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Want to Play John Dutton for a Day?
Ranchers in Montana are finding that offering tourists the “Yellowstone” experience can be lucrative.
Here are today’s highlights:
Business owners think it’s too hard to get a bank loan.
The labor shortage may be here to stay.
Ami Kassar notes there is far more advice about scaling up than about scaling down.
Mark Zandi says he still thinks inflation is headed in the right direction.
Ranchers in Montana have found a new side hustle: “Fifth-generation rancher Bayard Black has a lot of city folks looking to pay top dollar to rent his spread in the mountains near Yellowstone National Park. He can thank John Dutton in part for that. The runaway popularity of the ‘Yellowstone’ TV series, starring Kevin Costner as rancher patriarch Dutton, has helped spur interest among tourists to spend time on real ranches. Black is charging visitors for everything from traipsing his property in search of elk antlers to bird watching and fishing. His motivation is the same as for many other ranchers: getting extra income to help offset rising costs, including a 61 percent jump in property taxes since 2021 spurred by the hot real-estate market in nearby Bozeman. ‘We’re just trying to figure out how to keep the ranch in the family,’ said Black.”
“A startup called LandTrust has increased its number of rental listings, most of which are ranches, from 140 covering 300,000 acres in 2020 to 427 on 1.2 million acres currently. Many are in Montana, where ‘Yellowstone’ takes place. Chief Executive Nic De Castro said his Bozeman, Mont., firm, which has raised $10 million of funding, has recently added offerings including overnight stays in RVs. In all, landowners have earned $1 million from LandTrust rentals, according to the company.”
“Explore Ranches, based in Austin, Texas, started in 2018 with a roster of seven ranches in Texas and Colorado willing to rent out to large groups, and has since expanded to 20 in six Western states, said co-founder Allison Ryan. The firm specializes in upscale ranch stays. ‘Everyone wants their ‘Yellowstone’ moment,’ Ryan said.” READ MORE
This probably won’t surprise you, but small business owners think it should be easier to get bank loans: “According to a new survey by Goldman Sachs 10,000 Small Business Voices, 28 percent of small-business owners applied for a new business loan over the last year, and 70 percent of those owners said it was hard to access capital — up from 61 percent who said the same in survey results released by the group in April. Additionally, 76 percent said not being able to access affordable capital has negatively impacted their business, and 73 percent said rising interest rates are having a negative impact on their business.”
“The survey also found that: 68 percent of small-business owners have outstanding business loans or lines of credit. Of those owners, 58 percent have a fixed interest rate, while 42 percent have a variable interest rate.”
“Sixty-three percent of those with outstanding loans or lines of credit say rising interest rates have impacted their ability to service their existing debt obligations.”
“Sixty-eight percent of those with outstanding loans or lines of credit say they would not be able to maintain current operations or grow their business without their business loan or line of credit.” READ MORE
Yes, the labor market has softened, but there may always be a shortage: “Fresh projections by the Bureau of Labor Statistics paint a stark picture, with the labor force participation rate expected to drop from 62.2 percent in 2022 to 60.4 percent in 2032. It was 63.3 percent before the Covid-19 pandemic and had generally been falling from a height of 67.4 percent in 2000. This is driven in large part by population shifts, as baby boomers retire and the number of Gen Z workers entering the labor force is smaller than previous generations, which economists and demographic watchers have long viewed as a slow-burning structural problem exacerbated by the pandemic.”
“‘The projections released by the BLS confirm what economists and business owners are both seeing: what many believed to be a temporary, Covid-induced lack of workers is, in fact, a ‘forever’ labor shortage,’ said Tom Bowen, an economist at payroll-and-benefits provider Gusto.”
“So what have businesses been doing in response? They're increasingly hiring contractors, with Gusto data showing the share of companies turning to contract workers has grown 28 percent since the start of the pandemic.”
“Companies that are fully remote have also been increasing their hiring of foreign workers, with 20 percent of fully remote companies having at least one international employee.” READ MORE
Labor remains the biggest issue for construction firms: “General contractors are struggling to find not only skilled laborers, but also workers who have even basic skills to work in construction. According to the AGC survey, 68 percent of firms say applicants lack skills needed to work in construction. The numbers come at a time when the construction industry is facing a generational skills gap, with its workforce aging up and fewer younger workers entering the market to backfill more-experienced positions. The median age of construction workers is 42, one year older than the typical worker in the U.S. labor force, according to the 2021 American Community Survey.”
“Even though starts have slowed — year-to-date through July, total construction starts were 7 percent below the comparable mark in 2022, according to Dodge Construction Network — there's still not enough workforce for the amount of work in the pipeline.”
“Bill Ryan, workforce development and education coordinator at Dick Anderson Construction in Butte, Montana, said an overhaul of the company's apprenticeship model has led to a surge in its retention rate, going from 20 percent to between 70 percent and 80 percent in the past two years.”
“The program today includes, among other things, an opportunity for high-school students interested in construction as a career to work on job sites one or two hours after school. Ryan said the company is spending upwards of $500,000 on training and education this year, an amount he expects to go up in future years.” READ MORE
A majority of job listings now include salary information: “Thanks to an increase in state pay-transparency laws, slightly more than half of the listings on Indeed.com now include salary information, the highest share yet, per data from the jobs website out Thursday morning. Job seekers appreciate salary transparency because it gives them an edge in negotiations over pay — employers are less fond, for the same reason. Pay transparency is also seen as a way to reduce salary inequities for women and minorities.”
“New York state's pay-transparency law, which requires employers to disclose a salary range in job listings, takes effect on Sunday. (New York City's law went into effect last year.) But it's already changed things. The share of job postings in New York state that included salary information doubled in August to 61 percent from last year, per Indeed.”
“The new pay-transparency laws are making it harder for employers to retain employees, said TJ Freno, a vice-president at Orion Talent who helps manufacturing companies with hiring. Current employees see job listings for the same role they're doing at higher pay, and they're demanding raises — and often companies are unwilling to budge. ‘It's becoming a very big concern,’ he said.” READ MORE
Ami Kassar on things to do when times get tough: “Businesses struggle for many reasons, and it can happen in good economic times and in bad. Right now, pandemic relief funds have been exhausted. Interest rates are up. And some industries are having a tough time in this economic environment. Housing is an obvious example, and of course, there are a lot of related industries that struggle when houses stop selling. What do you do if your business hits a speed bump or even a speed crater? As one person pointed out in a recent post I read, there are plenty of books about scaling up. She was unaware of any books about scaling down.”
“When you are in a tough spot, being alone is especially hard. Connecting with a group of seasoned entrepreneurs you trust is always a good idea but especially when things head south. Be bold and ask for help.”
“A restaurant owner I know in Texas has seen her monthly mortgage payment increase by 50 percent over the last year. Then, this summer, with the brutal heat in Texas, business slowed to a trickle.”
“Do you understand what has changed in your business that has created your situation? Is the change temporary, or is it permanent? And how do you need to react?” READ MORE
Amazon announces it is deploying generative AI to help sellers write product descriptions: “Creating compelling product titles, bullet points, and descriptions has previously required significant work for sellers. Amazon is making new generative AI capabilities available to sellers to simplify that process, reducing the need to enter many pieces of specific product data to just one step. The new capabilities use large language models, a type of machine learning model specifically trained on large amounts of data that can recognize, summarize, translate, predict, and generate text and other content, to build more comprehensive product descriptions.”
“To get started, sellers only need to provide a brief description of the product in a few words or sentences, and Amazon will generate high-quality content for their review. Sellers can refine these, if they want to, or they can directly submit the automatically generated content to the Amazon catalog.”
“These new capabilities will help sellers create high-quality listings with less effort and present customers with more complete, consistent, and engaging product information that will enhance their shopping experiences.” READ MORE
Here’s what Mark Zandi thinks of the latest inflation report:
Employing both human intelligence and artificial intelligence, Duckbill offers personal-assistant services for $99 a month: “[Company founder Meghan Verena] Joyce said she started to feel overwhelmed by ‘life admin’ after she got married, bought a home and car, and had kids — all while working a high-stress job helping Uber to expand on the East Coast. ‘We were spending precious moments on hold with doctor’s offices or trying to find someone to help with some home maintenance issue,’ she said. She began building Duckbill in 2021, seeking to combine artificial intelligence software with ‘a human in the loop’ to take on those everyday tasks for busy people.”
“Early users have asked Duckbill to take on several types of tasks. One is booking medical and dental appointments, and finding providers who accept a person’s insurance plan. Another is assembling a family’s shared digital calendar, laying out schedules for school, vacation, and volunteer work.”
“Joyce says that customers can submit tasks via text message, email, the web, or the company’s mobile app. Duckbill has hired full-time employees — not contract or ‘gig’ workers — to execute the tasks, though the workers can be located anywhere in the US. Some may have specialties, such as party planning, or sorting through confusing medical bills. Duckbill has 30 employees.”
“Taking on household to-dos is a business challenge ‘that so many people have tried to tackle, with no clear winner in the space,’ Joyce acknowledged.” READ MORE
THE 21 HATS PODCAST
The temptation of private equity: This week, Shawn Busse, Jennifer Kerhin, and William Vanderbloemen discuss private equity. Both William and Jennifer have been getting emails and calls from representatives of PE firms who come promising all kinds of gifts—connections, expertise, money to invest in the business, and money to take off the table—which is why the temptation can be great. “If anybody even just offered me a three-day vacation, I think I would jump at it,” Jennifer jokes. But of course PE firms do exact a price, possibly including control of what used to be your business, which is why Jennifer says she wonders whether she should even take the phone calls. Entering the conversation, she says, feels a little like entering the Garden of Eden. Do you take a bite of that apple?”
Plus, Shawn thinks he’s found a better way to manage his company’s credit cards, and Jennifer gives us an update on her new website.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren