What Are You Gonna Do With Mike?
In his new book, Kurt Wilkin writes about how to manage difficult employment challenges, including the loyal, hard-working friend who just hasn’t grown with the job.
Here are today’s highlights:
If this is a recession, it’s a weird one.
There’s actually some good news on inflation.
Two family-owned shoemakers figure out how to manufacture domestically.
Slutty Vegan, an unusual food concept out of Atlanta, is going national.
THE 21 HATS PODCAST
Like a lot of entrepreneurs, Kurt Wilkin has attention-deficit issues. So when he decided to write a business book of his own, he kept it short, and he structured it so that you can find the parts that are most relevant to you and skip the rest. It’s called “Who’s Your Mike?” and it features chapters on the kinds of hiring and management challenges all entrepreneurs confront, including situations involving employees like Mike. Who exactly is this guy Mike? Oh, you know. He’s the incredibly loyal and hard-working employee who’s been with you from day one but who isn’t growing with the business. Says Kurt, “We all have, or have had, or will have a Mike.”
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Ami Kassar says businesses should do two things to prepare for recession: “Number one: make sure your line of credit is as large as possible. The second rule is to structure your debt with the lowest monthly payments to give you the greatest flexibility. Remember that running a business is like coaching a football team. You don't win in football without good offense and defense. So your balance sheet should be structured to allow you to play both as needed!” READ MORE
If this is a recession, it’s a strange one: “Today, something highly unusual is happening. Economic output fell in the first quarter and signs suggest it did so again in the second. Yet the job market showed little sign of faltering during the first half of the year. The jobless rate fell from 4 percent last December to 3.6 percent in May. It is the latest strange twist in the odd trajectory of the pandemic economy, and a riddle for those contemplating a recession. If the U.S. is in or near one, it doesn’t yet look like any other on record.”
“Between December and May, payrolls rose 2.4 million, or 1.6 percent. They are a coincident indicator, meaning they tend to rise and fall in sync with broad economic activity.”
“Mr. Kasman said firms now have a large cushion to the growing profit slowdown. Businesses are also swimming in nearly $4 trillion of cash, a record, he said, and another cushion.”
“Households are flush with cash, too. At the end of the first quarter, they had $18.5 trillion in checking accounts, savings accounts and money market mutual funds, according to Fed data. That was up from $13.3 trillion before the pandemic ...” READ MORE
As many as 30 percent of America’s dry cleaners have gone out of business: “Dry cleaners, already under threat from a dramatic decline in their business because of the pandemic, are raising prices. Operators and owners of dry cleaners say the prices of starch, steam irons, clothes hangers and utilities such as natural gas have climbed in the past year. There are also rising costs associated with the continuing labor shortage. The industry was hurting even before the recent boost in costs as the pandemic drove millions of people to work from home and opt for more-casual wear.”
“John Rothrock, the third-generation owner of Yale Cleaners in Tulsa, Okla., says he has never been more concerned about the low-margin industry’s future than he is now.”
“He says 90 percent of his sales disappeared practically overnight in March 2020. Business at the chain’s 11 locations remains at least 20 percent below pre-pandemic levels.”
“Mr. Rothrock has rolled out price increases of 5 percent and 8 percent since the start of the pandemic and is considering a third increase.”
“Tonya McCrea, who owns East Hills Cleaners in St. Joseph, Mo., is expanding into upscale home cleaning and adding a vintage resale shop to her store: ‘I don’t know that it will work, but I just try it because you never know.’” READ MORE
There’s some good news on inflation: “A slide in all manner of raw-materials prices—corn, wheat, copper and more—is stirring hopes that a significant source of inflationary pressure might be starting to ease. Natural-gas prices shot up more than 60 percent before falling back to close the quarter 3.9 percent lower. U.S. crude slipped from highs above $120 a barrel to end around $106. Wheat, corn and soybeans all wound up cheaper than they were at the end of March. Cotton unraveled, losing more than a third of its price since early May.”
“Benchmark prices for building materials copper and lumber dropped 22 percent and 31 percent, respectively, while a basket of industrial metals that trade in London had its worst quarter since the 2008 financial crisis.”
“‘Moderating commodity prices are clear evidence that inflation is cooling,’ said Louis Navellier, chief investment officer at Reno, Nev., money manager Navellier & Associates.”
“Much of the climb in prices was due to supply constraints following pandemic lockdowns, weather events last year that reduced harvests and sapped fuel reserves, and war in Europe. Those pressures have eased, though supply shocks are still jolting prices.” READ MORE
Workers are coming back and coming out: “There is no official measure of on-the-job comings out, but LGBT workers and colleagues who support them generally agree that people are more open about their sexual and gender identities in the post-pandemic workplace, mirroring a societal trend. In a recent Gallup survey, 7.1 percent of American adults identified as LGBT, up from 5.6 percent in 2020. Many LGBT workers say they’re usually, though not always, well received. A smaller subset are seeking more from their employers, pushing beyond tolerance and urging companies and co-workers to advocate for them.”
“A tight labor market in which employees have gained more say over when and how they work has made some less fearful about the risks of revealing personal details to co-workers. After all, they reason, they can find a place where they’re welcomed.”
“‘I don’t have the energy to wear a mask,’ says Mr. Kelaidis, 31 years old, who works in a conservative part of Utah. ‘People can deal with it.’” READ MORE
Two family-owned shoemakers are bucking the trend and manufacturing domestically: “Mickey Ashmore started Sabah, which makes shoes inspired by Turkish slippers, after being gifted a pair of traditional ones and searching out the best factory in Turkey that could make a more modern version. But these days, the company’s charismatic founder and CEO is excited about something closer to home: This spring, he quietly opened a new shoe factory in El Paso, Texas, to test new materials and styles of his shoes, which he calls sabahs and babahs, near his American consumers.”
“‘El Paso has a long history of leather crafts with cowboy boots and saddles,’ says Ashmore, 35, who is a native Texan. ‘The way you make a cowboy boot is very similar to the way you make a sabah.’”
“To be fair, Sabah, whose main shoe retails for $195, is handmade, creating a somewhat different challenge than that faced by mass-production shoemakers. But the move is intriguing at a time when discussions of reshoring and expansion of American manufacturing to meet supply-chain challenges have been front and center.”
“In Georgia, another family-owned shoemaker, Okabashi, which has always produced its footwear locally, recently announced a $20 million expansion to its own 100,000-square-foot American factory.”
“Okabashi, meanwhile, which has sales of more than $20 million, targets a different customer, with its sustainably made sandals, many of which sell for below $20 at mass retailers and on Amazon.” READ MORE
BookTok has become a dominant driver of book sales: “Early last year, the publishing industry began to notice that the books readers were gushing about on TikTok — the social media platform that traffics in short videos — were showing up on best seller lists. Publishers were surprised, authors were surprised, even the readers making those TikTok videos were surprised. A year later, the hashtag #BookTok has become a sustained and powerful force in the world of books, helping to create some of the biggest sellers on the market.”
“Now one of the commanding forces in adult fiction, BookTok has helped authors sell 20 million printed books in 2021, according to BookScan.”
“So far this year, those sales are up another 50 percent. NPD Books said that no other form of social media has ever had this kind of impact on sales.”
“In essence, BookTok supercharges something that’s always been essential to selling a book: word of mouth.” READ MORE
Atlanta’s Slutty Vegan is going national: “No, it’s not a diet-conscious strip club. It’s a fast-food restaurant with the energy of a strip club. When you enter, pretty much everyone behind the counter is dancing, including the people flipping the vegan burgers, in matching black, yellow mustard and ketchup red uniforms. The soundtrack is early Atlanta hip-hop circa Lil Jon and & The East Side Boyz. The Slutty Vegan staff yells out a hearty welcome as you approach the register as if you’ve just scored a touchdown. After ordering a One Night Stand, or a Super Slut, or a Heaux Boy (a play on the Po’ Boy, but with vegan shrimp) the person taking your order will ask if this is your first time and where you’re from. Your answers will be repeated — no, blared, out across the restaurant and the staff will erupt in cheers again.”
“It’s this kind of counter-programming that’s helped elevate Slutty Vegan from a shared kitchen/call-in order spot to a multi-million dollar franchise with five locations around Metro Atlanta (and Athens, Georgia).”
“Founder and CEO Pinky Cole, a former casting director, recently raised $25 million in a Series A funding round that valued her business at $100 million.”
“Fully capitalized, she’ll be expanding the Slutty Vegan brand to new locations in Columbus, Georgia; Birmingham, Alabama; Dallas, Texas; Brooklyn and Harlem.” READ MORE
The glut of goods at Target and Walmart is good news for liquidators and smaller retailers: “Liquidity Services, Xcess Limited, B-Stock LLC and other companies said they are seeing a glut of kitchen appliances, televisions, outdoor furniture and apparel that major chains are trying to clear out. In many cases, the liquidators are picking up pallets at the ports or from a warehouse without the goods ever hitting store shelves and are selling the items to smaller retailers and individuals who resell them online.”
“Home Buys, a Columbus, Ohio, off-price retailer with eight stores, is selling name-brand washers and dryers at 40 percent off the regular price.”
“‘Before Covid, we wouldn’t have had washers and dryers in our stores,’ said Brady Churches, the chain’s chief executive. ‘The market for those items is normally tight, and there isn’t a lot of excess.’”
“Jason Carrick, the owner of Xcess Limited, said the summer is typically a slow time for liquidations, but not this year. His company has been carting away 1,600 truckloads a month of excess merchandise from a large online retailer, including clothing, treadmills and video-game consoles.”
“Xcess Limited recently took 150 truckloads of Easter and spring goods off the hands of another large chain.” READ MORE
Bruce Katz co-founded the Rockport Shoe Company with his father in 1971: “In the late 1970s Mr. Katz developed a comfortable, casual shoe that became the foundation of Rockport’s business. The company was a pioneer in the use of features like cushioned, removable orthotics — or foot beds, as they are also called — to provide internal comfort and structure. ... Mr. Katz backed his walking shoes with a campaign designed to turn walking into a fitness movement. He sponsored a yearlong walk, from 1984 to 1985, around the United States by a chemical engineer, Robert Sweetgall, who wore Rockport’s new Pro Walker shoe over more than 11,000 miles to demonstrate the cardiovascular benefits of walking. He funded scientific research about walking; distributed leaflets, books and films; and promoted events with the American Lung Association and other organizations.”
“‘We want to be to walking what Jane Fonda was to aerobics,’ Mr. Katz told The Boston Globe in 1984. ‘It takes somebody, whatever their motivation, to make it happen.’”
“The campaign brought increased attention to Rockport, a fast-growing privately held company that in 1985 had sales of about $65 million. The next year, when Rockport’s sales were expected to exceed $100 million, Reebok acquired it for $118.5 million.”
“Then, after 27 years away from the shoe business, he returned, starting the Samuel Hubbard Shoe Company, which he named for his grandfather and the company he founded in the 1930s.” 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