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They Know They’re Doing Something Wrong
Today’s highlights: What happens when there’s no succession plan. Why employees are losing Covid-related workers comp cases. And in a new 21 Hats Podcast, Laura Zander talks about feeling trapped.
THE 21 HATS PODCAST
Episode 49: How Do We Get Out of This Cage? This week, Karen Clark Cole, William Vanderbloemen, and Laura Zander cover a lot of ground: What do you do when the to-do list seems endless? What do you do when employees decide they want to work remotely from random parts of the country? And Laura is confronting several big, interrelated issues. Her co-founder and husband, Doug, is ready to step back from the business. That’s a little tricky because the company operates off a 19-year-old platform that Doug built, and only he knows how to make it work. They’ve been trying to hire tech people for Doug to train, but they’ve been through 15 people in 10 years—and they know they’re doing something wrong. Do they need to hire a recruiter? Is it time to junk the legacy platform and go with Shopify? If they do that, will they forfeit 19 years of SEO value? All of which has left Laura feeling trapped. “That’s this cage that we’re in,” she says. “What the hell do you do?”
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What happens when the owner dies without a succession plan? “Ivo Puidak, who cooked for Presidents Jimmy Carter and Ronald Reagan as the head chef at the Federal Reserve Bank in Chicago, built the Galena Canning Company into a thriving specialty food business, selling premium barbecue sauces, salsas and seasonings around the country. But Mr. Puidak, who based his business in Galena, Ill., a resort town about 160 miles west of Chicago,never put a succession plan in place, not even after he learned he had cancer in 2017 and was given only a few months to live. Neither his wife, Shelly, nor their only child, Max, wanted to take over the business, so the family decided to sell. The sale was set to close on March 30, 2020. But two weeks before it could go through, Mr. Puidak died.”
“‘We can tell them they should do something for 1,000 years, but business owners hate to be told what to do,’ said Brian Baum, managing director at Interchange Capital Partners in Pittsburgh.”
“‘Last week, I had five or six people say they weren’t interested in exit planning that covers different contingencies. People just don’t want to do it.’”
“In Galena Canning’s case, there is a happy ending. But that ending offers lessons for other business owners.” READ MORE
On Saturday, we highlighted a metric that can help you assess whether you’re a good manager: your unemployment contribution rate. As the post explains: This rate happens to be something individual owners have some control over if they manage their employees well. We quoted Jay Goltz’s four-point plan for improving his rate.
One reader responded: “I feel like such an idiot for never even thinking about this. Thanks for bringing it to my attention everybody.”
Another commenter pointed out that the rules vary greatly by state and provided a helpful link to every state’s rate.
Employees filing Covid-related workers comp claims are struggling to prove their cases: “Insurance carriers and business groups feared at the start of the pandemic that they would be overwhelmed by workers’ comp claims related to Covid-19. That concern intensified as more than a dozen states passed laws giving some employees including nurses and firefighters a presumption of eligibility, or access to workers’ comp coverage without requiring them to prove infections occurred on the job. Those fears turned out to be unfounded. Workers filed hundreds of thousands of virus-related claims in 2020, but those cases, according to state and industry data, were more than offset by a steep drop in non-Covid-19 claims as layoffs, shutdowns and remote work reduced the number of workplace accidents and injuries.”
“The data also suggest that carriers are denying a significant percentage of claims related to Covid-19, even in states with the so-called presumptive-eligibility rules.”
“In the first three quarters of 2020, workers’ compensation payments and liabilities were 7.6 percent lower than in the same period of 2019, according to the National Council on Compensation Insurance, a trade group.”
“Given the decline in payouts, some insurers are lowering the premiums they charge employers for coverage this year.” READ MORE
The ban on new foreign workers forced many businesses to scale back production: “The U.S. closed the door to nearly all incoming foreign workers last year. The causes were Covid-19 restrictions that locked global borders and Trump administration policies that drastically reduced work visas, with the exception of farmworkers. The effect was an unexpected experiment in one of the country’s most hotly debated issues—the relationship between the labor market and immigration. The preliminary finding: Even with skyrocketing U.S. unemployment, businesses that relied on foreign workers and were able to remain open during the pandemic struggled to fill jobs, employers said.”
“Unemployed American workers weren’t interested in jobs typically held by foreign hires at the lower and seasonal end of the job market, and the visa ban didn’t help those unqualified for specialized jobs at the higher end, according to Alex Nowrasteh, director of immigration studies at the libertarian Cato Institute.”
“Since June, enterprises that managed to keep going through the pandemic—from web developers to resorts—say they haven’t been able to find the workers they need. Many scaled back production, cut hours or sent jobs overseas.” READ MORE
Buc-ee’s, the iconic Texas-size convenience store is facing a backlash as it moves east: “Buc-ee’s! Home of the interstate highway system’s most gleaming bathrooms! Buc-ee’s! The birthplace of Beaver Nuggets snacks, home to an incredible array of jerkies, land of infinite fruit snacks! Buc-ee’s! The mischievous beaver mascot, taunting motorists from billboards with come-ons like ‘Only 262 Miles to Buc-ee’s. You Can Hold It.’ It is a Texas icon, a brand to which many in the Lone Star State feel a fierce attachment, a beloved intermediary between our state’s far-flung destinations. Buc-ee’s! Also: a place some outside Texas—and even some here—would apparently prefer not to have as a neighbor.”
“Over the past several months, the chain has been embroiled in a battle with residents of the North Carolina community of Efland, about 25 minutes west of the college town of Chapel Hill, where some feared that a planned Buc-ee’s would worsen traffic congestion, pollute a protected watershed, and offend aesthetic sensitivities.”
“The protest came as Buc-ee’s expands across the South, with new stores opening in Alabama, Florida, and Georgia, as well as North Carolina. Communities are struggling with the Buc-ee’s paradox: it’s a great place to take a break during your journey to wherever, but some folks tend to get nervous when it decides to move in next door—or even a half-hour away.” READ MORE
While retail stores have been decimated across New York City, a stretch along Atlantic Avenue in Brooklyn has remained vital: “Any inquiry into how this has come to pass must begin with the fact that many of the stores belong to the individual people who created them. The monuments to corporate branding — the Guccis and Pradas — that line so many of the desolate retail corridors in Manhattan are essentially absent here. In the 1980s and ’90s, this part of Atlantic Avenue was given over to modest antiques stores serving a new population of first-time homeowners restoring brownstones in Boerum Hill.”
“When you walk into one of these stores, you are likely to find the owner behind the counter. Often she — and it’s usually a woman — is also the person making what she sells: lamps, pillows, pottery, dresses, body oils.”
“Ms. Dayton, who owns Consignment Brooklyn, a vintage clothing store, has had the same landlord for 17 years. ‘He is like my dad,’ she said. ‘His response when I called him was, I am here to help you be successful.’”
“He forgave three months of rent.” READ MORE
THE COVID ECONOMY
Lumber prices are setting records, indicating that the pandemic building boom continues: “Records have been set across species, products and grades, according to pricing service Random Lengths. It has never cost more to buy oriented strand board, known as OSB and used for walls, Southern yellow pine, which is favored for fences and decks, or ponderosa pine, which is popular in cabinetry and interior trim. Many engineered wood products used in new construction, such as I-joists, are in short supply, and mills are backlogged with orders well into March, the pricing service said.”
“Mills shut down and choked back output at the pandemic’s onset, reasoning that widespread job losses would wipe out what was looking like a promising spring for home-building. They were wrong.”
“Stuck-at-home Americans undertook home-improvement projects. Builders faced a stampede to the suburbs, brought on by record-low mortgage rates and people looking for more living space.” READ MORE
A Philadelphia architecture firm is pushing to build net-zero apartments: “The shiny, onyx-colored building appears alien in its drab, postindustrial Philadelphia neighborhood—the love child of a ‘D-volt battery and the Death Star,’ as one local architecture critic put it, admiringly. Called Front Flats, the four-story building is wrapped on all sides and roof by 492 translucent, double-sided solar panels. The building is airtight and extraordinarily energy-efficient, its developers say. By driving down consumption and producing electricity from its solar panels, Front Flats is designed to generate its own power. But this isn’t a corporate headquarters where executives can spend lavishly on a showcase edifice. It is 28 apartments, built on a budget for renters who make below the area’s median income.”
“One-bedroom apartments rent for under $1,400, less than the $1,750 average for the neighborhood, according to rental-listings website Zumper.”
“Onion Flats, the Philadelphia-based architecture-and-building firm behind Front Flats, is at the forefront of designing low-cost buildings that use design, mechanical equipment and residents’ behavior to slash fossil fuel consumption.”
“‘As an architect, if I’m not designing buildings that contribute no carbon to the environment then I’m being totally irresponsible,’ says Tim McDonald, 56, a principal in Onion Flats. ‘I might as well be designing buildings that sit on marshmallows.’” READ MORE
S. Prestley Blake, a co-founder of Friendly’s, was 106: “Mr. Blake and his younger brother, Curtis, who died in 2019 at 102, founded the first Friendly Ice Cream in the summer of 1935 in Springfield, Mass., with a $547 loan from their parents. The country was in the throes of the Depression, but the brothers thought they could attract customers by charging a nickel (the equivalent of about 95 cents today) for two scoops of ice cream — half the price their competitors charged. The shop was an instant success, with a line out the door on opening night, and profits started rolling in — enough for the brothers to buy a used Model A Ford, which they could easily share, since one of them was always at the shop.”
“In time, the Friendly Ice Cream Corporation expanded to several hundred locations, mainly in the East, by following a conservative business model. ‘We avoided debt like the plague, fueling almost all our growth from profits,’ Mr. Blake wrote.”
“The Blake brothers ultimately parlayed that initial $547 loan into a very big payday, when they sold the company in 1979 to the Hershey Company for about $164 million (about $620 million today).” READ MORE
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