surcharges is mostly being driven by restaurants trying to cope with the impact of rising inflation and a tight labor market on their bottom lines. In addition, Mastercard and Visa in April raised transaction fees for many merchants. Lightspeed, a global developer of point-of-sale software, said fee revenue nearly doubled from April 2021 to April 2022, based on a sample of 6,000 U.S. restaurants that use its platform. The number of restaurants adding service fees increased by 36.4 percent over the same period.”
“The practice is similar to shrinkflation, when snack-food companies reduce the size of packaging or portions to make it harder to spot a price increase. The fees are effective in part because unless people are paying close attention, many fail to notice them.”
“Rock Elm Tavern, a restaurant chain based in the Minneapolis-area that offers modern American fare, received attention on social media recently when a customer noticed a ‘wellness fee’ of 3 percent appended to his check.”
Troy Reding, co-owner of Ally Restaurants, which operates Rock Elm, said the company instituted the fee just before the pandemic to offer health-insurance coverage to all of its 140 employees if they work at least 25 hours a week.”
“The fee has since evolved into a strategy to offset inflationary pressures and remain competitive in a tight labor market, said Mr. Reding, who is weighing raising the wellness fee to 5 percent in the fall.” READ MORE
But are fees the best way to increase revenue? Gene Marks thinks not: “Indiscriminately charging extra fees is a bad model. Why? Because it makes people angry. They get told a price is one thing and then it winds up being something higher — in my hotel’s case a LOT higher — and you are hostage to the fleecing, because what am I going to do, fly back to Philly? My hotel will charge me a ‘cancellation fee.’ And my airline of course will be ready to charge me a ‘change fee’ and then for bags, carry-ons, snacks and a seat with a cushion!”
“Some people think that listing out all of their fees demonstrates transparency. What they don’t realize is that customers don’t really care about the details. They just care about what they’re ultimately paying.”
“And what they’re told upfront is what they expect to pay. When that number changes because a business is being ‘transparent’ as they indiscriminately add extra fees it only causes confusion and anger.’
“Rather than being open and honest, the practice actually comes across as a bit unethical.” READ MORE
Elon Musk’s younger sister has a streaming service: “Ms. Musk, 47, is the force behind Passionflix, an upstart subscription streaming service dedicated to movie and series adaptations of mass-market romance novels and erotic fan fiction. The online service costs $6 a month and organizes content by a ‘barometer of naughtiness.’ The categories are ‘Oh So Vanilla,’ ‘Mildly Titillating,’ ‘Passion & Romance,’ ‘Toe Curling Yumminess’ and ‘NSFW’ (Not Safe for Work). Passionflix has raised nearly $22 million in early funding. ‘We’re looking to raise another five, possibly 10,’ Ms. Musk said. ‘You know anybody?’”
“Passionflix is sort of a sexy Hallmark Channel. The stories are simple, and the acting is sometimes unrefined.”
“Early financial backers for Passionflix included the television producer Norman Lear and his wife, Lyn, who is also a producer; Jason Calacanis, an internet entrepreneur and angel investor; and Kimbal Musk.”
“And Elon? ‘It is difficult for me to answer that question,’ Ms. Musk said. ‘If I say that he is an investor, then everybody says, Oh, she just got her brother to pay for it. And if I say he didn’t invest, then you all say, He doesn’t support her.’” READ MORE
THE 21 HATS PODCAST
Tricia Groff, who has been a big supporter and fan of 21 Hats, is not a big fan of the latest 21 Hats Podcast episode, in which a management consultant discusses how the principles of management guru W. Edwards Deming might apply to the podcast regulars’ businesses: “Did you ever attend a meeting where you politely listen to people debate the word ‘culture’ and 50 minutes later, you are no closer to a solution for the two employees who want to kill each other? Or you agree to a game night outing and get stuck with 3 people who want to discuss the actual definition of each game rule before you ever start to play? Or my favorite, one of those horrible Bible studies where people earnestly ask whether heaven has actual gold or is a state of being or where it rests in the time and space continuum? And at some point, you just want to say ‘I hope it’s a happy place and I’d like to be there. Could we please MOVE ON?’”
“Thirty minutes in, I realized that instead of using the podcast to take the edge off of doing PT, I was using PT to take the edge off of listening to the podcast.”
“If you are an expert in anything, you know the pain of listening to a novice try to explain your specialty to you. Yet, that’s what the listener gets to experience: the pain of listening to people who have spent years honing their business practices try to explain their rationale to someone who discusses basic concepts that they worked through a long, long time ago.”
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