Discover more from The 21 Hats Morning Report
The Rise of the Six-Figure, Entry-Level Salary
In the tightest labor market ever, the expectations of college grads—and those already employed—continue to escalate.
Here are today’s highlights:
Gene Marks says business owners will find ways to cope with inflation.
Rising prices are forcing owners of Texas barbecue restaurants to get creative.
Especially given the Russian invasion, businesses of all sizes should review their cybersecurity policies.
Peloton is experimenting with a new strategy: “The company on Friday will start testing a new pricing system in which customers pay a single monthly fee that covers both the namesake stationary bike and a monthly subscription to workout courses. If a customer cancels, Peloton would take back the bike with no charge. Select Peloton stores in Texas, Florida, Minnesota and Denver will for a limited period offer a bike and subscription for between $60 and $100 a month, an experiment that aims to find a price proposition that will help return Peloton to profitability without crippling growth.”
“If adopted, the model would be a major shift for Peloton, which built a business around selling high-price, screen-equipped stationary bikes alongside $39-per-month subscriptions to its connected workout classes.”
“The idea: sell Peloton as a fitness service that can be canceled anytime rather than as a major purchase with a subscription attached.” READ MORE
With energy costs surging, inflation takes another leap: “U.S. inflation reached a new four-decade high of 7.9 percent in February, the Labor Department said Thursday, as Russia’s invasion of Ukraine pushed energy prices sharply higher. Before the Ukraine crisis, economists and policy makers had been hoping for a peak in year-over-year inflation this spring as supply chains heal from pandemic-related disruptions and the Federal Reserve begins an expected series of interest rate increases next week. But the outbreak of war has supercharged prices for oil, wheat, and precious metals, threatening higher inflation for longer.” READ MORE
Gene Marks says business owners shouldn’t be worried about inflation: “I can adjust because, as a small business owner, I can and have increased my prices, as 68 percent of small businesses reportedly have, according to a recent report from the National Federation of Independent Businesses. My customers aren’t thrilled. But it’s not as if they’re not expecting it. That’s because they’re doing the same with their customers. My competitors are doing the same. Big brands are doing the same. It’s a market economy. And the market is shifting. So we shift with it. The economy doesn’t go away when prices go up. Things adjust.”
“I’ll get an energy audit from my local utility company and more diligently monitor power usage in my office. I’ll cut back on travel where I can. I’ll buy products in bulk, comb through my overhead, limit discretionary spending and negotiate harder on contracts.”
“‘When this happens, I get more rides,’ my Uber driver said to me recently. ‘People would rather take an Uber than spend on gas for their car.” READ MORE
As prices rise, Texas barbecue restaurants are getting creative: “While restaurants of all kinds are feeling pinched by the rising costs, barbecue restaurants traffic in huge quantities of meat, typically sold by the pound, and often have few other offerings to offset price fluctuations. Texas barbecue is dominated by brisket, which many restaurant owners said has doubled in wholesale price over the past year or two.”
“Amid the pandemic and the fast-rising cost of meat, [Skeeter] Miller has had to raise prices, including four times in just the past year, he said. When he pushed the price of the Big Daddy Platter—a hefty rack of slow-smoked beef ribs—to $32.99 from $18.99, he handed all the waiters sheets with his cellphone number to give to any customers who complained.”
“Raul Rodriguez Jr., owner of RJ’s BBQ in the border city of Brownsville, has been in business since August 2020 and has already had to raise prices twice. He also moved from a full-service restaurant to a walk-up location in a mall, where he got a deal on rent.”
“Mr. Rodriguez recently found another trick: selling raffle tickets for things like a whole brisket or a catered event package. The ticket sales, at around $5 to $8 each, have brought in more than the cost of the meat. ‘Whatever we can do to bring in income,’ he said.” READ MORE
Another 4 million workers quit their jobs in January: “Some 4.3 million Americans quit or changed jobs in January, edging down a bit compared with December but still in record-high territory in yet another sign that workers continue to have the upper hand in a tight labor market. Employers hired 6.5 million people in January, while reporting 11.3 million job openings that month, as the omicron coronavirus variant picked up speed in many parts of the country, according to a new report by the Bureau of Labor Statistics. ‘It is, by many measures, the tightest labor market ever,’ said Julia Pollak, chief economist at ZipRecruiter. ‘Employers are having to play tug-of-war to get half an employee.’” READ MORE
Most employees who quit say they are looking for better pay and better career paths: “A recent Gallup survey also found that better pay was the top reason people considered accepting new job offers. In that survey of more than 13,000 U.S. workers, 64 percent said getting a significant increase in pay or benefits was their priority—rising from No. 4 on the list in 2015, when 41 percent of respondents said more money was very important. Seven years ago, the majority of workers Gallup surveyed (60 percent) said being able to do what they do best was their job priority.”
“Other pandemic-specific reasons that have driven staffing turnover, such as child-care needs and the desire to relocate, ranked comparatively lower.”
“Of those surveyed with children under age 18, some 48 percent said child-care issues were a factor that pushed them to quit. Another 35 percent said they wanted to move locations.”
“Some workers also feel emboldened to leave as they watch friends and colleagues do the same, she says: ‘It’s a little bit of, ‘Wow, everyone’s getting a better deal now—why shouldn’t I collect, too?’” READ MORE
College grads are walking out of school and into entry-level jobs that pay six figures: “As wage inflation hits campuses during a roaring economic recovery and tight labor market, the next cohort of frosh workers may be greeted by grouchy colleagues—some just a few years older—who are jealous and concerned. Some say new hires who don’t know what it is like to make less than $100,000 could be entitled, or out of touch with those of more modest means. ... Wall Street banks and blue-chip consulting firms boosted pay in recent years to compete with big tech companies and their lure of stock options.”
“And some venture-funded startups are showering young hires with cash—like so many mortarboards raining down on graduation ceremonies—prompting certain sectors to offer $100,000 or more to inexperienced workers.” READ MORE
United Airlines will allow unvaccinated workers to return at the end of March: “The move permits staffers with exemptions from the carrier’s vaccination requirement for its U.S. employees to return from unpaid leave or from the non-customer-facing roles they were allowed to apply for as an alternative to their regular jobs, the people said. United said in August last year that its 67,000 U.S. employees would have to be vaccinated against Covid-19 or face termination, making it one of the first U.S. companies to impose such a mandate.”
“United has said it fired more than 200 employees who refused vaccination, and they won’t be brought back, the people said.”
“An additional 2,200 employees had argued that they had religious or medical reasons not to be vaccinated. Those workers were generally put on unpaid leave unless they opted to apply for non-customer-facing roles.”
“Newly hired workers will still have to be vaccinated, one of the people said.” 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.
“I am delighted with the services rendered by Work Better Now. The virtual assistant they provided me is very efficient and has vastly exceeded my expectations. She helps me optimize my time allowing me to focus on the core activities that only I can do. Her work is contributing directly to revenue generation, profitability, and seamless, stress-free operations. She has completely changed my business.” – Ed Bohlke, Deserve Level Coaching
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
If you haven’t reviewed your cybersecurity policies lately (or ever), it’s time: “While there are no specific or credible cyberthreats aimed at the U.S. currently, in February the Cybersecurity and Infrastructure Security Agency warned that destructive malware against organizations in Ukraine may spread to businesses in other countries, especially as sanctions continue. Destructive malware can disrupt your daily operations, infiltrating your networks and cutting off access to critical data.”
“Cybersecurity should make up roughly 10 percent of your IT budget, and possibly more if your company holds large amounts of confidential data, such as medical or financial records, Jaya Baloo, chief information security officer at antivirus software maker Avast, told Inc.
“Increasingly sophisticated phishing emails may appear as if they come from someone in your organization, says Kevin Johnson, CEO of penetration testing firm Secure Ideas. So it's crucial to double-check the email signature of any internal messages asking for this information, educating staff to do so as well, and having a designated person at your organization who can look into any potential threats.”
“Tempe, Arizona-based software company NortonLifeLock recommends browser password managers or offering employees password manager applications to safely store passwords.” READ MORE
The first 100 dispensary licenses in New York will go to people with marijuana convictions: “New York State will soon announce plans to usher in its first outlets for retail sales of marijuana by the end of the year, giving applicants access to stockpiles of the drug grown by local farmers and offering sweeteners like new storefronts leased by the state. The only catch? To be one of the state’s first licensed retailers, you or a member of your family must have been convicted of a marijuana-related offense.”
“In favoring those with marijuana-convictions and prepping their businesses for turnkey sales, New York appears to be trying to avoid pitfalls encountered in some other states, which have seen designated ‘social equity’ applicants and other mom-and-pop marijuana businesses struggle with issues like lack of capital or competition from deep-pocketed corporate operations.”
“To that end, [Gov.] Hochul has proposed — and the Legislature seems likely to pass — $200 million in this year’s budget to support the fledgling businesses, money that would be spent on finding, securing and renovating storefronts for retailers.”
“In California, for example, such efforts have been complicated by strict regulation, high taxes and substantial barriers to entry that have left the state struggling, years later, to quell a thriving black market of untested, untaxed weed.”
“And in New Jersey, social equity candidates who hope to take advantage of a law similar to New York’s have struggled to find capital and secure leases — part of the impetus behind New York’s $200 million expenditure.” READ MORE
You may have seen the brutal photo of a Ukrainian mother lying dead in the street with her two children: “Palo Alto startup SE Ranking confirmed Wednesday that the photo depicts its chief accountant, Tatiana Perebeinis, 43, along with her daughter Alise, 9, and son Nikita, 18, who were shot at by Russian forces as they tried to flee the town of Irpin, a suburb about 15 minutes from Kyiv. ‘For me as her colleague it’s a tragedy to see those pictures,’ Ksenia Khirvonina, the company’s spokeswoman, told The Chronicle. ‘They show that it’s real. On the other hand they prove that (the) Russian army and Putin himself are monsters who deserve no mercy for their doings.”
“When the Russian invasion started, Perebeinis initially stayed in Irpin, where she and her family lived, because her mother was sick and her son, at 18, was in the age group of males not allowed to leave the country in case they are needed to defend Ukraine, Khirvonina said.”
“But after Irpin was surrounded, a bomb hit the family’s building, right above their apartment. ‘They couldn’t stay in their apartment any more; they spent all their time in the basement where it was cold with no food, light, heat, anything,’ Khirvonina said.”
“Perebeinis decided to use the promised ‘safe passage’ that Russia had agreed to for civilians to flee.” READ MORE
THE 21 HATS PODCAST
We Tried That Brand Thing. It Didn't Work: This week, Shawn Busse, Paul Downs, and Jay Goltz talk about the tendency of many businesses to obsess about their logo, their website, and the need to drive more leads. To which Shawn suggests concentrating first on customer experience. And Jay agrees: “It's better business,” he says, “to make your customers happier than to keep trying to find new customers.” But Paul has his doubts: “You can have your internal house in order, as I do,” he says. “And you can have a great website, as I do. But it's not driving new business to us at the moment.”
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