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‘This Will Come as a Relief to the Business Community’
Even in Texas, President Biden’s vaccine and testing mandate wins support from business leaders.
Good morning!
We’re starting something new today, introducing a weekly conversation where I’ll be talking to Gene Marks about the news stories business owners should be thinking about. This week’s topics include: the burden the president’s vaccine mandate will put on businesses, the expanded EIDL, mitigating inflation, preventing ransomware attacks, and getting creativity from a remote workforce. (You can learn more about Gene’s consulting business here and read his articles here.) The new podcast is called Dashboard, and you can find it in your 21 Hats Podcast feed. Or you can TRY IT HERE
Here are today’s highlights:
Restaurants are closing dining rooms again.
Salesforce offers to get its employees out of Texas.
Facebook offers to buy $100 million worth of unpaid invoices from small businesses.
MANAGEMENT
Car dealers are looking for a new business model: “The way people buy and sell cars is changing. More of it is happening online as buyers get comfortable with completing transactions remotely. It is a shift that started before the pandemic but accelerated over the last 18 months as Covid-19 spurred people to do more of their shopping from home and demand for cars unexpectedly surged. The auto dealership, as a result, could soon look like other parts of the business world upended by e-commerce. National chains, instead of local small businesses, will set prices and give salespeople less room to haggle. Dealers will hold fewer cars on the lot and operate more like service-and-delivery centers, using their dealerships as hubs where customers can pick up vehicles ordered online and get them serviced.”
“‘It was my time to ride off into the sunset,’ said John Medved, 73, a Denver-area dealer who last year sold his six-store chain to a larger dealership group in Canada.”
“Mr. Medved, a recognizable face and voice on local airwaves, said he wasn’t sure how to connect with consumers who wanted to shop online: ‘Nobody’s seen anything. Nobody is touching anything. I can’t do that.’”
“Tesla’s no-dealership model now is being adopted by other electric-vehicle startups such as Rivian Automotive and Lucid Group.” READ MORE
THE COVID ECONOMY
With Delta spreading, restaurants are closing dining rooms again: “Covid-19’s resurgence is creating whiplash for restaurants, which have slogged through a year and a half of pandemic-related disruptions. Sales that had steadily grown earlier in the summer have fallen in the past five weeks, data from restaurant analytics firm Black Box Intelligence showed. Bars and restaurants lost 41,500 jobs in August, the largest monthly decline of any single sector, according to Labor Department figures released earlier this month. It was the food-service industry’s first monthly decline since December.”
“For many independent sit-down restaurants, keeping customers in dining rooms remains a necessity. Some owners are now saddled with debt accrued since the start of the pandemic and said they need the sales.”
“Phil Simonson, owner of the Chocolate Lab restaurant and bar in Denver, came into the pandemic without any debt but now carries $100,000 in loans he took to keep his business afloat. He is paying the bills but not chipping away at his debt, Mr. Simonson said.”
“‘Keeping our dining area open and safe is my top priority,’ Mr. Simonson said. ‘It’s definitely a challenge.’” READ MORE
POLICY
President Biden’s vaccine and testing mandate wins plaudits and raises questions: “Many executives and business groups said they supported the government’s goal of speeding the pace of vaccinations to keep the recent surge in U.S. cases from hampering the economy. Some said they applauded the federal government’s harder stance while others, especially smaller employers and those with mostly hourly workers, cautioned the policy could be difficult to implement. Many employers still have questions about the timeline for implementing the new rules and are waiting for details about how employers could access Covid tests for employees and how they should monitor results.”
“The Business Roundtable, which counts the chief executive officers of dozens of the biggest U.S. companies as members, said it ‘welcomes the Biden Administration’s continued vigilance in the fight against Covid,’ in a statement from Joshua Bolten, the group’s president.”
“Jessica Johnson-Cope, owner of Johnson Security Bureau in New York City, said she worries about the mechanics of implementing President Biden’s directive. ‘Logistically, I don’t know how this will work for us,’ said Ms. Johnson, whose 160 employees provide unarmed and armed security services for businesses.”
“Making employees come to a central location for testing each week ‘may create a burden for some,’ Ms. Johnson said, noting that most employees work off-site and take public transportation to their jobs and some work irregular hours. She also worries about the cost of weekly testing. ‘That’s, in essence, another tax on the business.’” READ MORE
Even in Texas, employers seem to support the mandate: “Texas Gov. Greg Abbott called Biden’s move ‘an assault on private businesses,’ but businesses in his state’s largest city did not see it that way. ‘The context in which this is occurring really matters,” said [Bob] Harvey, a former energy industry executive [who is chief executive officer of the Greater Houston Partnership, the city’s largest business group]. ‘We’ve been hit hard by this fourth wave [of the virus] … and employers simply must play a role in addressing this problem. We’ve tried it every other way.’”
“In a recent survey, 23 percent of partnership members already required coronavirus vaccines for some or all employees and an additional 30 percent were considering doing so. Of the remaining members that were not, most said they feared that some workers would quit rather than submit.”
“The president’s blanket order, applying to all companies with at least 100 employees, eliminated that worry, Harvey said.”
“‘I have not heard from my members today, which is interesting. I think the reason is what he announced is so in line with the conversations we’ve been having. This will come as a relief to the business community, to have an order that requires all of them to move together.” READ MORE
TEXAS
Speculation is building that Texas’s new abortion bill could affect the state’s hopes of becoming a tech haven: “On Sept. 3, just two days after Texas banned abortions, Vivek Bhaskaran, the chief executive of an Austin-based online survey software company, quickly assembled the handful of female employees that are based in the city. In a virtual town hall that lasted about 15 minutes, he told the women that regardless of insurance, the company would cover out-of-state abortion services. ‘I’m not a politician; I can’t change anything. But I’m still responsible for my employees in Texas, and I have a moral responsibility to them,’ said Bhaskaran, CEO of QuestionPro.”
“Texas led the nation in population growth in 2020 attracting 373,965 residents, according to estimates from the U.S. Census Bureau. While experts say it’s too early to tell whether the new laws will cause any massive change in worker migration, they note that right-wing measures could lead to a pause of left-leaning tech workers considering moving to the state.”
“‘You might see a slow down,’ said Richard Alm, a writer in residence at Southern Methodist University’s Cox School of Business in Dallas who studies the Texas economy. ‘This has potential to impact the supply of labor if workers are less willing to relocate to Texas.’” READ MORE
Salesforce is offering to relocate employees away from Texas: “‘These are incredibly personal issues that directly impact many of us — especially women,’ Salesforce told employees in the message, which CNBC obtained. The company did not take a stance on the law. ‘We recognize and respect that we all have deeply held and different perspectives. As a company, we stand with all of our women at Salesforce and everywhere.’ The note continues, ‘With that being said, if you have concerns about access to reproductive healthcare in your state, Salesforce will help relocate you and members of your immediate family.’” READ MORE
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HUMAN RESOURCES
Former restaurant workers explain why they aren’t going back: “Pandemic-related federal unemployment benefits came to an end on Sept. 6, and businesses may be in for a rude awakening in the next few months: Many hospitality workers might not be coming back at all. In a recent survey by job hunting site Joblist, more than 50 percent of workers who were offered incentives to come back — like higher pay and benefits — preferred to enter a different industry. The Chronicle spoke with multiple former Bay Area hospitality workers to hear why they decided to leave the industry. Some had worked in restaurants for more than a decade, motivated by the world’s energy and creativity. But one could no longer contend with what she termed a toxic environment. Another wanted to pursue his passion for art. A former manager realized a pre-pandemic car accident meant his body couldn’t handle the physical work anymore.”
“When Covid hit and all these restaurants and bars had to shutter or limit service, it became kind of a realization for me, and I think for a lot of industry people, that those sorts of positions aren't as protected as we thought they would be.”
“I felt it was not worth it. I also didn’t want to pay for childcare for my 5-year-old daughter and 11-year-old son.”
“I’ve been able to focus on my health in a way I couldn’t in a previous life. I’ve lost 40 pounds, I ride my bike now and I quit smoking.” READ MORE
Employees and employers are still negotiating whether salaries should be based on geography: “In the past two months, more than 20 companies seeking guidance on what to do about the salaries of employees who have moved have called Kyle Holm, a vice president with Sequoia Consulting Group who advises clients on compensation and benefits. Geography’s impact on workers’ compensation used to be a given, he said, adding that now more employees are questioning whether a pay cut makes sense given that they are working more hours, producing the same quality of work and feel they could find another job if they needed to. For instance, people moving from San Francisco to Austin can argue there is high demand for their skills in Texas—and they would be right, Mr. Holm said.”
“‘Engineers are basically saying, like, we’re good where we are and we’re able to do our work where we are, maybe even more efficiently than before,’ said Mr. Holm. ‘Take away location and adjustment to compensation on its face just doesn’t make sense because the output is still there.’” READ MORE
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LITIGATION
A judge’s ruling is a win for small app developers: “[Zach] Shakked created an iPhone app that helps companies find trending hashtags on social media. Over the past 12 months, his sales have topped $5 million. But one of Mr. Shakked’s largest expenses is paying a cut to the world’s richest company. In his case, Apple took nearly $1.5 million — its fee for letting him run his app on its devices. Now, Mr. Shakked has hope that he could soon keep at least some of that money. On Friday, a federal judge ordered Apple to allow developers to steer their customers off their iPhone apps to pay for their goods or services, which Apple had banned.”
“The ruling, in Apple’s yearlong legal fight with Epic Games, the maker of the popular video game Fortnite, set off celebrations among app developers.”
“From one-person start-ups to Fortune 500 companies, they have long complained about paying hefty cuts of their businesses to Apple.
“‘It finally feels like the small guys got a win,’ Mr. Shakked, 25, said.” READ MORE
FINANCE
Facebook will buy $100 million worth of unpaid invoices from businesses owned by women and minorities: “By buying up outstanding invoices, the Facebook Invoice Fast Track program puts money in the hands of small businesses that would have otherwise had to wait weeks if not months to get paid by their customers. The program is the latest effort by Facebook to build its relationships and long-term loyalty among small businesses, many of whom rely on the social network to place ads targeted to niche demographics who may be interested in their services.”
“Businesses can submit outstanding invoices of a minimum of $1,000, and if accepted, Facebook will buy the invoice from the small business and pay them within a matter of days.”
“The customers then pay Facebook the outstanding invoices at the same terms they had agreed to with the small business.”
“Interested businesses will be able to start applying on Oct. 1 after the program officially expands, Facebook said.” 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