The Game Has to End at Some Point

In the latest 21 Hats Podcast episode, the owners talk about their evolving succession plans.

Good morning!

Here are today’s highlights:

• A digital marketer offers suggestions on hiring a digital marketing agency.

• Only a quarter of Paycheck Protection Program funding protected paychecks.

• Without a national standard, businesses have to negotiate a confusing array of local Covid regulations.

• Is social commerce the future of ecommerce?

THE 21 HATS PODCAST

The Game Has to End at Some Point: This week, Shawn Busse, Paul Downs, and Jay Goltz talk about their evolving succession plans. There are lots of options—selling the business, turning it over to a family member, selling it to an employee stock ownership plan, holding a going-out-of-business sale, just walking away—and they all come with advantages and disadvantages. Shawn, Paul, and Jay take us through their current thinking and also tell us whether their businesses are prepared for the possibility that they could be incapacitated. Plus: Would any of them consider instituting a four-day work week? And we can report that this podcast now has its first B Corp. Who knows what a B Corp is?

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

HUMAN RESOURCES

Employer demand for workers declined in January: “Employers pulled back on demand for workers last month amid signs the economy was starting to cool as the omicron variant of Covid-19 spread rapidly across the U.S., according to private-sector estimates of job openings. There were 10.8 million job openings on Jan. 21, according to an analysis of postings by jobs site Indeed, a decrease of more than a million from its estimate for the end of December.”

• “Demand was still historically high in January, with the slowdown primarily due to the Omicron wave, said Nick Bunker, an economist at Indeed.”

• “‘Overall, demand for workers is still quite strong, but some sectors might have just pulled back on their hiring plans because there has been a corresponding pullback in consumer demand for those services,’ Mr. Bunker said.”

• “He added that businesses offering in-person services were more affected by the Omicron variant.” READ MORE

MARKETING

On Saturday, we asked 21 Hats subscribers to comment on Liz Picarazzi’s decision to give up on digital marketing. We got several interesting responses, including one from Steve Krull, himself a digital marketer, who offered tips on hiring a digital firm: “Ask how the agency works to build trust/rapport. Ask how they define strategy! Hint: ‘buy more ads’ is not strategy. Ask how they set goals and realistic expectations. Hire an agency that will be honest with you above all else—be prepared to learn that your baby is ugly.”

• “A good partner tells you when your site won't convert, when your creative isn't creative, when your data is suspect or when your budget is meant for model rockets vs moon shots.”

• “That same good partner sets realistic expectations before they begin. Here's the thing, if you spent $50k and got no results, an agency won't be able to flip a switch to prosperity. It takes time and patience.” READ THE POST

FINANCE

Did the Paycheck Protection Program work? “New research, drawing on millions of wage and payroll records, suggests a complicated answer: Yes, but at an extraordinarily high cost. One new analysis found that only about a quarter of the money spent by the program paid wages that would have otherwise been lost, partly because the government steadily loosened the rules for how businesses could use the money as the pandemic dragged on. And because many businesses remained healthy enough to survive without the program, another analysis found, the looser rules meant the Paycheck Protection Program ended up subsidizing business owners more than their workers.”

• “Within one month of being approved, companies that got loans had an average headcount 8 percent higher than comparable businesses that didn’t. After seven months, their work forces were still 4 percent larger, maintaining a lead even as hiring nationwide began to bounce back.”

• “Businesses that received a loan from the program were 5.8 percent less likely to be closed one month after receiving the money, and 3.5 percent less likely to be shut down after seven months, Dr. Dalton found.”

• “But overall, the Paycheck Protection Program was extremely inefficient. For every $1 in wages that it prevented from being lost, it handed out $3.13 that went somewhere else, Dr. Dalton found.”

• “The analysis by Dr. Autor’s group, circulated for comment last month by the National Bureau of Economic Research, put the cost of saving a job for a year at $169,300 — far more than the $58,200 average compensation for those jobs, according to the group’s calculations.” READ MORE

FROM OUR SPONSOR: WORK BETTER NOW

Start getting more done with a virtual assistant: How many times at the end of the day do you realize that you haven’t completed the important things that really improve the value of your business. Too many business owners spend the bulk of their day on administrative tasks instead of high-value priorities like:

• Spending time with current and prospective customers. 

• Developing a new marketing initiative. Keeping your team engaged and focus. 

• Thinking about new products and services. 

• And of course, a little more personal time would be nice.

Work Better Now provides highly qualified, enthusiastic, and dedicated virtual assistants at a price any business can afford — and 21 Hats subscribers get $150 off for the first three months by mentioning “LOREN.” LEARN MORE HERE

RETAIL

People are flocking to small grocers in Texas: “Austin and Taylor Burge opened Chaparral Coffee on Lockhart’s town square five years ago, but the couple ended up serving their community more than just the best coffee in town. When the COVID-19 pandemic unfolded in 2020, they began carrying staples like bread, milk, eggs, and deli meats. As the tiny space morphed into a makeshift bodega, Taylor sent out a survey to the customers on their email list, inquiring about shopping habits and desired products. When they received more than three hundred detailed responses, they knew it was time to seek out a space to open a grocery store.”

• “The Burges opened Good Things Grocery in Martindale, ten miles west of Lockhart, in September 2020.”

• “It became one of a handful of mom-and-pop operations across Texas that pivoted to provide essentials when lines at major grocery stores were hours long and aisles completely wiped out.”

• “The chaos of the last two years re-enforced the fact that independent grocers are on the rise as customers seek a closer connection with community and food.” READ MORE

ECOMMERCE

Is social commerce the future of ecommerce? “In China, brands are tapping into livestream video on platforms such as TikTok, Instagram, and Pinterest to create interactive shoppable experiences for buyers. Brands find that this is a highly effective way to reach audiences and many experience higher conversion rates since shoppers can chat with other viewers, ask the host of the livestream questions about the product and click directly on the screen to purchase it. In the U.S., retailtainment is still in its infancy.”

• “Social commerce will continue to be one of the driving forces behind ecommerce growth in the U.S., as consumers – especially millennials and Gen Z – seek out peer-to-peer platforms like Poshmark not only to shop but also to forge connections with others.”

• “At Poshmark, our focus on community from Day 1 has led to a more social, more connected shopping experience. On average, Poshmark users spend 25+ minutes a day in the app – more akin to their use of social networks than ecommerce sites.”

• “Our unique social shopping features make it easy for our global community to connect with one another through billions of social interactions, which in turn are driving everything from brand discovery to brand engagement to purchasing on our marketplace.” READ MORE

THE COVID ECONOMY

Rents are up 40 percent in some cities, forcing millions to move: “Average rents rose 14 percent last year, to $1,877 a month, with cities like Austin, New York and Miami notching increases of as much as 40 percent, according to real estate firm Redfin. And Americans expect rents will continue to rise — by about 10 percent this year — according to a report released this month by the Federal Reserve Bank of New York.” READ MORE

Meanwhile, retail rents are falling in Manhattan: “Manhattan’s retail rents fell by the most in five years, with the biggest decline in tourist-heavy Times Square. Average asking rents slid 14 percent in the fourth quarter from a year earlier across the borough’s prime shopping districts, according to a report by Jones Lang LaSalle Inc. Times Square rents tumbled 37 percent as landlords repriced spaces to attract tenants, the brokerage firm said. Retailers are taking advantage of the discounts. The number of new leases rose 24 percent from the previous quarter. READ MORE

POLICY

With the Biden vax-or-test mandate struck down, businesses have to confront a complex array of local Covid rules: “The Walt Disney Company suspended its national vaccine mandate for Florida employees because of state regulations, even as it is working to keep the requirement in place for workers in its home state of California. A restaurant owner in Austin said he requested vaccines of his customers, but couldn’t check their proof of vaccination under state law. Hewlett Packard Enterprise has set up a crisis management team that meets twice weekly to evaluate Covid conditions and local laws in the 17 states where it operates, including Texas, and to assess the company’s ability to reopen offices and mandate vaccines or testing.”

• “In Texas and Florida, state officials maintained they wanted to protect the freedoms of workers by limiting the types of safety protocols employers could put in place. Many employers, though, have found that the regulations can be a barrier to keeping their workers safe and businesses open.”

• “‘It’s a bizarro world in Texas,’ said Austin Kaplan, an employment lawyer who has consulted with many companies in Austin struggling with Texas’ vaccine rules. ‘In other states, you have to show proof of vaccination to dine. In Texas, you’re not allowed to ask.’” READ MORE

PROFILE

Kent Taylor, the founder of Texas Roadhouse—later valued at more than $5 billion—took his own life after experiencing lingering side effects from Covid 19: “Taylor, who’d spent years as a restaurant manager, got turned down by more than 100 investors before three local cardiologists decided to back him to start his own. The first Texas Roadhouse opened in Clarksville, Ind., in 1993. Within six years, the young steakhouse chain had to close three of its first five restaurants owing to bad site selection. Taylor kept mementos from each of those duds in his office—two mounted fish and a cow skull—and for the rest of his life, he personally visited and approved every location.”

• “Taylor got his earliest employees to take a chance on him and Roadhouse with its partnership model. Store managers are required to pay $25,000 upfront and sign a five-year contract, but they then get 10 percent of the restaurant’s bottom line on top of their salary.”

• “In November 2020 he had contracted Covid and since then had suffered from severe tinnitus, a condition in which the brain responds to hearing loss by generating sounds to compensate for the ones the ear is no longer processing.”

• “The tinnitus had progressively worsened to the point that it sounded like ‘a jet airplane taking off in your ear 24 hours a day, seven days a week,’ says his son, Max Taylor.” READ MORE

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