These Women Are Not Sticking to Their Knitting
On Tuesday, January 4, a 21 Hats webinar conversation will feature three women emerging from the cultural upheaval in, yes, the yarn industry.
Good morning! The next regular edition of the Morning Report will be published on Monday, January 3. In the mean time, may your holidays be wonderful and safe. We very much look forward to seeing you next year.
Here are today’s highlights:
It’s not too late for businesses to save on this year’s taxes.
Should the SBA restrict EIDL loans to businesses that have suffered economic damage?
Architecture firms have a business model problem and now a unionization problem.
And yes, there is a shortage of pet food.
Adella Colvin, Felicia Eve, Gaye Glasspie
THE 21 HATS CONVERSATION
These Women Are Not Sticking to Their Knitting: It’s very possible you are not aware that the yarn industry has been enduring an unlikely culture war, divided by charges of racism and cultural appropriation that have erupted in a series of social media firestorms and prompted some owners to close, sell, or rebrand their business. It’s not that these cultural tensions don’t exist in the rest of the country; of course they do. It’s just surprising to find them attached to something as seemingly genteel as knitting, and it’s been compounded by the pandemic, which has challenged everyone in the industry.
Amid the upheaval, though, new voices and new leaders have emerged. In the next 21 Hats Conversation, we'll talk with three women about their experiences breaking into what is no longer your grandmother’s yarn industry: Adella Colvin, founder of LolaBean Yarn Company; Gaye Glasspie, one of the industry's leading social media influencers; and Felicia Eve, owner of String Thing Studio, one of the few Black-owned knitting shops in America. Bring your own questions. Tuesday, January 4, at 3 ET. REGISTER HERE
It’s not too late for businesses to save on this year’s taxes. For example, Gene Marks says, you can buy capital equipment, make a charitable contribution, write off long-overdue receivables, and help employees with student debt.
“You don’t even have to pay for this stuff right away. Even if you’re financing the acquisition, the rules allow you to take the deduction as long as the item is placed into service by year end.”
“Thanks to prior Covid-19 stimulus bills, you can personally take a $300 deduction ($600 for those filing jointly) on your tax return over and above the standard deduction this year and your business can deduct as much as 25 precent of its income for charitable contributions.”
“Thanks to Covid-related legislation, employers can now take deductions of as much as $5,250 each year per employee through 2025 when helping with student loan repayments and the employees won’t get taxed.” READ MORE
Ami Kassar says the SBA should restrict EIDL loans to those who have suffered economic damage: “A few weeks ago, I met an entrepreneur who bragged to me that he was having his best year in his company's history and just had $2 million wired into his account by the SBA. Despite the program restrictions, he has all types of outrageous plans about what he intends to do with the money and is comfortable taking the risk because the audit risks are so low. In contrast, I know of a Vietnam Vet whose business was decimated by the pandemic. He and most of his team have not been paid for a year, as they have struggled to survive and keep their 100-year-old company. He applied for the SBA EIDL increase half an hour after the program went live and has been stuck in the quicksand of the bureaucracy ever since.”
“Yesterday, he was declined because his credit score was too low. His credit has dropped dramatically since he applied, as he has struggled to keep his business alive.” READ MORE
Here’s how accelerator Y Combinator, which takes a 7 percent stake for $125,000, launches startups: “In its most recent batch, YC selected 401 companies out of a pool of more than 16,000 applicants to receive its imprimatur along with coaching from veteran founders on building products, formulating business plans, and raising funds. On August 31 and September 1, 377 of them pitched their companies—remotely, of course—to the investment community in the semiannual ritual called Demo Day. Each company’s founders had one minute to explain themselves: just enough time to plant a seed in a potential funder’s mind. Their ideas reflected YC’s implicit view that for every problem in the world …”
“YC has launched companies whose total valuation tops $400 billion; its alumni include such luminaries as Dropbox, Airbnb, Stripe, CoinBase, and DoorDash.”
“‘We're sort of like Crispr for startups,’ says Geoff Ralston, YC’s president since 2019. ‘Startups come into YC with raw DNA. We edit the DNA so that they have the alleles that make it more likely for them to be successful.’” READ MORE
THE COVID ECONOMY
On the final Saturday before Christmas, shopping in stores was down 26 percent from pre-pandemic years: “A lack of foreign tourists opening up their wallets and another wave of coronavirus cases in some major U.S. cities weighed on shopper turnout on the final Saturday before Christmas, preventing it from bouncing back to pre-pandemic levels. Visits to retail stores dropped 26.3 percent on Saturday compared with the Saturday before Christmas in 2019, according to preliminary data from Sensormatic Solutions, a division of Johnson Controls.”
“Year over year, though, retail traffic jumped 19.4 percent, Sensormatic said.”
“The day known as Super Saturday is viewed as the second-busiest shopping day of the holiday season, behind Black Friday, according to Sensormatic.” READ MORE
In Europe, businesses are getting government help as omicron drives customers away: “Throughout Britain and in other parts of Europe, new government restrictions combined with heightened anxiety over the highly contagious Omicron variant of the coronavirus have drastically reduced business at restaurants, pubs, event venues and stores, prompting urgent calls for additional government assistance. In Britain, the government responded Tuesday, announcing 1 billion pounds ($1.3 billion) in aid for the hospitality industry, with one-time grants of £6,000 and rebates for employees’ sick leave.”
“In France, government ministers announced Tuesday additional aid up to 12 million euros for travel agencies, events, caterers and indoor leisure companies that suffer big operating losses this month.”
“In the Netherlands, where most shops, bars, restaurants, gyms, outdoor sports, cultural venues and schools are closed through January, some business owners fear they may never reopen.”
“‘That is something that I ask myself every day,’ said Omar Waseq, who owns a cheese bar and film cafe in the center of Utrecht. ‘I’m not 100 percent sure.’” READ MORE
Is the $1 pizza slice history? “For two decades, 99 Cent Fresh Pizza, a New York City chain, has charged $1 for a slice of cheese pizza, luring anyone who needed to fill up for cheap in a notoriously expensive city, from construction workers to students to late-night partiers. But the pandemic has thrown its business model, which relies on heavy foot traffic in office districts and tourist hubs, into an existential crisis. With inflation rising at its fastest pace in a generation, prices for just about everything — from pizza boxes to pepperoni, flour and oil — have skyrocketed.”
“The chain’s owner, Mohammad Abdul, is now agonizing over whether to raise prices for the first time since opening in 2001.”
“Mr. Abdul is one of the last holdouts in New York City’s fiercely competitive dollar-slice pizza scene, where a growing number of chains have raised prices or closed locations permanently, in part because some can no longer pay their rent.”
“Many owners of dollar-slice businesses, including those who raised prices, said their revenues are half of what they were in 2019, before the pandemic.”
“‘You can sort of get away with higher rents if you’re charging $3.50 or $4 a slice,’ he said. ‘Honestly, $1 pizza really shouldn’t have ever existed.’” READ MORE
Employees at larger companies are really struggling with burnout—presenting smaller businesses with a buying opportunity: “Almost two years into the pandemic that left millions doing their jobs from home, many Americans are rethinking their relationship with work. Companies are struggling to stop employees from leaving and to boost morale. Some are trying mandatory company-wide vacation days and blackout hours when meetings are banned. Executives are experimenting with new ways of working, including four-day workweeks and asynchronous schedules that allow people to set their own hours.”
“Tom Larrow, a 45-year-old information-technology manager for a financial-services company in Brunswick, Ohio, spent more than a year juggling work while helping his two young sons attend school online. He lost his mother-in-law to Covid-19. His nerves, he said, were frayed.
In September, he said, he had a panic attack as he tried to give his diabetic son insulin and couldn’t figure out the dosage. ‘I could not, in my head, divide 50 by 25,’ he recalled. ‘I had to pull out a calculator and do that very, very basic math because my brain was so fried.’”
“Mr. Larrow’s employer has provided sessions on stress management, he said, which included recommendations to take five-minute breaks and meditate.” READ MORE
Interest in unionization is spreading to architecture firms, which have a business model problem: “On Tuesday, employees at the well-regarded firm SHoP Architects said that they were seeking to change the formula of long hours for middling pay by taking a step that is nearly unheard-of in their field. They are seeking to unionize. The organizers at SHoP, which has about 135 employees and is known for its work on the Barclays Center in Brooklyn and a luxury building south of Central Park previously called the Steinway tower, among other projects, said well over half their eligible colleagues had signed cards pledging support for the union.”
“Firms that specialize in customized designs, like SHoP, regularly spend weeks generating proposals for the competitions through which clients award contracts, and for which the firms receive little or no pay. And many firms propose fees that are too low to support adequate staffing, several experts in the field said.”
“‘People lower their fees, and once you lower your fees — I don’t know if it’s a slippery slope, but it’s definitely a slope,’ said Andrew Bernheimer, the principal at Bernheimer Architecture and an associate professor at the Parsons School of Design in New York.”
“Architects at SHoP and other firms said their employers typically resolved this contradiction through vast quantities of unpaid overtime.” READ MORE
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As their homeland fell, these Afghan women took over a restaurant business: “Most days when Taliha Masroor is at work managing Bistro Aracosia, her family’s flagship Afghan restaurant in [Washington, D.C.], her group text is constantly buzzing. It might be her younger sister, Iman, at their Aracosia McLean location, trying to solve a staffing issue, or her aunt, Eve, at the tiny cafe that started it all, Afghan Bistro in Springfield, Va., letting them know that another customer came in to hug her that day. The hugging started happening after Kabul fell. They are three of the four Afghan American women, including Taliha and Iman’s mother, Sofia, now in charge of this local restaurant empire — holding positions of power that the Taliban’s takeover has essentially denied to most women who’ve remained in their ancestral homeland.”
“All but Sofia, who fled with her family from the Russian invasion of Afghanistan as a child in 1981, were born in the United States and raised in the Washington area.”
“And they’ve ascended to running the family’s business only in the past four months, as a deliberate statement of defiance to what’s happened to the country and culture they love.”
“‘Ever since all of this stuff has happened, I have thought about how different my life would be,’ if their family hadn’t come to America, or if they’d moved back to Kabul, as was their plan at one point, says Taliha. “Would I have all the opportunities that I have now, or the position that I’m in, as far as running a business on my own? I don’t think I would.” READ MORE
There’s a shortage of pet food: “Shortages of labor, raw materials and transportation are crimping the human food supply, from beverages to snacks. The challenge is the same for pet food, and is even more acute, supermarket executives say, because of the sudden high demand. More people have adopted pets during the Covid-19 pandemic, and pet owners are buying bigger volumes of food. Pet-food sales at supermarkets grew 6.9 percent over the past 52 weeks ended Nov. 27, compared with 2.3 percent for food overall, according to research firm NielsenIQ.”
“Many supermarkets, unable to find substitutes, are leaving pet-food shelves empty. Pet-food manufacturers, struggling to secure ingredients and expand production, have signaled that shortages could persist.”
“J.M. Smucker Co.notified retailers in November that it would limit shipments of some pet-food products through January 2023, citing transportation challenges with the supply of wet food—which typically uses imported ingredients.” READ MORE
THE 21 HATS PODCAST
This Is What It Takes to Build a Business: This week, in our last episode of 2021, we take a look back at the conversations we’ve had this year, including what it’s like to sell your business, to fire an employee, to risk your own home in order to get financing, to have to make a bet-the-company decision, and to deal with mental health issues, even thoughts of suicide. In this bonus episode, we highlight some of our happiest, smartest, funniest, and most difficult exchanges from the past year.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
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